Appendix 4E
Abacus Property Group
(comprising Abacus Group Holdings Limited and its controlled entities, Abacus Trust and its controlled entities, Abacus Group Projects Limited
and its controlled entities, Abacus Income Trust and its controlled entities, Abacus Storage Property Trust and its controlled entities and Abacus
Storage Operations Limited and its controlled entities)
ABN: 31 080 604 619
Annual Financial Report
For the year ended 30 June 2023
Results for announcement to the market
(corresponding period: year ended 30 June 2022)
Total revenues and other income
up
12.2%
to
$371.2m
Net profit after income tax expense attributable to
stapled security holders
Funds from operations ("FFO") (1)
(1) FFO has been determined with reference to the updated Property Council of Australia’s voluntary disclosure guidelines to help investors and
$175.0m
8.8%
up
to
down
95.1%
to
$25.5m
analysts compare many different AREITs. FFO is calculated by adding back tenant incentive amortisation, depreciation on owner occupied
property, plant & equipment (PP&E), change in fair value of investments derecognised, unrealised fair value gains / losses on investment
properties, adjustments arising from the effect of revaluing assets / liabilities carried at fair value (such as derivatives, financial instruments
and investments), other non-recurring adjustments deemed significant on account of their nature and non-FFO tax benefit/expense.
Basic earnings per security (cents)
Basic funds from operations per security (cents)
Distribution per security (cents - including proposed distribution)
Weighted average securities on issue (million)
30 June 2023
30 June 2022
2.85
19.58
61.11
19.01
18.40
893.5
18.00
846.3
Distribution
June 2023 half year
This distribution was declared on 19 June 2023 and will be paid on 31 August 2023.
Record date for determining entitlement to the distribution
per stapled security
9.40 cents
3 July 2023
Refer to the attached announcement for a detailed discussion of the Abacus Property Group's results and the above figures for the year
ended 30 June 2023.
Details of individual and total distribution payments
per stapled security
Half December 2022 distribution
paid 28 February 2023
9.00
Total
$72.8m
The distribution was paid in full by Abacus Trust and Abacus Storage Property Trust which do not pay tax, hence there were no franking
credits attached.
Net tangible assets per security (2)
(2) Net tangible assets per security excludes external non-controlling interest.
Distribution Reinvestment Plan (DRP)
30 June 2023
30 June 2022
$3.70
$3.85
The Group’s Distribution Reinvestment Plan (DRP) will not apply to the final distribution. Information on the terms of the DRP is available from
our website www.abacusgroup.com.au.
ANNUAL FINANCIAL REPORT
30 JUNE 2023
Directory
Abacus Group Holdings Limited
ABN: 31 080 604 619
Abacus Group Projects Limited
ABN: 11 104 066 104
Abacus Storage Operations Limited
ABN: 37 112 457 075
Abacus Funds Management Limited
ABN: 66 007 415 590
Abacus Storage Funds Management Limited
ABN: 41 109 324 834
Registered Office:
Level 13, 77 Castlereagh Street
SYDNEY NSW 2000
Tel: (02) 9253 8600
Fax: (02) 9253 8616
Website: www.abacusgroup.com.au
Custodian:
Perpetual Trustee Company Limited
Level 12 Angel Place
123 Pitt Street
SYDNEY NSW 2000
Directors of
Abacus Group Holdings Limited:
Myra Salkinder, Chair
Steven Sewell, Managing Director
Trent Alston
Mark Haberlin
Sally Herman
Jingmin Qian
Company Secretary:
Belinda Cleminson
Auditor (Financial and Compliance Plan):
Ernst & Young
200 George Street
SYDNEY NSW 2000
Share Registry:
Boardroom Pty Ltd
Level 8, 210 George St
SYDNEY NSW 2000
Tel: 1300 737 760
Fax: 1300 653 459
CONTENTS
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CASH FLOW
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
2
49
50
51
52
54
55
57
113
114
It is recommended that this Annual Financial Report should be read in conjunction with the Annual Financial Report of Abacus Trust, Abacus Group Projects
Limited, Abacus Income Trust, Abacus Storage Property Trust and Abacus Storage Operations Limited as at 30 June 2023. 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.
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DIRECTORS’ REPORT
30 JUNE 2023
The Directors of Abacus Group Holdings Limited (“AGHL”), Abacus Funds Management Limited (“AFML”) – the
Responsible Entity of Abacus Trust (“AT”) and Abacus Income Trust (“AIT”), Abacus Group Projects Limited
(“AGPL”), Abacus Storage Funds Management Limited (“ASFML”) – the Responsible Entity of Abacus Storage
Property Trust (“ASPT”) and Abacus Storage Operations Limited (“ASOL”) present their report for the year ended
30 June 2023.
PRINCIPAL ACTIVITIES AND STRUCTURE
The principal activities of Abacus Property Group during the year were investment in and operation of Self Storage
and investment in Commercial properties (office and other). Abacus Property Group is a strong asset backed, annuity
style business where capital is directed towards assets that provide potential for enhanced income growth to generate
increased total returns and create value.
The operating and financial review is intended to convey the Directors’ perspective of Abacus Property Group and its
operational and financial performance. It sets out information to assist securityholders to understand and interpret the
financial statements included in this report prepared in accordance with Australian Accounting Standards and
International Financial Reporting Standards (“IFRS”), as issued by the Australian Accounting Standards Board
(“AASB”) and the International Accounting Standards Board (“IASB”) respectively. It should be read in conjunction
with the financial statements and accompanying notes.
Listed Structure / Entities
The listed Abacus Property Group is a diversified property group that operates predominantly in Australia. It
comprises AGHL, AT, AGPL, AIT, ASPT and ASOL (collectively “Abacus” or “the Group”) and its securities trade on
the Australian Securities Exchange (“ASX”) as ABP. Abacus was listed on the ASX in November 2002 and its market
capitalisation was over $2.4 billion at 30 June 2023. Abacus is included in the S&P/ASX 200 A-REIT index
(ASX:XPJ), a sub-index of the S&P/ASX 200 index that contains the listed vehicles classified as A-REITs. Abacus is
also included in the FTSE EPRA NAREIT Global Real Estate Index Series.
Shares in AGHL, AGPL and ASOL and units in AT, AIT and ASPT have been stapled together so that none can be
dealt with without the others and are traded together on the ASX as Abacus securities. An Abacus security consists of
one share in AGHL, one unit in AT, one share in AGPL, one unit in AIT, one share in ASOL and one unit in ASPT. A
transfer, issue or reorganisation of a share or unit in any of the component parts requires, while they continue to be
stapled, a corresponding transfer, issue or reorganisation of a share or unit in each of the other component parts.
AGHL, AGPL and ASOL are companies that are incorporated and domiciled in Australia. AT, AIT and ASPT are
Australian registered managed investment schemes. AFML is the Responsible Entity of AT and AIT and ASFML is the
Responsible Entity of ASPT. Both AFML and ASFML are incorporated and domiciled in Australia and are wholly-
owned subsidiaries of AGHL.
Abacus Property Group Consolidation
AGHL has been identified as the parent entity of the Group. The financial report of the Group for the year ended 30
June 2023 comprises the consolidated financial reports of AGHL and its controlled entities, AT and its controlled
entities, AGPL and its controlled entities, AIT and its controlled entities, ASOL and its controlled entities, ASPT and
its controlled entities.
Post Balance Date De-Stapling
On 27 July 2023, securityholders voted to de-staple Abacus to create two listed separate groups:
• Abacus Group (which trades under ASX:ABG) comprising AGHL, AT, AGPL and AIT; and
• Abacus Storage King (which trades under ASX:ASK) comprising ASOL and ASPT.
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DIRECTORS’ REPORT
30 JUNE 2023
Post Balance Date De-Stapling (continued)
Abacus Group and Abacus Storage King structures post de-stapling
These two groups are reported in the segment information note on page 60.
As a result of the de-stapling, each existing Abacus Property Group securityholder hold one stapled security in Abacus
Group and one stapled security in Abacus Storage King for each Abacus Property Group security held on 2 August
2023.
The de-stapling allows for the creation of Abacus Storage King as a dedicated Self Storage operating platform and real
estate investment group. It will also provide Abacus Property Group Securityholders with sector specific exposure to
the Storage King operating platform and to a $3.1 billion Investment Portfolio including 131 Self Storage Properties
and Other Investments. Refer to the diagram on page 3 for an overview of Abacus Group and Abacus Storage King
structures post de-stapling.
Additionally, the de-stapling allows for a focused strategy for Abacus Group which will continue to own and manage its
high quality, eastern seaboard focused $2.5 billion Commercial portfolio. Abacus Group’s Commercial portfolio
remains diversified by market, asset grade, asset life cycle, customer industry and customer profile. Abacus Group will
also provide management services to and initially own 19.9% of Abacus Storage King.
OPERATING AND FINANCIAL REVIEW
GROUP STRATEGY
Abacus is positioned as a strong asset backed business with key investments concentrated in the Self Storage and
Commercial property sectors. The Group invests its capital in assets that are forecasted to drive long term total
returns and securityholder value, with an investment objective to provide its investors with reliable asset backing, and
increasing returns over the medium to longer term.
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DIRECTORS’ REPORT
30 JUNE 2023
GROUP STRATEGY (continued)
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DIRECTORS’ REPORT
30 JUNE 2023
GROUP STRATEGY (continued)
The Group looks for investments in the Commercial and Self Storage sectors that can provide strong and stable cash-
backed distributions, with potential for capital and income growth. Despite a more challenging economic outlook, we
remain confident that the Group is positioned to leverage our key enablers, being:
• Our people and culture, repositioning capability and market insight.
• Strategic investment in assets in major markets with a clear path to sustainable income growth.
• Driving value through active management of the asset portfolio.
Abacus has a track record of acquiring property-based assets and actively managing those assets to enhance income
and thereby driving capital growth. This track record has facilitated strategic partnering and joint ventures with a
number of sophisticated third party owners and major groups.
The Board monitors a range of financial information and operating performance indicators to measure performance
over time. Funds from operations (“FFO”) is the key measure that Abacus uses to monitor the financial success of its
overall strategy.
Abacus Group is positioned to provide stable FFO growth over the medium to long term by using its active asset
management capabilities, strong relationships with customers and our ability to capitalise on value-accretive
investment opportunities.
The current economic environment is being driven by high inflation and rising interest rates. This may provide Abacus
opportunities to acquire core assets with medium to long term growth prospects. Despite the challenging economic
conditions, we believe our Commercial Office portfolio remains robust, given that the majority of the Group’s
investments:
• Are well located in CBD or suburban locations with low and often below market average rent levels;
• Have limited exposure to full floor or multi-floor tenants; and
• Focus on the responsible and sustainable evolution of core business practices.
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DIRECTORS’ REPORT
30 JUNE 2023
GROUP RESULTS SUMMARY
2023 was a period of volatility. We transitioned into an environment of higher inflation, driving a significant increase in
the cost of living. To combat the higher inflation, the RBA cash rate rose 325 basis points throughout the financial
year to 4.10%, becoming the fastest RBA hiking cycle on record.
The rising cost of capital and changing macroeconomic environment increased capitalisation rates throughout the
Commercial property sector. Abacus’ diversified Commercial portfolio of high quality assets has enabled us to
maintain occupancy rates over the period with our principal Commercial portfolio recording 95.1% (2022: 95.0%). In
a more challenged economic environment, we remain focused and disciplined on directing capital towards assets that
provide potential for enhanced income growth to generate increased total returns and create medium to long term
value.
Revenue ($ million)
Total income ($ million)
Statutory net profit ($ million)
Funds from operations ($ million)
Funds from operations per security (cents)
Underlying EBIT ($ million)
Underlying EBIT per security (cents)
Distributions per security (cents)
Interest cover ratio
2023
359.7
371.2
25.5
175.0
19.58
210.0
24.82
18.40
3.9x
2022
319.6
330.9
517.2
160.9
19.01
235.5
26.36
18.00
6.1x
Weighted average securities on issue (million)
893.5
846.3
The above table includes income from discontinued operations.
The Group earned a statutory net profit after tax of $25.5 million for the year ended 30 June 2023 (2022: $517.2
million). This profit has been calculated in accordance with Australian Accounting Standards. The decrease in the
Group’s statutory net profit compared to the prior period was principally due to:
•
•
a decrease in the fair value of the Commercial investment property portfolio by $247.6 million (2022: gain of
$40.3 million) with capitalisation rates expanding 38bps to 5.71%; as well as
reduced fair value gains of $150.3 million (2022: gain of $305.2 million) across the Self Storage investment
portfolio.
Despite the above economic headwinds, Abacus’ portfolio remained resilient recording FFO growth of 8.8% and a full
year distribution per security, in line with guidance, of 18.4cps (2022: 18.0cps).
FFO is derived from the statutory profit and presents the results of the ongoing business activities in a way that
reflects our underlying performance. FFO is the basis on which distributions are determined.
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DIRECTORS’ REPORT
30 JUNE 2023
GROUP RESULTS SUMMARY (continued)
FFO has been determined with reference to the Property Council of Australia’s voluntary disclosure guidelines to
help investors and analysts compare Australian real estate organisations. FFO is calculated by adding back tenant
incentive amortisation, depreciation on owner occupied property, plant & equipment (PP&E), change in fair value of
investment properties derecognised, capital costs, unrealised fair value gains / losses on investment properties,
adjustments arising from the effect of revaluing assets / liabilities carried at fair value (such as derivatives, financial
instruments and investments), other non-recurring adjustments deemed significant on account of their nature and
non-FFO tax benefit/expense.
The reconciliation between the Group’s statutory profit and FFO is as follows:
Consolidated statutory net profit after tax attributable to members of the Group
25,495
517,165
2023
$'000
2022
$'000
Adjust for:
Net change in fair value of investment properties derecognised
Net change in fair value of investment properties held at balance date
Net change in fair value of investments and financial instruments held at balance
date
Net change in fair value of investment properties included in equity accounted
investments
Impairment charges
Depreciation on owner occupied property, plant and equipment
Net change in fair value of derivatives
Amortisation of rent abatement incentives
Amortisation of other tenant incentives, finance costs and other
Straightline of rental income
Movement in lease liabilities
Net tax expense on non-FFO items
Abacus Funds From Operations (“FFO”)
Basic earnings per security (cents)
Basic FFO per security (cents)
Distribution per security (cents - including proposed distribution)
Weighted average securities on issue (million)
This reconciliation has not been reviewed by the Group’s auditor.
Capital management and allocation
9,157
97,313
1,035
(345,550)
(15,631)
(17,907)
16,610
(4,321)
-
4,213
6,661
13,480
12,497
(2,127)
(591)
7,905
174,982
2.85
19.58
18.40
893.5
4,903
4,307
(28,101)
9,687
5,562
(1,881)
(1,478)
17,455
160,876
61.11
19.01
18.00
846.3
During the year, Abacus extended the earliest dated tranches of both its Headstock syndicated facility and Self
Storage syndicated facility by one year to July 2024. Abacus has no bank debt expiring in the financial year ending 30
June 2024, with the majority of debt expiring from the financial year ending 30 June 2025 onwards.
In conjunction with the de-stapling, Abacus completed a fully underwritten 1-for-5.6 pro rata security offer in Abacus
Storage King at an issue price of $1.41 per stapled Abacus Storage King security which raised $225 million. The $225
million was received in August 2023.
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DIRECTORS’ REPORT
30 JUNE 2023
GROUP RESULTS SUMMARY (continued)
The $225 million raising, as well as the completed de-stapling, allow for optimisation of the capital structure for both
Abacus Group and Abacus Storage King, as each entity now has the flexibility to further differentiate their capital
structures and distribution policies to appropriately reflect their financial, operational and strategic objectives.
During the year, the Group continued to focus its investment capital on acquisitions across the Self Storage and
Commercial property sectors in line with its capital allocation strategy. This strategy is focused on growing recurring
earnings. In the year ended 30 June 2023, the Group’s net property income increased by 14.2% to $252.9 million
(2022: $221.4 million).
In the Commercial sector, the Group purchased the remaining 50% interest in 324 Queen Street, Brisbane QLD for
$93.8 million, settling in August 2022.
During the year Abacus divested three non-core properties for a total consideration of $97.9 million. The divested
properties are listed below:
• 33 Queen Street, Brisbane QLD
• 247 Adelaide Street, Brisbane QLD
•
187 Todd Road, Port Melbourne VIC
In the Self Storage sector, the Group expanded its portfolio of investments with acquisitions sourced from on market
campaigns, as well as successfully completing various off market transactions via the broader Storage King third party
licensee and industry relationships. In total, for the year, the Group invested $159.1 million including an additional 12
Self Storage sites, being:
• NSW: Chatswood, Campbelltown, Carlton, Croydon, Kogarah
• QLD: Loganholme, Capalaba, Currumbin
• VIC: Dandenong, Mulgrave, Glen Iris
• SA: Darlington
The Group has also committed to purchase five additional Self Storage properties (not pictured above) for $37.5
million which further cements our standing as a high conviction investor in the Self Storage property market.
Key capital metrics of the Group are:
Total assets ($ million)
Gearing (%)
Net assets ($ million)
Net tangible assets ($ million)
NTA per security ($)
2023
2022
$5,606.2
$5,407.1
33.2%
28.7%
$3,361.7
$3,501.1
$3,302.3
$3,432.4
$3.70
$3.85
The increase in total assets of the Group by 3.7% reflects the increase in the net acquisitions during the year. The
decrease in net assets of the Group by 4.0% primarily reflects the revaluation loss of the Commercial property
portfolio during the year.
The de-stapling referenced in the Group Strategy section, enables the optimisation of Abacus Group’s capital
structure. As a result, Abacus Group’s balance sheet remains strong with gearing post de-stapling within the Board’s
target gearing limit of 35%. The de-stapling is expected to provide balance sheet capacity to Abacus Group to fund
growth initiatives including acquisitions and developments.
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DIRECTORS’ REPORT
30 JUNE 2023
KEY SEGMENT RESULTS SUMMARY
Business activities that specifically contributed to the Abacus’ operating performance and financial condition for 2023
were the continuing Commercial and discontinuing Self Storage portfolios and are reported in the segment
information note.
Commercial
The Commercial portfolio consists of 21 assets (2022: 24 assets) and had a total value of $2.5 billion at year end
(2022: $2.7 billion).
Commercial
Portfolio Value ($ million)
$2,533.8
Number of assets
Occupancy1 (% by area)
WALE1
WACR2
1. Excludes development affected assets
2. WACR: Weighted Average Capitalisation Rate
21
95.1%
4.3 years
5.71%
The Office sector continued to face challenges throughout 2023 as the future role of ‘office space’ and ‘work from
home’ continues to develop and bond yields continued to rise during the period, negatively impacting valuations. In the
second half of 2023 in particular, we saw these factors contribute to capitalisation rate expansion throughout the
Office sector.
Pleasingly, our Office portfolio of 15 assets (2022: 18 assets) was relatively resilient to the market challenges, with
occupancy holding steady at 95.0% (2022: 94.7%). The resilience in our occupancy and income growth levels were
supported by our diversified lease profile with WALE of 3.7 years (2022: 3.8 years) and high-grade Office buildings.
Key Office Portfolio attributes:
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DIRECTORS’ REPORT
30 JUNE 2023
KEY SEGMENT RESULTS SUMMARY (continued)
The Retail sector saw strong momentum during 2023, with high occupancies throughout our portfolio of four assets.
Abacus’ 2023 Retail occupancy rate was high at 95.2% (2022: 95.6%), with a weighted average lease expiry of 5.8
years (2022: 6.2 years). Strong retail sales throughout the majority of 2023, despite increasing cost of living
pressures on consumers supported occupancy and rents.
Overall, Abacus’ Commercial portfolio delivered a segment result of $202.5 million loss for the year ended 30 June
2023 (2022: $119.5 million gain) which can be mainly attributed to fair value loss of investment properties $247.6
million (2022: $40.3 million gain).
The Commercial portfolio has a stable income growth profile, supported by high occupancy of 95.1% and a diversified
lease profile of 4.3 years.
Commercial Valuations
The Commercial investment property portfolio was revalued at year end which resulted in a loss of $247.6 million.
The investment property portfolio’s overall weighted average capitalisation rate expanded 38 basis points from 5.33%
in 2022 to 5.71% in 2023. The Commercial portfolio (excluding equity accounted properties) was valued at $2.1
billion at 2023 year-end across 18 assets (2022: $2.3 billion across 20 assets).
As part of the portfolio valuation process for the year ended 30 June 2023, all investment properties (excluding
equity accounted properties) were independently valued (2022: 60%).
As a result of current market conditions and a shift in future expectations in the Office sector, Abacus has targeted
assets that offer more stabilised income streams with longer dated value enhancing strategies. This capital allocation
strategy supports the Group’s drive to improve recurring earnings.
Self Storage
The Self Storage portfolio is well diversified in Australia and New Zealand across attractive metropolitan locations that
are easily accessible and are close to large population centres.
Self Storage
Portfolio Value ($ million)
$3,072.4
Number of assets
Occupancy1,4 (% by area)
WACR2
RevPAM1,3,4
Average rate1,4
1. Established portfolio
2. WACR: Weighted Average Capitalisation Rate
3. Revenue per available square metre
4. Average over last 12 months (by area)
131
91.3%
5.57%
$319 psqm
$349 psqm
2023 demonstrated both the resilience and diversification of our Self Storage portfolio and the strength of Storage
King’s brand.
The Group’s Self Storage portfolio delivered a segment result of $304.0 million for the year ended 30 June 2023,
down 30.5% on 2022 which can be mainly attributed to lower Self Storage fair value gains. As a result of the de-
stapling the Self Storage portfolio has been classified as discontinued operations in the financial statements.
As at 30 June 2023 the Self Storage portfolio equated to $3,072.4 million which is made up of 131 assets (trading
and development sites), reflecting an increase of 12 facilities during the period.
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DIRECTORS’ REPORT
30 JUNE 2023
KEY SEGMENT RESULTS SUMMARY (continued)
We saw a continuation of macroeconomic tailwinds supporting Self Storage sector growth in 2023. These include:
•
Limited supply for Self Storage space: there is only 2.16sqft of Self Storage per capita available in Australia and
2.61sqft in New Zealand, compared to the more mature US market of 7.21sqft.
•
• Densification of residential property and changes in consumer preferences: with a greater focus on increasing
utilisation in the home - rising housing density results in a higher concentration of dwellings and less available
space per household, increasing demand for offsite storage. Changes in consumer preferences towards apartment
living and a higher proportion of adults renting further supports housing turnover, mobility and therefore demand
for offsite storage.
Increased awareness and take-up: Self Storage usage in Australia and New Zealand increased to 9.4% of the
total adult population in 2021, up from 8.6% in 2020 and 5.0% in 2013. Further, Storage King is the most
recognised Self Storage brand across Australia and New Zealand, which may be leveraged to further acquire assets
as industry consolidation continues.
The rise of e-commerce leading to increased business usage: The way people are using Self Storage is changing,
with business usage on the rise. Supply chain challenges, the structural uplift in online sales penetration post-
COVID and the growing importance of last-mile distribution all present opportunities for Self Storage.
•
Self Storage Development
With an increased focus on capital allocation, the development pipeline of planned Self Storage assets currently
numbers 15 assets, with a combined carrying value of $182 million. These assets are at various stages of development
and are anticipated to be delivered to the established portfolio over the next few years as they are completed to
commence trading, and reach forecast optimum occupancy levels. It is anticipated that these assets will enhance the
average rental rate and RevPAM across the established portfolio over time.
During the period, the Group maintained full control of the Self Storage management business of Storage King. The
Group also maintained its investment in a listed Self Storage A-REIT, a stake that is intended to be held as a long term
investment in one of the Group’s key sectors.
Looking forward we see ongoing momentum, albeit at a more normalised pace, in the Self Storage industry given a
range of demand drivers in a fragmented industry with relatively high barriers to entry from a supply perspective.
Self Storage Valuations
As part of the 2023 valuation process, 131 Self Storage facilities out of 131 or 100% by number were independently
valued during the year to 30 June 2023. The valuation process resulted in a net full year revaluation gain of $150.3
million (2022: $305.2 million gain).
The Group has continued with its strategy of allocating investment capital to growing exposure to the Self Storage
sector. The Group acquired 3 operating stores as well as 9 development sites, that are expected to deliver income and
capital value returns to the portfolio over the medium to longer term.
FUTURE PROSPECTS
The de-stapling process will enable more optimised capital structures for both Abacus Group and Abacus Storage
King, with both entities expected to have reduced Adjusted Gearing at the lower end of their respective target ranges.
This is expected to provide balance sheet capacity to fund growth initiatives for both entities.
The strategy for continuing operations, Abacus Group, will be to continue targeting the acquisition of well-located
Commercial properties that will be held for the long term. Increasing exposure to this asset class is expected to
enhance Abacus Groups’ ability to grow recurring revenue over the longer term.
Abacus Group’s forecast level of gearing and liquidity post de-stapling will enable it to pursue its strategy and to take
advantage of any short-term volatility in the market, which is anticipated in this fluctuating macro-economic
environment. Abacus Group’s liquidity can potentially be further leveraged, to invest in a larger number of projects
through joint venture arrangements.
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DIRECTORS’ REPORT
30 JUNE 2023
KEY RISKS
Key Risk Areas
In the last year there has been notable change in the material and relevant risks affecting Abacus:
• WHS: Workplace health and safety remains a key priority and ongoing risk for Abacus to ensure that our
staff, customers and contractors are safe. Areas of particular focus are the operational and capital works at
our office buildings, retail customers at our shopping centres and operational activities within the Storage
King Self Storage portfolio. Significant improvement to our processes and systems has been made in the year
to help mitigate this risk.
• Cybersecurity: During the year there have been a number of cyber attacks on Australian companies that has
caused loss of customer data and disruption to businesses. Abacus remains vigilant to ongoing cyber-attacks
with improvements to our processes and systems and ongoing training for our staff.
