Appendix 4E
Abacus 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)
In August 2023, Abacus Group’s Self Storage business has been de-stapled from the Commercial business to create two separately listed stapled
groups of Abacus Storage King (ASX:ASK) and Abacus Group, respectively. Abacus Group has also changed its ASX code from ABP to ABG.
ABN: 31 080 604 619
Annual Financial Report
For the year ended 30 June 2024
Results for announcement to the market
(corresponding period: year ended 30 June 2023)
Total revenues and other income
up
36.5%
to
$194.1m
Net profit after income tax expense attributable to
stapled security holders
down
10.5x
to
($241.0m)
Funds from operations ("FFO")
(1)
down
52.8%
to
$82.5m
FFO from continuing operations
up
3.2%
to
$81.3m
(1) FFO has been determined with reference to the updated Property Council of Australia’s voluntary disclosure guidelines to help investors and
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.
30 June 2024
30 June 2023
Basic earnings per security (cents)
(26.97)
2.85
Basic funds from operations per security (cents)
9.24
19.58
Basic funds from continuing operations per security (cents)
9.10
8.82
Distribution per security (cents - including proposed distribution)
8.50
18.40
Weighted average securities on issue (million)
893.7 893.5
Distribution
Record date for determining entitlement to the distribution
per stapled security
4.25 cents
1 July 2024
June 2024 half year
This distribution was declared on 20 June 2024 and will be paid on 30 August 2024
Refer to the attached announcement for a detailed discussion of the Abacus Group's results and the above figures for the year ended
30 June 2024.
Total
Half December 2023 distribution
$38.0m
per stapled security
paid 29 February 2024
Details of individual and total distribution payments
4.25
The distribution was paid in full by Abacus Trust which does not pay tax, hence there were no franking credits attached.
Net tangible assets per security
(2)
30 June 2024
$3.70
$1.76
30 June 2023
(2) Net tangible assets per security excludes external non-controlling interest. The Group has lost control of Abacus Storage Operations Limited
and its controlled entities, and Abacus Storage Property Trust and its controlled entities during the period.
Distribution Reinvestment Plan (DRP)
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 2024
1
ANNUAL FINANCIAL REPORT
30 JUNE 2024
Directory
Abacus Group Holdings Limited
Directors of
ABN: 31 080 604 619
Abacus Group Holdings Limited:
Abacus Group Projects Limited
ABN: 11 104 066 104
Abacus Funds Management Limited
ABN: 66 007 415 590
Myra Salkinder, Chair
Steven Sewell, Managing Director
Trent Alston
Mark Haberlin
Sally Herman
Jingmin Qian
Registered Office:
Level 13, 77 Castlereagh Street
SYDNEY NSW 2000
Company Secretary:
Belinda Cleminson
Tel: (02) 9253 8600
Auditor (Financial and Compliance Plan):
Fax: (02) 9253 8616
Website: www.abacusgroup.com.au
Ernst & Young
200 George Street
SYDNEY NSW 2000
Custodian:
Perpetual Trustee Company Limited
Level 12 Angel Place
123 Pitt 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
2
AUDITOR’S INDEPENDENCE DECLARATION
51
CONSOLIDATED INCOME STATEMENT
52
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
53
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
54
CONSOLIDATED STATEMENT OF CASH FLOW
56
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
57
NOTES TO THE FINANCIAL STATEMENTS
59
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
110
DIRECTORS’ DECLARATION
111
INDEPENDENT AUDITOR’S REPORT
112
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 and Abacus Income Trust as at 30 June 2024. It is also recommended that the report be considered together with any public announcements made by
the Abacus Group in accordance with its continuous disclosure obligations arising under the Corporations Act 2001.
2
DIRECTORS’ REPORT
30 JUNE 2024
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”), and Abacus Group Projects Limited
(“AGPL”) present their report for the year ended 30 June 2024.
PRINCIPAL ACTIVITIES AND STRUCTURE
The principal activities of Abacus Group during the year were investment in Commercial properties (office and other).
Abacus 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 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 Group is a diversified property group that operates predominantly in Australia. It comprises AGHL,
AT, AIT and AGPL (collectively “Abacus” or “the Group”) and its securities trade on the Australian Securities
Exchange (“ASX”) as ABG. Abacus was listed on the ASX in November 2002 and its market capitalisation was over
$1.0 billion at 30 June 2024. Abacus Group is included in the S&P/ASX 300 A-REIT index (ASX:XPK), a sub-index
of the S&P/ASX 300 index that contains the listed vehicles classified as A-REITs.
In August 2023, Abacus Group’s Self Storage business was de-stapled from the Commercial business to create two
separately listed stapled groups of Abacus Storage King (ASX:ASK) and Abacus Group, respectively. Abacus Group
also changed its ASX code from ABP to ABG.
Shares in AGHL, AGPL and units in AT, AIT have been stapled together so that none can be dealt with without the
others and are traded together on the ASX as Abacus Group securities. An Abacus Group security consists of one
share in AGHL, one unit in AT, one share in AGPL and one unit in AIT. A transfer, issue or reorganisation of a share or
unit in any of the component parts 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 and AGPL are companies that are incorporated and domiciled in Australia. AT and AIT are Australian
registered managed investment schemes. AFML is the Responsible Entity of AT and AIT. AFML is incorporated and
domiciled in Australia and is a wholly owned subsidiary of AGHL.
Abacus Group Consolidation
AGHL (the company) has been identified as the parent entity of the Group. The financial report of the Group for the
year ended 30 June 2024 comprises the consolidated financial reports of AGHL and its controlled entities, AT and its
controlled entities, AIT and its controlled entities, AGPL and its controlled entities, and also includes Abacus Storage
Property Trust (“ASPT”) and its controlled entities and Abacus Storage Operations Limited (“ASOL”) until 3 August
2023, as ASPT and ASOL were destapled from the Group on this date.
3
DIRECTORS’ REPORT
30 JUNE 2024
OPERATING AND FINANCIAL REVIEW
GROUP OVERVIEW
Abacus Group completed a transformational de-staple in FY24, taking effect on 3 August 2023 to create a
standalone Self Storage REIT, Abacus Storage King (ASX:ASK) (‘ASK’). Post de-staple, Abacus Group is the
manager of the ASK and following the transaction also remains invested with a strategic stake of 19.8% of ASK. This
strategic stake is the largest asset on Abacus’ balance sheet as its largest source of income, both through distributions
received and from the fees it earns providing management services to ASK.
As a standalone entity, the Abacus has a more focused portfolio of Commercial assets and is well positioned to drive
income growth over the short to medium term. Abacus has limited capital expenditure forecast in the near term, with
major capital projects completed in recent periods, positioning the portfolio for growth. Looking forward, we expect
these investments to contribute positively to FFO as leasing up is achieved.
The Group looks for investments in the Commercial 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 Group has a track record of acquiring property-based assets and actively managing those assets to enhance
income and thereby drive 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 Group 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 high interest rates. This may provide Abacus
Group 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.
4
DIRECTORS’ REPORT
30 JUNE 2024
GROUP RESULTS SUMMARY
The rising cost of capital and changing macroeconomic environment increased capitalisation rates throughout the
Commercial property sector. Abacus Group’s diversified Commercial portfolio of high quality assets has enabled us to
maintain occupancy rates over the period with our principal Commercial portfolio recording 94.2% (2023: 95.1%). 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.
2024
2023
Revenue ($ million)*
168.5
152.0
Total income ($ million)*
194.1
142.2
Statutory net profit/(loss) ($ million)
(241.0)
25.5
Funds from continuing operations ($ million)
81.3
78.8
Funds from continuing operations per security (cents)
9.10
8.82
Funds from operations ($ million)
82.5
175.0
Funds from operations per security (cents)
9.24
19.58
Underlying EBIT ($ million)
122.7
210.0
Underlying EBIT per security (cents)
13.73
24.82
Distributions per security (cents)
8.50
18.40
Interest cover ratio
2.5x
3.9x
Weighted average securities on issue (million)
893.7
893.5
*Excludes income from discontinued operations.
The Group earned a statutory net profit/(loss) after tax of $241.0 million for the year ended 30 June 2024 (2023:
$25.5 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 contribution from discontinued operations from $263.8 million in 2023 to $1.0 million in
2024 as entities were de-stapled in August 2024;
a decrease in the fair value of the Commercial investment property portfolio by $275.4 million (2023: loss of
$247.6 million) with capitalisation rates expanding 79bps to 6.5%; as well as
an increase in finance costs to $41.6m (2023: $9.9m) following increases in interest rates in response to a
high inflationary environment
Despite the above economic headwinds, Abacus Group’s portfolio remained resilient recording FFO growth from
continuing operations of 3.2% and a full year distribution per security, in line with guidance, of 8.50cps (2023:
18.4cps).
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.
5
DIRECTORS’ REPORT
30 JUNE 2024
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 the following to
statutory net profit after tax:
-
Tenant incentive amortisation
-
Depreciation on owner occupied property, plant & equipment (PP&E)
-
Change in fair value of investment properties derecognized
-
Restructuring 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:
2024
2023
$'000
$'000
Consolidated statutory net profit after tax attributable to continuing operations
(241,989) (238,265)
Adjust for:
Net change in fair value of investment properties derecognised
8,244 9,097
Net change in fair value of investment properties held at balance date
275,407
247,617
Net change in fair value of investments and financial instruments held at balance date
1,798
854
Net change in fair value of investment properties included in equity accounted investments
(2,266)
15,954
Net change in fair value from deconsolidation
5,614
-
Depreciation and amortisation
236
912
Net change in fair value of derivatives
13,992 20,220
Amortisation of rent abatement incentives
14,495
13,480
Amortisation of other tenant incentives, finance costs and other
601
3,794
Cost associated with de-stapling
3,552 4,097
Straightline of rental income
(989)
(2,127)
Movement in lease liabilities
- (511)
Net tax expense on non-FFO Items
2,648
3,718
Abacus funds from operations ("FFO") from continuing operations
81,343
78,840
Abacus funds from operations ("FFO") from discontinued operations
1,191
96,142
Total Abacus FFO
82,534
174,982
2024
2023
Basic earnings per security (cents)
(27.08)
2.85
FFO per security (cents)
9.24
19.58
FFO from continuing operations per security (cents)
9.10
8.82
Distribution per security (cents - including proposed distribution)
8.50
18.40
Weighted average securities on issue (million)
893.7
893.5
This reconciliation has not been reviewed by the Group’s auditor.
6
DIRECTORS’ REPORT
30 JUNE 2024
GROUP RESULTS SUMMARY (continued)
Capital management and allocation
In December 2023, ABG successfully re-negotiated and agreed terms on its syndicated banking facility to increase
the limit by $125 million, increasing its overall facility limits to $1,182.8 million and extending its facility tranches tenor
on average by a further six months.
During the year Abacus Group divested two properties for total consideration of $108.4 million. The divested
properties are listed below:
•
63 Ann Street, Surry Hills NSW ($32.3 million)
•
Ashfield Mall, Ashfield NSW ($76.1 million)
Abacus Group also acquired two properties in FY24 for total consideration of $82.5 million. The acquired properties
are listed below:
•
North Sydney NSW ($10.5 million), which is included in the 99 Walker Street, Sydney property for simplicity
given it is immaterial from a valuation and operational perspective in the context of the portfolio
•
Myer, Melbourne VIC, ($72.0 million), representing acquisition of a further one sixth share in the property
Key capital metrics of the Group are:
FY241
FY23
Total assets ($ million)
$2,626.3
$5,606.2
Gearing (%)
33.8%
33.2%
Net assets ($ million)
$1,607.1
$3,361.7
Net tangible assets ($ million)
$1,575.9
$3,302.3
NTA per security ($)
$1.76
$3.70
1.
In August 2023, Abacus Group’s Self Storage business has been de-stapled from the Commercial business to create two
separately listed stapled groups of ASK and Abacus Group, respectively.
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 40%. The de-stapling is expected to provide balance sheet capacity to Abacus Group to fund
growth initiatives including acquisitions and developments.
7
DIRECTORS’ REPORT
30 JUNE 2024
KEY SEGMENT RESULTS SUMMARY
The Commercial portfolio consists of 19 assets (FY23: 21 assets) and had a total value of $2.2 billion at year end
(FY23: $2.5 billion).
The Commercial portfolio has a stable income growth profile, supported by high occupancy of 94.2% and a diversified
lease profile of 4.3 years.
FY24
FY23
Portfolio Value ($ million)
$2,207.6
$2,533.8
Number of assets
19
21
Occupancy1 (% by area)
94.2%
95.1%
WALE1
4.3 years
4.3 years
WACR2
6.46%
5.71%
1. Excludes development affected assets
2. WACR: Weighted Average Capitalisation Rate
3. Excludes cash and other non-property assets.
Office
The Office sector continued to face challenges throughout FY24 as the future role of the office continues to take
shape and bond yields remained elevated, negatively impacting valuations. These factors contributed to capitalisation
rate expansion throughout the Office sector.
Pleasingly, our Office portfolio of 14 assets (FY23: 15 assets) was relatively resilient to the market challenges, with
occupancy holding relatively steady at 93.4% (FY23: 95.0%) and strong like for like income growth of 4.7% in FY24,
up from 1.7% in FY23. The resilience in our occupancy and income growth levels were supported by our diversified
lease profile with WALE of 3.7 years (FY23: 3.7 years) and high-grade Office buildings, as well as high quality fit outs
and amenity upgrades completed in the period that have proven attractive to potential tenants.
Pleasingly, the Group achieved strong leasing outcomes in FY24 on key spec fit outs completed during HY24.
At 201 Elizabeth Street, Sydney NSW occupancy increased from 49.6% as at HY24 to 78.2% as at 31 July 2024
(+2,860bps), with over 13,400sqm of leasing achieved since HY24. The WALE of 201 Elizabeth Street has increased
to 4.9 years as at 31 July 2024 (FY23: 3.5 years) as a result of leasing activity in the period.
At 77 Castlereagh Street, Sydney NSW occupancy increased from 77.6% as at HY24 to 95.0% as at 31 July 2024
(+1,740bps), with over 3,400sqm of leasing achieved since HY24. The WALE has increased from 3.6 years in FY23
to 4.4 years as at 31 July 2024.
DIRECTORS’ REPORT
Key Commercial Metrics
Portfolio geographic diversification
Office Lease Expiry
NSW 42%
QLD 23%
VIC 28%
SA 4%
ACT 3%
6%
1%
12%
14%
14%
19%
34%
Vacant
Short Term
FY25
FY26
FY27
FY28
FY29+
NSW
QLD
VIC
SA
ACT
8
DIRECTORS’ REPORT
30 JUNE 2024
KEY SEGMENT RESULTS SUMMARY (continued)
Retail
The Retail sector saw strong momentum during FY24, with high occupancies throughout our portfolio of three assets.
Abacus Group’s FY24 Retail occupancy rate was high at 96.1% (FY23: 95.2%), with a weighted average lease expiry
of 5.8 years (FY23: 5.8 years).
Storage
The Group earned $14.5 million in ASK fees ($11.3 million from management fees and $3.2 million from development
fees). ASK reported strong RevPAM growth in established stores of +4.6% compared to FY23.
Other ASK operational highlights include the successful delivery of three new operating stores, adding 22,000 sqm of
NLA (3% of portfolio). And the acquisition of eight operating stores and three development sites, adding 35,100 sqm
of NLA (5% of portfolio). Abacus continues to view the Self Storage sector favourably and is positioned to benefit
from ASK’s various growth initiatives moving forward.
Commercial Valuations
The Commercial investment property portfolio was revalued at year end which resulted in a loss of $275.4 million. The
investment property portfolio’s overall weighted average capitalisation rate expanded 79 basis points from 5.71% in
FY23 to 6.50% in FY24. The Commercial portfolio (excluding equity accounted properties) was valued at $1.9 billion
at 2024 year-end across 16 assets (FY23: $2.1 billion across 18 assets).
As part of the portfolio valuation process for the year ended 30 June 2024, 63% of investment properties (excluding
equity accounted properties) were independently valued (FY23: 100%).
As a result of current market conditions and a shift in future expectations in the Office sector, Abacus Group 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.
ESG
Throughout FY24 the Group continued to build on embedding sustainable practices across the business and
undertook a detailed review of our strategic approach to sustainability. Highlights from FY24 include:
•
A 36% reduction in emission intensity from our FY19 baseline1;
•
Average NABERS Energy Rating of 4.8 stars;
•
Climate Active certification on two of our assets at 99 Walker Street and 51 Allara Street.
Supporting our people remains an important focus and our recent employee survey results showed 94% of our team
members believe that Abacus is committed to the health and safety of its employees.