•
Interest rates and inflation: Higher inflation and the consequent increase to interest rates creates an
increase in the cost of operating the business and higher bank interest on our borrowings, to the extent that
they are not hedged. Higher interest rates may also have the result of reducing the value of our property
assets.
• Office and storage demand: Subdued consumer and business sentiment has the potential to reduce the
demand for office space and demand for Self Storage space at our properties. The demand for office space is
also affected by changes ways of working with increased working from home.
The table below outlines some of Abacus’ key risk areas. The list is not exhaustive, and Abacus’ performance may be
affected adversely by any of these risks and other factors. The table also describes some of the key management
actions being taken to ensure such risks are taken in line with the Risk Appetite Statement.
Key Risk
Strategic Risk
Abacus activities and transactions are
aligned with the approved strategy so to
ensure that financial and operational
results are within expected and planned
outcomes.
Governance Risk
Abacus is reliant on an effective and
balanced governance approach to
people, conduct, and processes through
oversight, controls, checks, and subject
matter experts.
Regulatory, Compliance & Legal Risk
Abacus is responsive to regulatory
change and strives to operate in
accordance with its regulatory and legal
obligations.
Impact of risk
•
Lower than expected return on
capital
• Reduced investor sentiment
•
Loss of income or asset values
• Financial performance of assets
• Financial damage
•
Increased compliance costs
• Regulatory restrictions impacting
on business operations
How Abacus manages it
The Abacus Board and management
review and confirm Abacus strategy and
risk profile on a periodic basis and has a
number of processes and controls to
ensure the strategic direction of Abacus
is maintained.
Abacus has a number of governance
controls and processes implemented
across Abacus, with some aspects
including monitoring, reporting, and
training in respect of conduct, staff skills,
and processes.
Abacus has a number of controls and
arrangements in place to ensure
compliance with its legal and regulatory
obligations. Some aspects include
monitoring, testing, and reviewing
through dedicated compliance plans,
which are also subject to external review.
12
DIRECTORS’ REPORT
30 JUNE 2023
KEY RISKS (continued)
Key Risk
Operational Risk – Asset and
Development Management,
Acquisition and Capital Investment
Abacus’ operational systems are
developed and implemented with
operational controls embedded to ensure
best practice and the opportunity for
ongoing success.
Operational Risk – Cyber and
Information Technology
Abacus aims to leverage technology and
innovation to enhance the customer
experience while developing responsive
strategies to prevent cyber incidents and
attacks.
Impact of risk
• Financial performance of assets
• Reduced investor sentiment
• Financial damage
•
Lost productivity as a result from a
material critical technology
disruption
• Reduced market competitiveness
from a failure to adapt to changes in
advancements in technology
• Regulatory restrictions impacting
on business operations
Operational Risk – Health and Safety
Ensuring the health, safety and wellbeing
of Abacus’ people is of utmost
importance to the success of its
strategy.
• Material harm to people
• Reputational impact
• Civil and criminal penalties and
regulatory restrictions imposed
• Costs and effort to remediate
Operational Risk – People and
Culture
The motivation, high-performance and
capability of Abacus’ people are integral
to the success of its business outcomes.
• Workforce costs
• Workforce productivity
•
Loss of corporate knowledge
• Ability to attract and retain talent
How Abacus manages it
Abacus has a number of controls and
processes in place to ensure assets are
maintained to the required standard and
in accordance with documented asset
management protocols. Abacus has
documented processes for the
assessment of capital expenditure,
development activities and property
acquisitions and disposals.
Abacus has a number of controls,
arrangements, and recovery plans in
place over information and technology
assets, as well as active monitoring of its
digital footprint. Abacus also develops
strategies to continue to incorporate
technological innovations into assets.
Regular training is provided to staff to
ensure continued awareness of cyber
risks.
Abacus has arrangements and controls in
place to ensure that safety risks, hazards,
and incidents are reported and
addressed, and that assets have
embedded systems and processes to
ensure safe operation. The Board has a
Sustainability and WHS sub-committee
to monitor these risks.
Abacus has a number of controls,
processes, and strategies in place to
ensure people recruited are aligned to
Abacus’ culture and are continually
developed to meet the needs of the
business and ensure appropriate
succession planning. Abacus also
regularly monitors and maintains a
positive workplace culture in line with its
values. All staff are required to adhere
to the Code of Conduct.
13
DIRECTORS’ REPORT
30 JUNE 2023
KEY RISKS (continued)
Key Risk
Operational Risk – Strategic
Partnerships and Management
Arrangements
Maintaining professional relationships
with like minded property groups,
licensees and service providers is critical
to the success and growth of the
business.
Impact of risk
• Reputational damage
• Financial damage
•
Inability to attract new partnerships
Environmental and Sustainability Risk
Climate change is expected to affect
Abacus’ assets while also presenting an
opportunity to prepare for and build
resilience across its portfolio.
• Higher operating costs or requiring
remedial capital costs, leading to a
potential devaluation
• Reputational damage
• Reduced investor sentiment
Market and Investment Risk
Abacus incorporates appropriate
oversight and controls over key decisions
in acquisitions, disposals, capital
management, and valuations so to
ensure the best risk adjusted returns are
achieved.
Liquidity, Capital Management, and
Financial Performance and Reporting
Risk
Abacus maintains a diversified capital
structure to support stable investor
returns as well as appropriate access to
equity and debt funding.
•
Lowered expected returns on
investment
• Reduced investor sentiment
•
Limited capacity to execute
strategy
•
Increased cost of funding
• Reduced availability of debt
financing
How Abacus manages it
Abacus has periodic meetings to ensure
strategic alignment with our property
co-owners and foster a collaborative
approach to growth opportunities.
Abacus has controls, processes and
strategies in place to ensure that
obligations to be provided by third
parties to Abacus and obligations to be
provided by Abacus to others are
appropriately discharged.
Abacus has developed and implemented
a number of controls and strategies to
ensure that environmental issues are
incorporated into decision-making
process when acquiring assets and as part
of the ongoing management of each
asset. Active strategies are in place to
ensure that insurance cover is optimised
for climate risk affected properties.
Abacus has a number of controls and
processes in place that reviews and
approves significant transactions and
assesses their alignment with the
strategy. In addition, other aspects
include controls over capital planning,
forecasting, budgeting, and development
activities.
Abacus has a number of controls and
processes in place over capital
management to monitor, manage and
stress test property valuations, interest
rate changes, funding requirements,
liquidity buffers, and credit risk with
regular reporting to the Board and
internal Committees.
Abacus has documented policies and
operational procedures with controls
embedded over material risks as well as
external advisory in place over treasury
activities including interest rate hedging.
14
DIRECTORS’ REPORT
30 JUNE 2023
KEY RISKS (continued)
Environmental, Social and Governance Risks
Abacus continues to progress its governance policies and procedures regarding Environmental, Social and Governance
(‘ESG’) risks across the business. We recognise the growing importance of ESG across all facets of the business and as
such it remains a key focus area for our Executive Committee, Board and Sustainability Committee. We continue to
progress with our net zero emissions target by 2030 currently, with climate related risks being a consideration in all
investment decisions across the business. We continue to progress our understanding of the operating and capital
costs for each of our properties that may be impacted by climate change. Being a good corporate citizen underpins our
social responsibilities and we adhere by relevant laws and Abacus policies to mitigate social risks, with modern slavery
representing a major risk in this area. Abacus also practices strong governance throughout the business, with robust
governance policies in place that provide the framework for decision-making within the Group.
DIRECTORS AND SECRETARY
The qualifications, experience and special responsibilities of the Directors and Company Secretary are as follows:
Chair (non-executive)
Myra Salkinder MBA, BA
Myra is a Non Independent, Non-Executive Director and is a senior executive of the Kirsh Group. She has been
integrally involved over many years with the continued expansion of Kirsh Group’s property and other investments,
both in South Africa, Australia and internationally. Myra is a director of various companies associated with Kirsh
Group worldwide.
Myra is a member of the Abacus Property Group Sustainability and WHS Committee and Nomination Committee.
Tenure: 12 years 3 months
Managing Director
Steven Sewell BSc
Steven joined Abacus Property Group in October 2017, bringing over 20 years’ experience in real estate funds
management, asset management, equity and debt capital markets and M&A transactions. Steven’s prior career
experience is in listed and unlisted real estate funds management businesses, across various real estate sectors,
providing Commercial experience and insight in relation to institutional investors, the whole Abacus Property Group’s
business and sector specialised investment strategies, capital allocation and developing third party capital relationships.
Steven was appointed Abacus Property Group’s Managing Director in April 2018, and is a member of Property
Champions of Change and a member and past Chairman of the Shopping Centre Council of Australia.
Steven is a member of the Abacus Property Group Nomination Committee.
Tenure: 5 years 2 months
Trent Alston B. Build. (Hons), GMQ - AGSM, AMP – Insead, GAICD
Trent is a Non-Executive Director and has over 30 years of experience in the real estate and funds management
industry, with the last 13 years as Head of Real Estate for Challenger Limited. His experience includes direct and
wholesale property roles at Colonial First State Property and Lendlease. Trent is also a Non-Executive Director
of Landcom.
Trent is Chair of the Abacus Property Group People and Performance Committee and a member of the Abacus
Property Group Audit and Risk Committee and Nomination Committee.
Tenure: 3 year 9 months
15
DIRECTORS’ REPORT
30 JUNE 2023
DIRECTORS AND SECRETARY (continued)
Mark Haberlin BSc (Eng) Hons
Mark is a Non-Executive Director and is the Lead Independent Director. He has significant expertise in fields that
cover accounting and audit, capital transactions, mergers and acquisitions and risk management in the real estate and
financial services sectors. Mark was a partner at PwC for 24 years where he developed key accounting and audit
experience. Mark was a member of the PwC Governance Board and completed his last two years as Chair. Mark is also
a Non-Executive Director of Australian Clinical Labs.
Mark is Chair of the Abacus Property Group Audit and Risk Committee and a member of the Abacus Property
Group People and Performance Committee and Nomination Committee.
Tenure: 4 years 7 months
Sally Herman BA, GAICD (appointed December 2022)
Sally is a Non-Executive Director and joined the Abacus Property Group Board on 16 December 2022. Sally brings a
wealth of expertise across property, financial services, retail and manufacturing sectors as a Non-Executive Director.
Prior to that she had a successful executive career over 25 years, including 16 years with the Westpac Group in both
Australia and the United States of America, running various operating divisions. Sally sits on both listed and not-for-
profit boards, including Suncorp Group Limited, Premier Investments Limited, Breville Group Limited, Art Gallery of
NSW Trust and Sydney Film Festival. She is also a member of Chief Executive Women.
Sally is a member of the Abacus Property Group People and Performance Committee, Sustainability and WHS
Committee and Nomination Committee.
Tenure: 6 months
Jingmin Qian CFA, BEc, MBA, FAICD
Jingmin is a Non-Executive Director and has significant expertise in the property, infrastructure and investment
sectors as well as rich experience in Asia, a director of Jing Meridian and specialises in advising boards and senior
management on investment, cross-cultural management and governance. Jingmin has served as a member of the
business liaison program of the Reserve Bank of Australia. Jingmin is a Non-Executive Director of IPH Limited, a
trustee of HMC Capital Partner Fund, a member of Macquarie University Council, and Vice President of the
Australia China Business Council. Jingmin is a member of Chief Executive Women.
Jingmin is Chair of the Abacus Property Group Sustainability and WHS Committee and a member of the Abacus
Property Group Audit and Risk Committee and Nomination Committee.
Tenure: 6 years
Mark Bloom BCom, B.Acc, CA (retired 3 August 2023)
Mark is a Non-Executive Director and joined the Board on 1 July 2021. Mark had an extensive 36 year career as a
Finance Executive in Australia, Canada and South Africa, with his most recent role as Chief Financial Officer at
Scentre Group up until April 2019, having previously served as Deputy Group CFO at Westfield Group. He acts as a
consultant to Calculator Australia Pty Limited. Mark is also a Non-Executive Director of AGL Energy Limited and
Pacific Smiles Group Limited.
Mark is a member of the People Performance Committee.
Tenure: 2 years
16
DIRECTORS’ REPORT
30 JUNE 2023
DIRECTORS AND SECRETARY (continued)
Holly Kramer BA (Hons) Econ/Political Science, MBA (retired on 23 November 2022)
Holly was a Non-Executive Director and a member of the People Performance and Sustainability & WHS
Committees.
Company Secretary (effective 14 October 2022)
Belinda Cleminson
Belinda has over 20 years’ experience as a Company Secretary of Australian listed and unlisted companies including
ASX 200 clients. Belinda is the company secretary of various public and private companies, including ASX, NZX and
OTC listed companies across a range of industries. Belinda is a member of the Governance Institute of Australia, and a
Member of the Australian Institute of Company Directors.
Rebecca Pierro
Company Secretary (resigned 14 October 2022)
Directors’ Meetings
The number of meetings of directors (including meetings of committees of directors) of AGHL, AFML (the
Responsible Entity of AT and AIT), AGPL, ASFML (the Responsible Entity of ASPT) and ASOL, held during the year
and the number of meetings attended by each director were as follows:
Audit & Risk
People
Performance
Sustainability
Nomination
& WHS
Board
Committee
Committee
Committee
Committee
Eligible
Attended
Eligible Attended
Eligible Attended
Eligible
Attended
Eligible
Attended
M Salkinder
T Alston
M Haberlin
J Qian
S Sewell
M Bloom
S Herman
H Kramer
11
11
11
11
11
11
7
3
11
11
10
11
11
11
7
3
-
4
4
4
-
4
-
-
-
4
4
4
-
4
-
-
-
4
4
-
-
4
2
2
-
4
4
-
-
4
2
2
4
-
-
4
-
-
2
4
4
-
-
4
-
-
1
4
2
2
2
2
2
2
1
1
2
2
2
2
2
2
1
1
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 the secretary. The terms of this policy prohibit disclosure of the nature of the risks insured or the premium paid.
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount) – except for any loss in respect of any matters which are finally determined to have resulted from Ernst &
Young’s negligent, wrongful or wilful acts or omissions. No payment has been made to indemnify Ernst & Young
during or since the financial year.
17
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
Letter from the Chair of the People Performance Committee
On behalf of the People Performance Committee and the Board, I am
pleased to present the Remuneration Report for FY23.
The report summarises Abacus’s performance and remuneration outcomes
for FY23, the executive remuneration framework for FY23 and beyond, and
any increases to executive and non-executive remuneration for FY23.
Last year we said that we were mindful that our framework may need to
evolve as we make further progress with our strategy and evolution, to ensure
that it remains fit for purpose.
At the 27 July Extraordinary General Meeting (EGM), securityholders
approved Abacus Group (ASX:ABG) (Abacus) de-stapling proposal to
establish a new ASX listed Self Storage REIT now known as Abacus Storage
King REIT (ASK). ASK is an externally managed REIT with a majority
independent Board of Directors. Abacus is the manager of ASK and retains a
minority interest of up to 19.9% of the stapled securities in ASK.
Abacus’s growth in its Self Storage portfolio has been a result of effectively
managing and enhancing the Storage King platform to become Australia’s
most recognised Self Storage brand. Abacus has deployed over $1.4bn into
Self Storage assets over the last five years and determined that this was the
right time for the portfolio to be separately listed with its own capital
structure.
Post de-stapling, Abacus is positioned to provide stable earnings and
opportunities for growth for securityholders. Abacus continues to own and
manage its high quality, eastern seaboard focused $2.5bn Commercial
property portfolio, which is diversified by market, asset grade, asset life cycle, customer industry and customer profile.
FY23 Performance
Abacus is a strong asset backed, annuity style business model where capital is directed towards assets that provide
potential for enhanced income growth to create value. Our people, market insight and repositioning capability
together with strategic partnering are key enablers of our strategy.
In the last 12 months Abacus has been in a high inflationary environment and had a record RBA pace of rate rises to
combat this, which will adversely impact borrowing rates going forward. This means that the cost of capital (including
debt) has increased. As such there has and will be future headwinds to Funds from Operations per security which
cannot be fully offset by Management’s operating performance despite the Group being well hedged at rates
substantially below current market levels.
Post de-stapling Abacus Group has prudent levels of gearing, well below the Board's maximum target of 35%.
18
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
FY23 Remuneration
Executive Key Management Personnel fixed pay was adjusted only for the Chief Investment Officer and General
Counsel (CIO), with an 18.8% increase. This adjustment reflected his increased accountability in the new role.
The Funds from Operations profit result in FY23 was above target requirements against a 40% weighting within the
STI balanced scorecard for Executive KMP.
STI awards for Executive KMP correlated with annual performance outcomes against expectations, with payments
averaging 83.6% of maximum STI. Twenty-five percent of Executive KMP STI is deferred for a further twelve months.
Further details on the STI Plan can be found on page 29.
69.3% of the FY22 LTI grant’s first tranche will vest in August 2023 based on FFOPS AAGR. Both the CIO and the
CFO are recipients as they were both non KMP at the time of grant.
The legacy Executive Incentive Plan (“Security Acquisition Rights” or “SARs”) is expected to vest in September 2023
as a result of sustained performance since grant. This plan has been replaced by the LTI Plan.
FY23 KMP Changes
From 1 July 2022, Evan Goodridge was promoted to the role of Chief Financial Officer (CFO).
In November 2022, Holly Kramer stepped down from her position on the Board. Holly has served on our board for
the last four years and I, along with my fellow directors, would like to sincerely thank Holly for her valuable
contribution and leadership during her time on the Board.
In December 2022, Sally Herman was appointed to the Board. Sally joins the Board bringing a wealth of expertise
across property, financial services, retail, and manufacturing sectors as a non-executive director.
In anticipation of the de-staple, in June 2023, John O’Sullivan, Stephanie Lai and Karen Robbins were appointed to
the Boards of Abacus Storage Funds Management Limited and Abacus Storage Operations Limited. See Table One:
Non-Executive Directors (NED).
From 4 August 2023, Nikki Lawson became Fund Manager of ASK.
Impact of de–stapling on incentive awards on foot
Abacus has various unvested incentive awards on foot which will be impacted by the de-stapling. The Board has
determined the treatment of unvested awards on foot with the objective of preserving the overall value of awards
following de-stapling, ensuring that participants do not receive a benefit or are disadvantaged by the de-stapling. This
treatment applies for employees who either continue to be employed by Abacus Group or by Abacus Storage King
while continuing to hold relevant Abacus Property Group Incentive Awards. Details of the treatment for each
unvested award on foot impacted by the de-stapling are set out in section 5 of the Remuneration Governance and
Framework.
FY24 Changes to remuneration
Following a review of the LTI framework the Board has resolved to replace the FFO per security growth measure with
performance measures based on Relative TSR and EBIT per security CAGR for the FY24 LTI grant. More details of
the new arrangements will be provided in this year’s notice of Annual General Meeting on 17 November 2023.
19
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
Concluding remarks
It has been a significant year for Abacus Group and the Board acknowledges the strategic conviction and dedication of
the Management team. There are exciting times ahead for the Group and the Board and Management are confident in
our readiness to deliver the next phase of growth in our Commercial Property and Abacus Self Storage portfolios.
Trent Alston
Chair – People Performance Committee
20
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
The Board presents the FY23 Remuneration Report for Abacus in accordance with the Corporations Act 2001 and its
regulations. This report outlines the key remuneration policies and practices for the year ended 30 June 2023.
It highlights the link between remuneration and corporate performance and provides detailed information on the
remuneration for Key Management Personnel (KMP).
This remuneration report is set out under the following headings:
SECTION
CONTENTS
1.
2.
3.
4.
5.
6.
7.
Who is covered in this report – KMP
Remuneration Snapshot FY23
FY23: How did we perform?
Executive KMP remuneration
Remuneration governance and framework
Non-Executive Director remuneration
Additional required disclosures
PAGE
21
22
25
26
30
43
47
1.
WHO IS COVERED IN THIS REPORT – KMP
For the purposes of this report, the KMP are those persons who for the purposes of the accounting standards are
considered to have authority and responsibility for planning, directing, and controlling the major activities of the
Group in Tables 1 and 2 below.
Table 1 – Non-Executive Directors (NED)
NON-
EXECUTIVE
DIRCTOR
ROLE
BOARDS
COMMENCEMENT
DATE RESIGNED
Myra Salkinder1
Chair of the Board
Trent Alston1
Non-Executive Director
Mark Haberlin1
Non-Executive Director
Sally Herman1
Non-Executive Director
Jingmin Qian1
Non-Executive Director
Holly Kramer
Non-Executive Director
Mark Bloom2
Non-Executive Director
AGHL, AT, AGPL,
AIT, ASOL & ASPT
AGHL, AT, AGPL,
AIT, ASOL & ASPT
AGHL, AT, AGPL,
AIT, ASOL & ASPT
AGHL, AT, AGPL,
AIT, ASOL & ASPT
AGHL, AT, AGPL,
AIT, ASOL & ASPT
AGHL, AT, AGPL,
AIT, ASOL & ASPT
AGHL, AT, AGPL,
AIT, ASOL & ASPT
16 December 2022
23 November 2022
21
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
NON-EXECUTIVE
DIRCTOR
ROLE
BOARDS
COMMENCEMENT DATE RESIGNED
John O’Sullivan
Non-Executive Director
ASK Chair
ASOL & ASPT3
13 June 2023
Stephanie Lai
Non-Executive Director
ASOL & ASPT3
13 June 2023
Karen Robbins
Non-Executive Director
ASOL & ASPT3
13 June 2023
1 Resigned as director from ASOL & ASPT on 3 August 2023.
2 Resigned as director from AGHL, AT, AGPL & AIT on 3 August 2023.
3 ASOL & ASPT formed ASK on 3 August 2023, and the directors subsequently become members of the ASK board.
Table 2 – Executive KMP
EXECUTIVE KMP
ROLE
Steven Sewell
Managing Director (MD)
DATE APPOINTED
Evan Goodridge
Chief Financial Officer (CFO)
1 July 2022
Gavin Lechem
Chief Investment Officer and General Counsel (CIO)
2.
REMUNERATION SNAPSHOT FY23
The Abacus Performance and Reward framework aims to reward, engage, and develop our people focusing on, value
creation for our customers and community.
Fixed Remuneration
Short term Incentives
Long Term Incentives
Outcomes
Outcomes
There were no changes to
MD Fixed Remuneration
for FY23.
The CIO and General
Counsel received a 18.8%
increase effective 1 July
2022.
The MD received 82.7% of
his maximum STI.
The average STI outcome
for FY23 for Executive
KMP was 84% of the
maximum based on their
balanced scorecard.
25% of the STI has been
deferred for 12 months for
all KMP.
No LTI vested for the MD.
The CIO and CFO each
received 69.3% of a third
of the FY22 grant.1
The MD and CIO have
met the minimum security
holding requirement
(MSH).
The CFO is currently at
98% of the MSH with at
least 100% being required
by June 2026.
1The CIO and CFO were granted LTI in 2021 as non KMP with three tranches.
22
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
2.1.
Maximum Remuneration Mix
Abacus aims to ensure the split of fixed and variable (at risk) remuneration is appropriate for the type of business it
operates, namely a cyclical and established business that seeks to provide stable distributions to securityholders. This
remuneration strategy aligns with the Board's desired positioning of Abacus within the A-REIT industry.
The graph below sets out the remuneration structure and mix at maximum, for the MD and other Executive KMP at
Abacus for FY23. The remuneration mix is weighted towards variable remuneration.
Managing Director maximum pay mix.
Other Executive KMP maximum pay mix.
31%
31%
10%
28%
23%
8%
23%
46%
Fixed Remuneration
STI Cash
STI Deferral
LTI
2.2.
Our Remuneration Principles
Our people are key to our success, providing a wealth of market insight, industry experience and strategic partnering
that enables our growth and evolution. The more we nurture and invest in our people, the more we achieve. The
Abacus Performance and Reward strategy is guided by the following principles:
Reward
Balance
Alignment
Reward and promote the results and
behaviours consistent with the
Abacus purpose, objectives, and
values.
Balanced between financial
performance, strategic priorities and
continued focus on increasing
engagement of our people.
Alignment of interests to
stakeholders to focus on long term
sustainable value creation.
23
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
2.3.
FY23 Remuneration Framework
ELEMENT
PURPOSE
LINK TO PERFORMANCE
Fixed
Remuneration
(FR)
To attract, engage and retain
individuals with capability,
diversity of thought and
experience to continue
delivering on our strategy.
Appropriately compensating our
employees so that we remain
competitive.
Changes to FR are linked to a
combination of incumbent skills and
experience, and market rates
informed by benchmarking.
FY23 CHANGES /
OUTCOMES
The CIO and General
Counsel received a 18.8%
increase to fixed
remuneration.
Short Term
Incentive (STI)
Long Term
Incentive (LTI)
To focus performance on key
annual financial and non-
financial KPIs, including FFO
profit.
STI for Executive KMP is
delivered through cash with a
potential portion of 25% that
can be deferred to be settled
in the form of rights. A
deferred STI was introduced
to aid retention, align with
securityholders’ interests, and
provide for a “consequence
management” governance
mechanism for misconduct,
fraud, malfeasance, or
financial misstatement.
The LTI Plan is aimed at
attracting, rewarding, and
retaining high performing
Executives and other
nominated participants for
delivering sustained long term
growth and aligning them with
securityholder interests.
The following factors are among
those considered by the People &
Performance Committee (PPC) in
making its assessment on the
achievement of the STI opportunity:
For FY23 Executive KMP
STI outcome was on
average 84% of maximum
of which 25% was
deferred.
Unifying Financial performance.
Strategic Objectives.
Unifying People performance.
The STI is measured over a one-year
performance period and paid in cash
with 25% subject to deferral paid in
the form of rights. The rights will
have a deferral period of 12 months.
For further details of the
plan refer to section 5.2
page 31.
For further details of
FY23 STI outcomes refer
to section 4.2 table 4
page 28.
No LTI vests for the MD.
The CIO and CFO each
received 69% of a third of
the FY22 grant.
LTI granted are in the form of
performance rights.
The value of LTI awards offered in
FY23 was up to a maximum of 100%
of FR for the MD, and 50% for the
CFO and the CIO.
To align the interests of the Board
with securityholders, the MD is
required to maintain a minimum
holding of securities equivalent to
100% of his fixed remuneration.
Executive KMP are required to
maintain a minimum holding of
securities that is equivalent to 50%
of their fixed remuneration.
24
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
FY23: HOW DID WE PERFORM?
3.
One of the key principles of the Group’s remuneration framework is the alignment of interests to securityholders to
focus on long term sustainable value creation. This section provides a summary of both FY23 performance and the
Company’s five year financial performance outcomes.
Abacus’ FFO result exceeded target and the team has made significant progress during FY23 on delivery of our
business priorities. Of note, the Group:
-
-
-
announced its intention to create a new ASX listed Self Storage REIT known as Abacus Storage King (ASK),
which was successfully de-stapled post year end;
successfully completed a pro rata equity raising in ASK raising proceeds of approximately $225 million;
undertook strategic capital transactions investing over $450 million in Commercial and Self Storage assets
during the period, and additionally exchanging on an additional four Self Storage sites yet to settle;
-
divested approximately $100m of non-core assets;
-
achieved strong performance in its established Self Storage portfolio with growth in RevPAM of 9%;
-
continued the rollout of solar panels across its Self Storage facilities;
- maintained high levels across its Commercial portfolio occupancy at 95%;
-
-
delivered 100% of FFO from its core operations;
relocated both Abacus and Storage King’s head offices including a strong brand refresh of the organisation;
and
achieved high level of employee engagement.
-
Five year FFO performance
y
t
i
r
u
c
e
s
r
e
p
s
t
n
e
C
35
30
25
20
15
10
5
0
2019
2020
2021
2022
2023
FFO (total earnings)*
FFO (Core operations)*
*FFO earnings are unaudited.
25
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
3.1.
Relationship between remuneration and Abacus performance
Abacus performance over the last five years is illustrated below in table 3.
Table 3 – Key financial performance indicators
Key financial performance Indicators
FFO (core operations) per security (cents)*
FFO (total earnings) per security (cents)*
FFO Profit $m
2019
11.59
22.28
129.2
2020
13.34
19.38
125.2
Distributions paid and proposed (cents)
18.50
18.50
2021
16.21
2022
18.44
18.40
19.01
160.9
136.4
17.50
2023
19.58
19.58
175.0
18.00
18.40
Closing security price (30 June)
$4.10
$2.68
$3.15
$2.57
$2.69
Net Tangible assets per security**
$3.33
$3.32
$3.43
$3.85
$3.70
Weighted average securities on issue
580.0m 643.0m
741.1m
846.3m 893.5m
*FFO earnings are unaudited
**Net tangible assets per security include the impact of the fair value movements
4.
4.1.
EXECUTIVE KMP REMUNERATION
MD FY23 Remuneration details – Target and maximum remuneration in FY23
The target remuneration of the MD aims to ensure that the split of fixed and variable remuneration is appropriate for
the type of business it operates, namely, a cyclical and established business that seeks to provide stable distributions to
securityholders.
This at-risk portion aligns both the Group’s performance and the MD’s personal influence and contribution to the
Group’s performance. The total maximum and target for the MD for the full year is summarised in the graph below.
Maximum remuneration represents total potential remuneration of FR, maximum STI and face value of LTI (assuming
100% vesting subject to performance and employment conditions to be met). For STI, the amount is based on 120%
achievement of performance targets. Target remuneration represents total potential remuneration of FR, target STI
(amount based on 100% achievement of performance targets) and face value of LTI.
Fixed Remuneration
At Risk Remuneration
MD at Target
MD at Maximum
1,250,000
-
500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000
Fixed Remuneration
STI Cash
STI Deferral
LTI
$0,000
26
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
The following sets out the awards made to the Managing Director based on his performance during the year ended 30
June 2023.
FIXED REMUNERATION
FR OF $1,250,000 PER ANNUM
Maximum STI of $1,500,000 (120% of FR)
The balanced scorecard was based on the following:
SHORT TERM INCENTIVE
(STI)
• Financials 60%
• Strategy 30%
• People 10%
The Managing Director received 82.7% of his maximum STI for FY23.
75% or $929,940 of this was received in cash and 25% or $309,980 has been
received in rights and deferred for one year.
Maximum LTI of $1,250,000 (100% of FR)
100% of the LTI is granted as performance rights.
LONG TERM INCENTIVE
(LTI)
• 50% of the rights will be tested against performance requirements in
FY25.
• 50% of the rights will be tested against performance requirements in
FY26.
4.2.
FY23 Managing Director STI Outcome
The following table sets out the performance of the MD against his KPI’s for the year ended 30 June 2023
(scorecard) which were reviewed by the People Performance Committee and the Board. These KPIs are intended to
provide a link between remuneration outcomes and the key drivers of long term securityholder value.
The People Performance Committee and the Board reviewed these outcomes and the targets set against A-REIT
competitor performance and the property market overall.
The Board has exercised its discretion in relation to the achievement of the capital utilisation KPI and rating. This KPI
was set prior to the de-stapling transaction proposal which was announced in early H2 FY23. Taking this into
consideration, the Board believes it was warranted to apply the capital utilisation KPI to the first half only and apply a
de-stapling transaction KPI for the second half FY23.
27
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
Table 4 – Managing Director’s performance against KPI’s.
COMPONENT
FY23 KPI’S
WEIGHT
% OF
MAX
PERFORMANCE DETAIL
Funds from
Operations (FFO)
40%
75.7%
Above FFO Target, achieving $175m or 19.5 cps
which was above FY22.
A DPS of 18.4 cps which was in line with the
target rate.
Financial
Performance
Strategic
People
Capital utilisation,
acquisition, and
deployment – H1
Abacus Storage King
(ASK) De-stapling
transaction H2
SK Platform
Integration and
enhancement
ABP commercial,
WHS and
Sustainability
enhancement
10%
90.2%
Above target, achieving over $274m in capital
utilisation, acquisition, and deployment in the
first half.
10%
100%
99.97% of Securityholders voted recommending
unanimously in favour of all resolutions.
10%
93.2%
10%
83.0%
Substantial steps taken during the period to
successfully position the ASK business as a
standalone listed A-REIT achieved through
refinement of organisational design, clear
delineation of roles and responsibilities, systems,
and process.
The commercial asset portfolio has been
managed efficiently and effectively despite
challenging conditions and market sentiment.
WHS and Sustainability deliverables were met.
Proactive and positive engagement of all
stakeholders, wholesale brand refresh and
website delivered.
ABP Brand
10%
91.5%
Culture and
engagement
10%
65.9%
Achieved a 96% participation rate and
engagement pulse survey score of 83%.
The balanced scorecards for other Executive KMPs during FY23 are similar to that of the MD, in that both the
financial and people components and weightings are the same, but with strategic KPIs applicable to their individual
roles.
28
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
4.3.
Executive KMP FY22 STI Outcomes
Table 5 below provides details of each Executive KMP’s performance targets and the achievements and financial
outcomes during the financial year ended 30 June 2023.
Table 5 – Executive KMP performance targets and achievements
Executive
KMP
Key
Performance
Indicator
Weighting
Max STI
Potential $
Actual STI
awarded on
a % of Max
STI
potential
Actual Full
STI
awarded $
Actual STI
deferred $
STI
forfeited as
a % of Max
STI
potential
Steven
Sewell
Evan
Goodridge
Gavin
Lechem
Financial
Strategic
People
Total
Financial
Strategic
People
Total
Financial
Strategic
People
Total
60%
30%
10%
900,000
82.2%
739,636
184,909
450,000
89.2%
401,420
100,355
150,000
65.9%
98,864
24,716
100%
1,500,000
82.7%
1,239,920
309,980
60%
30%
10%
225,000
84.2%
189,364
47,341
112,500
90.9%
102,273
25,568
37,500
69.7%
26,136
6,534
100%
375,000
84.7%
317,773
79,443
60%
30%
10%
283,500
84.2%
238,598
59,650
141,750
93.4%
132,443
47,250
69.7%
32,932
33,111
8,233
100%
472,500
85.5%
403,973
100,993
17.8%
10.8%
34.1%
17.3%
15.8%
9.1%
30.3%
15.3%
15.8%
6.6%
30.3%
14.5%
4.4.
Executive KMP remuneration details – statutory table
Table 6 – Executive KMP remuneration
Name
Year
Base Pay
Short term benefits
Short
Term
Incentive
(STI)
Non-
monetary
benefits
Total cash
payments and
short-term
benefits
Post-
Employment
Super
Long
term
benefits
Long
Service
Leave
Security based
payment
Total
Deferred
STI Rights2
Rights2
$
Steven
Sewell
Evan
Goodridge1
Gavin
Lechem1
Rob
Baulderstone1
FY23
1,224,708
929,940
9,455
2,164,103
25,292
20,261
348,097
937,292
3,495,045
FY22
1,226,433
1,024,44
9
5,015
2,252,897
23,567
20,423
170,242
769,688
3,236,817
FY23
FY22
FY23
FY22
FY23
FY22
472,500
238,329
-
-
602,500
302,980
377,097
257,722
-
-
-
-
-
-
-
710,829
27,500
26,377
39,722
116,822
921,250
-
-
-
-
-
-
905,480
27,500
29,551
99,219
227,230
1,288,980
634,819
17,676
9,671
42,954
152,052
857,172
-
-
-
-
-
-
544,721
388,590
5,015
938,326
27,500
11,099
64,765
282,954
1,324,644
1Remuneration reflects period of service as Executive KMP.
2Accrued not presently entitled. Includes both LTI and Executive Incentive plan (SAR’s).
29
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
5.
REWARD GOVERNANCE AND FRAMEWORK
The Abacus Performance and Reward framework aims to reward, engage, and develop our people focusing on, value
creation for our customers and community.
The Group’s remuneration governance
5.1.
The People Performance Committee is responsible for making recommendations to the Board on the remuneration
arrangements for non-Executive directors and executives.
30
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
5.2.
Remuneration framework
Fixed Remuneration (FR)
What is fixed
remuneration?
Paid mainly as cash salary – comprises base salary, superannuation contributions and other
non-monetary benefits.
How is FR
determined?
Base salary is set in reference to each Executive’s position, performance, experience, and
market rates.
Short Term Incentive (STI)
What is the
purpose of the
short-term
incentive (STI)
plan?
What is the
performance
period?
The STI provides an incentive to deliver annual business plans that will lead to sustainable
superior returns for securityholders. We strive to set a series of financial and non-financial
targets that are appropriately ambitious in the context of our strategy, and which drive the
right long term behaviours.
In FY22 we introduced a deferral element for any STI awarded to Executive KMP for
retention, increased alignment with securityholders and better governance.
Under the Short Term Incentive Plan (STI), Abacus Property Group has issued to participants
Rights which are subject to a 12 month service vesting condition. On vesting of the STI
Rights, and subject to receipt of a valid exercise notice, the Abacus Property Group Board
may in its absolute discretion provide Abacus Property Group Securities to the relevant
participant.
1 July 2022 to 30 June 2023.
For FY23 the target and maximum STI opportunity for Executive KMP as a percentage of FR
were:
What is the award
opportunity?
% of FR
Target
Maximum
MD
75%
120%
CFO
50%
75%
CIO
50%
75%
What key
performance
indicators are
measured for STI
to be paid?
The following factors are among those considered by the People & Performance Committee
(PPC) in making its assessment on the achievement of the STI opportunity:
• Unifying Financial performance
• Strategic Objectives
• Unifying People performance
31
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
Short Term Incentive (STI)
Why were these
measures chosen?
An FFO profit target range was chosen by the Board because FFO demonstrates the closest
correlation to securityholder value creation (measured by total securityholder return). FFO profit
reflects the statutory profit as adjusted by adding back tenant incentive amortisation, depreciation on
owner occupied property, plant & equipment (PP&E), change in fair value of investment properties
derecognised, capital costs, unrealised fair value gains / losses on investment properties, adjustments
arising from the effect of revaluing assets / liabilities carried at fair value (such as derivatives, financial
instruments and investments), and other non-recurring adjustments deemed significant on account
of their nature and non-FFO tax benefit/expense.
This measure, although underlying, is consistent with the Property Council of Australia guidelines, is
derived from financial disclosures and is hence transparent. It reflects the Directors’ assessment of
the result for the ongoing business activities of Abacus, in accordance with the Property Council
guidelines for reporting FFO profit.
The other financial and non-financial KPIs were chosen as they represent the key drivers for the
short-term success of the business and provide a framework for long term securityholder value.
How is
performance
assessed?
The People Performance Committee considers the performance of the Executive KMP against their
KPIs and other applicable measures and has regard to independent benchmarking information. The
Committee then recommends current variable remuneration payments, if any, to the Board for its
approval.
What is the
relationship
between
performance scales
and outcomes?
Performance Scales
STI Outcome
Below threshold
0% paid
Between threshold and maximum
25% - 100% of maximum incentive paid
Maximum
100% of maximum incentive paid
Are any STI awards
deferred?
25% of STI awarded to Executive KMP is delivered in the form of rights with a one year deferral
period.
How is the number
of rights
determined?
The number of rights to be granted will be calculated by dividing the deferred STI amount by the 10-
day volume-weighted average price of the ABP securities on the ASX for the period commencing on
the second trading day after the full year’s financial results announcement for the year in which the
STI award is made were released to the market, rounded to the nearest whole number.
Are distributions
paid on deferred
STI awards?
No distributions are paid to participants during the vesting period. Participants receive an entitlement
to rights equal to accrued and reinvested distributions only on performance rights that vest and are
exercised.
32
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
Short Term Incentive (STI)
All STI incentive payouts are subject to annual ‘good behaviour’ and conduct checks, as determined
by the Board (or its delegate) in its absolute discretion. Failure to demonstrate good behaviour and
conduct may result in a reduction to or forfeiture of the STI payment for the Performance Period.
Examples include:
•
•
•
Are there any
disqualification
provisions?
the participant resigns;
the participant has breached the Company Code of Conduct or core company policies; and
the participant’s action/s led to a material WHS incident, material compliance issue,
material Corporate Social Responsibility (CSR) issue or material reputation issue.
The Board has discretion to delay the payment dates set out above, for example to allow time for it to
determine the appropriate outcome if there is an investigation underway by the Group or an external
third party.
The Group reserves the right to suspend or alter STI payments to any participant due to any action
which has caused the Group loss or reputational damage. This includes any deferred STI (in the form
of rights) in the event of fraud, malfeasance, dismissal for cause, or other misconduct.
How is STI treated
on cessation of
employment?
Unless the board determines otherwise, an Executive will forfeit their STI award and unvested
deferred awards if they resign or if their employment is terminated with cause.
Long Term Incentive (LTI)
The LTI Plan is aimed at attracting, rewarding, and retaining high performing Executives and other nominated
participants for delivering sustained long term growth and aligning them with securityholder interests.
⎯ Under the Long Term Incentive Plan (LTI), Abacus Property Group has issued to participants Rights which
are subject to performance-based vesting conditions.
⎯ Each of the rights granted under the LTI (LTI Rights) are subject to a hurdle based on growth in FFO per
security (FFOPS) over a specified performance period. Depending on the average annual growth rate in
the Abacus Property Group FFOPS, the relevant LTI Rights will vest at a level between 0% (for below
threshold performance) and 100% (for maximum performance where the FFOPS average annual growth
rate exceeds a certain level).
⎯ On vesting of LTI Rights, and subject to receipt of a valid exercise notice, the Board of Abacus Group may
in its absolute discretion provide Abacus Property Group Securities to the relevant participant.
Who participates
in the LTI plan
Participation is limited to Executive KMP and selected senior management positions by
invitation and as approved by the Board.
What size of
award is granted
The maximum opportunity for the MD is 100% of FR and for other Executive KMP it is 50%
of FR.
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DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
Long Term Incentive (LTI)
How are the grants
calculated?
The number of performance rights is calculated at the date of issue by dividing the value of LTI to be
awarded in the form of performance rights by the face value of an Abacus security. The face value is
based on the ten-day VWAP for Abacus securities starting from the second trading day after the full
year results announcement for the year ended 30 June 2022 were released to the market.
Plan Features
The LTI awards are in the form of performance rights subject to vesting conditions.
What are the
performance and
vesting periods?
The Rights will be tested against the relevant Performance Conditions following release of audited
financial results for the final year of the relevant Performance Period.
For the Executive KMP, half of the performance rights are tested on the third and half on the fourth
anniversary of their grant.
Performance is measured per the following:
Tranche One – 50% vest in year three
Tranche Two – 50% vest in year four
Do we allow for re-
testing?
No.
What are the
performance
conditions (FY22
Grant Tranche One
only)?
The Performance Conditions require the average annual growth rate (AAGR) in the Group’s FFOPS
over the relevant Performance Period to exceed a certain level.
100% vests on FFO per security (FFOPS) achieving an AAGR at or above 5%.
At 2 – 5%, this results in 50% to 100% vesting on a sliding scale.
FFOps AAGR
Less than 2%
At 2%
Between 2% and 5%
At or above 5%
% of Rights that vest
0%
50%
Pro rata vesting from 50% to 100%
100%
Are there
distributions or
voting rights?
Rights do not carry any voting rights. No distributions are paid to Participants during the vesting
period. Participants receive an entitlement to securities equal to accrued and reinvested distributions
only on performance rights that vest and are exercised.
Why was this
measure chosen?
At the time FFO growth per security was chosen by the Board because this closely correlates to
securityholder value creation and assists investors and analysts to compare Australian real estate
organisations. AAGR will reward stable annual growth and can provide better alignment with Abacus’
annuity style strategy and business model.
What happens on
cessation of
employment?
Unless the Board determines otherwise:
⎯ if the participant’s employment is terminated for cause or they resign (or give notice of their
resignation) prior to their Rights vesting, all unvested Rights will lapse; or
⎯ if the participant ceases employment for any other reason prior to their Rights vesting, all of
their unvested Rights will remain on foot and be tested in the ordinary course.
34
DIRECTORS’ REPORT
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REMUNERATION REPORT (audited)
Long Term Incentive (LTI)
What happens if a
change in control
occurs?
The Board may in its absolute discretion, accelerate vesting on some or all of any unvested securities
taking into consideration service and performance prior to a change in control.
Forfeiture for
Fraud, Dishonesty
or Misstatement
The Board has discretion to determine that a participants Rights lapse in certain circumstances,
including where they act fraudulently or dishonestly, or they are in breach of their obligations of the
Group.
When is Board
discretion used?
Abacus Security
Trading Policy
Discretion can be applied to the proportion that may vest, taking into account behaviour inconsistent
with our Code of Conduct, reputational damage, and having regard to any matters that it considers
relevant (including any adjustments for unusual or non-recurring items that the Board considers
appropriate). The extent and reasons for any discretion will be disclosed.
In accordance with Abacus’ Trading Policy, no director, employee, or associate may trade in APG
securities at any time if they are in possession of unpublished information which, if generally available,
might materially affect the price or value of ABG securities. They may only trade within specified
trading windows.
The table below provides the grant date fair value and the maximum potential value of all outstanding LTI grants at
grant date for the Executive KMP.
If the performance conditions are not met, the minimum value of the LTI will be nil.
Table 7 – Grant date fair value and maximum value for LTI grants*
EXECUTIVE
KMP
YEAR2
GRANT DATE
SECURITY
VALUE $
NUMBER
OF LTI
GRANTED
PERFORMANCE PERIOD
Steven
Sewell
FY23
2.74
FY22
3.40
Evan
Goodridge1
FY23
2.74
FY23
2.74
Gavin
Lechem
228,102
1 July 2022 to 30 June 2025
228,102
1 July 2022 to 30 June 2026
183,824
1 July 2021 to 30 June 2024
183,824
1 July 2021 to 30 June 2025
45,621
1 July 2022 to 30 June 2025
45,620
1 July 2022 to 30 June 2026
57,482
1 July 2022 to 30 June 2025
57,482
1 July 2022 to 30 June 2026
25,995
1 July 2021 to 30 June 2023
MAXIMUM
GRANT DATE
FACE VALUE $
1,250,000
1,250,000
250,000
315,000
FY22
3.40
25,995
1 July 2021 to 30 June 2024
265,148
25,995
1 July 2021 to 30 June 2025
1 Remuneration reflects period of service as Executive KMP.
2 The FY23 grant was issued on 23 December 2022 (FY22: 22 November 2021).
*The fair value of the securities granted in FY23 was $2.61
35
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
5.3.
Transitional changes to Abacus Property Group Incentive Awards
This Section outlines the proposed treatment of the Abacus Property Group Incentive Awards on foot for employees
that will, on de-stapling implementation, either continue to be employed by Abacus Group or be employed by Abacus
Storage King but continue to hold relevant Abacus Property Group Incentive Awards.
The Abacus Property Group Board has determined the treatments set out in the following table in order to preserve
the overall value of the Abacus Property Group Incentive Awards following the de-stapling, and to ensure that
participants do not receive a benefit that they would not have received before the de-stapling and are not
disadvantaged by the de-stapling.
AWARD
AWARD TYPE
SCHEDULED
VESTING DATE
TREATMENT OF DE-STAPLING IMPLEMENTATION (IN ADDITION
TO GENERAL AMENDMENTS)
LTI Rights set
to vest in July
2023
Rights to Abacus
Property Group
Securities or cash
equivalent
Remain the same
as these existing
LTI Rights, being
July 2023
The vesting hurdles will remain unchanged and these awards will be
tested against the relevant FFOPS hurdle for Abacus Property Group.
LTI Rights set
to vest after
July 2023
Rights to Abacus
Property Group
securities or cash
equivalent
Remain the same
as the relevant
existing LTI
Rights, being
either July 2024,
July 2025 or July
2026
The vesting hurdles for these LTI Rights will be adjusted so vesting is
tested against the compound annual growth rate in Earnings Before
Interest and Tax (EBIT Growth) and relative Total Securityholder Return
(TSR), rather than the FFOPS hurdle.
The performance period for testing the relevant LTI Rights against the
EBIT Growth hurdle will remain the same as the performance period
which applied to those LTI Rights prior to De-stapling Implementation.
The performance period for testing the relevant LTI Rights against the
TSR hurdle will be adjusted and reset to commence on the De-stapling
Implementation Date.
50% of the LTI Rights scheduled to vest in each year will be subject to
the TSR hurdle. TSR measures the growth in the price of securities plus
cash distributions notionally reinvested in securities. The TSR outcome
will be based on the combined performance of Abacus Group Securities
and Abacus Storage King Securities (Combined TSR Growth
Outcome). In order for the LTI Rights subject to the TSR hurdle to vest,
the Combined TSR Growth Outcome must exceed a minimum of the
50th percentile of the comparator peer group of ASX listed entities
over the relevant performance period. Vesting will range between 50%
(at 50th percentile achievement) to 100% (at 75th percentile or higher
achievement) with straight line vesting between 50th percentile
achievement and 75th percentile achievement.
36
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
AWARD
AWARD TYPE
SCHEDULED
VESTING DATE
TREATMENT OF DE-STAPLING IMPLEMENTATION (IN ADDITION
TO GENERAL AMENDMENTS)
50% of the LTI Rights scheduled to vest in each year will be subject to
the EBIT Growth hurdle. The EBIT Growth outcome will be based on the
combined performance of Abacus Group and Abacus Storage King
(Combined EBIT Growth Outcome). In order for the LTI Rights subject
to the EBIT Growth hurdle to vest, the Combined EBIT Growth
Outcome must exceed 3% for the relevant performance period. Vesting
will range between 50% (at 3% Combined EBIT Growth Outcome
achievement) and 100% (at 8% Combined EBIT Growth Outcome
achievement) with straight line vesting between 3% to 8% Combined
EBIT Growth Outcome achievement.
The service vesting condition will remain unchanged and these STI
Rights will be tested against the same time-based service conditions as
the existing STI Rights.
The Distribution Condition Clawback will continue to apply. The Board
of Abacus Group will continue to have the right (but not the obligation)
to clawback unvested SARs if the Distribution Condition Clawback is
triggered.
Short Term
Incentive Plan
(STI)
Rights to
Abacus
Property Group
Securities or
cash equivalent
Remain the same
as the existing STI
Rights, being July
2023
SARs awards
Rights to
Abacus
Property Group
Securities or
cash equivalent
Remain the same
as the existing
SARs, being July
2023 and July
2024
5.4.
Summary of unvested equity incentive changes
SECURITIES PLANS
ABACUS GROUP CHANGES
PERFORMANCE PERIOD
The prior performance measure is replaced
by the introduction of two new
performance measures:
EBIT based on CAGR; and
The performance period for RTSR will be
adjusted (Transition period), resetting to the date
of listing, which aligns to the new corporate
structure post de-stapling.
Remaining FY22 LTI Grant
Relative TSR
⎯ Due to vest July 2024 –
Tranche 2 (T2)
⎯ Due to vest July 2025 –
Tranche 3 (T3)
The performance period for the remaining
tranches of the FY22 and FY23 LTI grants
will be reset from [July/August] 2023,
which aligns to the new corporate structure
post – de stapling.
While the performance period has been
adjusted, the vesting dates remain the
same.
-
-
T2 changes from 1 July 2021 to 30
June 2024 (three years) to [August]
2023 to 30 June 2024 (circa one
year).
T3 changes from 1 July 2021 to 30
June 2025 (four years) to
[July/August] 2023 to 30 June 2024
(circa two years).
There is no change to the performance periods
for EBIT CAGR
This includes all KMP, MD, CIO. and CFO.
37
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
SECURITIES PLANS
ABACUS GROUP CHANGES
PERFORMANCE PERIOD
Remaining FY22 LTI Grant
⎯ Due to vest July 2024 –
Tranche 2 (T2)
⎯ Due to vest July 2025 –
Tranche 3 (T3)
The performance period for RTSR will be
adjusted (Transition period), resetting to the date
of listing, which aligns to the new corporate
structure post de-stapling.