Looking forward to FY25, our focus is on the use of renewable energy as our electricity contracts are renewed and
assessing other potential opportunities to drive improvements across our portfolio as well ensuring we are prepared for
Australian Sustainability Reporting Standard set to apply from July 2027.
1 Commercial assets under Abacus Group’s ownership and control.
9
DIRECTORS’ REPORT
30 JUNE 2024
FUTURE PROSPECTS
Abacus Group will continue targeting the acquisition of well located Commercial properties with future income growth
potential, that will be held for the long term as a high conviction owner and manager of assets. Increasing exposure to
this asset class is expected to enhance Abacus Groups’ ability to grow recurring revenue over the longer term, while
continuing to divest remaining non-core assets in the portfolio.
Abacus Group’s forecast level of gearing and liquidity since 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. There is limited capital expenditure forecast in the medium term and the Group also expects to benefit
by way of management and equity earnings from its strategic stake in Abacus Storage King. We also not that Abacus
Group’s liquidity can potentially be further leveraged, to invest in a larger number of projects through joint venture
arrangements.
RISK MANAGEMENT
Abacus has a Business Risk Management Policy which provides a framework to identify, assess, monitor, and manage
material risks to its operations, which was approved by the Board in June 2022. The Business Risk Management Policy
is based on ISO 31000:2018 Risk Management Guidelines, an internationally recognised set of principles for
managing risks in organisations.
Through application of our risk management process, we have identified the material risks being significant areas of
uncertainty or exposure, at a whole-of-entity level, that could adversely affect the achievement of our objectives and
future financial prospects. These risks are described below, together with key mitigations to manage them.
10
DIRECTORS’ REPORT
30 JUNE 2024
RISK MANAGEMENT (continued)
Key Risks and Mitigations
MACROECONOMIC ENVIRONMENT
Description
Mitigations
Global economic volatility and adverse economic conditions
such as rising interest rates and inflation outside of the RBA’s
target range, present a risk to our asset valuations, pressure
on operating costs and our tenants and customers demand
and consumption levels, which can impact the delivery of the
Group’s strategy and financial performance.
–
Disciplined approach to capital
management and managing risk exposure
through treasury management practices
–
Diversification of property locations across
Australia
–
Robust annual budgeting process
–
Abacus closely monitors tenancy demand
levels and adjusts pricing and incentives in
response
–
A Treasury Management Committee
provides oversight of capital management
and further engages an independent
treasury advisor
HEALTH, SAFETY AND WELLBEING OF OUR EMPLOYEES, SUPPLIERS, CUSTOMERS AND TENANTS
Description
Mitigations
Our office buildings and shopping centres, in conjunction
with self-storage facilities that are managed within the
Abacus Storage King portfolio, have operational hazards that
need to be managed on a day-to-day basis including traffic
management, contractor management and safe use of plant
and equipment in conjunction with monitoring and
certification of safety compliance. The associated risks
include harm to people, reputational damage, civil and
criminal penalties impose and cost and efforts to remediate.
–
Abacus Group management foster a
culture of promoting the importance of
health, safety and wellbeing
–
During the year a programme of work to
improve our processes and systems has
been progressed and we continue to make
improvements to support risk mitigation,
building on 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
–
Workplace health and safety matters are
also monitored by the Audit and Risk
Committee and WHS and Sustainability
Committee, subcommittees of the Board
11
DIRECTORS’ REPORT
30 JUNE 2024
RISK MANAGEMENT (continued)
Key Risks and Mitigations (continued)
CONSUMER AND WORKING BEHAVIOUR AND COMPETITION
Description
Mitigations
Subdued consumer and business sentiment has the potential
to reduce the demand for office and retail space at our
properties. The demand for office space is also affected by
changes in the ways of working with increased working from
home. Lower demand has the potential to reduce effective
rental levels through higher tenant incentives and higher
costs of office fit outs.
–
Abacus continues to engage with its
customers to understand their needs adapt
appropriately in order to respond to
changes in consumer and working
behaviour
–
Abacus continues to engage with its
tenants and monitor changes in asset
performance. Abacus also maintains a
disciplined acquisition process.
CYBERSECURITY
Description
Mitigations
A cybersecurity breach or disruption to our information
technology applications and infrastructure can limit
operational activity, and potential disclosure of confidential
and personal information which could result in reputational
damage, and regulatory and legal restrictions and penalties.
–
During the year a programme of work to
improve our processes and systems was
completed and we continue to make
improvements to our processes and
systems and ongoing training for our staff
–
Existence of recovery plans over
information and active monitoring of our
digital footprint
–
The Group has insurance cover in place to
help mitigate the effects of a potential
cyber-attack
12
DIRECTORS’ REPORT
30 JUNE 2024
RISK MANAGEMENT (continued)
Key Risks and Mitigations (continued)
MANAGEMENT OF ABACUS STORAGE KING
Description
Mitigations
Abacus is the manager of Abacus Storage King. The Group is
required to adhere to the agreements in place with a failure
to fulfil obligations resulting in reputational damage and a loss
of fees from management arrangements. The obligations of
the Group include:
Corporate strategy: Make recommendations in relation
to ASK’s corporate strategy and portfolio composition
and prepare ASK’s business plan, forecasts and budgets.
Capital transactions: Identify acquisition, development
and divestment opportunities, undertake due diligence
and source funding. Prepare and deliver capital
expenditure plans.
Development management: Manage and deliver
development projects and oversee implementation of
capital expenditure at the sites.
Investor relations: Provide information necessary for
reporting to ASK securityholders and liaise with ASK
securityholders and sell-side research.
Financial reporting: prepare statutory and management
accounts for ASK reporting and prepare reporting suite
for ASX disclosures, ASK Board and Abacus
management.
Regulatory functions: engage with ASX and deliver on
ASK’s requirements under the Listing Rules.
Back office corporate functions: Deliver tax, treasury
and accounting services, capital raising preparation and
valuations, risk and compliance and insurance services
and strategic oversight of Storage King.
–
Abacus has procedures and controls in
place to ensure that the services are
delivered in accordance with the contracts
in exchange for the management fees that
are charged to ASK
–
The Board of the Group has oversight of
service delivery in accordance with the
management arrangement and relationship
with the Board of Abacus Storage King
13
DIRECTORS’ REPORT
30 JUNE 2024
RISK MANAGEMENT (continued)
Key Risks and Mitigations (continued)
STRATEGIC EXECUTION
Description
Mitigations
The Group’s activities and transactions are aligned with the
approved strategy to ensure that financial and operational
results are within expected and planned outcomes. The
execution of the strategy incorporates key decisions
regarding acquisitions, disposals, capital management and
valuations to ensure the best risk adjusted returns are
achieved. The failure to execute the Group’s strategy could
result in a lower than expected return on capital and reduced
investor sentiment.
–
The Abacus Board and management review
and confirm Abacus’ strategy and risk
profile on a periodic basis, with controls in
place to ensure the strategic direction of
the Group is maintained
–
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
ASSET QUALITY AND MAINTENANCE
Description
Mitigations
Operational assets, including those under management, are
required to be maintained to legislated standards, and in
accordance with asset management protocols. A failure to
maintain assets to required standards can result in financial
penalties and the non-operation of assets resulting in a lack
of access for tenants. This could further cause reputational
damage hindering the ability to attract future tenants.
–
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
–
There are dedicated assets managers to
ensure asset quality is maintained and
continually improved in order to meet the
needs of current and future tenants
–
Abacus has documented processes for the
assessment of capital expenditure,
development activities and property
acquisitions and disposals
14
DIRECTORS’ REPORT
30 JUNE 2024
RISK MANAGEMENT (continued)
Key Risks and Mitigations (continued)
FUNDING AND MANAGEMENT OF CAPITAL AND LIQUIDITY
Description
Mitigations
The availability of funding and management of capital and
liquidity are important requirements to fund business
operations and growth. An inability to secure equity
contributions or external borrowings can reduce the returns
on investment and limit the capacity to execute on the
Group’s overall strategy.
–
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
PEOPLE RETENTION AND TALENT
Description
Mitigations
The motivation, high-performance and capability of Abacus’
people are integral to the success of its business outcomes.
The inability to attract and retain skilled team members who
are integral to the execution and delivery of strategic
programs and business operations could result in increased
workforce costs, and decreased productivity.
–
Abacus has a number of controls,
processes, and strategies in place to ensure
people recruited are aligned to the Group’s
culture and are continually developed to
meet the needs of the business and ensure
appropriate succession planning
–
Abacus regularly monitors and maintains a
positive workplace culture in line with its
values.
–
All staff are required to adhere to the Code
of Conduct
REGULATORY AND POLICY CHANGES
Description
Mitigations
The inability to identify and respond to regulatory and policy
change could have an adverse impact on Abacus’ operations
through increased compliance costs and regulatory
restrictions impacting on business operations.
–
Abacus has a number of controls and
arrangements in place to ensure
compliance with its legal and regulatory
obligations. Aspects include monitoring,
testing, and reviewing through dedicated
compliance plans, which are also subject to
external review
15
DIRECTORS’ REPORT
30 JUNE 2024
RISK MANAGEMENT (continued)
Key Risks and Mitigations (continued)
SUSTAINABILITY
Description
Mitigations
Sustainability encompasses all Environmental, Social and
Governance (‘ESG’) risks across the business. Climate
change is expected to affect Abacus’ assets while also
presenting an opportunity to prepare for and build resilience
across its portfolio. The associated risks are higher operating
costs or requiring remedial capital costs, leading to a potential
devaluation of assets, reputational damage if tenants assets
are damaged, and reduced investor sentiment. There are
additional risks associated with the adherence to relevant
laws, with modern slavery representing a major risk in this
area.
–
Abacus continues to progress its
governance policies and procedures
regarding ESG risks across the business and
given the growing importance as it impacts
all facets of the business, it remains a key
focus area for the Group’s Executive
Committee and the Abacus Board
–
Net zero emissions target by 2030, with
climate related risks being a consideration
in all investment decisions across the
business
–
Abacus also practices strong governance
throughout the business, with robust
governance policies in place that provide
the framework for decision-making within
the Group. The Group has developed and
implemented a number of controls and
strategies to ensure that environmental
issues are incorporated into decision-
making processes 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 specific policies to mitigate
social risks, such as modern slavery
16
DIRECTORS’ REPORT
30 JUNE 2024
DIRECTORS AND SECRETARY
The qualifications, experience and special responsibilities of the Directors and Company Secretary are as follows:
Myra Salkinder MBA, BA
Chair (non-executive)
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 Sustainability and WHS Committee and Nomination Committee.
Tenure: 13 years 3 months
Steven Sewell BSc
Managing Director
Steven joined Abacus 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 Group’s business and sector specialised
investment strategies, capital allocation and developing third party capital relationships. Steven was appointed Abacus
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 Group Nomination Committee.
Tenure: 6 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 Group People Performance Committee and a member of the Abacus Group Audit and
Risk Committee and Nomination Committee.
Tenure: 4 year 9 months
17
DIRECTORS’ REPORT
30 JUNE 2024
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 Group Audit and Risk Committee and a member of the Abacus Group People
Performance Committee and Nomination Committee.
Tenure: 5 years 7 months
Sally Herman BA, GAICD
Sally is a Non-Executive Director and joined the Abacus 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 Group People Performance Committee, Sustainability and WHS Committee and
Nomination Committee.
Tenure: 1 year and 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. Jingmin previously worked at L.E.K. Consulting, Boral Limited and Leighton
Holdings, with a broad range of commercial responsibilities covering strategy, planning, investment review, mergers
and acquisitions, operational improvement and Asia expansion. 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, a director of the CFA Society Australia, Jing
Meridian and the National Vice President of the Australia China Business Council. Jingmin is a member of Chief
Executive Women.
Jingmin is Chair of the Abacus Group Sustainability and WHS Committee and a member of the Abacus Group Audit
and Risk Committee and Nomination Committee.
Tenure: 7 years
Mark Bloom BCom, B.Acc, CA (retired 3 August 2023)
Mark was a Non-Executive Director and was the Lead Independent Director. Mark retired from the role of Non-
executive director on 3 August 2023.
Mark was a member of the Abacus Group Audit and Risk Committee and a member of the Abacus Group People
Performance Committee and Nomination Committee.
18
DIRECTORS’ REPORT
30 JUNE 2024
DIRECTORS AND SECRETARY (continued)
Belinda Cleminson
Company Secretary
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.
Directors’ Meetings
The number of meetings of directors (including meetings of committees of directors) of AGHL, AFML (the
Responsible Entity of AT and AIT), and AGPL, held during the year and the number of meetings attended by each
director were as follows:
Audit & Risk
People
Performance
Sustainability
& WHS
Board
Committee
Committee
Committee
Eligible
Attended
Eligible
Attended
Eligible
Attended
Eligible
Attended
M Salkinder
6
6
4
4
-
-
4
4
T Alston
6
6
4
4
3
3
4
4
M Bloom
-
-
-
-
1
1
1
1
M Haberlin
6
6
4
4
3
3
3
3
J Qian
6
6
4
4
3
3
4
4
S Sewell
6
6
4
4
3
3
1
1
S Herman
6
6
4
4
3
3
4
4
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.
19
DIRECTORS’ REPORT
30 JUNE 2024
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 FY24.
The report summarises Abacus’ performance and
remuneration outcomes for FY24, the executive
remuneration framework, and changes to FY24
executive and non-executive remuneration.
FY24 De-stapling and Performance
Abacus has an asset backed, annuity style business
model where capital is directed towards property assets
that provide potential for enhanced income growth to
create value. Our people, market insight and positioning
capability together with strategic partnering are key
enablers of our strategy.
During FY24 our Storage King assets were de-stapled
from Abacus Group to create a separate ASX listed
entity. The separation permitted greater transparency of
operations and financial performance for the two
primary asset groups within our portfolio with differing
valuation profiles. For continuity, the Abacus MD, as
well as nominated other executives, remained
accountable for managing the two ASX listed entities,
for which the Abacus Group receives a management
fee.
In the last 12 months Abacus has undertaken the
strategic repositioning of itself as an active investor and
manager of a primarily eastern seaboard focused
Commercial portfolio as well as an external manager of
the new ASX listed Self Storage REIT, Abacus Storage
King (ASK).
Despite the challenging office leasing market, the Group
achieved a high level of leasing in FY24, with 40,878
sqm leased across 95 deals (FY23: 94 deals). Office
occupancy as at June 2024 was 93.4 per cent and the
portfolio WALE was maintained at 3.7 years. Pleasingly,
since our half year update, we have increased the
occupancy at 201 Elizabeth Street and 77 Castlereagh
Street, Sydney by 29% and 17%, respectively.
The above performance has meant that, despite the high
inflationary environment, and the 13 cash rate rises since
May 2022, Abacus has been able to deliver an increase
in Funds from Operations (FFO) from continuing
operations by 3.2% to $81.3m.
FY24 Remuneration
During FY24, the Committee commissioned and
reviewed independent research to benchmark the
Managing Director’s (MD’s) and the Executives’
remuneration against an industry peer group.
The MD’ remuneration was last reviewed in FY21.
Based on this work, the Group’s relative position to its
peers, and the increased complexity of the MD’s role
managing two ASX listed property groups, it was
resolved to increase the MD’s fixed remuneration by 4%
in FY24.
The Chief Financial Officer’s (CFO) fixed remuneration
was increased by 10%.
For other Executive KMP, the Board resolved to
increase the fixed remuneration for FY24 by 4% for the
Chief Investment Officer and General Counsel (CIO).
The CEO’s STI maximum opportunity increased from
120% of fixed remuneration to 150% and the LTI
maximum opportunity increased from 100% of fixed
remuneration to 120%. The maximum STI opportunity
for other Executive KMP was increased to 100% of FR.
FY24 STI awards for Executive KMP correlated with
annual performance outcomes against expectations,
with payments averaging 75.7% of maximum STI. 25%
of Executive KMP STI is deferred for a further 12
months. Further details on the STI Plan can be found in
the section 4: Executive KMP Remuneration.
The first tranche of the FY22 LTI grant for the MD will
vest in August 2024 based on combined Underlying
Earnings before Interest and Tax (EBIT) CAGR and
Relative Total Securityholder Return (Relative TSR) for
Abacus Group and Abacus Storage King. EBIT CAGR
requirements were met in full which will result in full
vesting for the rights contingent on this measure.
Relative TSR performance was below the 50th
percentile of the peer group, resulting in nil vesting for
the rights contingent on this measure. Total vesting of
the first tranche will be 50% of maximum.
20
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
The legacy Executive Incentive Plan (“Security
Acquisition Rights” or “SARs”) is expected to vest in
September 2024 as a result of sustained performance
since grant. This is the last remaining tranche of this
plan, and it has been replaced by the LTI Plan.
The Board uses LTI awards to align interests of
Executive KMP with those of securityholders. The
Board also recognises the important role ABG has in
managing ASK. Having regard for these considerations,
the FY24 LTI award will be tested against performance
measures based on ABG EBIT per security CAGR,
ABG Relative TSR, and ASK Relative TSR.
More details of the new arrangements are outlined in
the remuneration governance and framework section.
FY24 KMP Changes
From 3 August 2023, Nikki Lawson became Fund
Manager of ASK in addition to her role of Group
General Manager, Strategy Self Storage.
In August 2023, as part of de-stapling implementation,
Mark Bloom resigned from the Abacus Group Board
after two years of service and remains as a Non-
Executive Director on the ASK Board. I, along with my
fellow directors, would like to sincerely thank Mark for
his valuable contribution and leadership during his time
on the Abacus Board.
Looking Ahead
We will be seeking approval for incentive arrangements
at the AGM, as, in good faith, Abacus Group manages
through the Storage King de-stapling for our common
securityholders. The AGM Notice of Meeting will
describe in more detail our conviction that certain
incentive arrangements will deliver continued success
from our de-stapling initiative.
It has been a significant year for Abacus Group and the
Board acknowledges the dedication of the team in a
challenging environment.
Trent Alston
Chair – People Performance Committee
21
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
The Board presents the FY24 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 2024.
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
PAGE
1.
Who is covered in this report- KMP
21
2.
Remuneration Snapshot FY24
22
3.
FY24: How did we perform?
25
4.
Executive KMP remuneration
27
5.
Remuneration governance and framework
31
6.
Non-Executive Director remuneration
45
7.
Additional required disclosures
49
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.
Table 1 - Non-Executive Directors (NED)
NON EXECUTIVE DIRECTOR
ROLE
RESIGNED
Myra Salkinder
Chair of the Board
Trent Alston
Non-Executive Director
Mark Bloom
Non-Executive Director
3 August 2023
Mark Haberlin
Non-Executive Director
Sally Herman
Non-Executive Director
Jingmin Qian
Non-Executive Director
Table 2 - Executive KMP
EXECUTIVE KMP
ROLE
COMMENCED
Steven Sewell
Managing Director
Evan Goodridge
Chief Financial Officer (CFO)
Nikki Lawson
Group General Manager, Self Storage and
Fund Manager ASK
3 August 2023
Gavin Lechem
Chief Investment Officer and General
Counsel (CIO)
22
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
2. REMUNERATION SNAPSHOT FY24
The Abacus Performance and Reward framework aims to reward, engage, and develop our people focusing on, value
creation for our customers and community.
1This reflects 50% (Tranche 1) of the FY22 Grant for the Managing Director.
2This reflects a 33.33% (Tranche 2) of the FY22 Grant for the CIO and CFO as this was granted prior to them becoming KMP.
2.1 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.
FIXED
REMUNERATION
Effective 1 July 2023:
The MD and the CIO
received a 4% fixed
remuneration
increase.
The CFO received a
10% fixed
remuneration
increase.
SHORT TERM INCENTIVE
The maximum STI opportunity
for the MD was increased to
150% of FR. The STI outcome in
FY24 was 71.6% of maximum for
the MD.
The maximum STI opportunity
for other Executive KMP was
increased to 100% of FR. The
average STI outcome in FY24
was 77% of maximum.
25% of awarded STI has been
deferred for 12 months for all
Executive KMP.
Vesting outcomes for the FY23
deferred STI grant vested at
100% for the MD, CIO, and
CFO.
LONG TERM INCENTIVES
The maximum LTI opportunity
for the MD was increased to
120% of FR.
The maximum LTI opportunity
for the CIO and the CFO was
increased to 100% and for the
GGM, Self Storage and Fund
Manager, ASK increased to
75% of FR.
All Executive KMP have a
portion of their FY24 LTI
opportunity contingent on
Abacus Storage King
performance (20% of FR).
Vesting outcomes for the FY22
LTI grant was half of the
maximum for the MD, CIO,
and CFO.1 , 2
23
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
The Abacus Performance and Reward strategy is guided by the following principles:
Reward
Reward and promote the results
and behaviours consistent with the
Abacus purpose, objectives, and
values.
Balance
Balanced between financial
performance, strategic priorities,
and continued focus on increasing
engagement of our people.
Alignment
Alignment of interests to
stakeholders to focus on long term
sustainable value creation.
2.2 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 an annuity style business model where capital is directed towards assets that provide potential for
enhanced income growth and ultimately value creation. 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 FY24. The remuneration mix is weighted towards variable remuneration.
Managing Director maximum pay mix.
Other Executive KMP maximum pay mix.
Fixed Remuneration
Max STI Cash
Max STI Deferral
Max LTI
24
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
2.3 FY24 Remuneration Framework
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.
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.
Short Term Incentive (STI)
To focus performance on key annual financial
and non-financial KPIs, including FFO profit.
STI for Executive KMP is delivered through 75%
in cash and 25% deferred in the form of rights
to securities.
The rights will have a deferral period of 12
months.
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 following factors are among those considered by the People &
Performance Committee (PPC) in making its assessment on the
achievement of the STI opportunity:
Financial performance.
Strategic objectives.
Environment, Social and Governance objectives.
The STI is measured over a one-year performance period.
The value of STI awards offered in FY24 was up to a maximum of
150% of FR for the MD, and 100% for the remaining Executive KMP.
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.
LTI granted are in the form of performance rights.
Performance rights are subject to three independent performance
conditions:
-
EBIT per security CAGR Abacus Group (ABG)
-
Relative TSR Abacus Group (ABG)
-
Relative TSR Abacus Storage King (ASK)
For the Executive KMP, 50% of the performance rights are tested on
the third anniversary of the grant date and 50% on the fourth
anniversary of the grant date
The maximum LTI opportunity in FY24 was 120% of FR for the MD,
100% of FR for the CFO and the CIO, and 75% of FR for the Fund
Manager, ASK.
25
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
3. FY24: HOW DID WE PERFORM?
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 FY24 performance and the
Company’s five year financial performance outcomes.
Abacus’ FY24 FFO result exceeded target. During the period, the Group continued to make significant progress
delivering on its business priorities as well as completing its strategic repositioning of becoming the external manager
of ASK. Of note, the Group:
successfully de-stapled and created the new ASX listed Self Storage REIT known as Abacus Storage King
(ASK);
successfully completed a pro rata equity raising in ASK raising proceeds of approximately $225 million – with
over half of the proceeds raised used to repay Abacus Group’s outstanding loan;
received 260.8 million securities (valued at $418.7 million as at FY24) as part of the de-stapling process;
undertook the role of external manager for Abacus Storage King receiving management and development
fees of $14m;
divested $111m of non-core assets at 7% below carrying value with a further $60m exchanged post year end in
line with book value, to ensure Abacus Group’s balance sheet remains strong with gearing well below the
Board’s [revised] target gearing limit of 40%;
increased its ownership in the Myer Centre, Melbourne to 50% with a call option to acquire an additional
16.7%;
maintained high levels across its Commercial portfolio occupancy at 93.4% despite the office leasing
environment remaining challenging;
continued to progress its net zero emissions target for Scope 1 and 2 by 2030;
successfully re-negotiated and agreed terms on its syndicated banking facility to extend its debt tenor and
increase its limit by $125 million;
revised its distribution policy, with the intention to distribute excess franking credits to securityholders over
the medium term; and
achieved high level of employee engagement.
26
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
3.1 Five year FFO performance
*FFO earnings are unaudited.
**Excludes the FFO performance of the ASK entities which formed part of Abacus Group until August 2023.
3.2 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
2020
2021
2022
2023
2024
Abacus funds from operations ("FFO") from
continuing operations per security (cents)*
12.66
10.24
7.32
8.82
9.10
FFO (total earnings) per security (cents)**
19.38
18.40
19.01
19.58
9.24
FFO Profit $m
125.2
136.4
160.9
175.0
82.5
Distributions paid and proposed (cents)
18.50
17.50
18.00
18.40
8.50
Closing security price (30 June)
$2.68
$3.15
$2.57
$2.69
$1.16
Net Tangible Assets per security***
$3.32
$3.43
$3.85
$3.70
$1.76
Weighted average securities on issue
643.0m
741.1m
846.3m
893.5m
893.7m
*Excludes the FFO performance of the ASK entities which formed part of Abacus Group until August 2023
**FFO earnings are unaudited.
***Net tangible assets per security include the impact of the fair value movements.
0
2
4
6
8
10
12
14
16
18
20
2020
2021
2022
2023
2024
Cents per security
FFO (total earnings)*
Abacus funds from operations ("FFO") from continuing operations per security (cents)**
27
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
4. EXECUTIVE KMP REMUNERATION
4.1 MD FY24 Remuneration details – Target and maximum remuneration in FY24
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 150%
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
Fixed Remuneration
STI Cash
STI Deferral
LTI
The following sets out the awards made to the Managing Director for the year ended 30 June 2024.
FIXED REMUNERATION
FR OF $1,300,000 PER ANNUM
SHORT TERM
INCENTIVE (STI)
Maximum STI of $1,950,000 (150% of FR)
The balanced scorecard was based on the following:
-
Financials 60%
-
Strategy 30%
-
Environment, Social, Governance 10%
The Managing Director received 71.6% of his maximum STI for FY24.
75% or $1,047,682 of this was received in cash and 25% or $349,227 has been
received in rights and deferred for one year.
LONG TERM INCENTIVE
(LTI)
Maximum LTI of $1,560,000 (120% of FR)
100% of the LTI is granted as performance rights.
-
50% of the rights will be tested against performance requirements in FY26.
-
50% of the rights will be tested against performance requirements in FY27.
-
500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000
MD at Maximum
MD at Target
$
28
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
4.2
FY24 Managing Director STI Outcome
The following table sets out the performance of the MD against his KPI’s for the year ended 30 June 2024
(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.
Table 4 – Managing Director’s performance against KPI’s.
COMPONENT
FY24 KPI’S
WEIGHT
% OF
MAX
PERFORMANCE DETAIL
Financial
Performance
Funds from
Operations (FFO)
ABG
50%
78.6%
Above FFO Target, achieving $82.5m or
9.24 cps which was above FY23.
A DPS of 8.5 cps which was in line with the
target rate.
Funds from
Operations (FFO)
ASK per security
10%
55.0%
Delivered a cps of 6.3 in the first year as a
listed REIT.
Strategic
Abacus Storage
King business model
and strategy
10%
90.9%
The ASK business model and strategy has
been further developed and endorsed,
ensuring we remain competitive and
innovative in the market.
ABG Commercial
Strategy
20%
59.1%
Substantive progress made in the recycling of
non-core office and commercial assets.
Strong balance sheet management with
resultant sound leverage.
ESG
Environment, Social
and Governance
10%
59.1%
Development of a sustainability strategy
which is aligned to future business direction,
incorporating cross functional teams.
The balanced scorecards for other Executive KMPs during FY24 are similar to that of the MD, in that both the
financial and ESG components and weightings are the same, but with strategic KPIs applicable to their individual roles.
During the financial year the Board resolved to convert the ASK FFO measure to ASK FFO per security to better
align with reporting to investors. No change to performance requirements were made other than converting targets to
an FFO per security basis.
29
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
4.3
Executive KMP FY24 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 2024.
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
Financial
60%
1,170,000
74.7%
873,955
218,488
25.3%
Strategic
30%
585,000
69.7%
407,727
101,932
30.3%
ESG
10%
195,000
59.1%
115,227
28,807
40.9%
Total
100%
1,950,000
71.6%
1,396,909
349,227
28.4%
Evan
Goodridge
Financial
60%
330,000
79.8%
263.200
65,800
20.2%
Strategic
30%
165,000
75.8%
125,000
31,250
24.2%
ESG
10%
55,000
67.3%
37,000
9,250
32.7%
Total
100%
550,000
77.3%
425,200
106,300
22.7%
Nikki Lawson
Financial
60%
345,000
79.8%
275,164
68,791
20.2%
Strategic
30%
172,500
72.7%
125,455
31,364
27.3%
ESG
10%
57,500
67.3%
38,682
9,670
32.7%
Total
100%
575,000
76.4%
439,300
109,825
23.6%
Gavin
Lechem
Financial
60%
393,120
79.8%
315,543
78,386
20.2%
Strategic
30%
196,560
75.8%
148,909
37,227
24.2%
ESG
10%
65,520
67.3%
44,077
11,019
32.7%
Total
100%
655,200
77.3%
506,529
126,632
22.7%
30
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
4.4
Executive KMP remuneration details – statutory table
Table 6 – Executive KMP remuneration
NAME
YEAR
SHORT TERM BENEFITS
POST-
EMPLOY
MENT
LONG
TERM
BENEFIT
SECURITY BASED
PAYMENT
TOTAL
Base Pay
Short Term
Incentive
(STI)
Non-
monetary
benefits
Total cash
payments
and short-
term
benefits
Super
Long
Service
Leave
Deferred
STI
Rights2
Rights2
$
Steven
Sewell
FY24
1,272,601
1,047,682
11,857
2,332,141
27,399
25,718
351,848
1,029,385
3,766,490
FY23
1,224,708
929,940
9,455
2,164,103
25,292
20,261
348,097
937,292
3,495,045
Evan
Goodridge
FY24
522,500
318,900
-
841,400
27,500
18,484
98,521
212,864
1,198,769
FY23
472,500
238,329
-
710,829
27,500
26,377
39,722
116,822
921,250
Nikki
Lawson1
FY24
497,405
329,475
-
826,880
24,887
9,084
54,912
78,075
993,839
FY23
-
-
-
-
-
-
-
-
-
Gavin
Lechem
FY24
627,500
379,897
-
1,007,397
27,500
15,411
122,498
299,643
1,472,449
FY23
602,500
302,980
-
905,480
27,500
29,551
99,219
227,230
1,288,980
1Remuneration reflects period of service as Executive KMP.
2Accrued not presently entitled. Includes both LTI and Executive Incentive plan (SAR’s).
4.5
Executive KMP remuneration details – realised remuneration table
This section provides details of the cash and value of other benefits received by the Executive KMP. This is a voluntary
disclosure to provide securityholders with increased clarity and transparency in relation to Executive KMP
remuneration.
Actual pay in Table 7 below represents the pre-tax take home amounts by each Executive KMP for the financial years
ended 30 June 2024. This consists of cash remuneration that was received in relation to FY24 which includes Fixed
pay and the non-deferred portion of any FY24 STI which will be received. The table also includes the value of the
deferred STI awards from FY22 which vested during FY24 and prior year SAR’s and LTI awards which vested during
FY24 based on share price at vesting/exercise date.
Table 7 – Executive KMP remuneration
Name
Year
Fixed Pay $
Short Term
Incentive
(STI)
received as
cash $
Previous
years DSTI
which were
realised $
Previous
years LTI
and SARs
which were
realised $
Total
remuneration
received and
or realised $
Awards
which lapsed
or were
forfeited $
Steven Sewell
FY24
1,300,000
1,047,682
330,984
717,588
3,396,254
(218,965)
Evan Goodridge
FY24
550,000
318,900
84,775
64,155
1,017,830
(14,014)
Nikki Lawson1
FY24
522,292
329,475
-
50,401
902,168
(30,964)
Gavin Lechem
FY24
655,000
379,897
109,275
161,636
1,305,808
(41,663)
1Remuneration reflects period of service as Executive KMP effective 3 August 2023.
31
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
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 stakeholders.
32
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.1.
The Group’s remuneration governance
The People Performance Committee is responsible for making recommendations to the Board on the remuneration
arrangements for non-Executive directors and executives.
BOARD
PEOPLE, PERFORMANCE COMMITTEE
(PPC)
MANAGEMENT
Ensuring that the Abacus
group remuneration framework
is aligned with the group’s
purpose, values, strategic
objectives, and risk appetite.
Determining Non-Executive
Directors and Executive
remuneration.
Monitoring performance of the
Managing Director and
executive team in their
implementation of the strategy
and overseeing succession
plans for the key management
team.
Review and approve the Group’s remuneration
policy to ensure remuneration is competitive in the
market and effectively designed to attract,
motivate, and retain team members.
Reviewing and recommending to the Board
arrangements for the Executive KMP and the
Executive committee in relation to their terms of
employment, remuneration and participation in the
Groups incentive programs (including
performance targets).
Review and approve the structure of short- term
incentive plans annually to ensure they are
effectively designed to reward the achievement of
business and individual objectives equitably.
Review the design of long term incentives annually
to ensure its design meets the Groups objectives,
is aligned with industry standards and is within the
groups cost parameters.
Recommend and implement
the Abacus Group’s
remuneration policies and
practices ensuring ease of
understanding.
Providing information relevant
to remuneration decisions and
making recommendations.