-
-
T2 changes from 1 July 2021 to 30
June 2024 (three years) to [August]
2023 to 30 June 2024 (circa one
year).
T3 changes from 1 July 2021 to 30
June 2025 (four years) to
[July/August] 2023 to 30 June 2024
(circa two years).
There is no change to the performance periods
for EBIT CAGR
This includes all KMP, MD, CIO. and CFO.
The nature of the right is varied, that is
ABG and ASK Rights are provided upon
vesting.
The prior performance measure is replaced
by the introduction of two new
performance measures:
EBIT based on CAGR; and
Relative TSR
The performance period for the remaining
tranches of the FY22 and FY23 LTI grants
will be reset from [July/August] 2023,
which aligns to the new corporate structure
post – de stapling.
While the performance period has been
adjusted, the vesting dates remain the
same.
The nature of the right is varied, that is
ABG and ASK Rights are provided upon
vesting.
STI Deferral FY22
Due to vest July 2023
SAR’s FY20 & FY21
Due to vest August 2023
(FY20 T3, FY21 T2)
Due to vest August 2024 (T3)
Vary terms of rights such that each right
vests as an Abacus Group Security and an
Abacus Storage Group Security.
No change
Vary terms of rights such that each right
vests as an Abacus Group Security and an
Abacus Storage Group Security.
No change.
38
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
5.5.
Security based payments
The below outlines the FY23 LTI grant reflecting the two new performance hurdles and then moves on to the
Executive Incentive Plan (Legacy Plan) as shown from table 10.
Performance Long term Incentive Plan Grants
Grant
Tranche
Performance hurdles each weighted 50%
Vesting date
Tranche One –
50% of Grant
EBIT CAGR1
- 50% vesting at 3% EBIT CAGR
-
100% vesting at 8% EBIT CAGR
- Pro rata vesting between 3% and 8%
- 0% if less than 3% EBIT CAGR
Relative TSR2
FY23
Grant
Tranche Two –
50% of Grant
- 50% vesting is achieved when ranking at the
-
median.
100% vesting is achieved when our peer group
ranking is at the 75th percentile or higher pro‑rata
vesting is achieved between the median and the
75th percentile.
- 0% if less than peer group ranking below the
median.
August 2025
August 2026
1EBIT CAGR is Underlying Earnings before Interest and Tax Compound Annual Growth Rate
2Relative TSR is Relative Total Shareholding Return
Table 8 – Movements in LTI holdings of key management personnel during the year
The table below provides the movement of all security-based payments granted to the Executive KMP.
BALANCE
1 JULY 2022
GRANTED AS
REMUNERATION
NO. LAPSED
DURING THE
YEAR1
LTIS VESTED
BALANCE
30 JUNE 2023
367,648
456,204
-
Evan Goodridge
35,295
91,241
(4,074)
Gavin Lechem
77,985
114,964
(9,001)
Total
480,928
662,409
(13,075)
-
-
-
-
823,852
122,462
183,948
1,130,262
KMP
Steven Sewell
(Managing Director)
1The CIO and CFO were granted LTI in 2021 as non KMP with three tranches. 30.7% of the rights have lapsed as the FFOps average annual
growth rate was less than 5%.
39
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
5.6.
Executive Incentive Plan (Legacy SAR’s Plan)
The Executive Incentive plan ceased in the year ending 30 June 2021 and has been replaced by a more contemporary
and market aligned Long Term Incentive Plan. The Executive Incentive plan was delivered in the form of an annual
grant of security acquisition rights (SARs) under the deferred security acquisition rights plan (SARs Plan). The SARs
will continue to vest under this plan until September 2024.
⎯ Under the executive incentive plan, Abacus Property Group issued to participants rights (in the form of
Security Acquisition Rights (SARs)) which are subject to time based vesting with the Abacus Property Group
Board having the right (but not the obligation) to clawback unvested SARs if Abacus Property Group
distributions fall below a certain threshold amount per Abacus Property Group Security in respect of any
financial year (Distribution Condition Clawback).
⎯ On vesting of the SARs, the Abacus Group Board may in its absolute discretion provide securities to the
relevant participant.
SARs allocated to an Executive as their deferred variable remuneration for a financial year will vest in three equal
annual tranches on the second, third and fourth anniversaries of the allocation date.
Executives were entitled before any tranche of SARs vests, to extend the vesting date for that tranche by 12 months.
The table below discloses the number of SARs that vested or lapsed during the year. No further grants will be made
under this Plan.
Table 9 – Grants under the Deferred Security Acquisition Rights Plan (SARs)
EXECUTIVE KMP
YEAR
VESTING DATE
NO. VESTED
DURING THE
YEAR
NO. LAPSED
DURING THE
YEAR
Steven Sewell
Evan Goodridge
2021
2020
2019
2021
2020
2019
09/2022
09/2022
09/2022
09/2022
09/2022
09/2022
2021
09/2022
Gavin Lechem
2020
09/2022
2019
09/2022
96,825
59,222
41,499
9,840
6,768
5,724
27,061
16,920
14,310
-
-
-
-
-
-
-
-
-
40
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
Table 10 – The value of SARs granted, exercised, and lapsed during the year.
EXECUTIVE KMP
Steven Sewell
Evan Goodridge
Gavin Lechem
Total
VALUE OF SARS
GRANTED DURING THE
YEAR $
VALUE OF SARS
EXERCISED DURING
THE YEAR $
VALUE OF SARS LAPSED DURING
THE YEAR $
-
-
-
-
634,809
72,106
187,870
894,785
-
-
-
-
There were no alterations to the terms and conditions of the SARs since their grant date.
Refer to Note 19 for details on the valuation of the Long Term and Deferred Variable Incentive Plan, including models
and assumptions used.
Table 11 – Securities acquired on exercise of SARs.
EXECUTIVE KMP
SECURITIES ACQUIRED
(NUMBER)
PAID PER SECURITY $
Steven Sewell
Evan Goodridge
Gavin Lechem
229,516
26,070
67,924
2.76
2.76
2.76
The number of securities acquired is based on the SARs that vested in the year and the distributions that would have
been paid on that number of securities from the grant date to the allocation date. No amount was paid by participants
for securities acquired above.
Table 12 – Movements in SARs holdings of key management personnel during the year
The table below provides the movement of all security-based payments granted to the Executive KMP.
KMP
BALANCE 1 JULY
2022
GRANTED AS
REMUNERATION
SARS EXERCISED
BALANCE 30 JUNE 2023
Steven Sewell
450,418
75,214
(229,516)
Evan Goodridge
Gavin Lechem
48,780
129,333
8,390
21,911
(26,070)
(67,924)
296,116
31,100
83,320
Total
628,531
105,515
(323,510)
410,536
41
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
All equity transactions with Executive KMP other than those arising from the vesting of the security acquisition rights
have been entered into under terms and conditions no more favourable than those that Abacus would have adopted if
dealing at arm’s length. Other than disclosed in the ASX market, there have been no movements in holdings since 30
June 2023.
5.7.
Minimum security holding requirement for Executive KMP
To align the interests of the Board with securityholders, the Board introduced a minimum security holding
requirement for Executive KMP.
• The MD is required to maintain a minimum holding of securities equivalent to 100% of his fixed
remuneration. Executive KMP are required to maintain a minimum holding of securities that is equivalent to
50% of their fixed remuneration.
• Executive KMP had until the fourth anniversary of the later of 27 June 2022 or the date they become an
Executive KMP, to meet the minimum holding requirement.
• For FY24 this anniversary will be updated in respect of any KMP (including the Managing Director) to the
later of the de-stapling of Abacus Group and Abacus Storage King or the date they become a member of the
KMP.
Table 13 – Executive KMP ownership – security holdings details as at 30 June 2023
SECURITIES
EXECUTIVE KMP
BALANCE
1 JULY 2022
VESTING OF
RIGHTS
PURCHASE /
SALES
BALANCE
30 JUNE 2023
Steven Sewell (MD)
402,572
362,449
101,104
Evan Goodridge
64,857
Gavin Lechem
236,759
26,070
101,465
-
-
866,125
90,927
338,224
EXECUTIVE KMP
Steven Sewell (MD)
Evan Goodridge
Gavin Lechem
SECURITY PRICE
30 JUNE 2023
BALANCE
30 JUNE 2023
MSH
REQUIREMENT
MSHR ASSESSMENT DATE
$2.69
$2.69
$2.69
$2,329,876
$1,250,000
$244,594
$250,000
$909,823
$315,000
June 2026
June 2026
June 2026
Unvested rights are not included in the calculation of the minimum holding of securities.
42
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
6.
6.1.
NON-EXECUTIVE DIRECTOR REMUNERATION
Objective
The Committee assesses the appropriateness of the nature and amount of remuneration of Non-Executive Directors
(NEDs) on a periodic basis by reference to market rates with the overall objective of attracting and retaining Board
members with an appropriate combination of industry and specialist functional knowledge and experience.
6.2.
Fee Structure and Policy
The following table outlines the Non-Executive Directors (NEDs) fee policy and any changes introduced for FY23.
Maximum aggregate
fees approved by
securityholders
Abacus’ constituent documents and the ASX Listing Rules specify that the
maximum aggregate remuneration of Non-Executive directors must be
approved by securityholders. The last determination was at the annual general
meeting held on 14 November 2022 when securityholders approved an
aggregate remuneration limit of $1,250,000 per year.
Contracts
Upon appointment to the Board, all NEDs receive a letter of appointment
which summarises the Board policies and terms, including compensation,
relevant to the office of Director.
The Board reviews NED fees on an annual basis in line with general industry
practice. This ensures fees are appropriately positioned in the market to attract
and retain high calibre individuals. The fees were last increased in July 2021.
NEDs are entitled to be reimbursed for all reasonable costs and expenses
incurred by them in performing their duties.
NED fee changes FY23
Non-Executive
Director fees reviews
There are no changes to the Board base fees and committee in FY23. Refer to
Table [14] for details of FY23 fees.
NED fee changes FY24
There are no changes to the Board base fees and committee in FY24. Refer to
Table 14 for details of FY24 fees.
The aggregation of all Board and committee fees for FY23 and FY24,
respectively, remains below the current pool limit.
Superannuation
The fees set out above include superannuation contributions in accordance with
relevant statutory requirements.
Post-employment
benefits
The Non-Executive directors do not receive retirement benefits. Nor do they
participate in any incentive programs.
43
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
Table 14 –Non-Executive Director fee levels (inclusive of superannuation) – Abacus Group
BOARD/COMMITTEE
ROLE
Board
Chair
Non-Executive Director
Audit and Risk Committee
Chair
Non-Executive Director
Chair
Non-Executive Director
Chair
Non-Executive Director
Work, Health Safety and
Sustainability Committee
People Performance
Committee
Total
PER ROLE $
$252,000
$113,000
$27,300
$12,285
$21,000
$10,500
$23,000
$11,250
FY23
TOTAL
$252,000
$565,000
$27,300
$36,855
$21,000
$10,500
$23,000
$33,750
$969,405
Table 15 –Non-Executive Directors’ remuneration details – Abacus Group
Non-Executive Director
Year
Base Fees
Non-
monetary
benefits
Total cash
payments and
short-term benefits
Superannuation
$
Myra Salkinder (Chair)1
Trent Alston
Mark Bloom2
Mark Haberlin
Sally Herman3
Holly Kramer4
Jingmin Qian
FY23
252,000
FY22
238,636
FY23
134,195
FY22
134,804
FY23
123,561
FY22
124,123
FY23
137,149
FY22
137,773
FY23
66,078
FY22
-
FY23
53,594
FY22
131,688
FY23
132,384
FY22
132,986
-
-
-
-
-
-
-
-
-
-
-
-
-
-
252,000
238,636
134,195
134,804
123,561
124,123
137,149
137,773
66,078
-
53,594
131,688
132,384
132,986
-
13,364
14,090
13,481
12,974
12,412
14,401
13,777
6,938
-
-
3,062
13,901
13,299
252,000
252,000
148,285
148,285
136,535
136,535
151,550
151,550
73,016
-
53,594
134,750
146,285
146,285
1Myra Salkinder as Chair does not receive any fees for other sub-committees.
2Mark Bloom ceased as director of AGHL, AT, AGPL & AIT on 3 August 2023. Mark will continue as director for ASPT & ASOL.
3Sally Herman was appointed 16 December 2022.
4Holly Kramer resigned 23 November 2022.
44
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
Table 16 –Non-Executive Director fee levels (inclusive of superannuation) – Abacus Storage King in effect
from 4 August 2023
BOARD/COMMITTEE
ROLE
Board
Chair
Non-Executive Director
Audit and Risk Committee
Chair
Non-Executive Director
Remuneration Committee
Chair
Non-Executive Director
Total
PER ROLE $
$252,000
$113,000
$27,300
$12,285
$12,000
$8,000
FY23
TOTAL
$252,000
$339,000
$27,300
$24,570
$12,000
$16,000
$670,870
Table 17 – Non-Executive Director’s remuneration details – Abacus Storage Operations Limited and
Abacus Storage Property Trust
SHORT TERM BENEFITS
POST-
EMPLOYMENT
TOTAL
Non-Executive Director
Year
Base Fees
Non-
monetary
benefits
Total cash
payments and
short-term benefits
Superannuation
$
John O’Sullivan (Chair) 1
Stephanie Lai1
Karen Robbins1
FY23
12,094
FY22
-
FY23
5,423
FY22
-
FY23
5,423
FY22
-
-
-
-
-
-
-
12,094
-
5,423
-
5,423
-
1John O’Sullivan, Stephanie Lai and Karen Robbins were appointed 13 June 2023.
1,270
-
569
-
569
-
13,364
-
5,992
-
5,992
-
6.3. Minimum security holding requirement for Non-Executive Directors FY23
The Board of Abacus Property Group (Abacus) recognises the importance of aligning the interests of its senior
executives and directors with the long term interests of Abacus’ securityholders. To further align this interest, the
Board has introduced a minimum security holding requirement for NEDs. Each Non-Executive Director must
accumulate and retain a minimum security holding in Abacus securities equivalent to their annual director’s fee
inclusive of base fee, superannuation contributions and before any tax deductions. The minimum security holding was
to be achieved progressively by the 4th anniversary of the later of 27 June 2022 or the date of their appointment, to
meet the minimum holding requirement.
45
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
For FY24 the minimum security holding is to be achieved progressively by the 4th anniversary of:
•
•
in respect of any Non Executive Director of Abacus Group, the later of the de-stapling of Abacus Group and
Abacus Storage King or the date of their appointment as a Director; and
in respect of any Non Executive Director of Abacus Storage King, the later of the de-stapling of Abacus Group
and Abacus Storage King or the date of their appointment as a Director.
Non-Executive Directors are bound by Abacus’s Securities Trading Policy. No additional remuneration is provided to
Non-Executive Directors to purchase these stapled securities.
Table 18 – Non-Executive Director’s security holdings details – Abacus Group
NON-EXECUTIVE
DIRECTOR
BALANCE 1
JULY 2022
PURCHASE /
SALE
BALANCE
30 JUNE
2023
MSHR
ASSESSMENT
MSHR
POLICY
MSHR ASSESMENT
DATE
Myra Salkinder
(Chair)
197,925
14,604,246
14,802,171
$39,817,840
$252,000
June 2026
Trent Alston
36,250
9,000
45,250
$121,723
$148,285
June 2026
Mark Bloom
37,000
36,600
73,600
$197,984
$136,535
June 2026
Mark Haberlin
42,292
-
42,292
$113,765
$151,550
June 2026
Sally Herman
-
18,150
18,150
$48,824
$136,535
December 2026
Jingmin Qian
33,167
12,000
45,167
$121,499
$146,285
June 2026
All equity transactions with Non-Executive Directors have been entered into under terms and conditions no more
favourable than those that Abacus would have adopted if dealing at arm’s length. There have been no movements in
holdings since 30 June 2023.
Table 19 –Non-Executive Director’s security holdings details – Abacus Storage King in effect from 4
August 2023
NON-EXECUTIVE
DIRECTOR
BALANCE 1
JULY 2022
PURCHASE /
SALE
John O’Sullivan
(Chair)
Stephanie Lai
Karen Robbins
-
-
-
-
-
-
BALANCE
30 JUNE
2023
-
-
-
MSHR
ASSESSMENT
MSHR
POLICY
MSHR ASSESMENT
DATE
-
-
-
$252,000
June 2027
$148,300
June 2027
$137,285
June 2027
All equity transactions with Non-Executive Directors have been entered into under terms and conditions no more
favourable than those that Abacus would have adopted if dealing at arm’s length. There have been no movements in
holdings since 30 June 2023.
46
DIRECTORS’ REPORT
30 JUNE 2023
REMUNERATION REPORT (audited)
7.
7.1.
ADDITIONAL REQUIRED DISCLOSURES
Executive KMP employment terms
The total remuneration package is reviewed annually, and the key terms are summarised below:
ROLE
TERM OF
AGREEMENT
NOTICE
PERIOD (BY
COMPANY OR
BY EMPLOYEE)
POST-
EMPLOYMENT
RESTRAINTS
TERMINATION BENEFITS
Steven Sewell
No expiry date
9 months
12 months
Evan Goodridge No expiry date
6 months
6 months
Gavin Lechem
No expiry date
6 months
6 months
No redundancy payment entitlements. If
there are any termination entitlements to be
paid, they will be limited by the current
Corporations Act 2001 (Cth) or the ASX
Listing Rules or both.
Covered by National Employment Standards
(NES).
Covered by National Employment Standards
(NES).
Abacus may terminate an Executive KMP’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.
7.2.
Use of Remuneration advisors
The People and Performance Committee engages external remuneration consultants from time to time to provide
independent benchmarking data and information on best practice. This ensures the Company continually reviews
assesses and adapts the remuneration governance functions to assist the Board and Committee in making informed
remuneration decisions. No remuneration recommendations as defined under the Corporations Act 2001 (Cth) were
provided to the Committee by remuneration consultants in FY23.
7.3.
Loans to Key Management Personnel
There were no loans to key management personnel or their related parties at any time in 2023 or in the prior year.
7.4.
Other transactions with Key Management Personnel
During the year, transactions occurred between Abacus and key management personnel which were within normal
employee and investor relationships.
47
DIRECTORS’ REPORT
30 JUNE 2023
SIGNIFICANT EVENTS AFTER BALANCE DATE
On 27 July 2023, securityholders voted to de-staple Abacus Storage King from Abacus Property Group with the de-
stapling being completed on 4 August 2023.
In conjunction with the de-stapling, a fully underwritten 1-for-5.6 pro rata security offer in Abacus Storage King was
completed at an issue price of $1.41 per stapled Abacus Storage King security which raised $225 million. The $225
million was received in August 2023.
Abacus acquired a minority investment of 19.9% of the Abacus Storage King Securities on issue.
Other than as disclosed already in this report and to the knowledge of directors, there has been no matter or
circumstance that has arisen since the end of the financial year that has significantly affected, or may 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.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group is subject to environmental regulation in respect of its property activities and there are systems in place for
the management of the Group’s environmental responsibilities, and compliance with relevant licence requirements
and regulations. No material breaches of requirements or any environmental issues have been identified during the
year.
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 Corporations Instrument
2016/191. The Group is an entity to which the instrument applies.
AUDITOR’S INDEPENDENCE DECLARATION
We have obtained an independence declaration from our auditor, Ernst & Young, and such declaration is set out on
page 49.
During the year, Ernst & Young provided non-audit services to the Group, as outlined in Note 23 of the financial
statements. The directors are satisfied that the provision of non-audit services, during the year, by the auditor is
compatible with the general standard of independence for auditors imposed by this Act.
The Directors are satisfied that the provision of non-audit services by the auditor, as set out in Note 23, did not
compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
- all non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
- none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants.
Signed in accordance with a resolution of the directors.
Abacus Group Holdings Limited (ABN 31 080 604 619)
Myra Salkinder
Chair
Sydney, 18 August 2023
Steven Sewell
Managing Director
48
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s independence declaration to the directors of Abacus Group
Holdings Limited
As lead auditor for the audit of the financial report of Abacus Group Holdings Limited for the financial
year ended 30 June 2023, I declare to the best of my knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of Abacus Group Holdings Limited and the entities it controlled during
the financial year.
Ernst & Young
Anthony Ewan
Partner
18 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 30 JUNE 2023
REVENUE
Rental income
Finance income
Fee income
Total Revenue
OTHER INCOME
Other income
Total Revenue and Other Income
Net change in fair value of investment properties derecognised
Net change in fair value of investment and financial instruments derecognised
Net change in fair value of investment properties held at balance date
Share of (loss)/profit from equity accounted investments
Net change in fair value of derivatives
Net change in fair value of investments held at balance date
Property expenses and outgoings
Depreciation and amortisation expense
Impairment charges
Finance costs
Administrative and other expenses
PROFIT/(LOSS) BEFORE TAX FROM CONTUNUING OPERATIONS
Income tax expense
NET PROFIT/(LOSS) AFTER TAX FROM CONTINUING OPERATIONS
Discontinued Operations
Net profit after tax from discontinued operations
NET PROFIT AFTER TAX
PROFIT ATTRIBUTABLE TO:
Equity holders of the parent entity (AGHL)
Equity holders of other stapled entities
AT members
AGPL members
AIT members
ASPT members
ASOL members
NET PROFIT
Notes
1
7(a)
3(a)
3(b)
3(c)
3(d)
4(a)
21
2023
$'000
2022
$'000
147,075
3,483
1,455
152,013
130,539
11,229
2,082
143,850
60
152,073
324
144,174
(9,097)
(1,023)
(247,617)
(8,846)
(20,220)
(854)
(41,880)
(5,800)
-
(9,893)
(39,458)
(232,615)
(992)
(107)
40,308
13,429
28,101
622
(33,370)
(6,070)
(4,903)
(19,217)
(32,741)
129,234
(5,650)
(238,265)
(9,995)
119,239
263,760
25,495
397,926
517,165
(64,516)
(25,486)
(138,796)
(2,377)
(22,967)
143,641
110,510
25,495
148,031
19,882
(4,084)
264,008
114,814
517,165
50
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 30 JUNE 2023
N ET PRO FIT AFTER TAX
O THER C O M PREHEN S IVE IN C O M E
Items that may be reclassified subsequently to the income statement
Foreign exchang e translation adjustments associated with continuing operations
Foreign exchang e translation adjustments, net of tax associated with discontinued operations
TO TAL C O M PREHEN S IVE IN C O M E FO R THE PERIO D
Total c ompre he ns ive inc ome attributable to:
Members of the G roup
TO TAL C O M PREHEN S IVE IN C O M E FO R THE PERIO D
Total c ompre he ns ive inc ome / (los s ) attributable to membe rs of the G roup analys ed by
amounts attributable to:
AG HL members
AT members
AG PL members
AIT members
ASPT members
ASO L members
TO TAL C O M PREHEN S IVE IN C O M E AFTER TAX ATTRIB U TAB LE
TO M EM B ERS O F THE G RO U P
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
25,49 5
517,16 5
-
1,9 25
2 7,42 0
-
(1,6 23)
5 15 ,5 42
27,420
2 7,42 0
515,542
5 15 ,5 42
(6 4,516 )
(138,79 6 )
(2,377)
(22,9 6 7)
145,510
110 ,56 6
(25,486 )
148,0 31
19 ,882
(4,0 84)
26 2,6 83
114,516
2 7,42 0
5 15 ,5 42
51
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
C U RREN T AS S ETS
Assets associated with discontinued operations
Cash and cash equivalents
Trade and other receivables
Derivatives at fair value
O ther
TO TAL C U RREN T AS S ETS
N O N -C U RREN T AS S ETS
Investment properties
Property loans
Equity accounted investments
Deferred tax assets
Property, plant and equipment
O ther financial assets
Intangible assets and goodwill
Derivatives at fair value
O ther
TO TAL N O N -C U RREN T AS S ETS
TO TAL AS S ETS
C U RREN T LIAB ILITIES
Liabilities associated with discontinued operations
Trade and other payables
Derivatives at fair value
Income tax payable
O ther
TO TAL C U RREN T LIAB ILITIES
N O N -C U RREN T LIAB ILITIES
Interest-bearing loans and borrowings
Derivatives at fair value
Deferred tax liabilities
O ther
TO TAL N O N -C U RREN T LIAB ILITIES
TO TAL LIAB ILITIES
N ET AS S ETS
TO TAL EQ U ITY
N ote s
21
8
5
6 (a)
7
4(c)
15
6 (b)
20
21
10
4(c)
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
3,0 72,416
71,9 0 0
46 ,6 37
30 ,283
4,0 56
3 ,2 2 5 ,2 9 2
2,0 9 9 ,876
53,142
158,6 74
11,6 41
458
3,9 87
32,46 3
14,541
6 ,10 0
2 ,3 80 ,882
-
176 ,50 5
43,472
20 ,86 9
7,281
2 48,12 7
4,50 0 ,582
53,144
172,9 6 1
15,9 9 8
21,6 6 8
244,334
10 5,6 26
38,0 72
6 ,547
5 ,15 8,9 3 2
5 ,6 0 6 ,174
5 ,40 7,0 5 9
1,142,40 1
57,584
20 ,6 0 3
-
5,476
1,2 2 6 ,0 6 4
-
127,0 30
-
1,732
9 ,188
13 7,9 5 0
1,0 0 6 ,50 8
859
9 ,735
1,319
1,0 18,42 1
1,70 9 ,241
-
52,9 0 6
5,853
1,76 8,0 0 0
2 ,2 44,485
1,9 0 5 ,9 5 0
3 ,3 6 1,6 89
3 ,5 0 1,10 9
3 ,3 6 1,6 89
3 ,5 0 1,10 9
52
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
AS AT 30 JUNE 2023
Equity attributable to members of AGHL:
Contributed equity
Reserves
Retained earnings
Total equity attributable to members of AGHL:
Equity attributable to unitholders of AT:
Contributed equity
Accumulated losses
Total equity attributable to unitholders of AT:
Equity attributable to members of AGPL:
Contributed equity
Retained earnings
Total equity attributable to members of AGPL:
Equity attributable to unitholders of AIT:
Contributed equity
Accumulated losses
Total equity attributable to unitholders of AIT:
Equity attributable to members of ASPT:
Contributed equity
Reserves
Retained earnings
Total equity attributable to members of ASPT:
Equity attributable to members of ASOL:
Contributed equity
Reserves
Retained earnings
Total equity attributable to members of ASOL:
TOTAL EQUITY
Contributed equity
Reserves
Retained earnings
Reserves of discontinued operations
TOTAL EQUITY
Notes
2023
$'000
568,862
4,144
63,684
636,690
2022
$'000
568,221
2,941
128,200
699,362
1,373,217
(321,050)
1,052,167
1,372,070
(107,236)
1,264,834
47,064
62,253
109,317
46,983
64,630
111,613
188,472
(140,532)
47,940
188,330
(113,047)
75,283
334,610
259
464,005
798,874
84,424
(31)
632,308
716,701
333,683
(1,346)
412,174
744,511
84,059
(351)
521,798
605,506
12
3,361,689
3,501,109
2,596,649
4,144
760,668
228
3,361,689
2,593,346
1,244
906,519
-
3,501,109
53
CONSOLIDATED STATEMENT OF CASH FLOW
YEAR ENDED 30 JUNE 2023
C AS H FLO W S FRO M O PERATIN G AC TIVITIES
Income receipts
Interest received
Distributions received
Income tax paid
Finance costs paid
O perating payments
Payments for inventory
N ote s
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
326 ,56 0
358,6 0 5
111
853
10 ,136
12,579
(12,0 47) (11,50 3)
(46 ,9 52) (31,6 26 )
(159 ,9 88) (134,477)
- (9 38)
N ET C AS H FLO W S FRO M O PERATIN G AC TIVITIES
8
15 3 ,0 5 0
15 8,2 6 3
C AS H FLO W S FRO M IN VES TIN G AC TIVITIES
Payments for investments and funds advanced
Proceeds from sale and settlement of investments and funds repaid
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Payments for investment properties and capital expenditure
Proceeds from disposal of investment properties
Payment for other investments and financial assets
(1,158) (326 ,823)
75,325
142,50 2
(8,30 4) (3,745)
8
49
(39 6 ,786 ) (80 5,49 7)
170 ,0 54
83,438
-
(48,0 78)
N ET C AS H FLO W S U S ED IN IN VES TIN G AC TIVITIES
(2 9 5 ,5 14) (82 3 ,5 0 1)
C AS H FLO W S FRO M FIN AN C IN G AC TIVITIES
Proceeds from issue of stapled securities
Payment of issue costs
Payment of borrowing costs
Repayment of borrowings and financial instruments
Repayment of principal portion of lease liabilities
Proceeds from borrowing s
Distributions paid
- 20 3,29 0
(42) (4,0 51)
(6 71) (4,39 6 )
(1,783) (6 5,6 6 5)
(89 6 ) (1,371)
271,36 4
758,9 34
(16 6 ,547) (10 2,818)
N ET C AS H FLO W S FRO M FIN AN C IN G AC TIVITIES
10 1,42 5
783 ,9 2 3
Net increase in cash and cash equivalents from continuing operations
Net (decrease)/increase in cash and cash equivalents from discontinued operations
N ET IN C REAS E / (DEC REAS E) IN C AS H AN D C AS H EQ U IVALEN TS
Net foreig n exchange differences
Cash and cash equivalents at beg inning of period
21
39 ,36 5
11,373
79 ,320
(52,412)
(41,0 39 )
118,6 85
22 (172)
57,9 9 2
176 ,50 5
C AS H AN D C AS H EQ U IVALEN TS AT EN D O F PERIO D
8
13 5 ,488
176 ,5 0 5
54
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2023
CONSOLIDATED
Attributable to the stapled security holders
Issued
capital
$'000
Reserves of
discontinued
Operations*
$'000
Employee
equity
benefits
$'000
Retained
earnings
$'000
Total
equity
$'000
At 1 July 2022
2,593,346 (1,697)
2,941
906,519
3,501,109
Other comprehensive income
- 1,925
-
1,925
Net income for the period
-
-
- 25,495 25,495
Total comprehensive income for the
period
Issue costs
- 1,925
- 25,495
27,420
(42)
-
-
- (42)
Distribution reinvestment plan
3,345
-
-
- 3,345
Security acquisition rights
-
- 1,203
- 1,203
Distribution to security holders
-
-
- (171,346) (171,346)
At 30 June 2023
2,596,649
228
4,144
760,668
3,361,689
*The reserves of discontinued operations are foreign currency translation reserve.