Recommend and implement a
remuneration framework that is
fit for purpose.
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.
33
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.2.
Remuneration framework
Short Term Incentive (STI)
What is the
purpose of the
short-term
incentive (STI)
plan?
The STI provides an incentive to deliver annual business plans that will lead to sustainable 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.
25% of any STI awarded to Executive KMP is deferred in the form of Rights with a 12-month
vesting period to provide increased alignment with securityholders.
What is the
performance
period?
1 July 2023 to 30 June 2024.
What is the award
opportunity?
For FY24 the target and maximum STI opportunity for Executive KMP as a percentage of FR were:
% of FR
MD
Other Executive KMP
Target
75%
60%
Maximum
150%
100%
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 ESG performance
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.
34
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.2.
Remuneration framework (continued)
Short Term Incentive (STI)
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 ABG 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 equal to accrued and reinvested distributions only on performance rights that vest.
Are there any
disqualification
provisions?
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:
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.
35
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.2.
Remuneration framework (continued)
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.
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 is the
payment vehicle?
LTI awards are granted in the form of performance rights. Performance rights that vest subject to
ABG performance conditions entitle executives to receive Abacus Group securities or, at the
discretion of the Board, cash of equivalent value at exercise.
Performance rights that vest subject to ASK performance conditions will be settled in cash of
equivalent value to be invested in ASK securities within 12 months of vesting.
What is the
maximum
opportunity?
The maximum opportunity for the MD is 120% of FR and for other Executive KMP it ranges from
75% to 100% of FR.
How are the
grants calculated?
The number of performance rights that are granted to each participant is calculated by dividing the
maximum LTI opportunity (face value) by the face value of an Abacus security. The face value is
based on the 10-day VWAP for Abacus securities measured from the second trading day after the
full year results announcement for the year ended 30 June 2023 were released to the market.
What are the
performance
periods, vesting
periods and
exercise periods?
The performance 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, 50% of the performance rights are tested on the third anniversary of the
grant date and 50% on the fourth anniversary of the grant date.
Rights that vest subject to ABG performance conditions can be exercised up to 15 years from the
grant date. Rights that vest subject to ASK performance conditions can be exercised up to 12
months from the vesting date.
36
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.2.
Remuneration framework (continued)
Long Term Incentive (LTI)
What are the
performance
conditions for
FY24?
The performance rights are subject to the following three independent performance conditions
(with a percentage of total performance rights granted to be separately tested against each
performance condition) that will be tested separately at the end of each of the applicable
performance periods:
Performance Condition
Weight (MD grant)
ABG EBIT per security CAGR
41.67%
ABG Relative TSR
41.67%
ASK Relative TSR
16.66%
ABG EBIT per security CAGR is measured based on the compound annual growth rate in earnings
before interest and tax (EBIT) configured on a per security basis. The FY23 base year EBIT per
security for performance measurement is 13.0 cps.
ABG and ASK Relative Total Securityholder Return (TSR) is measured by taking into account the
change in the ABG/ASK security price over the relevant performance period as well as the
distributions received (and assumed to be reinvested into ABG/ASK securities on the ex-dividend
date). Tax and any franking credits (or equivalent) will be ignored. This outcome will then be tested
against a comparator group.
The performance requirements for each measure are as follows:
ABG EBIT per Security CAGR
Percentage % of Rights that vest
Less than 2%
0%
2%
50%
2 - 6%
Pro rata vesting from 50% to 100%
6%
100%
ABG / ASK Relative TSR percentile rank
Percentage % of Rights that vest
< 50th
0%
50th
50%
> 50th to 75th
Pro rata vesting from 50% to 100%
75th and above
100%
Why were these
measures chosen?
Growth in EBIT per security reflects management operational performance.
Relative TSR provides alignment with outcomes for securityholders that invest in the A-REIT
sector.
The comparator group for both the Abacus Group and Abacus Storage King Relative TSR
conditions is outlined below and has been derived from the ASX200 A-REIT’s.
37
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.2.
Remuneration framework (continued)
Long Term Incentive (LTI)
Who is the
comparator group
for FY24?
The Board has determined the comparator group for the FY24 LTI for the Relative TSR test for
each of Abacus Group and Abacus Storage King to be:
-
BWP Trust (BWP)
-
Charter Hall Retail REIT (CQR)
-
Cromwell Property Group (CMW)
-
Dexus Property Group (DXS)
-
GPT Group (GPT)
-
Growthpoint Properties (GOZ)
-
Mirvac Group (MGR)
-
National Storage REIT (NSR)
-
Scentre Group Limited (SGC)
-
Region Group (RGN)
-
Stockland (SGP)
-
Vicinity Centres (VCX)
Do we allow for re-
testing?
No.
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.
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.
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?
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.
Abacus Security
Trading Policy
In accordance with Abacus’ Trading Policy, no director, employee, or associate may trade in ABG
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.
38
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
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.
5.3.
Security based payments
Tables 8, 9 and 10 outline the FY24 LTI grant reflecting the three new performance hurdles, the movements in LTI
holdings of Executive KMP and the vesting outcomes for the year. Following this, Legacy Plans are shown from tables
11 to 16.
Table 8 – Performance Long term Incentive Plan Grants
Participant
LTI max as
a % of FR
Performance
measure
Number of
performance
rights granted
Fair value per
performance
right
Total estimated
fair value
Steven Sewell –
Managing Director
50
EBIT per security
560,345
1.03
576,819
50
ABG Relative TSR
560,345
1.03
576,819
20
ASK Relative TSR
224,138
1.16
258,879
Total
120
1,344,828
1,412,518
Evan Goodridge – Chief
Financial Officer
40
EBIT per security
189,655
1.03
195,231
40
ABG Relative TSR
189,655
1.03
195,231
20
ASK Relative TSR
94,828
1.16
109,526
Total
100
474,138
499,988
Nikki Lawson – Group
General Manager, Self
Storage and Fund
Manager ASK
27.5
EBIT per security
136,314
1.03
140,322
27.5
ABG Relative TSR
136,315
1.03
140,323
20
ASK Relative TSR
99,138
1.16
114,504
Total
75
371,767
395,149
Gavin Lechem – Chief
Investment Officer and
General Counsel
40
EBIT per security
225,931
1.03
232,573
40
ABG Relative TSR
225,931
1.03
232,573
20
ASK Relative TSR
112,916
1.16
130,418
Total
100
564,778
595,565
1EBIT CAGR is Underlying Earnings before Interest and Tax Compound Annual Growth Rate.
2Relative TSR is Relative Total Securityholder Return.
3ASK Relative TSR will be cash settled.
39
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
Table 9 – 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.
KMP
BALANCE
1 JULY 20231
GRANTED AS
REMUNERATION
NO. LAPSED
DURING THE
YEAR1
LTIS EXERCISED
BALANCE
30 JUNE 20241
Steven Sewell
(Managing Director)
823,852
1,331,895
(95,344)
-
2,060,403
Evan Goodridge
122,462
427,347
(6,102)
-
543,707
Nikki Lawson
377,556
33,100
(18,141)
-
392,515
Gavin Lechem
183,948
516,143
(13,483)
-
686,608
Total
1,130,262
2,308,485
(133,070)
-
3,683,233
1Number of Abacus securities include participants receiving an entitlement equal to accrued and reinvested distributions only on performance
rights that vest.
Table 10 – Movements in LTI holdings (ASK cash securities) 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 20231
GRANTED AS
REMUNERATION
NO. LAPSED
DURING THE
YEAR1
LTIS EXERCISED
BALANCE
30 JUNE 20241
Steven Sewell
(Managing Director)
-
241,112
-
-
241,112
Evan Goodridge
-
102,010
-
-
102,010
Nikki Lawson
-
106,645
-
-
106,645
Gavin Lechem
-
121,521
-
-
121,521
Total
-
571,288
-
-
571,288
1Number of securities include participants receiving an entitlement equal to accrued and reinvested distributions only on performance rights that
vest.
5.4.
Legacy Plans
a) Impact of De-stapling on Abacus Group Incentive Awards
This Section outlines the approved treatment by securityholders of the Abacus Group Incentive Awards on foot for
employees that, on de-stapling implementation, either continued to be employed by Abacus Group or be employed
by Abacus Storage King but continue to hold relevant Abacus Group Incentive Awards.
40
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.4.
Legacy Plans (continued)
The Abacus Group Board 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.
Legacy Plans FY22 and FY23
What are the
performance
conditions for grants
in FY22 & FY23?
The performance rights are subject to two independent performance conditions (with a percentage
of total performance rights granted to be separately tested against each performance condition)
that will be tested separately at the end of each of the applicable performance periods:
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).
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
has been adjusted and reset to commence on the 1st August 2023.
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.
Combined EBIT Growth outcome
Percentage % of Rights that vest
<3%
0%
3%
50%
>3% to 8%
Pro rata vesting from 50% to 100%
8%
100%
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).
ASK/ABG Relative TSR percentile rank
Percentage % of Rights that vest
< 50th
0%
50th
50%
> 50th to 75th
Pro rata vesting from 50% to 100%
75th and above
100%
Who is the
comparator group?
The Board has determined the comparator group for the Relative TSR test for each of Abacus
Group and Abacus Storage King to be:
-
BWP Trust (BWP)
-
Charter Hall Retail REIT (CQR)
-
Cromwell Property Group (CMW)
-
Dexus Property Group (DXS)
-
GPT Group (GPT)
-
Growthpoint Properties (GOZ)
-
Mirvac Group (MGR)
-
National Storage REIT (NSR)
-
Scentre Group Limited (SGC)
-
Region Group (RGN)
-
Stockland (SGP)
-
Vicinity Centres (VCX)
41
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.4.
Legacy Plans (continued)
Table 11 – Grant date fair value and maximum value for LTI grants*
EXECUTIVE
KMP
YEAR2
GRANT
DATE
SECURITY
PRICE $
NUMBER OF LTI RIGHTS
GRANTED
PERFORMANCE PERIOD
MAXIMUM
GRANT DATE
FACE VALUE $
ABG
ASK
Steven
Sewell
FY23
2.74
228,102
228,102
1 July 2022 to 30 June 2025
1,250,000
228,102
228,102
1 July 2022 to 30 June 2026
FY22
3.40
183,824
183,824
1 July 2021 to 30 June 2024
1,250,000
183,824
183,824
1 July 2021 to 30 June 2025
Evan
Goodridge1
FY23
2.74
45,621
45,621
1 July 2022 to 30 June 2025
250,000
45,620
45,620
1 July 2022 to 30 June 2026
Gavin
Lechem
FY23
2.74
57,482
57,482
1 July 2022 to 30 June 2025
315,000
57,482
57,482
1 July 2022 to 30 June 2026
FY22
3.40
25,995
25,995
1 July 2022 to 30 June 2024
265,148
25,995
25,995
1 July 2022 to 30 June 2025
25,995
25,995
1 July 2022 to 30 June 2026
1 Remuneration reflects period of service as Executive KMP.
2 The FY23 grant was issued on 23 December 2022 (FY22: November 2021).
On 1 July 2024 the Managing Director became entitled to the first tranche for the FY22 LTI Plan. Executive KMP
became entitled to both the second tranche of the FY22 LTI Plan and the first tranche of the FY23 LTI plan (Grants
were made prior to them becoming KMP).
42
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.4.
Legacy Plans (continued)
Table 12 - FY22 & FY23 Vesting Outcome
PERFORMANCE
MEASURE
WEIGHTING
MINIMUM
(50% vests)
MAXIMUM
(100% vests)
GROUP RESULT
VESTING
OUTCOME
FY221
FY232
EBIT CAGR
50%
3%
8%
12.5%
8.2%
50%
Relative TSR
50%
50th percentile
75th percentile
<50th
<50th
0%
Overall Result
50%
1For the FY22 grant this is the first tranche for the Managing Director as KMP.
2For Executive KMP the FY23 grant is only applicable to Nikki Lawson for her time as non KMP.
b) 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.
43
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.4.
Legacy Plans (continued)
Table 13 – Grants under the Executive Incentive Plan (Legacy SARs)
EXECUTIVE KMP
YEAR
VESTING DATE
NO. EXERCISED DURING THE YEAR1
NO. LAPSED
DURING THE
YEAR
ABG
ASK
Steven Sewell
2021
09/2023
96,825
96,825
-
2020
09/2023
59,222
59,222
-
Evan Goodridge
2021
09/2023
9,840
9,840
-
2020
09/2023
6,768
6,768
-
Gavin Lechem
2021
09/2023
27,061
27,061
-
2020
09/2023
16,920
16,920
-
Table 14 – The value of SARs granted, exercised, and lapsed during the year.
EXECUTIVE KMP
VALUE OF SARS GRANTED
DURING THE YEAR $
VALUE OF SARS
EXERCISED DURING THE
YEAR $
VALUE OF SARS LAPSED
DURING THE YEAR $
Steven Sewell
-
428,154
-
Evan Goodridge
-
45,629
-
Gavin Lechem
-
120,706
-
Total
-
594,489
-
There were no alterations to the terms and conditions of the SARs since their grant date.
Refer to Note 18 for details on the valuation of the Long Term and Deferred Variable Incentive Plan, including models
and assumptions used.
44
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.4.
Legacy Plans (continued)
Table 15 – Securities acquired on exercise of SARs.
EXECUTIVE KMP
SECURITIES
ACQUIRED
(NUMBER)
SECURITIES
ACQUIRED
(NUMBER)
PAID PER SECURITY $
PAID PER SECURITY $
ABG
ASK
ABG
ASK
Steven Sewell
185,107
185,107
1.08
1.23
Evan Goodridge
19,727
19,727
1.08
1.23
Gavin Lechem
52,185
52,185
1.08
1.23
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 16 – 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
2023
GRANTED AS
REMUNERATION
SARS EXERCISED
BALANCE 30 JUNE 2024
Steven Sewell
296,116
7,799
(185,107)
118,808
Evan Goodridge
31,100
701
(19,727)
12,074
Gavin Lechem
83,320
2,070
(52,185)
33,205
Total
410,536
10,570
(257,019)
164,087
Other than disclosed in the ASX market, there have been no movements in holdings since 30 June 2024.
5.5.
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.
45
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
5.5.
Minimum security holding requirement for Executive KMP (continued)
Table 17 – Executive KMP ownership – security holdings detail as at 30 June 2024
EXECUTIVE KMP
BALANCE
1 JULY 2023
VESTED/EXERCISED
RIGHTS
PURCHASE / SALES
BALANCE
30 JUNE 2024
Steven Sewell (MD)
866,125
597,692
51,598
1,515,415
Evan Goodridge
90,927
111,069
-
201,996
Nikki Lawson
-
21,924
-
21,924
Gavin Lechem
338,224
188,750
-
526,974
Table 18 Executive KMP ownership – Minimum security holding detail as at 30 June 2024
EXECUTIVE KMP
BALANCE
30 JUNE 2024
MSH REQUIREMENT
MSHR ASSESSMENT DATE
Steven Sewell (MD)
$2,405,121
$1,300,000
Aug-27
Evan Goodridge
$338,002
$275,000
Aug-27
Nikki Lawson
$25,322
$287,500
Aug-27
Gavin Lechem
$989,994
$327,500
Aug-27
Unvested rights are not included in the calculation of the minimum holding of securities.
6. NON-EXECUTIVE DIRECTOR REMUNERATION
6.1.
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.
46
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
6.2.
Fee Structure and Policy
The following table outlines the Non-Executive Directors (NEDs) fee policy and any changes introduced for FY24.
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.
Non-Executive Director
fees reviews
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
There were no changes to the Board base fees and committee fees in FY24. There
are no planned changes to the Board base fees and committee in FY25.
Refer to Table 19 for details of FY24/FY25 fees.
The aggregation of all Board and committee fees for FY24 and FY25, 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.
47
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
6.2.
Fee Structure and Policy (continued)
Table 19 –Non-Executive Director fee levels (inclusive of superannuation) – Abacus Group
BOARD/COMMITTEE
ROLE
FY24/FY25
PER ROLE $
TOTAL
Board
Chair
$252,000
$252,000
Non-Executive Director
$113,000
$565,000
Audit and Risk Committee
Chair
$27,300
$27,300
Non-Executive Director
$12,285
$36,855
Work, Health Safety and
Sustainability Committee
Chair
$21,000
$21,000
Non-Executive Director
$10,500
$10,500
People Performance
Committee
Chair
$23,000
$23,000
Non-Executive Director
$11,250
$33,750
Total
$969,405
Table 20 –Non-Executive Directors’ remuneration details – Abacus Group
NON-EXECUTIVE
DIRECTOR
FY
BASE FEES
NON-
MONETARY
BENEFITS
TOTAL CASH
PAYMENTS AND
SHORT-TERM
BENEFITS
SUPERANNUATION
$
Myra Salkinder (Chair)1
FY24
245,757
-
245,757
6,243
252,000
FY23
252,000
-
252,000
-
252,000
Trent Alston
FY24
133,590
-
133,590
14,695
148,285
FY23
134,195
-
134,195
14,090
148,285
Mark Bloom2
FY24
11,587
-
11,587
1,275
12,862
FY23
123,561
-
123,561
12,974
136,535
Mark Haberlin
FY24
136,531
-
136,531
15,018
151,550
FY23
137,149
-
137,149
14,401
151,550
Sally Herman3
FY24
131,460
-
131,460
3,340
134,800
FY23
66,078
-
66,078
6,938
73,016
Jingmin Qian
FY24
131,789
-
131,789
14,497
146,285
FY23
132,384
-
132,384
13,901
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.
3Sally Herman was appointed 16 December 2022.
48
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
6.3.
Minimum security holding requirement for Non-Executive Directors FY24
The Board 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.
From FY24 the minimum security holding is to be achieved progressively by the 4th anniversary of the later of the de-
stapling of Abacus Group and Abacus Storage King or the date of their appointment as a Director.
NON-
EXECUTIVE
DIRECTOR
BALANCE 1
JULY 2023
PURCHASE /
SALE
BALANCE 30
JUNE 2024
MSHR
ASSESSMENT
MSHR
POLICY
MSHR
ASSESSMENT
DATE
Myra Salkinder
(Chair)
14,802,171
-
14,802,171
$23,572,839
$252,000
Aug-27
Trent Alston
45,250
-
45,250
$116,203
$148,285
Aug-27
Mark Haberlin
42,292
-
42,292
$107,928
$151,550
Aug-27
Sally Herman
18,150
71,950
90,100
$114,903
$134,800
Aug-27
Jingmin Qian
45,167
-
45,167
$102,517
$146,285
Aug-27
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.
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 2024.
49
DIRECTORS’ REPORT
30 JUNE 2024
REMUNERATION REPORT (continued)
7. ADDITIONAL REQUIRED DISCLOSURES
7.1.
Executive KMP employment terms
The total remuneration package is reviewed annually, and the key terms are summarised below:
KMP
TERM OF
AGREEMENT
NOTICE
PERIOD (BY
COMPANY OR
BY EMPLOYEE)
POST-
EMPLOYMENT
RESTRAINTS
TERMINATION BENEFITS
Steven Sewell
No expiry date
9 months
12 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.
Evan Goodridge
No expiry date
6 months
6 months
Covered by National Employment Standards
(NES).
Nikki Lawson
No Expiry date
6 months
6 months
Covered by National Employment Standards
(NES).
Gavin Lechem
No expiry date
6 months
6 months
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 FY24.
7.3.
Loans to Key Management Personnel
There were no loans to key management personnel or their related parties at any time in 2024 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.
7.5.
Directors and Officers Insurance
During the year, Abacus Group paid for a Directors and Officers Insurance policy. In accordance with usual
commercial practice, the insurance policy prohibits disclosure of details relating to the nature of the liabilities covered
by the insurance, the limit of indemnity and the amount of the premium paid under the contract.
50
DIRECTORS’ REPORT
30 JUNE 2024
SIGNIFICANT EVENTS AFTER BALANCE DATE
On 16 August 2024, the Group exchanged contracts for the divestment of its interest in Market Central, Lutwyche
QLD at a sale price of $60.4 million.
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 51.
During the year, Ernst & Young provided non-audit services to the Group, as outlined in Note 22 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 22, 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
Steven Sewell
Chair
Managing Director
Sydney, 23 August 2024
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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 2024, 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
23 August 2024
52
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 30 JUNE 2024
2024
2023
Notes
$'000
$'000
REVENUE
Rental income
144,373
147,075
Finance income
1(a)
6,957
3,483
Fee income
1(b)
17,180
1,455
Total Revenue
168,510
152,013
OTHER INCOME
Net change in fair value of investments and derivatives derecognised
658 (1,023)
Share of (loss)/profit from equity accounted investments
7(a)
24,977 (8,846)
Other income
- 60
Total Revenue and Other Income
194,145
142,204
Net change in fair value of investment properties derecognised
(8,244) (9,097)
Net change in fair value of investment properties held at balance date
(275,407) (247,617)
Net change in fair value of derivatives
(13,992) (20,220)
Net change in fair value of investments held at balance date
3(a)
(1,798)
(854)
Net change in fair value from deconsolidation
20
(5,614)
-
Property expenses and outgoings
(43,588) (41,880)
Depreciation and amortisation expense
3(b)
(4,091)
(5,800)
Finance costs
3(c)
(41,557) (9,893)
Administrative and other expenses
3(d)
(38,241) (39,458)
PROFIT/(LOSS) BEFORE TAX FROM CONTUNUING OPERATIONS
(238,387) (232,615)
Income tax expense
4(a)
(3,602) (5,650)
NET PROFIT/(LOSS) AFTER TAX FROM CONTINUING OPERATIONS
(241,989) (238,265)
Discontinued Operations
Net profit after tax from discontinued operations
20
951
263,760
NET (LOSS)/PROFIT AFTER TAX
(241,038)
25,495
PROFIT/(LOSS) ATTRIBUTABLE TO:
Equity holders of the parent entity (AGHL)
(33,286) (64,516)
Equity holders of other stapled entities
AT members
(178,499) (138,796)
AGPL members
3,028 (2,377)
AIT members
(33,232)
(22,967)
ASPT members
(7,913)
143,641
ASOL members
8,864
110,510
NET (LOSS)/PROFIT AFTER TAX
(241,038)
25,495
Basic and diluted earnings per stapled security (cents)
2
(26.97)
2.85
Basic and diluted earnings per stapled security from continuing operations (cents)
2
(27.08)
(26.67)
53
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 30 JUNE 2024
2024
2023
$'000
$'000
NET PROFIT AFTER TAX
(241,038)
25,495
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to the income statement
Share of other comprehensive income of an associate
(491)
-
Foreign exchange translation adjustments, net of tax associated with discontinued operations
1,145 1,925
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD
(240,384)
27,420
Total comprehensive income attributable to:
Members of the Group
(240,384)
27,420
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD
(240,384)
27,420
Total comprehensive income / (loss) attributable to members of the Group analysed by
amounts attributable to:
AGHL members
(33,286) (64,516)
AT members
(178,917) (138,796)
AGPL members
2,955 (2,377)
AIT members
(33,232) (22,967)
ASPT members
(6,852)
145,510
ASOL members
8,948 110,566
TOTAL COMPREHENSIVE INCOME/(LOSS) AFTER TAX ATTRIBUTABLE
TO MEMBERS OF THE GROUP
(240,384) 27,420
54
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
2024
2023
Notes
$'000
$'000
CURRENT ASSETS
Investment properties held for sale
5
123,000
-
Assets associated with discontinued operations
20
- 3,072,416
Cash and cash equivalents
8
23,556 71,900
Trade and other receivables
28,502 46,637
Derivatives at fair value
3,971 30,283
Other
6,595
4,056
TOTAL CURRENT ASSETS
185,624
3,225,292
NON-CURRENT ASSETS
Investment properties
5
1,762,000 2,099,876
Property loans
6(a)
55,870
53,142
Equity accounted investments
7
565,324
158,674
Deferred tax assets
4(c)
8,180
11,641
Property, plant and equipment
288
458
Other financial assets
6(b)
4,938
3,987
Intangible assets and goodwill
19
32,426
32,463
Derivatives at fair value
7,186
14,541
Other
4,500 6,100
TOTAL NON-CURRENT ASSETS
2,440,712
2,380,882
TOTAL ASSETS
2,626,336
5,606,174
CURRENT LIABILITIES
Liabilities associated with discontinued operations
20
- 1,142,401
Trade and other payables
61,919
57,584
Derivatives at fair value
- 20,603
Other
6,226
5,476
TOTAL CURRENT LIABILITIES
68,145
1,226,064
NON-CURRENT LIABILITIES
Interest-bearing loans and borrowings
10
939,327 1,006,508
Derivatives at fair value
858
859
Deferred tax liabilities
4(c)
9,399
9,735
Other
1,475 1,319
TOTAL NON-CURRENT LIABILITIES
951,059
1,018,421
TOTAL LIABILITIES
1,019,204
2,244,485
NET ASSETS
1,607,132
3,361,689
TOTAL EQUITY
1,607,132
3,361,689
55
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
AS AT 30 JUNE 2024
2024
2023
Notes
$'000
$'000
Equity attributable to members of AGHL:
Contributed equity
568,862 568,862
Treasury shares
(4,358)
-
Reserves
6,045 4,144
Retained earnings
93,324 63,684
Total equity attributable to members of AGHL:
663,873 636,690
Equity attributable to unitholders of AT:
Contributed equity
1,373,217 1,373,217
Reserves
(418)
-
Accumulated losses
(555,467) (321,050)
Total equity attributable to unitholders of AT:
817,332 1,052,167
Equity attributable to members of AGPL:
Contributed equity
47,064 47,064
Reserves
(73)
-
Retained earnings
65,281 62,253
Total equity attributable to members of AGPL:
112,272 109,317
Equity attributable to unitholders of AIT:
Contributed equity
188,471 188,472
Accumulated losses
(174,816) (140,532)
Total equity attributable to unitholders of AIT:
13,655 47,940
Equity attributable to members of ASPT:
Contributed equity
- 334,610
Reserves
- 259
Retained earnings
- 464,005
Total equity attributable to members of ASPT:
- 798,874
Equity attributable to members of ASOL:
Contributed equity
- 84,424
Reserves
- (31)
Retained earnings
- 632,308
Total equity attributable to members of ASOL:
- 716,701
TOTAL EQUITY
1,607,132 3,361,689
Contributed equity
12
2,177,614 2,596,649
Treasury shares
(4,358)
-
Reserves
5,554 4,144
Retained earnings
(571,678)
760,668
Reserves of discontinued operations
- 228
TOTAL EQUITY
1,607,132 3,361,689
56
CONSOLIDATED STATEMENT OF CASH FLOW
YEAR ENDED 30 JUNE 2024
2024
2023
Notes
$'000
$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Income receipts
203,025 358,605
Interest received
1,513 853
Distributions received
- 12,579
Income tax paid
(2,827) (12,047)
Finance costs paid
(36,474) (46,952)
Operating payments
(89,263) (159,988)
NET CASH FLOWS FROM OPERATING ACTIVITIES
8
75,974 153,050
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for investments and funds advanced
(1,267) (1,158)
Proceeds from sale and settlement of investments and funds repaid
140,849 75,325
Purchase of property, plant and equipment
(28) (8,304)
Proceeds from disposal of property, plant and equipment
- 49
Payments for investment properties and capital expenditure
(188,028) (396,786)
Proceeds from disposal of investment properties
110,523 83,438
Payment for other investments and financial assets
(16,051) (48,078)
NET CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES
45,998 (295,514)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of issue costs
- (42)
Payment of borrowing costs
(1,315) (671)
Payment of treasury shares
(4,358)
-
Repayment of borrowings and financial instruments
(249,098) (1,783)
Repayment of principal portion of lease liabilities
(33) (896)
Proceeds from borrowings
122,752 271,364
Distributions paid
(70,149) (166,547)
NET CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES
(202,201)
101,425
Net (decrease)/increase in cash and cash equivalents from continuing operations
(48,390)
11,373
Net (decrease) in cash and cash equivalents from discontinued operations
(31,839) (52,412)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
(80,229) (41,039)
Net foreign exchange differences
42 22
Cash and cash equivalents at beginning of period from continuing operations
71,900 176,505
Cash and cash equivalents at beginning of period from discontinuing operations
63,588
-
Less cash balance attributable to discontinued operations at deconsolidation
20
(31,745)
(63,588)
CASH AND CASH EQUIVALENTS AT END OF PERIOD
8
23,556 71,900
57
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2024
Employee
Issued
Share of
equity
Treasury
Retained
Total
capital
reserves*
benefits
shares
earnings
equity
CONSOLIDATED
$'000
$'000
$'000
$'000
$'000
$'000
At 1 July 2023
2,596,649 228 4,144
- 760,668 3,361,689
Other comprehensive income
- 654
- -
654
Net income for the period
- - - - (241,038) (241,038)
Total comprehensive income for the
period
- 654
-
- (241,038) (240,384)
Performance rights
- - 1,901
- 1,901
Treasury shares
- - - (4,358)
- (4,358)
Distribution to security holders
- - - - (76,024) (76,024)
De-stapling of discontinued operations (419,035) (1,373)
- - (1,015,284) (1,435,692)
At 30 June 2024
2,177,614 (491)
6,045 (4,358) (571,678)
1,607,132
Foreign
currency
Employee
Issued
translation
equity
Treasury
Retained
Total
capital
reserve
benefits
shares
earnings
equity
CONSOLIDATED
$'000
$'000
$'000
$'000
$'000
$'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
- 1,925
-
- 25,495
27,420
Issue costs
(42)
- - - - (42)
Distribution reinvestment plan
3,345
- - - - 3,345
Performance 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
Attributable to the stapled securityholders
*The share of reserves are from equity accounted investments.
Attributable to the stapled securityholders
58
CONTENTS
30 JUNE 2024
Notes to
the financial
statements
About this report
Page 59
Segment information
Page 61
Results for the period
Operating assets
and liabilities
Capital structure
and financing costs
Group Structure
Other Items
1.
Revenue
5.
Investment
properties
8.
Cash and cash
equivalents
14. Parent entity
financial
information
15. Commitments and
contingencies
2.
Earnings per
stapled security
6.
Property loans
and other
financial assets
9.
Capital
management
16. Related party
disclosures
3.
Expenses
7.
Investments
accounted for
using the equity
method
10. Interest bearing
loans and
borrowings
17. Key management
personnel
4.
Income Tax
11.
Financial
instruments
18. Security based
payments
12. Contributed
equity
19. Intangible assets
and goodwill
13. Distributions
paid and
proposed
20. Discontinued
Operations
21. Summary of
material
accounting policies
22. Auditor’s
remuneration
23. Events after
balance date
Signed
reports
Consolidated entity disclosure statement
Page 110
Directors’ declaration
Page 111
Independent auditor’s report
Page 112
59
NOTES TO THE FINANCIAL STATEMENTS – About this Report
30 JUNE 2024
Abacus Group (“Abacus” or the “Group”) is comprised of Abacus Group Holdings Limited (“AGHL”) (the nominated
parent entity), Abacus Trust (“AT”), Abacus Income Trust (“AIT”) and Abacus Group Projects Limited (“AGPL”).
Shares in AGHL and AGPL, units in AT and AIT have been stapled together so that neither can be dealt with without
the other. The securities trade as one security on the Australian Securities Exchange (the “ASX”) under the code
ABG.
The financial report of the Group for the year ended 30 June 2024 was authorised for issue in accordance with a
resolution of the directors on 23 August 2024.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
MATERIAL 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.
Material judgements, estimates and assumptions made by management in the preparation of these financial
statements are outlined below:
(a) Material 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) Material accounting estimates and assumptions
Valuation of investment properties
The Group makes judgements in respect of the fair value of investment properties (Note 21(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.
60
NOTES TO THE FINANCIAL STATEMENTS – About this Report
30 JUNE 2024
MATERIAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued)
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.
Fair value of financial assets
The Group holds investments in unlisted securities which are held at fair value based on 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 fair value less costs to sell
calculations (FVLCS) 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
19.
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.
61
NOTES TO THE FINANCIAL STATEMENTS – Segment Information
30 JUNE 2024
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 operates wholly within one business segment being the operation and management of Commercial assets
in Australia. The operating results presented in the consolidated statement of profit or loss represent the same
segment information as reported in internal management information.
The Group has no individual customer which represents greater than 10% of total revenue.
62
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
1.