Attributable to the stapled security holders
Foreign
currency
translation
reserve
$'000
Employee
equity
benefits
$'000
Issued
capital
$'000
Retained
earnings
$'000
Total
equity
$'000
CONSOLIDATED
At 1 July 2021
2,349,791 (74)
2,705
549,457
2,901,879
Other comprehensive income
- (1,623)
-
(1,623)
Net income for the period
-
-
- 517,165
517,165
Total comprehensive income for the
period
Equity raisings
Issue costs
- (1,623)
- 517,165
515,542
203,290
-
-
- 203,290
(4,051)
-
-
- (4,051)
Distribution reinvestment plan
44,316
-
-
- 44,316
Security acquisition rights
-
- 236
- 236
Distribution to security holders
At 30 June 2022
-
-
- (160,103) (160,103)
2,593,346 (1,697) 2,941
906,519
3,501,109
55
CONTENTS
30 JUNE 2023
Notes to
the financial
statements
About this report
Segment information
Page 57
Page 59
Results for the period Operating assets
1. Revenue
and liabilities
5.
Investment
properties
Capital structure
and financing costs
8. Cash and cash
equivalents
Group Structure
Other Items
14. Parent entity
financial
information
15. Property, plant
and equipment
2. Earnings per
stapled security
6. Property loans
and other
financial assets
9. Capital
management
3. Expenses
7.
Investments
accounted for
using the equity
method
10. Interest bearing
loans and
borrowings
4.
Income Tax
11. Financial
instruments
12. Contributed
equity
13. Distributions
paid and
proposed
Signed
reports
Directors’ declaration
Independent auditor’s report
16. Commitments and
contingencies
17. Related party
disclosures
18. Key management
personnel
19. Security based
payments
20. Intangible assets
and goodwill
21. Discontinued
Operations
22. Summary of
significant
accounting policies
23. Auditor’s
remuneration
24. Events after
balance date
Page 113
Page 114
56
NOTES TO THE FINANCIAL STATEMENTS – About this Report
30 JUNE 2023
Abacus Property Group (“APG” or the “Group”) is comprised of Abacus Group Holdings Limited (“AGHL”) (the
nominated parent entity), Abacus Trust (“AT”), Abacus Group Projects Limited (“AGPL”), Abacus Income Trust
(“AIT”), Abacus Storage Property Trust (“ASPT”) and Abacus Storage Operations Limited (“ASOL”). Shares in
AGHL, AGPL and ASOL and units in AT, AIT and ASPT 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 2023 was authorised for issue in accordance with a
resolution of the directors on 18 August 2023.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In applying the Group’s accounting policies management continually evaluates judgements, estimates and assumptions
based on experience and other factors, including expectations of future events that may have an impact on the Group.
All judgements, 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 these judgements, estimates and assumptions.
Significant judgements, estimates and assumptions made by management in the preparation of these financial
statements are outlined below:
(a) Significant accounting judgements
Control and significant influence
In determining whether the Group has control over an entity, the Group assesses its exposure or rights to variable
returns from its involvement with the entity and whether it has the ability to affect those returns through its power
over the investee. The Group may have significant influence over an entity when it has the power to participate in the
financial and operating policy decisions of the entity but is not in control or joint control of those policies.
(b) Significant accounting estimates and assumptions
Valuation of investment properties
The Group makes judgements in respect of the fair value of investment properties (Note 22(n)). The fair values of
these properties are reviewed regularly by management with reference to 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 and discount rates that reflect current market conditions and current
or recent property investment prices. These judgements, assumptions and estimates have also been applied to
investment properties held through investments accounted for using the equity method.
Expected credit loss (ECL) provision and impairment of property loans and trade receivables
The Group has applied the simplified approach and recorded lifetime expected losses on trade receivables with the
exception of property loans. In estimating the ECL provision, historical recoverability and underlying risks within the
financial asset are considered.
In considering the ECL provision for property loan financial assets at amortised cost, the Group has established a
provision matrix which includes assessing the credit rating of each borrower to determine the probability of default,
loss given default and exposure at default, taking into account sensitivity factors to work out the ECL provision for
each property loan.
In considering the impairment of property loans and financial assets, the Group undertakes a market analysis of the
secured property development and other securities being utilised to support the underlying loan and financial assets
and identifies 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.
Fair value of derivatives
The fair value of derivatives is determined based on discounted cash flow analysis using assumptions supported by
observable market rates adjusted for counterparty creditworthiness.
57
NOTES TO THE FINANCIAL STATEMENTS – About this Report
30 JUNE 2023
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued)
Fair value of financial assets
The Group holds investments in listed and unlisted securities which are held at fair value based on quoted securities
and valuation of underlying asset values.
Impairment of goodwill, intangible assets and other non-financial assets
The Group determines whether goodwill, intangible assets and other non-financial assets 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 intangible assets are allocated. For goodwill and intangible assets this involves value in use calculations which
incorporate a number of key estimates and assumptions around cash flows and fair value of investment properties
upon which these determine the revenue / cash flows. The assumptions used in the estimations of the recoverable
amount and the carrying amount of goodwill and intangible assets are discussed in Note 20.
Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be
available against which the losses can be utilised. This requires management judgement to determine the amount of
deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits,
together with future tax planning strategies. Further details on taxes are disclosed in Note 4.
58
NOTES TO THE FINANCIAL STATEMENTS – Segment Information
30 JUNE 2023
The Group predominately operates in Australia. The Group’s operating segments are regularly reviewed by the Chief
Operating Decision Maker (“CODM”) to make decisions about resource allocation and to assess performance.
The Group’s operating segments are:
(a) Continuing Operations – Commercial: the segment is responsible for the management and ownership of
commercial (office and other) properties. This segment also includes the equity accounting of co-investments in
property entities and secured property loan; and
(b) Discontinued Operations – Self Storage: the segment is responsible for the management, operation and
ownership of self storage properties. This segment also includes the operating business Storage King, ownership
of listed securities and equity accounting of co-investments.
The FY22 segment information on net profit and balance sheet have been restated to split the continuing operations
and discontinued operations into separate segments.
The segment result includes transactions between operating segments which have been eliminated.
59
NOTES TO THE FINANCIAL STATEMENTS – Segment Information
30 JUNE 2023
Year ended 30 June 2023
Revenue
Rental income
Finance income
Fee income
Total revenue
Other income
Total consolidated revenue and other income
Core
Continuing
Discontinued
operations
operations
Commercial
Self Storage
Consolidated
$'000
$'000
$'000
147,075 190,454
337,529
3,483
450
3,933
1,455
16,824 18,279
152,013
207,728
359,741
60
11,426
11,486
152,073
219,154 371,227
Net change in fair value of investments and financial instruments derecognised
Net change in fair value of investment properties derecognised
(1,023)
12,254 11,231
(9,097) (60) (9,157)
Net change in fair value of investments held at balance date
(854) 16,485 15,631
Share of loss from equity accounted investments
(8,846) (314) (9,160)
*
^
Net change in investment properties held at balance date
(247,617) 150,304 (97,313)
Property expenses and outgoings
Depreciation and amortisation expense
Administrative and other expenses
Costs associated with de-stapling
Segment result
Net change in fair value of derivatives
Finance costs
Profit/(loss) before tax
Income tax expense
(41,880) (42,758) (84,638)
(5,800) (3,434) (9,234)
(35,361) (43,470) (78,831)
(4,097) (4,138) (8,235)
(202,502)
304,023 101,521
(20,220) 13,559 (6,661)
(9,893)
(43,802)
(53,695)
(232,615)
273,780
41,165
(5,650)
(10,020)
(15,670)
Net profit/(loss) for the year attributable to members of the Group
(238,265)
263,760
25,495
^ includes fair value loss of $15.4 million
* includes fair value loss of $0.7 million
60
NOTES TO THE FINANCIAL STATEMENTS – Segment Information (continued)
30 JUNE 2023
Ye ar ended 3 0 June 2 0 2 2
Reve nue
Rental income
Finance income
Fee income
Total reve nue
O ther income
Total c ons olidated reve nue and other inc ome
Net change in fair value of property, plant and equipment,
investments and financial instruments derecognised
C ore
C ommerc ial
N on-C ore
S elf S torage Deve lopme nt C ons olidate d
$ '0 0 0
$ '0 0 0
$ '0 0 0
$ '0 0 0
130 ,539
16 0 ,538
- 2 9 1,0 77
3,0 30
5
8,19 9
11,2 3 4
2,0 82
15,228
- 17,3 10
13 5 ,6 5 1
175 ,771
8,19 9
3 19 ,6 2 1
324
10 ,9 6 1
- 11,2 85
13 5 ,975
186,73 2
8,19 9
3 3 0 ,9 0 6
(10 7)
5,0 33
- 4,9 2 6
Net change in fair value of investment properties derecognised
(9 9 2) (43)
- (1,0 3 5 )
Net change in fair value of investments held at balance date
Net change in investment properties held at balance date
Share of profit from equity accounted investments
Property expenses and outgoings
Depreciation and amortisation expense
Impairment charges
Administrative and other expenses
S e gment re s ult
6 22
40 ,30 8
^
13,441
17,286
30 5,242
- 17,9 0 8
- 3 45 ,5 5 0
- (12)
13 ,42 9
(33,370 ) (36 ,276 )
- (6 9 ,6 46 )
(6 ,0 70 ) (2,9 32)
- (9 ,0 0 2 )
(1,0 28)
- (3,875) (4,9 0 3 )
(29 ,289 ) (37,30 1) (3,452) (70 ,0 42 )
119,490
43 7,741
86 0
5 5 8,0 9 1
Net change in fair value of derivatives
28,10 1
-
- 28,10 1
Finance costs
Profit be fore tax
Income tax expense
(19 ,217)
(19 ,343)
- (38,560 )
12 8,3 74
418,3 9 8
(9 ,9 9 5) (20 ,472)
86 0
5 47,6 3 2
- (30 ,46 7)
N e t profit for the ye ar attributable to membe rs of the G roup
118,3 79
3 9 7,9 2 6
86 0
5 17,16 5
^ includes fair value gain of $4.9 million
61
NOTES TO THE FINANCIAL STATEMENTS – Segment Information (continued)
30 JUNE 2023
As at 3 0 June 2 0 2 3
Current assets
Non-current assets
Total as s ets
Current liabilities
Non-current liabilities
Total liabilitie s
N e t as s ets
C ontinuing
O pe rations
C omme rc ial
$ '0 0 0
152,876
2,380 ,882
2 ,5 3 3 ,75 8
83,6 6 3
1,0 18,421
1,10 2 ,0 84
Dis c ontinue d
O pe rations
S e lf S torage *
$ '0 0 0
3,0 72,416
Total
$ '0 0 0
3 ,2 2 5 ,2 9 2
- 2 ,3 80 ,882
5 ,6 0 6 ,174
3 ,0 72 ,416
1,142,40 1
1,2 2 6 ,0 6 4
- 1,0 18,42 1
2 ,2 44,485
1,142 ,40 1
1,43 1,6 74
1,9 3 0 ,0 15
3 ,3 6 1,6 89
Total facilities - bank loans
Facilities used at reporting date - bank loans
Fac ilitie s unus ed at re porting date - bank loans
1,0 57,750
2,0 57,750
1,0 0 0 ,0 0 0
(9 72,750 ) (9 79 ,10 7) (1,9 51,857)
10 5 ,89 3
2 0 ,89 3
85 ,0 0 0
* Details of assets and liabilities are disclosed in Note 21.
As at 3 0 June 2 0 2 2
Current assets
Non-current assets
Total as s ets
Current liabilities
Non-current liabilities
Total liabilitie s
N e t as s ets
C omme rc ial
$ '0 0 0
111,0 6 1
2,584,440
2 ,6 9 5 ,5 0 1
S e lf S torag e
$ '0 0 0
137,0 6 6
2,574,49 2
2 ,711,5 5 8
Total
$ '0 0 0
2 48,12 7
5 ,15 8,9 3 2
5 ,40 7,0 5 9
48,342
9 43,132
9 9 1,474
89 ,6 0 8
824,86 8
9 14,476
13 7,9 5 0
1,76 8,0 0 0
1,9 0 5 ,9 5 0
1,70 4,0 2 7
1,79 7,0 82
3 ,5 0 1,10 9
Total facilities - bank loans
Facilities used at reporting date - bank loans
Fac ilitie s unus ed at re porting date - bank loans
2,0 57,750
(1,6 77,0 11)
3 80 ,73 9
62
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
1. REVENUE
Finance income
Interest and fee income on secured loans - amortised cost
Interest and fee income on secured loans - fair value
Bank interest
Total finance income
2. EARNINGS PER STAPLED SECURITY
2023
$'000
2022
$'000
2,963
2,924
- 8,199
106
520
11,229
3,483
2 0 2 3
2 0 2 2
B asic and diluted earnings per stapled security (cents)
B asic and diluted earnings per stapled security for continuing operations (cents)
2.85
(26 .6 7)
6 1.11
14.0 9
Rec onc iliation of earnings us ed in c alc ulating earnings per s tapled s ec urity
Basic and diluted earnings per stapled security
Continuing operations
Discontinued operations
N et profit ($ '0 0 0 )
W eighted average number of sec urities :
W eighted average number of stapled securities for basic earning per security ('0 0 0 )
3. EXPENSES
(a) N e t c hange in fair value of inves tments he ld at balanc e date
Net change in fair value of listed and unlisted property securities held at balance date
Net change in fair value of property loans held at balance date
Net change in fair value of other investments held at balance date
Total c hange in fair value of inves tments he ld at balanc e date
(238,26 5)
26 3,76 0
2 5 ,49 5
119 ,239
39 7,9 26
5 17,16 5
89 3,452
846 ,26 0
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
1,0 68 (6 30 )
-
-
(214)
8
85 4 (6 2 2 )
(b) De prec iation and amortis ation expens es
Depreciation and amortisation of property, plant and equipment and intangible assets
Amortisation - leasing costs
Total deprec iation and amortis ation expens es
9 12
4,888
5 ,80 0
1,40 1
4,6 69
6 ,0 70
(c ) Financ e c os ts
Interest on loans
Amortisation of finance costs
Total financ e c os ts
(d) Adminis trative and othe r e xpe ns es
W ages and salaries
Contributions to defined contribution plans
O ther expenses
Restructuring cost
Total adminis trative and other e xpe ns e s
9 ,49 1
40 2
9,893
16,157
3,0 6 0
19 ,2 17
25,40 6
1,544
8,16 5
4,343
3 9,45 8
23,39 7
1,113
8,231
-
3 2 ,741
63
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
4.
INCOME TAX
(a) Inc ome tax e xpens e
The major components of income tax expense are:
Inc ome S tateme nt
C urrent in come tax
Current income tax charg e
Adjustments in respect of current income tax of previous years
Deferred in come tax
Relating to origination and reversal of temporary differences
Total inc ome tax expe ns e
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
7,119 (7,733)
6 70
26 4
(1,733)
5 ,6 5 0
17,0 58
9 ,9 9 5
(b) N umeric al rec onc iliation be tw e en agg re g ate tax e xpens e rec og nis e d in the inc ome s tate me nt and tax e xpe ns e
c alc ulate d pe r the s tatutory inc ome tax rate
A reconciliation between tax expense and the product of the accounting profit before income tax multiplied by the G roup's
applicable income tax rate is as follows:
Profit/(loss) before tax from continuing operations
Profit before tax from discontinued operations
Profit before inc ome tax e xpe ns e
(232,6 15)
273,780
41,16 5
129 ,235
418,39 7
547,6 32
Prima facie income tax expense calculated at 30 % (AU )
Prima facie income tax expense calculated at 28% (NZ)
Less prima facie income tax expense on profit from Trusts
Prima Facie income tax of entities subject to income tax
Adjustment of prior year tax applied
U nrecognised tax benefit on tax losses
Share of results of joint ventures and associates
Security acquisition rig hts
O ther items (net)
Total inc ome tax expe ns e
Less income tax expense attributable to discontinued operations
Inc ome tax e xpens e attributable to c ontinuing ope rations
16 3,218
11,6 0 4
6 9 6
1,0 0 0
(1,184) (135,853)
28,36 5
11,116
6 54
270
4,59 0
1,6 14
(387) (418)
71
(152)
181
233
15 ,6 70
3 0 ,46 7
(10 ,0 20 ) (20 ,472)
9 ,9 9 5
5 ,6 5 0
64
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
4.
INCOME TAX (continued)
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
(c ) Rec og nis ed deferred tax as s ets and liabilities
Deferred income tax relates to the following:
Deferred tax liabilities
Revaluation of investment properties at fair value
36 ,551
40 ,125
Revaluation of investments and financial instruments at fair value
1,775
39 7
Capital allowances
2,140
2,29 9
B rand
9 ,489
9 ,489
O ther
8,9 6 8
9 ,782
G ros s deferred inc ome tax liabilitie s
5 8,9 2 3
6 2 ,0 9 2
Set off ag ainst deferred tax assets
(4,872) (6 ,0 17)
N et de ferred inc ome tax liabilities
5 2 ,9 0 6
5 7,2 2 0
Less deferred tax liabilities attibutable to discontinued operations (47,485)
Deferred tax liabilities
9 ,73 5
Deferred tax as s ets
Revaluation of investments and financial instruments at fair value
Provisions - employee entitlements
Losses available for offset against future taxable income
O ther
G ros s deferred inc ome tax as s ets
Set off of deferred tax liabilities
N et de ferred inc ome tax as s ets
Less deferred tax assets attibutable to discontinued operations
Deferred tax as s ets
- 6 5
4,126
4,80 4
16 ,885
10 ,20 4
9 39
1,50 5
16 ,5 13
2 2 ,0 15
(4,872) (6 ,0 17)
15 ,9 9 8
11,6 41
-
11,6 41
Tax consolidation
AGHL and its 100% owned Australian resident subsidiaries, and ASOL and its 100% owned Australian resident
subsidiaries have formed separate tax consolidated groups. AGHL and ASOL are the head entities of their respective
tax consolidated groups. The head entity and the controlled entities in the tax consolidated group continue to account
for their own current and deferred tax amounts. These amounts are measured in a manner that is consistent with the
broad principles in AASB 112 Income Taxes. The nature of the tax funding agreements are discussed further below.
Nature of the tax funding agreement
Members of the respective tax consolidated groups have entered into tax funding agreements. The tax funding
agreements require 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 Interpretation 1052, the head entity accounts for these as equity transactions.
The amounts receivable or payable under the tax funding agreements 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.
65
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
5.
INVESTMENT PROPERTIES
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
Leasehold investm ent p ro perties 1
F reehold investm ent prop erties
T otal inve s tm e nt prop e rtie s
13,0 22
4,6 9 9 ,0 13
4,7 12 ,0 3 5
The carrying amount of the leasehold property is presented gross of the finance liability of $2.4 million (30 June 2022: $2.5 million).
1.
13,27 2
4,48 7 ,310
4,5 0 0 ,5 8 2
Inve s tme nt prope rtie s - c ontinuing ope rations
Commercial
Self Storag e
Total inve s tme nt prope rtie s
Inve s tme nt prope rtie s - dis c ontinue d ope rations
Self Storag e
Total inve s tme nt prope rtie s inc luding he ld for s ale
Reconciliation
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
2,0 9 9 ,876
2,26 0 ,6 33
- 2,239 ,9 49
4,5 0 0 ,5 82
2 ,0 9 9 ,876
2,6 12,159
4,712 ,0 3 5
-
4,5 0 0 ,5 82
A reconciliation of the carrying amount of investment properties at the beginning and end of the period is as follows.
All investment properties are classified as Level 3 in accordance with the fair value hierarchy outlined in Note 11:
Continuing Opera tio ns
Freehold investment properties
Carrying amount at beginning of the financial period
Additions
Capital expenditure
Net change in fair value as at balance date
Net change in fair value derecognised
Disposals
Straightlining 1
C arrying amount at end of the period
Held for sale
N on-c urrent
3 0 Jun 2 02 3
$ '00 0
3 0 Jun 2 02 2
3 0 Jun 2 02 3
3 0 Jun 2 0 2 2
$ '00 0
$ '0 00
$ '0 00
1,758,166
2,260 ,633
- 161,571
50 8,927
- 99,50 6
-
72,353
77,385
- 511
-
40 ,308
- (247,617)
- (685) (9,097) (30 7)
- (161,39 7) (83,061) (120,695)
1,881
- 2,127
-
2 ,2 60 ,63 3
- 2 ,099 ,876
-
66
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
5.
INVESTMENT PROPERTIES (continued)
Discontinued Operations
Leasehold investment properties
Carrying amount at beginning of the financial period
Capital expenditure
Net change in fair value as at balance date
Carrying amount at end of the period
Freehold investment properties
Carrying amount at beginning of the financial period
Additions
Capital expenditure
Net change in fair value as at balance date
Net change in fair value derecognised
Effect of movements in foreign exchange
Carrying amount at end of the period
2023
$'000
13,272
14
(264)
13,022
2022
$'000
11,613
27
1,632
13,272
30 Jun 2022
30 Jun 2023
$'000
$'000
1,418,592
2,226,677
142,358 466,833
46,396
74,242
150,568
303,610
(60) (44)
5,352 (8,710)
2,599,137
2,226,677
Investment properties are carried at the Directors’ determination of fair value. 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.
Sensitivity Information
Significant input
Adopted capitalisation rate
Weighted average capitalisation rate
Rate per unit
Optimal occupancy
Adopted discount rate
Fair value measurement sensitivity to
significant increase in input
Fair value measurement sensitivity to
significant decrease in input
Decrease
Decrease
Increase
Increase
Decrease
Increase
Increase
Decrease
Decrease
Increase
67
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
5.
INVESTMENT PROPERTIES (continued)
The adopted capitalisation rate forms part of the income capitalisation approach.
When calculating the income capitalisation approach, the net market rent has a strong interrelationship with the
adopted capitalisation rate given the methodology involves assessing the total net market income receivable from the
property and capitalising this in perpetuity to derive a capital value. In theory, an increase in the net market rent and
an increase (softening) in the adopted capitalisation rate could potentially offset the impact to the fair value. The
same can be said for a decrease in the net market rent and a decrease (tightening) in the adopted capitalisation rate.
A directionally opposite change in the net market rent and the adopted capitalisation rate could potentially magnify
the impact to the fair value.
The adopted discount rate of a discounted cash flow has a strong interrelationship in deriving a fair value given the
discount rate will determine the rate in which the terminal value is discounted to the present value.
External valuations are conducted by qualified independent valuers who are appointed by the Chief Investment
Officer who is also responsible for the Group’s internal valuation process. He is assisted by in-house certified
professional valuers who are experienced in valuing the types of properties in the applicable locations.
Investment properties are independently valued on a staggered basis every two years unless the underlying financing
requires a different valuation cycle.
The majority of the investment properties are used as security for secured bank debt outlined in Note 10.
The weighted average capitalisation rate for Abacus is 5.64% (30 June 2022: 5.39%) and for each significant
category above is as follows:
- Self Storage – 5.57% (30 June 2022: 5.45%)
- Commercial – 5.71% (30 June 2022: 5.33%)
The optimal occupancy rate utilised in the valuation process ranged from 82.5% to 100.0% (30 June 2022: 80.0%
to 100.0%). The current occupancy rate for the principal commercial portfolio excluding development and self
storage assets is 95.1% (30 June 2022: 95.0%). The occupancy rate for the established self storage portfolio is 91.3%
(30 June 2022: 92.9%).
The key assumptions and estimates used in the valuations include:
•
forecast future rental income, based on the location, type and quality of the property, which are supported by the
terms of any existing leases, other contracts or external evidence such as current market rents for similar
properties;
•
•
lease assumptions based on current and expected future market conditions after expiry of any current lease; and
the capitalisation rate and discount rate derived from recent comparable market transactions.
The property valuations have been prepared based on the information that is available at 30 June 2023.
In the event that there are any unanticipated material circumstances, this may impact the fair value of the Group’s
investment property portfolio, and the future price achieved if a property is divested. The potential effect of a
decrease / increase in weighted average capitalisation rate of 25 bps on property valuation would have the effect of
increasing the fair value by up to $96.1 million or decrease the fair value by $88.1 million respectively.
During the year ended 30 June 2023, 100% (2022: 60%) of the number of investment properties in the portfolio
were subject to external valuations. Those properties that were subject to an external valuation prior to 30 June 2023
were subject to an internal valuation at 30 June 2023.
68
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
5.
INVESTMENT PROPERTIES (continued)
C omme rc ial
9 9 W alker Street, North Sydney NSW
77 Castlereag h St, Sydney NSW
20 1 Elizabeth Street, Sydney NSW
The O asis, B roadbeach Q LD
314-336 B ourke Street, Melbourne VIC
452 Johnston Street, Abbotsford VIC
14 Martin Place, Sydney NSW
Industry Lanes, Richmond, VIC
W estpac House, Adelaide SA
324 Q ueen Street, B risbane Q LD 1
Ashfield Shopping Centre, Ashfield NSW
Kingsg ate, Fortitude Valley Q LD
181 James Ruse Drive, Camellia NSW
51 Allara Street, Canberra ACT - Current
Market Central, Lutwyche Q LD
11 B owden Street, Alexandria NSW
O ther (2 assets; 20 22: 4 assets) 2
Total C omme rc ial
S elf S torag e
NSW (47 facilities; 20 22: 42 facilities) 3
VIC (25 facilities; 20 22: 23 facilities) 4
Q LD (24 facilities; 20 22: 21 facilities) 5
ACT (6 facilities; 20 22: 6 facilities)
W A (10 facilities; 20 22: 10 facilities)
SA (3 facilities; 20 22: 2 facilities)
NZ (15 facilities; 20 22: 15 facilities)
Total S elf S torage
6
O w ne rs hip
Inte res t
%
Fair Value
2 0 2 3
$ '0 0 0
C apitalis ation
Rate
2 0 2 3
%
Fair Value
2 0 2 2
$ '0 0 0
10 0 288,0 0 0
10 0 225,50 0
32 215,36 0
10 0 178,0 0 0
33 150 ,0 0 0
10 0 133,0 0 0
50 112,50 0
50 10 4,0 0 0
50 86 ,0 0 0
10 0 16 9 ,0 0 0
50 77,76 6
50 78,0 0 0
10 0 6 6 ,0 0 0
10 0 6 1,0 0 0
50 6 0 ,350
10 0 45,0 0 0
10 0 50 ,40 0
5.50 30 8,0 0 0
5.13 250 ,0 0 0
5.13 227,20 0
6 .75 178,0 0 0
5.6 3 153,333
5.50 140 ,0 0 0
5.13 121,50 0
5.13 110 ,850
6 .88 9 1,250
6 .13 9 1,250
5.75 88,0 0 0
6 .25 82,0 0 0
N/A 77,50 0
6 .75 72,50 0
6 .25 70 ,350
5.88 55,50 0
5.13 143,40 0
C apitalis ation
Rate
2 0 2 2
%
5.0 0
4.6 3
4.6 3
6 .75
5.50
5.25
4.75
4.75
6 .50
5.6 3
5.50
5.75
N/A
6 .25
5.75
5.25
4.9 1
2 ,0 9 9 ,876
5 .71
2 ,2 6 0 ,6 3 3
5 .3 3
10 0 9 6 0 ,332
10 0 428,881
10 0 420 ,415
10 0 285,0 9 7
10 0 185,382
10 0 29 ,6 6 0
10 0 30 2,39 2
2 ,6 12 ,15 9
5.20 829 ,9 14
5.78 378,239
5.6 6 326 ,36 5
5.28 249 ,16 2
6 .28 149 ,132
6 .0 0 23,30 8
6 .0 0 283,829
2 ,2 3 9 ,9 49
5 .5 7
5.0 6
5.57
5.53
5.28
6 .42
5.87
5.82
5 .45
1. In August 2022, Abacus acquired remaining 50% interest in 324 Queen St, Brisbane QLD.
2. In June 2023, Abacus has divested 2 non-core assets being 187 Todd Road, VIC and 33 Queen St QLD.
3. Abacus has acquired 5 properties in NSW being Chatswood, Leumeah, Carlton, Croydon and Kogarah.
4. Abacus has acquired 2 properties in VIC being Dandenong and Mulgrave.
5. Abacus has acquired 3 properties in QLD being Loganholme, Capalaba and Currumbin.
6. Abacus has acquired 1 property in Darlington SA.
69
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
6. PROPERTY LOANS AND OTHER FINANCIAL ASSETS
(a) N on-c urre nt prope rty loans
Secured loans - amortised cost
Provision for secured loans - am ortised cost
(b) N on-c urre nt othe r financ ial as s e ts
O ther financial assets
Investm ent in securities and options - unlisted - fair value
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
53,148
53,148
(6 ) (4)
5 3 ,144
5 3 ,142
- 240 ,46 9
3,86 5
2 44,3 3 4
3,9 87
3 ,9 87
Other financial assets associated with discontinued operations of $224.1 million was disclosed in Note 21.
70
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
7.
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
(a) Extract from joint ventures and associates’ profit and loss statements
F o rd tran s P ty L td *
A W 7 10 C o llin St T ru st
Oth er J o in t V en tu res
T o tal
2023
$'000
2022
$'000
2023
$'000
2022
$'000
2023
$'000
2022
$'000
2023
$'000
2022
$'000
Revenue
E xpenses
10,286
12,032
8,617
10,112
9,528
16,984
28,431
39,128
(6,899) (4,446) (16,730) (1,776) (21,837) (5,254) (45,466) (11,476)
N et p ro fit / (lo ss)
3,38 7
7 ,58 6
(8 ,113)
8 ,336
(12,309)
11,7 30
(17 ,035)
27 ,652
Sh are o f n et p ro fit / (lo ss)
1,631
3,621 (4 ,238 )
3,8 8 6 (6,239)
5,922 (8 ,8 4 6)
13,4 29
*Included in the net profit of Fordtrans Pty Ltd for the year ended 30 June 2023: Interest income $0.8 million (2022: $1.5 million) and interest expense $1.6
million (2022: $1.5 million)
(b) Extract from joint ventures and associates’ balance sheets
F o rd tran s P ty L td *
A W 7 10 C o llin St T ru st
Oth er J o in t V en tu res
T o tal
2023
$'000
2022
$'000
2023
$'000
2022
$'000
2023
$'000
2022
$'000
2023
$'000
2022
$'000
2,732
5,824
964
772
84,111
3,939
87,807
10,535
246,627
245,859
103,000
117,000
13,845
108,467
363,472
471,326
249,359
251,683
103,964
117,772
97,956
112,406
451,279
481,861
(82,093) (5,911) (3,662) (3,548) (35,244) (12,562) (120,999) (22,021)
- (79,554)
-
- (13,223) (34,825) (13,223) (114,379)
167 ,266
166,218
100,302
114 ,224
4 9,4 8 9
65,019
317 ,057
34 5,4 61
C urrent assets
N on-current assets
C urrent liabilities
N on-current liabilities
N et assets
Sh are o f n et assets
8 3,633
8 3,109
50,151
57 ,112
24 ,8 90
32,7 4 0
158 ,67 4
17 2,961
*Included in the net assets of Fordtrans Pty Ltd as at 30 June 2023: cash and cash equivalents $0.6 million (2022: $4.1 million), current interest bearing loans
and borrowings $75.0 million (2022: $Nil) and non-current interest bearing loans and borrowings $Nil (2022: $65.1 million).
There were no impairment losses or contingent liabilities relating to the investment in the joint ventures and associates.
1. Fordtrans Pty Ltd (Virginia Park) (“VP”)
Abacus has a 50% interest in the ownership and voting rights of Fordtrans Pty Ltd. VP’s principal place of
business is in Bentleigh East, Victoria.
VP owns a sizeable Business Park providing a mixture of industrial and office buildings as well as supporting
facilities including gymnasium, swim centre, childcare centre, children’s play centre and cafe. Abacus jointly
controls the venture with the other partner under the terms of Unitholders Agreement and requires unanimous
consent for all major decisions over the relevant activities.
Abacus’ share of distributions (including capital distributions) for the year ended 30 June 2023 was $1.2 million
(2022: $2.3 million).
2. AW 710 Collins Street Trust (“710 Collins”)
Abacus’ share of distributions (including capital distributions) for the year ended 30 June 2023 was $2.9 million
(2022: $2.0 million).
71
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
8. CASH AND CASH EQUIVALENTS
Reconciliation to Statement of Cash Flow
For the purposes of the Statement of Cash Flow, cash and cash equivalents comprise the following:
Cash at bank and in hand 1
Cash at bank and in hand attributable to discontinued operations1
Cash and cash equivelants
71,9 0 0
6 3,588
13 5 ,488
176 ,50 5
-
176 ,5 0 5
1. C ash at bank earns interest at floating rates. The carrying amounts of cash and cash equivalents represent fair value.
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
Net profit from continuing operations
Net profit from discontinued operations
Net profit
Adjus tme nts for:
Depreciation and amortisation of non-current assets
Net chang e in fair value of derivatives
Net chang e in fair value of investment properties held at balance date
Net chang e in fair value of investments held at balance date
Net chang e in fair value of investment properties derecognised
Net chang e in fair value of investment and financial instruments derecognised
Net (gain) / loss on disposal of property, plant and equipment
Share of profit from equity accounted investments
Increase / (decrease) in payables
(Increase) / decrease in receivables and other assets
N e t c as h from operating ac tivitie s
(a) Disclosure of financing facilities
Refer to Note 10.
(b) Disclosure of non-cash financing facilities
(238,26 5)
26 3,76 0
25,49 5
119 ,239
39 7,9 26
517,16 5
9 ,234
9 ,0 0 2
6 ,6 6 1 (28,10 1)
9 7,313 (345,550 )
(15,6 31) (17,9 0 7)
9 ,157
1,0 35
(11,26 6 ) (4,9 19 )
35 (8)
9 ,16 0 (13,429 )
24,9 86
21,9 40
15,9 89
9 52
15 8,2 6 3
15 3 ,0 5 0
Non-cash financing activities include capital raised pursuant to the Abacus distribution reinvestment plan. During the year 1.2
million (2022: 13.7 million) stapled securities were issued with a cash equivalent of $3.3 million (2022: $44.3 million).
72
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
9. CAPITAL MANAGEMENT
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 a going concern. Abacus also protects its
equity in assets by taking out insurance.
Abacus 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, Abacus reviews its capital
structure to ensure sufficient funds and financing facilities (on a cost effective basis) are available to implement its
strategy, that adequate financing facilities are maintained and distributions to members are made within the stated
distribution guidance (i.e. paid out of funds from operations).
The following strategies are available to the Group to manage its capital: issuing new stapled securities, its distribution
reinvestment plan, electing to have the distribution reinvestment plan underwritten, adjusting the amount of
distributions paid to members, activating a security buyback program, divesting assets, active management of its fixed
rate swaps and collars, directly purchasing assets from joint ventures, or (where practical) recalibrating the timing of
transactions and capital expenditure so as to avoid a concentration of net cash outflows.
During the year, Abacus extended the earliest dated tranches of both its Headstock syndicated facility and Self
Storage syndicated facility by one year to July 2024. Abacus has no bank debt expiring in the financial year ending 30
June 2024, with the majority of debt expiring from the financial year ending 30 June 2025 onwards.
Abacus has a total gearing covenant as a condition of the current $1 billion Headstock syndicated facility and the $11
million Bilateral facility. The total gearing covenant requires Abacus to have total liabilities (net of cash) to be less than
or equal to 50% of total tangible assets (net of cash). As at date of reporting period, Abacus was compliant in meeting
all its debt covenants.
73
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
10. INTEREST BEARING LOANS AND BORROWINGS
N on-c urrent
B ank loans - A$
B ank loans - A$ value of NZ$ denominated loan
Loan from related party - A$
Less: U namortised borrowing costs
(a) Total non-c urrent
(b) M aturity profile of non-c urre nt interes t bearing loans
Due within one year
Due between one and five years
Due after five years
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
9 72,757
1,49 2,137
- 184,885
34,222
32,6 54
(471) (435)
1,70 9 ,2 41
1,0 0 6 ,5 0 8
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
-
789 ,0 0 8
217,50 0
1,0 0 6 ,5 0 8
-
883,172
826 ,0 69
1,70 9 ,2 41
Abacus 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 including discontinued operations are A$ and NZ$ denominated and are provided by several banks at
interest rates which are set periodically on a fixed or floating basis. The loan facilities term to maturity varies from July
2024 to July 2028. The bank loans are secured by charges over the investment properties and certain property, plant
and equipment.
Including the discontinued operations, approximately 61.3% (30 June 2022: 76.1%) of bank debt drawn was subject
to fixed rate hedges and the drawn bank debt had a weighted average term to maturity of 3.5 years (30 June 2022:
4.7 years). Hedge cover as a percentage of available facilities at 30 June 2023 is 58.2% (30 June 2022: 62.1%).
100% of the available facilities and drawn bank for the continued operations were subject to fixed rate hedges, and the
drawn bank debt had a weighted average term to maturity of 3.8 years.
Abacus’ weighted average interest rate including discontinued operations for the year ended 30 June 2023 was 2.78%
(30 June 2022: 2.07%). The weighted average interest rate for the continued operations for the year ended 30 June
2023 was 1.12%. The weighted average interest rate included line fees on undrawn facilities.
(c) Assets pledged as security
The carrying amounts of assets pledged as security for current and non-current interest bearing liabilities are:
N on-c urrent
First mortgage
Investment properties
Total non-current assets pledged as security
Total as s ets pledge d as s e c urity
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
2,0 9 9 ,876
2,0 9 9 ,876
4,0 6 2,149
4,0 6 2,149
2 ,0 9 9 ,876
4,0 6 2 ,149
Total assets pledged as security associated with discontinued operations was $2,150 .6 million.
(d) Defaults and breaches
During the current and prior years, there were no defaults or breaches of any of the Group’s loans.
74
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
11. FINANCIAL INSTRUMENTS
Financial Risk Management
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.
Primary responsibility for identification and control of financial risks rests with the Treasury Management Committee
under the authority of the Board. The Board reviews and agrees policies for managing each of the risks identified
below, including the setting of limits for trading in derivatives, hedging cover of interest rate risks and cash flow
forecast projections.
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 derivatives. 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 instruments are disclosed in the section about this report and Note 22 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 including any adverse economic events such as the current inflationary environment, and
arises principally from the Group’s receivables from customers, investment in securities and options, secured property
loans and interest bearing loans and derivatives with banks.
The Group manages its exposure to risk by:
- 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 satisfied
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).
75
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
11. FINANCIAL INSTRUMENTS (continued)
(a) Credit risk (continued)
Credit risk exposures
The Group’s maximum exposure to credit risk at the reporting date was:
Receivables
Listed and unlisted property securities
Cash and cash equivalents
Derivatives
C as h and othe r financ ial as s e ts
Secured property loans - amortised cost *
S e c ure d prope rty loans
Total c re dit ris k e xpos ure
* The secured property loan is with one borrower.
(b) Liquidity Risk
C arry ing Amount
2 0 2 3
$ '0 0 0
46 ,6 37
3,9 87
71,9 0 0
44,824
16 7,3 48
2 0 2 2
$ '0 0 0
43,472
244,334
176 ,50 5
58,9 41
5 2 3 ,2 5 2
53,142
5 3 ,142
53,144
5 3 ,144
2 2 0 ,49 0
5 76 ,3 9 6
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of
funding through 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.
The table below shows an analysis of the contractual maturities of key liabilities which forms part of the Group’s
assessment of liquidity risk.
3 0 June 2 0 2 3
L iab ilities
C arrying
C ontrac tual
1 Ye ar or
O ve r 1 ye ar
Amount
$ '0 0 0
c as h flow s
$ '0 0 0
le s s
$ '0 0 0
to 5 ye ars
$ '0 0 0
O ve r
5 ye ars
$ '0 0 0
Trade and other payables
Interest bearing loans and borrowing s incl derivatives#
Total liabilitie s
57,584
1,0 0 6 ,50 8
1,0 6 4,0 9 2
57,584
1,214,877
1,2 72 ,46 1
57,584
48,414
-
9 48,852
10 5 9 9 8 9 48,85 2
-
217,6 11
2 17,6 11
76
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
11. FINANCIAL INSTRUMENTS (continued)
(b) Liquidity risk (continued)
3 0 June 2 0 2 2
L iab ilities
C arrying
C ontrac tual
1 Ye ar or
O ve r 1 ye ar
Amount
$ '0 0 0
c as h flow s
$ '0 0 0
le s s
$ '0 0 0
to 5 ye ars
$ '0 0 0
O ve r
5 y e ars
$ '0 0 0
Trade and other payables
Interest bearing loans and borrowing s incl derivatives#
Total liabilitie s
127,0 30
1,70 9 ,241
1,83 6 ,2 71
127,0 30
2,0 79 ,133
2 ,2 0 6 ,16 3
127,0 30
53,0 73
180 ,10 3
-
1,177,30 6
1,177,3 0 6
-
848,754
848,75 4
# Carrying amount includes fair value of derivative liabilities. Contractual cash flow includes contracted debt and net swap payments using
prevailing forward rates.
(c) Market risk
Market 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.
Interest rate risk / Fair value interest rate risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to its long-term bank debt
obligations which are based on floating interest rates. The Group has a policy to maintain a mix of floating exposure
and fixed interest rate hedging with fixed rate cover highest in years 1 to 5.
The Group hedges to minimise interest rate risk by entering into variable to fixed interest rate swaps which also helps
deliver interest covenant compliance and positive carry (net rental income in excess of interest expense) on the
property portfolio. Interest rate swaps have the economic effect of converting borrowings from variable rates to fixed
rates. Under the interest rate swaps, the Group agrees to exchange, at specified intervals, the difference between
fixed and variable rate interest amounts calculated by reference to the agreed notional principal amounts. At 30 June
2023, after taking into account the effect of interest rate swaps, approximately 61.3% (2022: 76.1%) of the Group’s
drawn debt is subject to fixed rate hedges. Hedge cover as a percentage of available facilities at 30 June 2023 is
58.2% (2022: 62.1%). 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.
77
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
11. FINANCIAL INSTRUMENTS (continued)
(c) Market risk (continued)
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:
W eighted average interest rate*^
4.0 7%
5.50 %
3 0 June 2 0 2 3
Financ ial As s e ts
Cash and cash equivalents
Receivables
Secured loans
Derivatives
Other financial assets
Total financ ial as s ets
Financ ial liabilities
Interest bearing liabilities - bank
Interest bearing liabilities - other
Derivatives
Payables
Total financ ial liabilities
Notional principal swap balance
maturities*
W eighted average interest rate
on drawn bank debt*
Floating
Fixed interes t
Fixed interes t
Fixed interes t
N on interes t
interes t rate
les s than 1 year
1 to 5 years
over 5 years
$ '0 0 0
$ '0 0 0
$ '0 0 0
$ '0 0 0
bearing
$ '0 0 0
Total
$ '0 0 0
71,9 0 0
-
-
- 30 ,283
-
-
-
-
-
- 53,142
14,541
-
6 7,6 83
3 0 ,2 83
-
71,9 0 0
926 ,0 0 7
- 46 ,750
- 34,222
859
-
- 20 ,60 3
-
-
-
9 2 6 ,0 0 7
2 0 ,6 0 3
81,83 1
-
- 46 ,6 37
-
-
- 3,9 87
- 5 0 ,6 2 4
- 71,9 0 0
46 ,637
- 53,142
- 44,824
3,9 87
2 2 0 ,49 0
- (471)
-
-
- 57,584
- 5 7,113
9 72,286
- 34,222
- 21,46 2
57,584
1,0 85 ,5 5 4
-
9 50 ,0 0 0
1,110 ,0 0 0
-
- 2,0 6 0 ,0 0 0
1.12%
78
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
11. FINANCIAL INSTRUMENTS (continued)
(c) Market risk (continued)
3 0 June 2 02 2
Financ ial Assets
Cash and cash equivalents
Receivables
Secured loans
Derivatives
Other financial assets
Total financ ial assets
Floating
Fixed interest
Fixed interest
Fixed interest
N on interest
interest rate
less than 1 year
1 to 5 years
over 5 years
$ '000
$ '000
$ '000
$ '000
bearing
$ '000
Total
$ '000
176,505
-
-
- 20,869
-
-
-
- 53,144
38,072
-
-
-
-
176,505
2 0,869
91,2 16
-
- 43,472
-
-
- 244,334
- 2 87,806
- 176,505
43,472
- 53,144
- 58,941
244,334
576,3 96
Weighted average interest rate*^
0.85%
5.50%
Financ ial liabilities
Interest bearing liabilities - bank
Interest bearing liabilities - other
Payables
Total financ ial liabilities
Notional principal swap balance
maturities*
Weighted average interest rate
on drawn bank debt*
1,630,261
-
-
1,630,2 61
- 46,750
- 32,654
-
- 79,404
-
- (424)
-
- 127,030
- 12 6,606
1,676,587
- 32,654
127,030
1,83 6,2 71
-
780,000
1,175,000
-
-
1,955,000
2.07%
calculated for the year ended 30 June
*
^ weighted average interest rate excludes the impact of derivatives
The following table is a summary of the interest rate sensitivity analysis:
30 June 2023
Financial assets
Financial liabilities
30 June 2022
Financial assets
Financial liabilities
Carrying amount
Floating
$'000
-1%
Profit
$'000
AUD
Equity
$'000
+1%
Profit
$'000
Equity
$'000
71,900 (719)
926,007 (4,138)
- 719
- 5,761
-
-
Carrying amount
Floating
$'000
-1%
Profit
$'000
AUD
Equity
$'000
+1%
Profit
$'000
Equity
$'000
176,505 (1,765)
1,630,261 3,611
- 1,765
- 14,623
-
-
79
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
11. FINANCIAL INSTRUMENTS (continued)
(d) Fair values
The fair value of the Group’s financial assets and liabilities are approximately equal to that of their carrying values.
Details of the Group’s fair value measurement, valuation technique and inputs are detailed below.
Class of assets /
liabilities
Fair value
hierarchy
Investment properties
Level 3
Valuation technique
Discounted Cash Flow (""DCF"")
Direct comparison
Income capitalisation method
Securities and options
– unlisted
Level 3
Pricing models
Derivative – financial
instruments
Level 2
DCF (adjusted for counterparty
Credit worthiness)
Inputs used to measure fair
value
Net Operating income
Adopted capitalisation rate
Rate per unit
Optimal occupancy
Adopted discount rate
Security price
Underlying net asset
Property valuations
Interest rates
Consumer price index (“CPI”)
Volatility
Securities and options
– listed
Level 1
Quoted prices (unadjusted) in active
Market for identical assets or liabilities
Quoted security price
Level 1
Level 2
Quoted prices (unadjusted) in active market for identical assets or liabilities;
Inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3
Inputs for the asset or liability that are not based on observable market data.
There were no transfers between Levels 1, 2 and 3 during the period.
Income capitalisation method
This method involves assessing the total net market income receivable from the property and
capitalising this in perpetuity to derive a capital value, with allowances for capital expenditure
reversions.
Direct comparison
This method directly compares and analyses sales evidence on a rate per unit.
Discounted cash flow method Under the DCF method, the fair value is estimated using explicit assumptions regarding the
benefits and liabilities of ownership over the assets’ or liabilities’ life including an exit or
terminal value. The DCF method involves the projection of a series of cash flows from the
assets or liabilities. To this projected cash flow series, an appropriate, market-derived
discount rate is applied to establish the present value of the cash flow stream associated with
the assets or liabilities.