REVENUE
2024
2023
$'000
$'000
(a) Finance income
Interest and fee income on secured loans - amortised cost
5,780
2,963
Bank interest
1,177
520
Total finance income
6,957
3,483
(b) Fee Income
Asset management fees
11,298
88
Property management fees
1,161
1,123
Development management fees
4,721
244
Total funds management income
17,180
1,455
2. EARNINGS PER STAPLED SECURITY
2024
2023
Basic and diluted earnings per stapled security (cents)
(26.97)
2.85
Basic and diluted earnings per stapled security for continuing operations (cents)
(27.08)
(26.67)
Reconciliation of earnings used in calculating earnings per stapled security
Basic and diluted earnings per stapled security
Continuing operations
(241,989)
(238,265)
Discontinued operations
951
263,760
Net profit ($'000)
(241,038)
25,495
Weighted average number of securities:
Weighted average number of stapled securities for basic earning per security ('000)
893,658
893,452
63
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
3. EXPENSES
2024
2023
$'000
$'000
(a) Net change in fair value of investments held at balance date
Net change in fair value of unlisted property securities held at balance date
1,594
1,068
Net change in fair value of other investments held at balance date
204 (214)
Total change in fair value of investments held at balance date
1,798 854
(b) Depreciation and amortisation expenses
Depreciation and amortisation of property, plant and equipment and intangible assets
236
912
Amortisation - leasing costs
3,855
4,888
Total depreciation and amortisation expenses
4,091 5,800
(c) Finance costs
Interest on loans
40,099
9,491
Amortisation of finance costs
1,458 402
Total finance costs
41,557
9,893
(d) Administrative and other expenses
Wages and salaries
25,058
25,406
Contributions to defined contribution plans
1,517 1,544
Other expenses
8,090 8,165
Restructuring cost
3,576
4,343
Total administrative and other expenses
38,241
39,458
64
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
4. INCOME TAX
2024
2023
$'000
$'000
(a) Income tax expense
The major components of income tax expense are:
Income Statement
Current income tax
Current income tax charge
3,922 7,119
Adjustments in respect of current income tax of previous years
(393)
264
Deferred income tax
Relating to origination and reversal of temporary differences
73 (1,733)
Total income tax expense
3,602 5,650
(b) Numerical reconciliation between aggregate tax expense recognised in the income statement and tax expense
calculated per the statutory income tax rate
A reconciliation between tax expense and the product of the accounting profit before income tax multiplied by the Group's
applicable income tax rate is as follows:
Profit/(loss) before tax from continuing operations
(238,387) (232,615)
Profit before tax from discontinued operations
951 273,780
Profit before income tax expense
(237,436)
41,165
Prima facie income tax expense calculated at 30% (AU)
(71,231)
11,604
Prima facie income tax expense calculated at 28% (NZ)
- 696
Less prima facie income tax expense on profit from Trusts
73,755 (1,184)
Prima Facie income tax of entities subject to income tax
2,524 11,116
Adjustment of prior year tax applied
(393)
270
Unrecognised tax benefit on tax losses
2,818 4,590
Share of results of joint ventures and associates
(225) (387)
Security acquisition rights
(811) (152)
Other items (net)
(311)
233
Total income tax expense
3,602 15,670
Less income tax expense attributable to discontinued operations
- (10,020)
Income tax expense attributable to continuing operations
3,602 5,650
65
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
4. INCOME TAX (continued)
2024
2023
$'000
$'000
(c) Recognised deferred tax assets and liabilities
Deferred income tax relates to the following:
Deferred tax liabilities
Revaluation of investment properties at fair value
- 40,125
Revaluation of investments and financial instruments at fair value
124 397
Capital allowances
- 2,299
Brand
- 9,489
Other
9,481 9,782
Gross deferred income tax liabilities
9,605 62,092
Set off against deferred tax assets
(206) (4,872)
Net deferred income tax liabilities
9,399 57,220
Less deferred tax liabilities attibutable to discontinued operations
- (47,485)
Deferred tax liabilities
9,399 9,735
Deferred tax assets
Provisions - employee entitlements
3,609 4,804
Losses available for offset against future taxable income
3,865 10,204
Other
912 1,505
Gross deferred income tax assets
8,386 16,513
Set off of deferred tax liabilities
(206) (4,872)
Net deferred income tax assets
8,180 11,641
Tax consolidation
AGHL and its 100% owned Australian resident subsidiaries have formed a tax consolidated group. AGHL is the head
entity of the tax consolidated group. The head entity and the controlled entities in the tax consolidated group continue
to account for their own current and deferred tax amounts. 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.
66
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
5. INVESTMENT PROPERTIES
2024
2023
$'000
$'000
Freehold investment properties
1,885,000
2,099,876
Total investment properties
1,885,000 2,099,876
2 024
2 023
$'000
$'000
Investment properties held for sale
Commercial
1
123,000
-
Total investment properties held for sale
12 3,000
-
Investment properties
Commercial
1,762,000
2,099,876
Total investment properties
1,762,000
2,099,876
Total investment properties including held for sale
1,885,000
2,099,876
1. Properties held for sale include 81 James Ruse Drive, Camellia and Market Central, Lutwyche.
Reconciliation
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:
30 Jun 2024
30 Jun 2023
30 Jun 2024
30 Jun 2023
Freehold investment properties
$'000
$'000
$'000
$'000
Carrying amount at beginning of the financial period
-
- 2,099,876 2,260,633
Additions
-
- 88,097
99,506
Capital expenditure
-
- 90,099 77,385
Net change in fair value as at balance date
-
- (275,407)
(247,617)
Net change in fair value derecognised
-
- (8,244) (9,097)
Disposals
-
- (110,410) (83,061)
Properties transferred to / (from) held for sale
123,000
- (123,000)
-
Rental straightlining adjustment
-
- 989 2,127
Carrying amount at end of the period
123,000
- 1,762,000 2,099,876
Held for sale
Non-current
67
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
5. INVESTMENT PROPERTIES (continued)
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
Fair value measurement sensitivity to
significant increase in input
Fair value measurement sensitivity to
significant decrease in input
Net Operating Income
Increase
Decrease
Adopted capitalisation rate
Decrease
Increase
Rate per unit
Increase
Decrease
Optimal occupancy
Increase
Decrease
Adopted discount rate
Decrease
Increase
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 future cashflows and terminal value are 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.
68
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
5. INVESTMENT PROPERTIES (continued)
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 6.50% (30 June 2023: 5.71%).
The current occupancy rate for the principal commercial portfolio excluding development assets is 94.2% (30 June
2023: 95.1%).
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 2024.
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 $72.1 million (2023: $96.1 million) or decrease the fair value by $66.8 million (2023:
$88.1 million) respectively.
During the year ended 30 June 2024, 63% (2023: 100%) of the number of investment properties in the portfolio
were subject to external valuations; the remaining 37% (2023: 0%) were subject to internal valuation.
69
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
5. INVESTMENT PROPERTIES (continued)
Ownership
Interest
%
Fair Value
2024
$'000
Capitalisation
Rate
2024
%
Fair Value
2023
$'000
Capitalisation
Rate
2023
%
Commercial
Walker Street, North Sydney NSW1
100
236,900
6.65
288,000
5.50
314-336 Bourke Street, Melbourne VIC2
50
216,000
6.00
150,000
5.63
77 Castlereagh St, Sydney NSW
100
203,000
6.00
225,500
5.13
201 Elizabeth Street, Sydney NSW
32
198,400
6.13
215,360
5.13
The Oasis, Broadbeach QLD
100
170,000
7.25
178,000
6.75
324 Queen Street, Brisbane QLD
100
142,700
7.25
169,000
6.13
452 Johnston Street, Abbotsford VIC
100
122,500
6.50
133,000
5.50
14 Martin Place, Sydney NSW
50
105,000
5.88
112,500
5.13
Industry Lanes, Richmond, VIC
50
96,000
5.88
104,000
5.13
Westpac House, Adelaide SA
50
82,000
7.25
86,000
6.88
Kingsgate, Fortitude Valley QLD
50
75,500
6.75
78,000
6.25
181 James Ruse Drive, Camellia NSW 5
100
65,200
N/A
66,000
N/A
Market Central, Lutwyche QLD5
50
57,800
6.75
60,350
6.25
51 Allara Street, Canberra ACT
100
57,000
7.25
61,000
6.75
11 Bowden Street, Alexandria NSW
100
44,500
6.63
45,000
5.88
Other (1 asset; 2023: 2 assets)4
100
12,500
N/A
50,400
5.13
Ashfield Shopping Centre, Ashfield NSW3
-
- - 77,766
5.75
Total Commercial
1,885,000
6.50
2,099,876
5.71
1. Includes both 83 and 99 Walker Street, North Sydney NSW. The former was acquired in December 2023.
2. In June 2024, Abacus acquired a further 16.67% interest in Myer Centre.
3. In April 2024, Abacus divested Ashfield Mall, Ashfield NSW.
4. In February 2024, Abacus divested a non-core asset being 63 Ann St, Surry Hills NSW.
5. Held for sale and classified as current.
6. PROPERTY LOANS AND OTHER FINANCIAL ASSETS
2024
2023
$'000
$'000
(a) Non-current property loans
Secured loans - amortised cost
55,894 53,148
Provision for secured loans - amortised cost
(24) (6)
55,870 53,142
(b) Non-current other financial assets
Investment in unlisted securities - fair value
4,938 3,987
4,938 3,987
70
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
7. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
(a) Extract from joint ventures and associates’ profit and loss statements
2024
2023
2024
2023
2024
2023
2024
2023
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Revenue
290,471
- 10,102 10,286 17,813 18,145 318,386 28,431
Expenses
(154,990)
- (7,871) (6,899) (22,195) (38,567) (185,056) (45,466)
Net profit / (loss)
135,481
- 2,231 3,387 (4,382) (20,422)
133,330 (17,035)
Share of net profit / (loss)
26,187
- 1,086 1,631 (2,296) (10,477) 24,977 (8,846)
Abacus Storage King*
Fordtrans Pty Ltd ^
Other Joint Ventures
Total
* Abacus Group’s share of profit from ASK includes the elimination of related party transactions. Interest income of $1.3 million and interest expense of $32.3
million were included in the net profit of ASK for the year ended 30 June 2024.
^Included in the net profit of Fordtrans Pty Ltd for the year ended 30 June 2024: interest income of $1.8 million (2023: $1.6 million) and interest expense of
$4.1 million (2023: $3.2 million).
(b) Extract from joint ventures and associates’ balance sheets
2024
2023
2024
2023
2024
2023
2024
2023
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Current assets
220,296
- 2,417 2,732 5,144 85,075 227,857 87,807
Non-current assets
3,008,566
- 247,535 246,627 168,086 116,845 3,424,187 363,472
3,228,862
- 249,952 249,359 173,230 201,920 3,652,044 451,279
Current liabilities
84,920
- 67,119 82,093 5,369 38,906 157,408 120,999
Non-current liabilities
1,029,590
- 15,107
- 42,499 13,223 1,087,196 13,223
Net assets
2,114,352
- 167,726 167,266 125,362 149,791 2,407,440
317,057
Share of net assets
418,723
- 83,863 83,633 62,738 75,041 565,324 158,674
Abacus Storage King*
Fordtrans Pty Ltd^
Other Joint Ventures
Total
There were no impairment losses or contingent liabilities relating to the investment in the joint ventures and associates.
* Upon de-stapling, ASK issued 260.8 million securities to Abacus Group for $415.1 million by settling a portion of an outstanding loan with
Abacus Group and acquiring units in Abacus Repository Trust. The Group has received or is going to receive $14.5 million of management fee
from Abacus Storage King for the management services provided during the period. Details on transactions with ASK are disclosed in Note
16(d).
Included in the net assets of ASK as at 30 June 2024: cash and cash equivalents $89.0 million, non-current interest bearing loans and
borrowings $990.2 million, and deferred tax liability $32.5m.
^Included in the net assets of Fordtrans Pty Ltd as at 30 June 2024: cash and cash equivalents $0.8 million (2023: $0.6 million), current
interest bearing loans and borrowings $58.7 million (2023: $75.0 million) and non-current interest bearing loans and borrowings $Nil (2023:
Nil).
There were no impairment losses or contingent liabilities relating to the investment in the joint ventures and associates.
71
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
7. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued)
1. Abacus Storage King
Post de-stapling, Abacus owns 19.8% of securities in ASK. Abacus’ share of distributions (including capital
distributions) for the year ended 30 June 2024 was $15.6 million.
2. 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 2024 was $0.9 million
(2023: $1.2 million).
72
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
8. CASH AND CASH EQUIVALENTS
2024
2023
$'000
$'000
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 hand1
23,556 71,900
Cash at bank and in hand attributable to discontinued operations1
- 63,588
Cash and cash equivelants
23,556 135,488
1. Cash at bank earns interest at floating rates. The carrying amounts of cash and cash equivalents represent fair value.
Net profit from continuing operations
(241,989)
(238,265)
Net profit from discontinued operations
951
263,760
Net profit
(241,038)
25,495
Adjustments for:
Depreciation and amortisation of non-current assets
4,406
9,234
Net change in fair value of derivatives
16,791
6,661
Net change in fair value of investment properties held at balance date
275,407
97,313
Net change in fair value of investments held at balance date
4,659 (15,631)
Net change in fair value of investment properties derecognised
8,244
9,157
Net change in fair value of investment and financial instruments derecognised
(658) (11,266)
Net (gain) / loss on disposal of property, plant and equipment
- 35
Net change in fair value from deconsolidation
5,614
-
Share of profit from equity accounted investments
(25,022)
9,160
Increase / (decrease) in payables
4,771
21,940
(Increase) / decrease in receivables and other assets
22,800
952
Net cash from operating activities
75,974
153,050
Less: Net cash from operating activities from discontinued operations
(9,788) (65,273)
Net cash from operating activities from continuing operations
66,186
87,777
(a) Disclosure of financing facilities
Refer to Note 10.
(b) Disclosure of non-cash financing facilities
Non-cash financing activities include capital raised pursuant to the Abacus’ distribution reinvestment plan. During the year no
(2023: 1.2 million) stapled securities were issued (2023: cash equivalent of $3.3 million).
73
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
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 successfully negotiated and agreed terms on its syndicated banking facility to increase the
limit by $125 million to $1.125 billion and extend the facility tranches tenor on average by a further 6 months. Abacus
also extended its $11 million Bilateral facility by two years to July 2027. Abacus has no bank debt expiring in the
financial year ending 30 June 2025, with the majority of debt expiring from the financial year ending 30 June 2026
onwards.
Abacus has a total gearing covenant as a condition of the current $1.125 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.
74
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
10. INTEREST BEARING LOANS AND BORROWINGS
2024
2023
$'000
$'000
Non-current
Bank loans - A$
904,272
972,757
Loan from related party - A$ 1
35,293
34,222
Less: Unamortised borrowing costs
(238)
(471)
(a) Total non-current
939,327
1,006,508
1 - Details of loan maturity and applicable intrest rate are disclosed in Note 16(d)
2024
2023
$'000
$'000
(b) Maturity profile of non-current interest bearing loans
Due between one and five years
939,327
789,008
Due after five years
- 217,500
939,327
1,006,508
2024
2023
$'000
$'000
Available financing facility
Total facilities - bank loans
1,182,750
1,057,750
Facilities used at reporting date - bank loans
(904,250) (972,750)
278,500
85,000
Abacus maintains a range of interest-bearing loans and borrowings. The sources of funding are spread over a number
of counterparties and the terms of the instruments are negotiated to achieve a balance between capital availability and
cost of debt.
Bank loans are A$ 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 August 2025 to June 2029. The bank loans are
secured by charges over the investment properties and certain property, plant and equipment.
Approximately 76.0% (30 June 2023: 100.0% for continuing operations) of bank debt drawn was subject to fixed
rate hedges and the drawn bank debt had a weighted average term to maturity of 3.4 years (30 June 2023: 3.8
years). Hedge cover as a percentage of available facilities at 30 June 2024 is 58.1% (30 June 2023: 100.0% for
continuing operations).
Abacus’ weighted average interest rate including discontinued operations for the year ended 30 June 2024 was 4.41%
(30 June 2023: 1.12% for continuing operations). 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:
2024
2023
$'000
$'000
Non-current
First mortgage
Investment properties
1,522,400
1,791,976
Total non-current assets pledged as security
1,522,400
1,791,976
Total assets pledged as security
1,522,400
1,791,976
(d) Defaults and breaches
During the current and prior years, there were no defaults or breaches of any of the Group’s loans.
75
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
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, and price 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 material 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 21 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).
76
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
11. FINANCIAL INSTRUMENTS (continued)
(a) Credit risk (continued)
Credit risk exposures
The Group’s maximum exposure to credit risk at the reporting date was:
2024
2023
$'000
$'000
Trade and other receivables
28,502 46,637
Other financial assets
4,938
3,987
Cash and cash equivalents
23,556 71,900
Derivatives at fair value
11,157
44,824
Cash and other financial assets
68,153
167,348
Secured property loans - amortised cost *
55,870
53,142
Secured property loans
55,870
53,142
Total credit risk exposure
124,023
220,490
Carrying Amount
* The secured property loan is with one borrower.
(b) Liquidity Risk
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.