Pricing models – unlisted
securities
The fair value is determined by reference to the net assets which approximates fair value of
the underlying entities.
Pricing models – options
The fair value is determined using generally accepted pricing models including Black-Scholes
and adjusted for specific features of the options including share price, underlying net assets
and property valuations and prevailing exchange rates.
80
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
11. FINANCIAL INSTRUMENTS (continued)
(d) Fair values (continued)
The following table is a reconciliation of the movements in secured loans, unlisted securities and options classified as
Level 3 for the period ended 30 June 2023.
Opening balance as at 30 June 2022
Fair value movement through the income statement
Additions
Disposals
Closing balance as at 30 June 2023
Opening balance as at 30 June 2021
Fair value movement through the income statement
Additions
Disposals
Closing balance as at 30 June 2022
Sensitivity of Level 3 - unlisted securities and options
Secured
Unlisted
loans
securities/
Total
(fair value)
$'000
options
$'000
$'000
- 3,865
3,865
- (846) (846)
- 968
968
- - -
3,987
- 3,987
Secured
Unlisted
loans
securities/
Total
(fair value)
$'000
options
$'000
$'000
70,536
67,946
2,590
- 629
629
- 646 646
- (67,946)
3,865
- 3,865
(67,946)
The potential effect of using reasonable possible alternative assumptions based on a decrease / increase in the property
valuations by 5% would have the effect of reducing the fair value by up to $0.1 million (30 June 2022: $0.1 million)
or increase the fair value by $0.1 million (30 June 2022: $0.1 million) respectively.
81
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
12. CONTRIBUTED EQUITY
(a) Issued stapled securities
Stapled securities
Issue costs
Total contributed equity
(b) Movement in stapled securities on issue
At beginning of financial period
- equity raisings
- distribution reinvestment plan
Securities on issue at end of financial period
13. DISTRIBUTIONS PAID AND PROPOSED
2022
2023
$'000
$'000
2,649,833
2,646,488
(53,184) (53,142)
2,593,346
2,596,649
Stapled securities
Number
2023
'000
Number
2022
'000
892,429 818,591
- 60,145
13,693
1,229
892,429
893,658
2023
$'000
2 02 2
$'000
(a) Distributions paid during the period
June 2022 half: 9.25 cents per stapled security (2021: 8.50 cents)
December 2022 half: 9.00 cents per stapled security (2021: 8.75 cents)
82,550
80,429
73,673
72,784
(b) Distributions declared and recognised as a liability^
June 2023 half: 9.40 cents per stapled security (2022: 9.25 cents)
84,004
82,550
^ The final distribution of 9.40 cents per stapled security declared on 19 June 2023. The distribution being paid on or around 31 August 2023
will be approximately $84 million.
Distributions were paid from Abacus Trust and Abacus Storage Property Trust (which do not pay tax provided they distribute all their taxable
income) hence, there were no franking credits attached.
The total amount of franking credits available for the subsequent financial years including franking credits that will arise from the payment of
income tax payable at the end of the financial year, based on a tax rate of 30 per cent, is $120 million (2022: $103 million). $87.5 million is
attributable to continuing operations and $32.5 million is attributable to discontinued operations.
82
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
14. PARENT ENTITY FINANCIAL INFORMATION
Re s ults of the pare nt e ntity
Profit for the year
Total c ompre he ns ive e xpe ns e for the y e ar
Financ ial pos ition of the pare nt e ntity at ye ar e nd
Current assets
Total as s e ts
Current liabilities
Total liabilitie s
N e t as s e ts
Total e quity of the pare nt e ntity c ompris ing of:
Issued capital
Retained earning s / Accumulated losses
Employee options reserve
Total e quity
(a)
Parent entity contingencies
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
9 5,6 0 8
9 5 ,6 0 8
4,89 0
4,89 0
4,528
83 7,485
80 9
2 43 ,114
5 9 4,3 71
4,29 1
75 7,2 80
225
2 6 0 ,3 6 2
49 6 ,9 18
56 8,86 2
56 8,221
21,36 5 (74,244)
2,9 41
4,144
49 6 ,9 18
5 9 4,3 71
There are no contingencies of the parent entity as at 30 June 2023 (2022: Nil).
(b)
Parent entity capital commitments
There are no capital commitments of the parent entity as at 30 June 2023 (2022: Nil).
83
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
15. PROPERTY, PLANT AND EQUIPMENT
N on-c urrent
Right of use property asset
Storage equipment
Office equipment / furniture and fittings
Total non-c urrent property, plant and equipment
Rig ht of us e prope rty as s e t
At the beg inning of the period net of accumulated depreciation
D epreciation charg e for the period
At the e nd of the pe riod ne t of ac c umulate d de pre c iation
G ross value
Accumulated depreciation
N e t c arrying amount at e nd of the pe riod
Plant and e quipme nt
At the beg inning of the period net of accumulated depreciation
Transferred to discontinued operations
Additions
Exchang e differences
D epreciation charg e for the period
At the e nd of the pe riod ne t of ac c umulate d de pre c iation
Plant and e quipme nt
G ross value
Accumulated depreciation
N e t c arrying amount at e nd of the pe riod
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
- 453
- 20 ,6 70
545
2 1,6 68
458
45 8
2 0 2 3
$ '0 0 0
453
(453)
-
3,173
(3,173)
-
21,215
(20 ,6 70 )
189
-
(276 )
45 8
2,6 34
(2,176 )
45 8
2 0 2 2
$ '0 0 0
1,36 0
(9 0 7)
45 3
3,173
(2,720 )
45 3
20 ,30 4
-
3,6 0 7
(225)
(2,471)
2 1,2 15
34,6 78
(13,46 3)
2 1,2 15
Total
45 8
2 1,6 6 8
84
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
16. COMMITMENTS AND CONTINGENCIES
(a) Operating lease commitments – Group as lessor
Future minimum rentals receivable under non-cancellable operating leases as at 30 June 2023 are as follows:
Within one year
Within two years
Within three years
Within four years
Within five years
More than five years
2023
$'000
2022
$'000
107,453 106,998
96,257
94,576
85,591 81,837
69,193
69,975
53,164
52,064
118,158
134,657
529,498 540,425
These amounts do not include contingent 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.
(b) Capital and other commitments
At 30 June 2023 the Group had numerous commitments which principally related to property acquisition
settlements, loan facility guarantees for the Group's interest in the jointly controlled property developments and funds
management vehicles, commitments relating to property refurbishing costs and unused mortgage loan facilities to
third parties.
Commitments planned and/or contracted at reporting date but not recognised as liabilities are as follows:
W ithin one year
- gross settlement of property and investment acquisitions
- property refurbishment costs
- property development costs
(c) Contingencies
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
3,80 6
36,444
11,858
5 2 ,10 8
48,526
24,6 21
81,6 36
15 4,783
At 30 June 2023 the Group had a $12.5 million bank guarantee facility which expires in July 2025 (2022: $10.0
million) and $7.5 million of bank guarantees had been issued from the facility (2022: $7.5 million).
Bank guarantees issued at reporting date but not recognised as liabilities are as follows:
Bank guarantees
- Australian Financial Service Licences
- redevelopment of investment properties
- lease of office premises
2023
$'000
2022
$'000
7,500 7,500
1,163
1,502
- 564
8,663 9,566
85
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
17. RELATED PARTY DISCLOSURES
(a) Subsidiaries
The consolidated financial statements include the financial statements of the following entities:
Entity
Abacus Group Holdings Limited and its subsidiaries
Abacus Castle Hill Trust
Abacus Finance Pty Limited
Abacus Funds Management Limited
Abacus Investment Pty Ltd
Abacus Mortgag e Fund
Abacus Nominee Services Pty Limited
Abacus Nominees (No 5) Pty Limited
Abacus Nominees (No 7) Pty Limited
Abacus Nominees (No 9 ) Pty Limited
Abacus Nominees (No 11) Pty Limited
Abacus Note Facilities Pty Ltd
Abacus Property Services Pty Ltd
Abacus SP Note Facility Pty Ltd
Abacus Storag e Funds Management Limited
Abacus Camellia Investments Pty Limited
Abacus Riverlands Investments Pty Limited
Abacus Group Projects Limited and its subsidiaries
Abacus Property Pty Ltd
Abacus Allara Street Trust*
Abacus Repository Trust*
Abacus Ventures Trust*
* These entities are wholly owned by Abacus
Equity interes t
2 0 2 3
%
2 0 2 2
%
10 0
10 0
10 0
10 0
-
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
74
74
51
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
74
74
51
86
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
17. RELATED PARTY DISCLOSURES (continued)
(a) Subsidiaries (continued)
Entity
Abacus Trust and its subsidiaries:
Abacus Abbotsford Trust
Abacus Ann Street Trust
Abacus Ashfield Mall Property Trust
Abacus B owden Street Trust
Abacus K1 Property Trust
Abacus Lutwyche Trust
Abacus Oasis Trust
Abacus Potts Point Trust
Abacus Richmond Trust
Abacus Shopping Centre Trust
Abacus Virginia Trust
Abacus W estpac House Trust
Abacus W estpac House No. 2 Trust
Abacus 14 Martin Place Trust
Abacus 33 Queen Street Trust
Abacus 324 Queen Street Trust
Abacus 464 St Kilda Road Trust
444 Queen Street Trust
Lutwyche City Shopping Centre U nit Trust
Oasis JV U nit Trust
Abacus Income Trust and its subsidiaries:
Abacus Grant Street Trust
Abacus Todd Road Trust
Castlereagh Sub 1 Trust
Castlereagh FH Sub 1 Trust
Equity interes t
2 0 2 3
%
2 0 2 2
%
10 0
10 0
10 0
10 0
10 0
10 0
10 0
-
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
-
-
10 0
10 0
-
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
87
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
17. RELATED PARTY DISCLOSURES (continued)
(a) Subsidiaries (continued)
Entity
Abacus Storage Operations Limited and its subsidiaries:
Abacus Storage NZ O perations Pty Limited
Abacus Storage Solutions Pty Limited
Abacus Storage Solutions NZ Pty Limited
Abacus U SI C Trust
Abacus U Stow It A1 Trust
Abacus U Stow It B 1 Trust
Abacus U Stow It A2 Trust
Abacus U Stow It B 2 Trust
U Stow It Holdings Limited
U Stow It Pty Limited
Abacus SK Pty Limited
Storage King Corporate Holdings Pty Limited
Storage King Services Pty Limited
SK Licensing Pty Limited
SK (Licensees) Pty Limited
Storage King Management Pty Limited
Storage King Store Management Pty Limited
Storage King Management NZ Limited
Storage King (Singapore) Pte Limited
Storage King International Limited
Storage King Pty Limited
Storage King NZ Limited
A.A1 Storage King Pty Limited
Abacus Storage Property Trust and its subsidiary:
Abacus Storage NZ Property Trust
(b) Ultimate parent
AGHL has been designated as the parent entity of the Group.
(c) Key management personnel
Details of payments are disclosed in Note 18.
Equity interes t
2 0 2 3
%
2 0 2 2
%
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
10 0
88
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
17. RELATED PARTY DISCLOSURES (continued)
(d) Transaction with related parties
Transactions with related parties other than associates and joint ventures
Revenues
Property management fees received / receivable
Transactions with associates and joint ventures
Revenues
Management fees received / receivable from joint ventures
Share of (loss)/profit from joint ventures
Other transactions
Loan advanced from joint ventures
Terms and conditions of transactions
2023
$'000
2022
$'000
337 268
861
(8,926)
1,195
13,429
1,568 1,496
Fees to and purchases and fees charged from related parties are made in accordance with commercial terms in the
management agreements.
Outstanding balances at year-end are unsecured and settlement occurs in cash.
There are no ECL provisions incurred with respect to amounts payable or receivable from related parties during the
year.
Loan from related parties is disclosed in Note 10.
Ultimate controlling entity
Calculator Australia Pty Ltd (“Kirsh”) is the ultimate controlling securityholder in the Group with a holding of
approximately 51.8% of the ordinary securities of the Group (2022: 54%).
During the year, Abacus Property Services Pty Ltd was engaged to manage the following properties:
Property
Relationship with Kirsh
Charge per annum
2023
2022
14 Martin Place
Tenants-in-common
3% of gross rental
278,984
277,531
4 Martin Place
100% owned by Kirsh
3% of gross rental
336,932
268,093
$
$
Mrs Myra Salkinder is the Chair of the Group and is a senior executive of Kirsh. Mr Mark Bloom is a Non-Executive
Director of the Group and is a consultant to Kirsh.
89
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
18. KEY MANAGEMENT PERSONNEL
(a) Compensation for key management personnel
Sho rt-term em p lo y ee b enefits
Po st-em ploy m ent benefits
O ther long -term benefits
Security -based pay m ents
(b) Loans to key management personnel
2 0 2 3
$
2 0 2 2
$
4,7 0 2,314
145,0 0 4
7 6 ,18 9
1,7 6 8 ,38 2
6 ,6 9 1,8 8 9
4,7 29 ,0 52
138 ,138
41,19 3
1,48 2,6 55
6 ,3 9 1,0 3 8
There were no loans to key management personnel and their related parties at any time in 2023 or in the prior year.
(c) Other transactions and balances with key management personnel and their related parties
During the financial year, transactions occurred between the Group and key management personnel which are within
normal employee and investor relationships.
19. SECURITY BASED PAYMENTS
(a) Recognised security payment expenses
2023
$'000
2022
$'000
Expense arising from equity-settled payment transactions
2,615
2,388
Type of security – based payment plan
Long Term Incentives (LTI)
In FY22, Abacus introduced a new Long Term Incentive (“LTI”) Plan. The LTI plan has been designed to align the
interests of executives with those of securityholders by providing for a significant portion of the remuneration of
participating executives to be linked to the delivery of funds from operations (“FFO”), covering the distribution level
implicit in the Group’s security price.
Key executives have been allocated LTIs in the current financial year. Allocations were based on the performance
assessment completed in determining current variable incentive awards for the prior financial year, adjusted to take
into account other factors that the Board considers specifically relevant for the purpose of providing LTIs.
The LTIs granted during the year vest as follows:
Executive KMP
Grant
Tranche
Vesting date
Potential
number to vest
Tranche One – 50% of Grant
August 2025
354,200
FY23 Grant
Tranche Two – 50% of Grant
August 2026
351,499
90
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
19. SECURITY BASED PAYMENTS (continued)
(a) Recognised security payment expenses (continued)
Other Executives
Grant
Tranche
Tranche One – 33% of Grant
FY23 Grant
Tranche Two – 33% of Grant
Tranche Three – 33% of Grant
Deferred Short Term Incentives (Deferred STI)
Vesting date
August 2024
August 2025
August 2026
Potential
number to vest
207,508
207,508
207,529
In FY22, Abacus introduced a Deferred STI plan for Executive KMP. 25% of an Executive KMP’s short term incentive
is deferred by 12 months and settled in the form of rights. The deferred STI was introduced to aid retention, better
align Executive KMP with securityholders’ interests, and provide for a “consequence management” governance
mechanism for misconduct, fraud, malfeasance, or financial misstatement.
Security Acquisition Rights (SARs)
The deferred variable incentive plan ceased in the year ending 30 June 2021 and has been replaced by the LTI plan.
The deferred variable incentive plan was delivered in the form of an annual grant of security acquisition rights (SARs)
under the deferred security acquisition rights plan (SARs Plan). The SARs will continue to vest under this plan until
September 2024.
When SARs vest, they will convert into ABP securities on a one for one basis or at the Board’s discretion a cash
equivalent amount will be paid.
(b) Summary of Performance Rights granted
Long Term Incentives (LTI)
The following table illustrates movements in LTI during this year:
O pening balance
G ranted during the year
Forfeited during the year
Vested during the year
O uts tanding at the end of the ye ar
Exe rc is able at the end of the ye ar
2 0 2 3
N o.
2 0 2 2
N o.
9 20 ,539
1,422,6 9 8
(77,86 1)
-
2,26 5,376
-
9 20 ,539
-
-
9 20 ,539
-
-
The weighted average fair value of LTI granted during the year was $2.61 (2022: $3.39).
91
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
19. SECURITY BASED PAYMENTS (continued)
(b) Summary of Performance Rights granted (continued)
Deferred Short Term Incentives (Deferred STI)
The following table illustrates movements in Deferred STI during this year:
O pening balance
G ranted during the y ear
Forfeited during the y ear
Vested during the y ear
O uts tanding at the e nd of the ye ar
Exe rc is able at the e nd of the ye ar
2 0 2 3
N o.
2 0 2 2
N o.
-
217,0 46
-
-
217,0 46
-
-
-
-
-
-
-
The weighted average fair value of Deferred STI granted during the year was $2.61 (2022: $3.39).
Security Acquisition Rights (SARs)
The following table illustrates movements in SARs during this year:
Opening balance
Granted during the year*
Forfeited during the year
Vested during the year
Outstanding at the end of the year
Exercisable at the end of the year
2023
No.
2022
No.
2,025,528
1,508,159
-
256,444
(16,185)
-
(812,357) (517,369)
1,508,159
936,061
-
-
* To achieve a closer alignment of interests of securityholders and senior executives, when a tranche of SARs vests, the holder will
be paid in respect of each SAR vesting an amount (a notional distribution) equivalent to the aggregate of the distributions per
Abacus security paid during the period.
The weighted average remaining life of the performance rights (both LTIs and SARs) at 30 June 2023 was 1.7 years
(2022: 1.5 years).
The following table lists the inputs to the model used for the performance rights’ plans for the years ended 30 June
2023 and 30 June 2022:
Expected volatility (%)
Risk-free interest rate (%)
Life of instrument (years)
Model used
2023
2022
22-27
3.25 - 3.40
0.6 - 3.7
Trinomial
32
0.04 - 0.19
1.8 - 3.8
Trinomial
The expected life of the performance rights is based on historical data and current expectations and is not necessarily
indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical
volatility over a period similar to the life of the performance rights is indicative of future trends, which may not
necessarily be the actual outcome.
92
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
20. INTANGIBLE ASSETS AND GOODWILL
Description of the Group’s intangible assets
Abacus Funds Management Limited
Goodwill
Balance at 1 July
At the end of the year
Software
At 1 July, net of accumulated amortisation
Additions
Amortisation charge for the year
At the end of the year, net of accumulated amortisation
Total goodwill and intangibles
Intang ible as e ts and g oodw ill attributable to dis c ontinue d ope rations :
Sto ra g e Kin g C o rp o ra te H o ld in g s L im ited
G oodw ill
B alance at 1 July
At the e nd of the y e ar
B rand and trade mark s w ith inde finite live s
B alance at 1 July
At the e nd of the y e ar
Lic e nc e s and manag e me nt rig hts
B alance at 1 July
Additions
Amortisation charg e for the year
At the e nd of the y e ar, ne t of ac c umulate d amortis ation
S oftw are
At 1 July , net of accumulated amortisation
Additions
Amortisation charg e for the year
At the e nd of the y e ar, ne t of ac c umulate d amortis ation
Total g oodw ill and intang ible s
Notes
2023
$'000
2022
$'000
32,394
32,394
32,394
32,394
280 357
- 122
(211) (199)
69 280
32,463
32,674
N ote s
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
33,132
3 3 ,13 2
33,132
3 3 ,13 2
31,6 29
3 1,6 2 9
31,6 29
3 1,6 2 9
7,376
7,9 0 6
- 1
(532) (531)
7,3 76
6 ,844
89 4
815
19 4
43
(113) (122)
815
89 6
72 ,5 0 1
72 ,9 5 2
Intangible assets of $72.5 million for Storage King Corporate Holdings Limited has been transferred to discontinued
operations (refer to Note 21).
93
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
20. INTANGIBLE ASSETS AND GOODWILL (continued)
Impairment tests for goodwill and intangible assets
(i) Description of the cash generating units and other relevant information
Goodwill and intangible assets acquired through business combinations for the purposes of impairment testing are
allocated to the respective Group’s property / asset management businesses or cash generating units relating to one of
the Group’s segment. The recoverable amount of the unit has been determined based on a fair value less costs of
disposal calculation using cash flow projections as at 30 June 2023 covering a five year period.
(ii) Key assumptions used in valuation calculations
Goodwill and intangible assets – the calculation is most sensitive to the following assumptions:
a. Management and other fee income: based on market rates and revenue / funds under management within the
financial year and the underlying growth rate of 2%.
b. Licence & management and other fee income: based on actual income and revenue within the financial year and
the underlying growth rate of 8%.
c. Discount rates: reflects management’s estimate of the time value of money and the risks specific to each unit
that are not reflected in the cash flows
d. Property values of the funds / properties under management for Abacus Funds Management Limited: based on
the fair value of properties
e. Selling costs: management’s estimate of costs to sell the funds / properties under management
f. For Abacus Funds Management Limited, a pre-tax discount rate of 8.6% (2022: 7.5%) and a terminal growth
rate of 2.6% (2022: 2.0%) have been applied to the cash flow projections for goodwill to reflect the current risk-
free rate.
g. For Storage King Corporate Holdings Pty Limited, a pre-tax discount rate of 8.6% (2022: 7.5%) and a terminal
growth rate of 2.6% (2022: 2.0%) have been applied to the cash flow projections for goodwill and all intangible
assets to reflect the current risk-free rate.
(iii) 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, however, the goodwill valuation as at 30 June 2023 has significant head room
thus no reasonable changes in the assumptions would cause or give rise to an impairment.
94
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
21. DISCONTINUED OPERATIONS
On 16 February 2023, the Group announced its intention to create a new ASX listed Self Storage REIT to be known
as Abacus Storage King REIT (ASK). ASK was established by de-stapling Abacus’ existing Self Storage assets and will
be an externally managed REIT with a majority independent Board of Directors. Abacus will be the manager of ASK
and retain a minority interest of up to 19.9% of the stapled securities in ASK.
The de-stapling of ASK completed on 4 August 2023. At 30 June 2023, the Self Storage business has been
presented as a discontinued operations in the financial report. Associated assets and liabilities were classified as current
assets and current liabilities in the financial report for the year ended 30 June 2023.
The eliminations on the transactions between discontinued operations and continuing operations have been included in
the financial performance and balance sheet.
The financial performance of the discontinued operations segment for the year ended 30 June 2023 was as follows:
Storag e Income
Fee Income
Finance income
Total Re ve nue
O THER IN C O M E
Net chang e in fair value of investment properties held at balance date
Net chang e in fair value of investment held at balance date
Net chang e in fair value of PPE, investments and financial instruments derecog nised
Net chang e in fair value of derivatives
O ther income
Total Re ve nue and O the r Inc ome
Net chang e in fair value of investment properties derecog nised
Storag e expenses
Share of (loss)/profit from equity accounted investments
D epreciation and amortisation expenses
Finance costs
Administrative and other expenses
PRO FIT B EFO RE TAX FRO M D IS C O N TIN U ED O PERATIO N S
2 0 2 3
$ '0 0 0
2 0 2 2
$ '0 0 0
19 0 ,454
16 ,824
450
2 0 7,72 8
16 0 ,538
15,228
5
175 ,771
150 ,30 4
16 ,485
12,254
13,559
11,426
411,75 6
30 5,242
17,286
5,0 33
-
10 ,9 6 1
5 14,2 9 3
(6 0 ) (43)
(42,758) (36 ,276 )
(314)
(3,434) (2,9 32)
(43,80 2) (19 ,343)
(47,6 0 8) (37,30 1)
418,3 9 8
2 73 ,780
-
Income tax expense
N ET PRO FIT AFTER TAX FRO M D IS C O N TIN U ED O PERATIO N S
(10 ,0 20 ) (20 ,472)
3 9 7,9 2 6
2 6 3 ,76 0
95
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
21. DISCONTINUED OPERATIONS (continued)
The major classes of assets and liabilities that are held for distribution as at 30 June 2023 and represent those that will
form ASK are as follows:
Assets
Intangible assets and goodwill
Investment Property
Property, Plant and equipment
Trade and receivables
Equity accounted Investments
Derivative financial instruments
Other financial assets
Other
Cash and cash equivelents
Total assets
Liabilities
Trade and other payables
Provisions
Derivative financial instruments
Deferred tax liabilities
Other liabilities
Interest-bearing liabilities
Total liabilities
Net assets
2023
$'000
72,501
2,612,159
25,982
21,047
16,047
31,612
224,146
5,334
63,588
3,072,416
106,908
4,239
770
47,485
3,947
979,052
1,142,401
1,930,015
The net cash flow for the discontinued operations for the year ended 30 June 2023 were as follows:
Operating
Investing
Financing
Net cash (outflow) / inflow
2023
$'000
2022
$'000
65,273 84,084
(212,204) (565,933)
94,519 561,169
(52,412) 79,320
96
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of Preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001 and Australian Accounting Standards. The financial report has also been
prepared on a historical cost basis, except for investment properties and derivative financial instruments which have
been measured at fair value, interests in joint ventures and associates which are accounted for using the equity
method, and certain investments and financial assets measured at fair value.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars
($'000) unless otherwise stated under the option available to the Group under ASIC Corporations Instrument
2016/191. The Group is an entity to which the instrument applies.
(b)
Statement of Compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting Standards
(IFRS), as issued by the AASB and IASB respectively.
(c)
New accounting standards and interpretations
(i) Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous financial year except for the adoption of new
standards and interpretations effective as of 1 July 2022.
There are several amendments and interpretations apply for the first time on 1 July 2022 as follows, but they do not
have an impact on the consolidated financial statements of the Group.
- AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018–2020 and
Other Amendments (effective for annual reporting periods from 1 January 2022)
The amending standard made amendments to the following standards and conceptual framework:
Reference to the Conceptual Framework – Amendments to AASB 3
The amendments are intended to replace a reference to the Framework for the Preparation and Presentation of
Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting
issued in March 2018 without significantly changing its requirements. The Board also added an exception to the
recognition principle of AASB 3 to avoid the issue of potential ‘day 2’ gains or losses arising for liabilities and
contingent liabilities that would be within the scope of AASB 137 or Interpretation 21 Levies, if incurred
separately.
At the same time, the Board decided to clarify existing guidance in AASB 3 for contingent assets that would not
be affected by replacing the reference to the Framework for the Preparation and Presentation of Financial
Statements. The amendments apply prospectively and they had no impact on consolidated financial statements of
the Group.
97
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c)
(i)
New accounting standards and interpretations (continued)
Changes in accounting policy and disclosures(continued)
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to AASB 116
The amendments prohibit entities deducting from the cost of an item of property, plant and equipment, any
proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be
capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from
selling such items, and the costs of producing those items, in profit or loss.
The amendment must be applied retrospectively to items of property, plant and equipment made available for use
on or after the beginning of the earliest period presented when the entity first applies the amendment. The
amendments had no impact on the consolidated financial statements of the Group.
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to AASB 137
The amendments specify which costs an entity needs to include when assessing whether a contract is onerous or
loss-making. The amendments apply a “directly related cost approach”. The costs that relate directly to a contract
to provide goods or services include both incremental costs and an allocation of costs directly related to contract
activities. General and administrative costs do not relate directly to a contract and are excluded unless they are
explicitly chargeable to the counterparty under the contract.
The Group will apply these amendments to contracts for which it has not yet fulfilled all its obligations at the
beginning of the annual reporting period in which it first applies the amendments.
The amendments had no impact on the consolidated financial statements of the Group.
Fees in the ‘10 per cent’ test for derecognition of financial liabilities (part of annual improvements 2018-2020 cycle) –
Amendment to AASB9
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified
financial liability are substantially different from the terms of the original financial liability. These fees include only
those paid or received between the borrower and the lender, including fees paid or received by either the borrower
or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or
exchanged on or after the beginning of the annual reporting period in which the entity first applies the
amendment.
98
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c)
New accounting standards and interpretations (continued)
(ii) Accounting Standards and Interpretation issued but not yet effective
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 2023. The significant
new standards or amendments are outlined below:
- AASB 2021-2 Amendments to Disclosure of Accounting Policies, Definition of Accounting Estimates and Other
Amendments (effective for annual reporting periods from 1 January 2023)
The amending standard made amendments to the following standards:
Making Materiality Judgements – Disclosure of Accounting Policies – Amendments to AASB 7, AASB 101, AASB 134
Interim Financial Reporting and AASB Practices Statement 2
The amendments to AASB 101 require disclosure of material accounting policy information, instead of significant
accounting policies. Unlike ‘material’, ‘significant’ was not defined in the Australian Accounting Standards.
The amendments to AASB Practice Statement 2 supplement the amendments to AASB 101 by illustrating how
the four-step materiality process can identify material accounting policy information.
Definition of Accounting Estimates – Amendments to AASB 108
The amendments to AASB 108 clarify the definition of an accounting estimate, making it easier to differentiate it
from an accounting policy. The distinction is necessary as their treatment and disclosure requirements are
different. Critically, a change in an accounting estimate is applied prospectively whereas a change in an accounting
policy is generally applied retrospectively.
The new definition provides that ‘Accounting estimates are monetary amounts in financial statements that are
subject to measurement uncertainty.’ The amendments explain that a change in an input or a measurement
technique used to develop an accounting estimate is considered a change in an accounting estimate unless it is
correcting a prior period error.
- AASB 2020-1, AASB 2020-6 Amendments to Australian Accounting Standards - Classification of Liabilities as
Current or Non-current (effective for annual reporting periods from 1 January 2024)
The amendments to paragraphs 69 to 76 of AASB 101 specify the requirements for classifying liabilities as current
or non-current. The amendments clarify:
• What is meant by a right to defer settlement
• That a right to defer must exist at the end of the reporting period
• That classification is unaffected by the likelihood that an entity will exercise its deferral right
• That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a
liability not impact its classification
The amendments are effective for annual reporting periods beginning on or after 1 January 2024 and must be
applied retrospectively. The Group is currently assessing the impact the amendments will have on current practice
and whether existing loan agreements may require amendments.
The amendments are applied prospectively and are not expected to have a material impact on the Group.
99
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. 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, AIT and its subsidiaries, ASPT and its subsidiaries and ASOL and its subsidiaries
collectively referred to as the Group.
Subsidiaries are all those entities over which the Group has power over the investee such that the Group is able to
direct the relevant activities, has exposure or rights to variable returns from its involvement with the investee and has
the ability to use its power over the investee to affect the amount of the investor’s returns.
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.
Non-controlling interests are allocated their share of net profit after tax in the consolidated income statement and are
presented within equity in the consolidated statement of financial position, separately from the equity of the owners
of the parent.
(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 on translation of foreign operations 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 foreign operations 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.
100
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(f) Revenue recognition
Revenue is recognised when performance obligations have been met and is 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:
Rental income
Rental income from investment properties is accounted for on a straight-line basis over the lease term. Lease
incentives granted are recognised as an integral part of the total rental income.
Finance income
Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost or principal 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.
Management and other fee income
Revenue from rendering of services is recognised in accordance with the performance obligations under the terms and
conditions of the service agreements and the accounting standards.
Dividends and distributions
Revenue is recognised when the Group’s right to receive the payment is established.
Net change in fair value of investments and financial instruments derecognised during the year
Revenue from sale of investments is recognised on settlement when all performance obligations under the contract
have been met. Performance obligations are generally considered to have been met at the time of settlement of the
sale. Financial instruments are derecognised when the right to receive or pay cash flows from the financial derivative
has expired or when the entity transfers substantially all the risks and rewards and the performance obligations of the
financial derivative through termination. Gains or losses due to derecognition are recognised in the income statement.
Net change in fair value of investments held at balance date
Changes in market value of investments are recognised as revenue or expense in determining the net profit for the
period.
Sale of inventory
Revenue from property development sales is recognised when the significant risks, rewards of ownership and effective
control has been transferred to the purchaser which has been determined to occur upon settlement and after
contractual duties are completed.
No revenue is recognised if there are significant uncertainties regarding performance obligations, the costs incurred or
to be incurred cannot be measured reliably, there is a risk of return or there is continuing management involvement to
the degree usually associated with ownership.
(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.
101
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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 Statement of Cash Flow, cash and cash equivalents consist of cash and cash equivalents as
defined above.
(i) Trade and other receivables
Trade and other receivables, which generally have 30 day terms, are held to collect contractual cash flows and these
contractual cash flows are solely payments of principal and interest. At initial recognition, these are measured at
amortised cost at the transaction price.
Trade and other receivables are subsequently measured at amortised cost using the effective interest rate method,
reduced by impairment losses. Interest income and impairment losses are recognised in the income statement. The
receivable is written off when there is no reasonable expectation of recovering the contractual cash flows. Any gain or
loss on derecognition is also recognised in the income statement.
In assessing for impairment under AASB 9, the Group assesses on a forward-looking basis the expected credit losses
associated with its financial assets carried at amortised cost. For trade receivables, the Group applies the simplified
approach permitted by the standard, which requires lifetime expected losses to be recognised from initial recognition
of the receivables.
To measure the expected credit losses, trade debtors and other receivables have been grouped based on shared credit
risk characteristics and the days past due. The expected loss rates are based on outstanding balances, days past their
due date and the corresponding historical credit losses experienced. Historical loss rates are adjusted to reflect current
and forward looking information on macroeconomic factors (including GDP) affecting the ability of customers to
settle their debts.
(j) Derivative financial instruments and hedging
The Group utilises derivative financial instruments, both foreign exchange and interest rate derivatives to manage the
risk associated with foreign currency and interest rate fluctuations. Such derivative financial instruments are
recognised at fair value through profit or loss (“FVTPL”).
The Group has set defined policies and implemented hedging policies to manage interest and exchange rate risks.
Derivative instruments are transacted in line with these policies to achieve the economic outcomes in line with the
Group’s treasury and hedging policy. They are not transacted for speculative purposes.
The Group does not employ hedge accounting and as such derivatives are recorded at fair value with gains or losses
arising from the movement in fair values recorded in the income statement.
(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 9 Financial Instruments are classified as either financial assets at fair value
through profit or loss or financial assets at amortised cost. 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 the Group’s investments in listed and unlisted securities have been classified as financial assets at fair
value through profit or loss and property loans are classified as loans and receivables at amortised cost. Property loan
financial assets that have a certain level of profit sharing component that do not meet the solely payments of principal
and interest (SPPI) criterion under AASB 9 are measured at FVTPL.
102
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k) Investments and other financial assets (continued)
Financial assets at fair value through profit or loss
The Group classifies its financial assets that do not meet the SPPI criterion and derivatives at FVTPL.
At initial recognition, the financial asset is measured at its fair value and transaction costs are recognised in profit or
loss as incurred. Financial assets at FVTPL are subsequently measured at fair value. Any gains and losses from changes
in fair value are recognised through profit or loss unless they have been designated and qualify as cash flow or net
investment hedging instruments, where the effective portion of changes in fair value is recognised in either a cash flow
or foreign currency reserve within equity. Any gain or loss on derecognition is recognised in the income statement.
The Group holds investments in listed securities, unlisted securities and enters into loans and receivables with
associated options that provide for a variety of outcomes including repayment of principal and interest, satisfaction
through obtaining interests in equity or property or combinations thereof.
Loans and receivables
Loans and receivables are non-derivative financial assets that are not quoted in an active market with SPPI. 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.
Subsidiaries
Investment in subsidiaries are held at lower of cost or recoverable amount as disclosed within the parent entity note.
(l)
Interest in joint arrangements and associates
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 the lower of cost or recoverable amount in the investing entities.
The Group’s interest in joint operations that give the parties a right to the underlying assets and obligations themselves
is accounted for by recognising the Group’s share of those assets and obligations.
(m) Property, plant and equipment
Property, 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:
Plant and equipment – over 5 to 15 years Right-of-use property – up to 5 years
Impairment
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset
belongs.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or
cash-generating units are written down to their recoverable amount.
The recoverable amount of property (including land and buildings), plant and equipment is the greater of fair value less
costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the assets.
Impairment losses are recognised in the income statement.
103
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Property, plant and equipment (continued)
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.
Other property, plant and equipment are independently valued on a staggered basis every two years unless the
underlying financing requires a more frequent independent valuation cycle.
(n) 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 and property specific conditions at the balance
sheet date. This includes investment properties under redevelopment because fair value can be calculated based on
estimated fair value on completion of redevelopment after allowing for the remaining expected costs of completion
plus an appropriate risk adjusted development margin. Gains or losses arising from changes in the fair values of
investment properties are recognised in the income statement 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 the income statement in the year of retirement
or disposal.
Investment properties under construction are carried at cost until when the construction is near completion (70%-
80% complete) because the fair value of an investment property under construction cannot be reliably measured.
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.
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.
Land and buildings that meet the definition of investment property 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.
Investment properties are independently valued on a staggered basis every two years unless the underlying financing
requires a more frequent independent valuation cycle. 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. Leasing costs and incentives are included in the carrying value of investment property and are
amortised over the respective lease period, either using a straight-line basis, or a basis which is more representative of
the pattern of benefits.
104
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Investment properties (continued)
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.
(o) 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
At the lease commencement date, a right-of-use asset and a corresponding lease liability is recognised.
The liabilities arising from the lease are initially measured on a present value basis. Lease liabilities include the net
present value of future lease payments, less any lease incentives receivable. When adjustments to lease payments
based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Lease
payments are allocated between principal and finance cost.
Right-of-use assets are measured at cost comprising:
– the amount of the initial measurement of the lease liability;
– any lease payments made at or before the commencement date, less any lease incentives received;
– any initial direct costs incurred; and
– any restoration costs.
Right-of-use property assets are measured and classified as either investment property or property plant and
equipment in accordance with the policies above.
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 Group accounts for a modification to an operating lease either due to a change in scope or consideration of the
lease as a new lease from the effective date of the modification, considering any prepaid or accrued lease payments
relating to the original lease as part of the lease payments for the new lease.
(p) 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 8 Operating Segments.
105
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(p) Goodwill and intangibles (continued)
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.
Impairment losses recognised for goodwill are not subsequently reversed.
Intangibles assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired
in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated
intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in
profit or loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are
amortised over the useful economic life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a
finite useful life are reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in
the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in
accounting estimates and adjusted on a prospective basis. The amortisation expense on intangible assets with finite
lives is recognised in the statement of profit or loss as the expense category that is consistent with the function of the
intangible assets.
Intangible assets with indefinite useful lives, such as goodwill, are not amortised but are tested for impairment at each
reporting period, either individually or at the CGU level. The assessment of indefinite life is reviewed at each reporting
period to determine whether the indefinite life continues to be supportable. If not, the change in useful life from
indefinite to finite is made on a prospective basis. Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the carrying amount of the asset and are
recognised in the statement of profit or loss when the asset is derecognised.
Brand and trademarks
The Group acquired the Storage King brand and trademarks as part of the acquisition of the Storage King Group in
November 2020. The brand and trademarks have been registered with the relevant government agency. In a licencing
and management business, brand and trademarks are the most valuable intangible assets and may be renewed at little
or no cost to the Group. As a result, the brand and trademarks are assessed as having an indefinite useful life.
Licencing and management agreements
The Group acquired Storage King’s licencing and management agreements as part of the acquisition of the Storage
King Group in November 2020. Storage King enters into licencing agreements with all its licensees which licensed the
brand and trademarks to its licensees and provides specialist management services pursuant to a separate management
agreement. In turn Storage King generates licencing and management fees income from these agreements.
106
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(p) Goodwill and intangibles (continued)
Software
The Group acquired Storage King’s software as part of the acquisition of the Storage King Group in November 2020.
Storage King has invested in the development of software systems known as the Storage King User Dashboard
(“SKUD”) which transforms data into actionable insights for the licensees, and an e-commerce platform which is fully
integrated with the website and available self storage units in real time to provide an enhanced customer experience.
A summary of the policies applied to the Group’s intangible assets is as follows:
Brand and trademarks
Indefinite
No amortisation
Useful lives
Amortisation method
used
Internally generated
or acquired
Acquired
Licencing and management
agreements
Finite (15 years)
Amortised on a straightline
basis over the period of the
agreements
Acquired
Software
Finite (2-10 years)
Amortised on a
straightline basis over the
useful life
Acquired
(q) 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
non-financial 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 than 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.
(r) 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.
(s) 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-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. Expenses for
non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.
107
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(s)
ii)
Provisions and employee leave benefits (continued)
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.
(t) Distributions and dividends
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 securityholders 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.
(u) 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 are included as part of the carrying amount
of loans and borrowings.
Borrowings are classified as non-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. 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.
(v) 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 securities are shown in equity as a
deduction, net of tax, from the proceeds.
108
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(w) Inventories
Property Development
Inventories are stated at the lower of cost and net realisable value. Net realisable value is determined on the basis of
sales in the ordinary course of business. Expenses of marketing, selling and distribution to customers are estimated
and deducted to establish net realisable value. Where the net realisable value of inventory is less than cost, an
impairment expense is recognised in the consolidated income statement. Reversals of previously recognised
impairment charges are recognised in the consolidated income statement such that the inventory is always carried at
the lower of cost and net realisable value. Cost includes the purchase consideration, development costs and holding
costs such as borrowing costs, rates and taxes.
(x) 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.
Trust income tax
Under current Australian income tax legislation AT, AIT and ASPT are not liable to Australian income tax provided
securityholders 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 and ASOL and its Australian resident wholly-owned
subsidiaries have formed separate tax consolidation groups. AGHL and ASOL have entered into tax funding
agreements with their 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 tax entity and the controlled entities in each tax consolidated group continue to account for their own
current and deferred tax amounts.
In addition to its own current and deferred tax amounts, the head tax entity 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 or payable under the tax funding agreements
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.
109
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(x) Taxation (continued)
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.
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.
New Zealand
The trusts that operate in New Zealand (“NZ”) are treated as a company for NZ income tax purposes and are taxed at
the corporate tax rate of 28% (2022: 28%). NZ income tax paid by the Trusts can be claimed as foreign tax credits to
offset against foreign income and distributable to securityholders. NZ tax losses are carried forward provided the
continuity test of ownership is satisfied. Interest expense from the Trusts are fully deductible subject to thin
capitalisation considerations. Property revaluation gains or losses are to be excluded from taxable income, with no
deferred tax implications as capital gains are not taxed in NZ.
Income derived by companies which are incorporated in Australia and registered in NZ as overseas companies is
exempt from tax in Australia where the income has been taxed in NZ. This income is regarded as non-assessable non-
exempt income. As such, income tax is calculated on the companies’ NZ taxable income and taxed at the NZ
corporate rate of 28% (2022: 28%).
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.
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.
110
NOTES TO THE FINANCIAL STATEMENTS
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22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(y) Earnings per stapled security (EPSS)
Basic EPSS is calculated as net profit attributable to stapled securityholders, 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 securityholders, 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.
(z) Security based payment plans
Executives of the Group receive remuneration in the form of security based payments, whereby Executives render
services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made, using an
appropriate valuation model and is recognised, together with a corresponding increase in other capital reserves in
equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense
recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the
vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest.
The income statement expense or credit for a period represents the movement in cumulative expense recognised as at
the beginning and end of that period and is recognised in employee benefits expense (Note 19).
No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which
vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or
not the market or non-vesting conditions are satisfied, provided that all other performance and / or service conditions
are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the
terms not been modified, if the original terms of the award are met. An additional expense is recognised for any
modification that increases the total fair value of the security based payment transaction, or is otherwise beneficial to
the employee as measured at the date of modification.
When an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not
yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within
the control of either the entity or the employee are not met.
(aa) Non-current assets held for sale or distribution and discontinued operations
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered
principally through a sale transaction or deemed disposal rather than through continuing use. Upon classification as
held for sale, assets of a disposal group are recognised at the lower of carrying amount and fair value less costs to sell
with the exception of investment properties, other financial assets and derivatives which are valued in accordance with
Note 22(n) and Note 22(j) respectively.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for
sale. Assets and liabilities classified as held for sale are presented separately as current items in the statement of
financial position.
A segment, entity or operation disposed of or wound up qualifies as discontinued operations if it is a component of the
Group that represents a separate major line of business or geographical area of operations. Discontinued operations
are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax
from discontinued operations in the statement of profit or loss. Additional disclosures are provided in Note 21. All
other notes to the financial statements include amounts for continuing operations, unless indicated otherwise.
111
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
23. AUDITOR’S REMUNERATION
Amounts received or due and receivable by Ernst & Young Australia:
- Fees for auditing the statutory financial report of the parent covering the Group and
auditing the statutory financial reports of any controlled entities
- Services required by legislation to be provided by the auditor
- compliance services
- Other assurance and agreed-upon-procedures services under other legislation or
2023
$
2022
$
1,125,000 1,075,000
38,915 53,400
contractual arrangements where there is discretion as to whether the service is provided
29,430
159,926
by the auditor or another firm
- Other services
- due diligence services
- Internal audit quality assurance services
Total
24. EVENTS AFTER BALANCE SHEET DATE
Subsequent to the financial year end:
730,000
37,800
-
-
1,961,145
1,288,326
• On 27 July 2023, securityholders voted to de-staple Abacus Storage King which is represented by ASOL and
•
ASPT from Abacus Property Group with the de-stapling being completed on 4 August 2023.
In conjunction with the de-stapling, a fully underwritten 1-for-5.6 pro rata security offer in Abacus Storage
King was completed at an issue price of $1.41 per stapled Abacus Storage King security which raised $225
million.
• Abacus acquired a minority investment of 19.9% of the Abacus Storage King Securities on issue.
Other than as disclosed in this report, there has been no other 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 years, the
results of those operations or the Group’s state of affairs in future financial years.
112
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.
b.
c.
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)
(ii)
giving a true and fair view of the company’s and consolidated entity’s financial position
as at 30 June 2023 and of their performance for the year ended on that date; and
complying with Australian Accounting Standards (including Australian Accounting
Interpretations) and the Corporations Regulations 2001;
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 22(b); and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
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 2023.
On behalf of the Board.
Myra Salkinder
Chair
Sydney, 18 August 2023
Steven Sewell
Managing Director
113
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent auditor’s report to the members of Abacus Group
Holdings Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Abacus Group Holdings Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position
as at 30 June 2023, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Investment Properties
Why significant
How our audit addressed the key audit matter
The Group’s total assets include investment
properties either held directly or through an
interest in Joint Ventures. These assets are
carried at fair value, which was assessed by the
directors with reference to either external
independent property valuations or internal
valuations and are based on market conditions
existing at the reporting date.
As disclosed in Note 5, the valuation of
investment properties is inherently subjective
given there are alternative assumptions and
valuation methods that may result in a range of
values. A small difference in any one of the key
market input assumptions, when aggregated
across all the properties, could result in a
significant change to the valuation of investment
properties.
Two approaches are generally used: the Income
Capitalisation approach and the Discounted Cash
Flow approach to arrive at a range of valuation
outcomes, from which the valuers derive their
best estimate of the value at a point in time.
We have considered this a key audit matter due
to the number of judgments required in
determining fair value. For the same reasons we
consider it important that attention is drawn to
the information in Note 5 in assessing the
property valuations at 30 June 2023.
Our audit procedures included the following:
We discussed the following matters with
management:
movements in the Group’s investment
property portfolio;
changes in the condition of each property
including tenancy matters and development
status;
On a sample basis, we performed the following
procedures for selected properties:
Evaluated the key valuation assumptions and
agreed passing rental income to tenancy
schedules. These assumptions and inputs
included the adopted capitalisation rate and
a number of leasing assumptions including
market and contractual rent, occupancy
rates including forecast occupancy levels,
forecast rent, lease terms, re-leasing costs,
operating expenditure and future capital
expenditure. We assessed the accuracy of
tenancy reports which are used as source
data in the property valuations by testing a
sample of leases to the tenancy reports.
Tested the mathematical accuracy of
valuations.
Involved our real estate valuation specialists
to assist with the assessment of the valuation
assumptions and methodologies.
Where relevant we compared the valuation
against comparable transactions utilised in
the valuation process.
Evaluated the suitability of the valuation
methodology based on the type of asset.
Assessed the qualifications, competence and
objectivity of the valuers.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Discontinued Operations
Why significant
How our audit addressed the key audit matter
On 7 June 2023 the Group announced a
proposed de-stapling of the Group into two
separate entities Completion of the de-stapling
occurred after the reporting date, on 1 August
2023.
Due to the de-stapling the storage business
segment of the Group meets the definition of a
disposal group under Australian Accounting
Standards and accordingly has been classified as
Held for Sale and as a Discontinued Operation at
30 June 2023.
We considered this a key audit matter due to the
number of judgments required in determining
the valuation of assets associated with the
disposal group, the significance of the
transaction to the Group and the nature of the
disclosures required.
For the same reasons we consider it important
that attention is drawn to the disclosure in Note
21 which describes the contribution of the
discontinued operations to the financial
performance and financial position of the Group
as at 30 June 2023.
Our audit procedures included the following:
We reviewed the Group’s assessment that the
storage business segment should be presented
as Held for Sale as at 30 June 2023 in
accordance with the requirements of Australian
Accounting Standards.
We assessed the adequacy of the Group’s
Discontinued Operations disclosures in the
financial report outlined in Note 21.
We assessed whether the transaction costs that
were appropriately included in the Consolidated
Income Statement for the year ended 2023.
The procedures performed with respect to
Investment Property held within the disposal
group were consistent with the procedures
outlined in the Investment Properties Key Audit
Matter section.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2023 annual report other than the financial report and our
auditor’s report thereon. We obtained the directors’ report that is to be included in the annual report,
prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the annual
report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
► Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
► Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 18 to 47 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the Remuneration Report of Abacus Group Holdings Limited for the year ended 30
June 2023, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Anthony Ewan
Partner
Sydney
18 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
ADDITIONAL INFORMATION
Number of holders of ordinary full paid securities
Number of holders holding less than a marketable parcel or ordinary fully paid stapled securities
9,797
1,319
Voting rights attached to ordinary fully paid stapled securities.
One vote per security
Top 20 largest security holdings as at 7 August 2023
HOLDER NAME
NUMBER OF
SECURITIES
% ISSUED
SECURITIES
CALCULATOR AUSTRALIA PTY LIMITED
411,705,733
46.07%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
121,040,594
13.54%
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
88,352,171
9.89%
CITICORP NOMINEES PTY LIMITED
54,865,570
6.14%
CALCULATOR AUSTRALIA PTY LIMITED
51,192,965
5.73%
NATIONAL NOMINEES LIMITED
24,694,507
2.76%
ARYM INVESTMENT HOLDINGS PTY LTD
14,600,000
1.63%
BNP PARIBAS NOMS PTY LTD
11,554,146
1.29%
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
UBS NOMINEES PTY LTD
5,213,956
3,788,323
2,448,761
2,422,512
0.58%
0.42%
0.27%
0.27%
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
2,229,790
0.25%
CHARTER HALL WHOLESALE MANAGEMENT LIMITED
CHARTER HALL WHOLESALE MANAGEMENT LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
WARBONT NOMINEES PTY LTD
NULIS NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS (NZ) LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1,657,026
1,650,000
1,564,869
1,434,039
1,280,244
1,156,402
1,028,531
0.19%
0.18%
0.18%
0.16%
0.14%
0.13%
0.12%
Total Securities of Top 20 Holdings
803,880,139
89.95%
Total of Securities
893,657,633
HOLDERS
NUMBER OF SECURITIES
% ISSUED SECURITIES
Spread of securities as at 7 August 2023
RANGE
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
2,293
3,534
1,863
2,020
100,001-9,999,999,999
95
Totals
9,805
Substantial security holder notices
SECURITYHOLDER
Calculator Australia Pty Limited
929,510
9,758,553
13,569,642
47,292,984
822,106,944
893,657,633
0.10%
1.09%
1.52%
5.29%
91.99%
100%
NUMBER OF SECURITITES
462,898,698