Carrying
Amount
Contractual
cash flows
1 Year or
less
Over 1 year
to 5 years
Over
5 years
30 June 2024
$'000
$'000
$'000
$'000
$'000
Liabilities
Trade and other payables
61,919
61,919
61,919
-
-
Interest bearing loans and borrowings incl derivatives#
940,185
1,121,608
49,926 1,071,682
-
Total liabilities
1,002,104 1,183,527 111,845
1,071,682
-
77
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
11. FINANCIAL INSTRUMENTS (continued)
(b) Liquidity risk (continued)
Carrying
Amount
Contractual
cash flows
1 Year or
less
Over 1 year
to 5 years
Over
5 years
30 June 2023
$'000
$'000
$'000
$'000
$'000
Liabilities
Trade and other payables
57,584
57,584
57,584
-
-
Interest bearing loans and borrowings incl derivatives#
1,027,970
1,214,877
48,414
948,852
217,611
Total liabilities
1,085,554 1,272,461
105,998 948,852
217,611
# 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 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
2024, after taking into account the effect of interest rate swaps, approximately 76.0% (2023: 100%) of the Group’s
drawn debt is subject to fixed rate hedges. Hedge cover as a percentage of available facilities at 30 June 2024 is
58.1% (2023: 100.0%).
78
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
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:
Floating
interest rate
Fixed interest
less than 1 year
Fixed interest
1 to 5 years
Fixed interest
over 5 years
Non interest
bearing
Total
30 June 2024
$'000
$'000
$'000
$'000
$'000
$'000
Financial Assets
Cash and cash equivalents
23,556
- -
-
- 23,556
Receivables
-
- -
- 28,502
28,502
Secured loans
-
- 55,870
-
- 55,870
Derivatives
- 3,971
7,186
-
- 11,157
Other financial assets
-
- -
- 4,938
4,938
Total financial assets
23,556
3,971
63,056
- 33,440
124,023
Weighted average interest rate*^
4.35%
4.70%
Financial liabilities
Interest bearing liabilities - bank
857,284
- 46,750
-
- 904,034
Interest bearing liabilities - other
-
- 35,293
-
- 35,293
Derivatives
-
- 858
-
- 858
Payables
-
- -
- 61,919 61,919
Total financial liabilities
857,284
- 82,901
- 61,919
1,002,104
Notional principal swap balance
maturities*
-
610,000 825,000
- - 1,435,000
Weighted average interest rate
on drawn bank debt*
4.41%
79
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
11. FINANCIAL INSTRUMENTS (continued)
(c) Market risk (continued)
Floating
interest rate
Fixed interest
less than 1 year
Fixed interest
1 to 5 years
Fixed interest
over 5 years
Non interest
bearing
Total
30 June 2023
$'000
$'000
$'000
$'000
$'000
$'000
Financial Assets
Cash and cash equivalents
71,900
- - - - 71,900
Receivables
- - - - 46,637 46,637
Secured loans
- - 53,142
- - 53,142
Derivatives
- 30,283 14,541
- - 44,824
Other financial assets
- - - - 3,987 3,987
Total financial assets
71,900 30,283 67,683
- 50,624 220,490
Weighted average interest rate*^
4.07%
5.50%
Financial liabilities
Interest bearing liabilities - bank
925,536
- 46,750
- - 972,286
Interest bearing liabilities - other
- - 34,222
- - 34,222
Derivatives
- 20,603 859
- - 21,462
Payables
- - - - 57,584 57,584
Total financial liabilities
925,536 20,603 81,831
- 57,584 1,085,554
Notional principal swap balance
maturities*
-
950,000 1,110,000
- - 2,060,000
Weighted average interest rate on
1.12%
*
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:
Carrying amount
-1%
+1%
Floating
Profit
Equity
Profit
Equity
30 June 2024
$'000
$'000
$'000
$'000
$'000
Financial assets
23,556 (236)
- 236
-
Financial liabilities
857,522 (2,841)
- 5,502
-
Carrying amount
-1%
+1%
Floating
Profit
Equity
Profit
Equity
30 June 2023
$'000
$'000
$'000
$'000
$'000
Financial assets
71,900 (719)
- 719
-
Financial liabilities
926,007 (4,138)
- 5,761
-
AUD
AUD
80
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
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
Valuation technique
Inputs used to measure fair
value
Investment properties
Level 3
Discounted Cash Flow (""DCF"")
Net Operating income
Direct comparison
Adopted capitalisation rate
Income capitalisation method
Rate per unit
Optimal occupancy
Adopted discount rate
Securities – unlisted
Level 3
Pricing models
Security price
Underlying net asset
Property valuations
Derivative – financial
Level 2
DCF (adjusted for counterparty
Interest rates
instruments
Credit worthiness)
Consumer price index (“CPI”)
Volatility
Level 1
Quoted prices (unadjusted) in active market for identical assets or liabilities;
Level 2
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.
81
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
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.
Unlisted
securities
$'000
Opening balance as at 30 June 2023
3,987
Fair value movement through the income statement
(198)
Additions
1,149
Closing balance as at 30 June 2024
4,938
Unlisted
securities
$'000
Opening balance as at 30 June 2022
3,865
Fair value movement through the income statement
(846)
Additions
968
Closing balance as at 30 June 2023
3,987
Sensitivity of Level 3 - unlisted securities and options
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 2023: $0.1
million) or increase the fair value by $0.1 million (30 June 2023: $0.1 million) respectively.
82
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
12. CONTRIBUTED EQUITY
2024
2023
(a) Issued stapled securities
$'000
$'000
Stapled securities
2,220,407
2,649,833
Issue costs
(42,792)
(53,184)
Total contributed equity 1
2,177,615
2,596,649
1 - Reduction in contributed equity is a result of destapling in August 2023
N umber
N umber
2024
2023
(b) M ovement in stapled securities on issue
'000
'000
At beginning of financial period
893,658
892,429
- distribution reinvestment plan
- 1,229
Securities on issue at end of financial period
893,658
893,658
Stapled securities
13. DISTRIBUTIONS PAID AND PROPOSED
2024
2023
$'000
$'000
(a) Distributions paid during the period
June 2023 half: 9.40 cents per stapled security (2022: 9.25 cents)
84,004
82,550
December 2023 half: 4.25 cents per stapled security (2022: 9.00 cents)
37,980 80,429
(b) Distributions declared and recognised as a liability^
June 2024 half: 4.25 cents per stapled security (2023: 9.40 cents)
37,980
84,004
^
The final distribution of 4.25 cents per stapled security was declared on 20 June 2024. The distribution will be on or around 30 August
2024 and will be approximately $38 million.
50% of distributions were paid from Abacus Trust and Abacus Income Trust (which do not pay tax provided they distribute all their taxable
income) hence, there were no franking credits attached. Another 50% of distributions were paid from Abacus Group Holdings Limited as
fully franked dividends with $8.1 million 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 $75.9 million (2023: $87.5 million).
83
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
14. PARENT ENTITY FINANCIAL INFORMATION
2024
2023
$'000
$'000
Results of the parent entity
Profit for the year
30,545
95,608
Total comprehensive expense for the year
30,545 95,608
Financial position of the parent entity at year end
Current assets
654,256
4,528
Total assets
843,136
837,485
Current liabilities
18,676
809
Total liabilities
220,678 243,114
Net assets
622,458
594,371
Total equity of the parent entity comprising of:
Issued capital
568,862
568,862
Accumulated profit/(losses)
(74,243)
(74,243)
Profit available for dividend distribution
126,153
95,608
Employee options reserve
6,044
4,144
Treasury shares
(4,358)
-
Total equity
622,458
594,371
(a)
Parent entity contingencies
There are no contingencies of the parent entity as at 30 June 2024 (2023: Nil).
(b)
Parent entity capital commitments
There are no capital commitments of the parent entity as at 30 June 2024 (2023: Nil).
In July 2024, AGHL has provided a letter of support to its subsidiaries who have entered into interest free inter-entity
loans within the Group as the support for the subsidiaries to continue as a going concern.
84
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
15. COMMITMENTS AND CONTINGENCIES
(a) Operating lease commitments – Group as lessor
Future minimum rentals receivable under non-cancellable operating leases as at 30 June 2024 are as follows:
2024
2023
$'000
$'000
Within one year
110,063
107,453
Within two years
100,986
96,257
Within three years
86,974 85,591
Within four years
71,229 69,975
Within five years
52,388
52,064
More than five years
117,109
118,158
538,749 529,498
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 2024 the Group had numerous commitments which principally related to property and investment
acquisition settlements, loan facility guarantees for the Group's interest in the jointly controlled property
developments and funds management vehicles, and commitments relating to property refurbishing costs.
Commitments planned and/or contracted at reporting date but not recognised as liabilities are as follows:
2024
2023
$'000
$'000
Within one year
- gross settlement of property and investment acquisitions
2,655 3,806
- property refurbishment costs
18,759 36,444
- property development costs
1,523 11,858
22,937 52,108
(c) Contingencies
At 30 June 2024 the Group had a $12.5 million bank guarantee facility which expires in July 2026 (2023: $12.5
million) and $10.0 million of bank guarantees had been issued from the facility (2023: $7.5 million).
Bank guarantees issued at reporting date but not recognised as liabilities are as follows:
2024
2023
$'000
$'000
Bank guarantees
- Australian Financial Service Licences
10,000
7,500
- redevelopment of investment properties
1,005 1,163
11,005
8,663
85
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
16. RELATED PARTY DISCLOSURES
(a) Subsidiaries
The consolidated financial statements include the financial statements of the following entities:
2024
2023
Entity
%
%
Abacus Group Holdings Limited and its subsidiaries
Abacus Castle Hill Trust
-
100
Abacus Finance Pty Limited
100
100
Abacus Funds Management Limited
100
100
Abacus Investment Pty Ltd
100
100
Abacus Nominee Services Pty Limited
-
100
Abacus Nominees (No 5) Pty Limited
-
100
Abacus Nominees (No 7) Pty Limited
-
100
Abacus Nominees (No 9) Pty Limited
-
100
Abacus Nominees (No 11) Pty Limited
-
100
Abacus Note Facilities Pty Ltd
100
100
Abacus Property Services Pty Ltd
100
100
Abacus SP Note Facility Pty Ltd
-
100
Abacus Storage Funds Management Limited
100
100
Abacus Camellia Investments Pty Limited
100
100
Abacus Riverlands Investments Pty Limited
100
100
Abacus Group Projects Limited and its subsidiaries
Abacus Property Pty Ltd
100
100
Abacus Allara Street Trust*
74
74
Abacus Repository Trust^
-
74
Abacus Ventures Trust*
51
51
Equity interest
* These entities are wholly owned by Abacus
^ This entity was wholly owned by Abacus in 2023 and was acquired by ASK in August 2023 during de-stapling.
86
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
16. RELATED PARTY DISCLOSURES (continued)
(a) Subsidiaries (continued)
2024
2023
Entity
%
%
Abacus Trust and its subsidiaries:
Abacus Abbotsford Trust
100
100
Abacus Ann Street Trust
100
100
Abacus Ashfield Mall Property Trust
100
100
Abacus Bowden Street Trust
100
100
Abacus K1 Property Trust
100
100
Abacus Lutwyche Trust
100
100
Abacus Oasis Trust
100
100
Abacus Richmond Trust
100
100
Abacus Shopping Centre Trust
100
100
Abacus Virginia Trust
100
100
Abacus Westpac House Trust
100
100
Abacus Westpac House No. 2 Trust
100
100
Abacus 14 Martin Place Trust
100
100
Abacus 33 Queen Street Trust
100
100
Abacus 324 Queen Street Trust
100
100
Lutwyche City Shopping Centre Unit Trust
100
100
Oasis JV Unit Trust
100
100
Abacus Income Trust and its subsidiaries:
Abacus Todd Road Trust
-
100
Castlereagh Sub 1 Trust
100
100
Castlereagh FH Sub 1 Trust
100
100
Equity interest
87
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
16. RELATED PARTY DISCLOSURES (continued)
(a) Subsidiaries (continued)
2024
2023
Entity
%
%
Abacus Storage Operations Limited and its subsidiaries:
Abacus Storage NZ Operations Pty Limited
-
100
Abacus Storage Solutions Pty Limited
-
100
Abacus Storage Solutions NZ Pty Limited
-
100
Abacus USI C Trust
-
100
Abacus U Stow It A1 Trust
-
100
Abacus U Stow It B1 Trust
-
100
Abacus U Stow It A2 Trust
-
100
Abacus U Stow It B2 Trust
-
100
U Stow It Holdings Limited
-
100
U Stow It Pty Limited
-
100
Abacus SK Pty Limited
-
100
Storage King Corporate Holdings Pty Limited
-
100
Storage King Services Pty Limited
-
100
SK Licensing Pty Limited
-
100
SK (Licensees) Pty Limited
-
100
Storage King Management Pty Limited
-
100
Storage King Store Management Pty Limited
-
100
Storage King Management NZ Limited
-
100
Storage King (Singapore) Pte Limited
-
100
Storage King International Limited
-
100
Storage King Pty Limited
-
100
Storage King NZ Limited
-
100
A.A1 Storage King Pty Limited
-
100
Abacus Storage Property Trust and its subsidiary:
Abacus Storage NZ Property Trust
-
100
Equity interest
(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 17.
88
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
16. RELATED PARTY DISCLOSURES (continued)
(d) Transaction with related parties
2024
2023
$'000
$'000
Transactions with related parties other than associates and joint ventures
Revenues
Property management fees received / receivable
355 337
Transactions with associates and joint ventures
Revenues
Management fees received / receivable from joint ventures and associates
15,257 861
Share of (loss)/profit from joint ventures and associates
24,977 (8,926)
Other transactions
Loan advanced from joint ventures
1,628 1,568
Loan repayments to joint ventures
(297)
-
Loans advanced to associate*
76,324
-
Distribution received / receivable
15,615
-
* The loans provided to and by an associate, Abacus Storage King were fully repaid as part of the de-stapling process
Terms and conditions of transactions
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.
The term to maturity of the loan facility from a related party is April 2027 with an interest rate of 4.71%.
Ultimate controlling entity
Calculator Australia Pty Ltd (“Calculator”) is the ultimate controlling securityholder in the Group with a holding of
approximately 50.0% of the ordinary securities of the Group (2023: 51.8%).
During the year, Abacus Property Services Pty Ltd was engaged to manage the following properties:
Property
Relationship with Calculator
Charge per annum
2024
2023
$
$
14 Martin Place
Tenants-in-common
3% of gross rental
271,264
278,984
4 Martin Place
100% owned by Calculator
3% of gross rental
355,108
336,932
Mrs Myra Salkinder is the Chair of the Group and is a senior executive of Calculator. Mark Bloom was Non-Executive
Director of the Group (retired on 3 August 2023) and is a consultant to Calculator.
89
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
17. KEY MANAGEMENT PERSONNEL
(a) Compensation for key management personnel
2024
2023
$
$
Short-term employee benefits
5,798,531
4,702,314
Post-employment benefits
162,354
145,004
Other long-term benefits
68,698
76,189
Security-based payments
2,247,746
1,768,382
8,277,329
6,691,889
(b) Loans to key management personnel
There were no loans to key management personnel or their related parties at any time in 2024 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.
18. SECURITY BASED PAYMENTS
(a) Recognised security payment expenses
2024
2023
$'000
$'000
Expense arising from equity-settled payment transactions
3,522
2,615
Type of security – based payment plan
Long Term Incentives (LTI)
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 Earnings Before
Interest and Tax (“EBIT”) and Relative Total Securityholder Return (“RTSR”).
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
1,112,246
FY24 Grant
Tranche One – 50% of Grant
August 2026
1,112,245
Tranche Two – 50% of Grant
August 2027
90
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
18. SECURITY BASED PAYMENTS (continued)
(a) Recognised security payment expenses (continued)
Other Executives
Grant
Tranche
Vesting date
Potential
number to vest
Tranche One – 33% of Grant
August 2025
166,408
Tranche Two – 33% of Grant
August 2026
166,408
Tranche Three – 33% of Grant
August 2027
166,409
FY24 Grant
Deferred Short Term Incentives (Deferred STI)
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.
During the year, ABG has purchased 3.9 million securities ($4.3 million) on the market in advance to cover future LTI
and deferred STI payments. The unallocated securities are held in a Trust account and accounted as reduction in equity
reserve.
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 ABG and ASK 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:
2024
2023
No.
No.
Opening balance
2,265,376
920,539
Granted during the year
4,194,875
1,422,698
Forfeited during the year
(333,519) (77,861)
Exercised during the year
(59,623)
-
Outstanding at the end of the year
6,067,109
2,265,376
Exercisable at the end of the year
418,767
-
The weighted average fair value of LTI granted during the year was $1.03 (2023: $2.61). The fair value of LTI was
calculated as the volume-weighted average price (“VWAP”) from the grant date with a 3.75% discount.
91
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
18. 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:
2024
2023
No.
No.
Opening balance
217,046
-
Granted during the year
459,437
217,046
Forfeited during the year
-
-
Issued during the year
(128,519)
-
Outstanding at the end of the year
547,964
217,046
Exercisable at the end of the year
453,103
-
The weighted average fair value of Deferred STI granted during the year was $1.07 (2023: $2.61). The fair value of STI
was calculated as the volume-weighted average price (“VWAP”) from the grant date with a 3.75% discount.
Security Acquisition Rights (SARs)
The following table illustrates movements in SARs during this year:
2024
2023
No.
No.
Opening balance
936,061 1,508,159
Granted during the year*
21,427
256,444
Forfeited during the year
- (16,185)
Vested during the year
(587,402)
(812,357)
Outstanding at the end of the year
370,086 936,061
Exercisable at the end of the year
-
-
* 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 2024 was 1.8 years
(2023: 1.7 years).
92
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
19. INTANGIBLE ASSETS AND GOODWILL
Description of the Group’s intangible assets
2024
2023
N otes
$'000
$'000
Goodw ill
Balance at 1 July
32,394
32,394
At the end of the year
32,394
32,394
Software
At 1 July, net of accumulated amortisation
69
280
Amortisation charge for the year
(37)
(211)
At the end of the year, net of accumulated amortisation
32
69
Total goodwill and intangibles
32,426
32,463
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 2024 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. 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
c.
Property values of the funds / properties under management for Abacus Funds Management Limited: based on
the fair value of properties
d.
Selling costs: management’s estimate of costs to sell the funds / properties under management
e.
For Abacus Funds Management Limited, a pre-tax discount rate of 10.0% (2023: 9.7%) and a terminal growth
rate of 2.5% (2023: 2.6%) have been applied to the cash flow projections for goodwill 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. The goodwill valuation as at 30 June 2024 shows head room is declining,
however no other changes in the assumptions would cause or give rise to an impairment.
93
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
20. 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
became an externally managed REIT with a majority independent Board of Directors. The de-stapling of ASK
completed on 4 August 2023. Upon deconsolidation, ASK settled a portion of an outstanding loan to Abacus Group
for $415.1 million, in exchange for 19.9% of the equity in ASK by Abacus Group. The investment in ASK is classified as
an equity accounted investment by Abacus Group (Note 7). The difference between the fair value of the equity
accounted investment in ASK upon deconsolidation and consideration provided is recognised as a loss of $5.6m.
At the date when control of the Self Storage assets and business was lost, the balance sheet attributable to ASPT and
ASOL was as follows, ultimately leading to the loss recognised on loss of control by Abacus Group as summarised
below:
3 August 2023
30 June 2023
$'000
$'000
Assets
Cash and cash equivalents
31,745 63,588
Investment Property
2,550,626
2,612,159
Property, Plant and equipment
25,803
25,982
Trade and receivables
24,808
21,047
Equity accounted Investments
16,046
16,047
Derivative financial instruments
28,863 31,612
Other financial assets
221,284
224,146
Other
6,183
5,334
Intangibles
72,451 72,501
Total assets
2,977,809
3,072,416
Liabilities
Trade and other payables
95,310
106,908
Provisions
5,909
4,239
Derivative financial instruments
1,775
770
Deferred tax liabilities
47,480 47,485
Other liabilities
2,269
3,947
Interest-bearing liabilities
1,389,375
979,052
Total liabilities
1,542,118
1,142,401
Total net assets and reserves attributable to members of ASPT and ASOL derecognised
1,435,691 1,930,015
Valuation of loans attributable to Abacus Group
415,136
Investment equity accounted at fair value by Abacus Group
409,522
Loss recognised on loss of control
(5,614)
94
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
20. DISCONTINUED OPERATIONS (continued)
The financial performance of the discontinued operations segment for the year ended 30 June 2024 was as follows:
2024
2023
$'000
$'000
Storage Income
16,427 190,454
Fee Income
1,289 16,824
Finance income
50 450
Total Revenue
17,766
207,728
OTHER INCOME
Net change in fair value of investment properties held at balance date
- 150,304
Net change in fair value of investment held at balance date
(2,861)
16,485
- 12,254
Net change in fair value of derivatives
(2,799)
13,559
Other income
- 11,426
Total Revenue and Other Income
12,106 411,756
Net change in fair value of investment properties derecognised
(1) (60)
Storage expenses
(4,016) (42,758)
Share of (loss)/profit from equity accounted investments
45 (314)
Depreciation and amortisation expenses
(314) (3,434)
Finance costs
(2,950) (43,802)
Administrative and other expenses
(3,919) (47,608)
PROFIT BEFORE TAX FROM DISCONTINUED OPERATIONS
951
273,780
Income tax expense
- (10,020)
NET PROFIT AFTER TAX FROM DISCONTINUED OPERATIONS
951
263,760
Net change in fair value of PPE, investments and financial instruments derecognised
The net cash flow for the discontinued operations for the year ended 30 June 2024 were as follows:
2024
2023
$'000
$'000
Operating
9,788 65,273
Investing
(29,494) (212,204)
Financing
(12,133)
94,519
Net cash (outflow) / inflow
(31,839)
(52,412)
95
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES
(a)
Basis of Preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001 and Australian Accounting Standards. The financial report has also been
prepared on a historical cost basis, except for investment properties and derivative financial instruments which have
been measured at fair value, interests in joint ventures and associates which are accounted for using the equity
method, and certain investments and financial assets measured at fair value.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars
($'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 2023.
There are several amendments and interpretations apply for the first time on 1 July 2023 as follows, but they do not
have an impact on the consolidated financial statements of ABG.
-
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.
96
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL 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 ABG for the annual reporting period ended 30 June 2024. The significant new
standards or amendments are outlined below:
-
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. ABG is currently assessing the impact the amendments will have on current practice and
whether existing loan agreements may require amendments.
-
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture (effective for annual reporting periods beginning on or after 1 January
2025)
The amendments to AASB 10 Consolidated Financial Statements and AASB 128 Investments in Associates and
Joint Ventures clarify that a full gain or loss is recognised when a transfer to an associate or joint venture involves a
business as defined in AASB 3 Business Combinations. Any gain or loss resulting from the sale or contribution of
assets that does not constitute a business, however, is recognised only to the extent of unrelated investors’
interests in the associate or joint venture.
-
AASB 18 Presentation and Disclosure in Financial Statements (effective for annual reporting periods beginning
on or after 1 January 2027)
AASB 18 has been issued to improve how entities communicate in their financial statements, with a particular
focus on information about financial performance in the statement of profit or loss. The key presentation and
disclosure requirements established by AASB 18 are:
The presentation of newly defined subtotals in the statement of profit or loss
The disclosure of management-defined performance measures (MPM)
Enhanced requirements for grouping information (i.e. aggregation and disaggregation)
AASB 18 is accompanied with limited consequential amendments to the requirements in other accounting
standards, including AASB 107 Statement of Cash Flows.
97
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(c)
New accounting standards and interpretations (continued)
AASB 18 introduces three new categories for classification of all income and expenses in the statement of profit
or loss: operating, investing and financing. Additionally, entities will be required to present subtotals for ‘operating
profit or loss’, ‘profit or loss before financing and income taxes’ and ‘profit or loss’. For the purposes of classifying
income and expenses into one of the three new categories, entities will need to assess their main business activity,
which will require judgement. There may be more than one main business activity.
AASB 18 also requires several disclosures in relation to MPMs, such as how the measure is calculated, how it
provides useful information and a reconciliation to the most comparable subtotal specified by AASB 18 or another
standard.
AASB 18 will replace AASB 101 Presentation of Financial Statements.
The amendments are not expected to have a material impact on the Group with the exception of AASB 18 for which
management is currently assessing the impact.
(d)
Basis of consolidation
The consolidated financial statements comprise the financial statements of AGHL and its subsidiaries, AT and its
subsidiaries, AIT and its subsidiaries, and AGPL and its subsidiaries collectively referred to as the Group, and also
includes ASPT and its controlled entities ASOL until 3 August 2023, as ASPT and ASOL were de-stapled from the
Group on this date.
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.
98
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(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.
99
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(f) Revenue recognition
Revenue is recognised when performance obligations have been met and is measured at the amount that reflects
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.
(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.
100
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL 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, 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.
101
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL 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 and unlisted securities.
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 and associate is accounted for under the equity method of accounting in
the consolidated financial statements. The investment in the joint venture entities and associate 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 and associate, less any impairment in value. The consolidated income statement reflects the Group’s share of
the results of operations of the joint ventures and associate.
Investments in joint ventures and associate 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.
102
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(m) Property, plant and equipment (continued)
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.
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.
(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.
103
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(n) Investment properties (continued)
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.
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
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.
104
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(p) Goodwill (continued)
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.
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.
(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.
105
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(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.
ii)
Long service leave
The liability for long service leave is recognised and measured as the present value of expected future payments to be
made in respect of services provided by employees up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of
service. Expected future payments are discounted using market yields at the reporting date on national government
bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.
(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.
106
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(u) Interest-bearing loans and borrowings (continued)
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.
(w) 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 and AIT 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 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
107
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(w) Taxation (continued)
-
when the deductible temporary differences associated with investments in subsidiaries, associates and interests in
joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the temporary
differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax
asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences, except:
-
when the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss; or
-
when the taxable temporary differences associated with investments in subsidiaries, associates and interests in
joint ventures, and the timing of the reversal of the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the
same taxation authority.
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except when the GST incurred on a purchase
of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the
cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables are stated
with the amount of GST included.
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.
108
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(x) 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.
(y) 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 18).
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.
When the award securities are acquired from the market in advance, the unallocated securities are treated as
reduction of equity reserve.
A portion of security based payments are classified as cash-settled, as Executives are awarded a cash equivalent of
shares to purchase securities. For these securities the fair value is measured upon issue and recorded as an expense.
Until the liability is settled, the fair value will be remeasured at each reporting period.
109
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
21. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(z) 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 21(n) and Note 21(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 20. All
other notes to the financial statements include amounts for continuing operations, unless indicated otherwise.
22. AUDITOR’S REMUNERATION
2024
2023
$
$
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
680,000
1,125,000
- Services required by legislation to be provided by the auditor
- compliance services
41,239 38,915
- Other assurance and agreed-upon-procedures services under other legislation or
contractual arrangements where there is discretion as to whether the service is provided
by the auditor or another firm
8,812 29,430
- Other services
- due diligence services
- 730,000
- Internal audit quality assurance services
- 37,800
Total
730,051
1,961,145
23. EVENTS AFTER BALANCE SHEET DATE
On 16 August 2024, the Group exchanged contracts for the divestment of its interest in Market Central, Lutwyche
QLD at a sale price of $60.4 million.
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.
110
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
AS AT 30 JUNE 2024
Body corporate
Body corporate
Country of
% of share
Country of
Entity name
Entity type
incorporation
capital held
tax residence
Abacus Group Holdings Limited
Body corporate
Australia
100
Australia
Abacus Finance Pty Limited
Body corporate
Australia
100
Australia
Abacus Funds Management Limited
Body corporate
Australia
100
Australia
Abacus Investments Pty Ltd
Body corporate
Australia
100
Australia
Abacus Note Facilities Pty Ltd
Body corporate
Australia
100
Australia
Abacus Property Services Pty Ltd
Body corporate
Australia
100
Australia
Abacus Storage Funds Management Limited
Body corporate
Australia
100
Australia
Abacus Camellia Investments Pty Limited
Body corporate
Australia
100
Australia
Abacus Riverlands Investments Pty Limited
Body corporate
Australia
100
Australia
444 Queen Street Pty Limited
Body corporate
Australia
100
Australia
Abacus 77 Castlereagh Street Pty Limited
Body corporate
Australia
100
Australia
Abacus Repository Pty Limited
Body corporate
Australia
100
Australia
Abacus U Stow It A1 Pty Limited
Body corporate
Australia
100
Australia
Abacus U Stow It B1 Pty Limited
Body corporate
Australia
100
Australia
Abacus USI C Pty Limited
Body corporate
Australia
100
Australia
Lutwyche City Shopping Centre Pty Limited
Body corporate
Australia
100
Australia
Oasis JV Pty Limited
Body corporate
Australia
100
Australia
Abacus Group Projects Limited & its subsidiaries
Abacus Group Projects Limited
Body corporate
Australia
100
Australia
Abacus Property Pty Ltd
Body corporate
Australia
100
Australia
Abacus U Stow It A2 Pty Limited
Body corporate
Australia
100
Australia
Sucaba UST Pty Limited
Body corporate
Australia
100
Australia
Abacus Allara Street Trust
Trust
N/A
N/A
Australian Trust
Abacus Ventures Trust
Trust
N/A
N/A
Australian Trust
Abacus Trust & its subsidiaries
Abacus Trust
Trust
N/A
N/A
Australian Trust
Abacus Abbotsford Trust
Trust
N/A
N/A
Australian Trust
Abacus Ann Street Trust
Trust
N/A
N/A
Australian Trust
Abacus Ashfield Mall Property Trust
Trust
N/A
N/A
Australian Trust
Abacus Bowden Street Trust
Trust
N/A
N/A
Australian Trust
Abacus K1 Property Trust
Trust
N/A
N/A
Australian Trust
Abacus Lutwyche Trust
Trust
N/A
N/A
Australian Trust
Abacus Oasis Trust
Trust
N/A
N/A
Australian Trust
Abacus Richmond Trust
Trust
N/A
N/A
Australian Trust
Abacus Shopping Centre Trust
Trust
N/A
N/A
Australian Trust
Abacus Virginia Trust
Trust
N/A
N/A
Australian Trust
Abacus Westpac House Trust
Trust
N/A
N/A
Australian Trust
Abacus Westpac House No. 2 Trust
Trust
N/A
N/A
Australian Trust
Abacus 14 Martin Place Trust
Trust
N/A
N/A
Australian Trust
Abacus 33 Queen Street Trust
Trust
N/A
N/A
Australian Trust
Abacus 324 Queen Street Trust
Trust
N/A
N/A
Australian Trust
Lutwyche City Shopping Centre Unit Trust
Trust
N/A
N/A
Australian Trust
Oasis JV Unit Trust
Trust
N/A
N/A
Australian Trust
Abacus Income Trust & its subsidiaries
Abacus Income Trust
Trust
N/A
N/A
Australian Trust
Castlereagh Sub 1 Trust
Trust
N/A
N/A
Australian Trust
Castlereagh FH Sub 1 Trust
Trust
N/A
N/A
Australian Trust
Abacus Group Holdings Limited & its subsidiaries
As trusts are unable to meet the definition of “Australian resident” or “foreign resident” within the meaning of the Income Tax
Assessment Act 1997, the Group has elected to disclose whether the trusts satisfy the definition of “Australian Trust”, and/or if
the trusts are considered residents of a jurisdiction other than Australia.
111
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Abacus Group Holdings Limited, we state that:
In the opinion of the directors:
(a)
the consolidated financial statements, notes and the additional disclosures included in the Directors’
report designated as audited, are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including Australian Accounting
Interpretations) and the Corporations Regulations 2001;
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 21(b); and
(c)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they
become due and payable.
(d)
The consolidated entity disclosure statement required by section 295(3A) of the Corporations Act
2001 is true and correct.
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 2024.
On behalf of the Board.
Myra Salkinder
Steven Sewell
Chair
Managing Director
Sydney, 23 August 2024
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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 2024, the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes to the financial statements, including material
accounting policy information, the consolidated entity disclosure statement 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 2024
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 and associates. 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 to the financial
statements, 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 to the financial
statements in assessing the property valuations
at 30 June 2024.
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 the properties
including tenancy matters and development
status on a sample basis.
•
On a sample basis, we performed the following
procedures for selected properties:
•
Evaluated the key valuation assumptions and
inputs. 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 agreed the passing rental
income in the valuations to the audited
passing rental income.
•
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
Equity Accounted Investment in Abacus Storage King
Why significant
How our audit addressed the key audit matter
The de-stapling of Abacus Storage Property
Trust (ASPT) and Abacus Storage Operations
Limited (ASOL) and the listing of a new Self
Storage REIT, Abacus Storage King (‘ASK’), with
ASOL as the nominated parent entity, was
implemented in early August 2023. ASK is
externally managed by Abacus Group and
following the de-stapling Abacus Group retained
a 19.9% stake in ASK.
Upon de-stapling the Group’s investment in ASK
was classified as an equity accounted
investment, in accordance with AASB 128
Investment in Associates and Joint Ventures, in
the Group’s financial statements. Management
have prepared an analysis outlining the
accounting treatment.
We considered this a key audit matter due to the
significance of the transaction to the Group
during the financial year ended 30 June 2024,
the complexity of the deconsolidation
procedures, the carrying value of the investment
in ASK and the required disclosures in the
financial statements.
For the same reasons we consider it important
that attention is drawn to the disclosure in Note
7 to the financial statements, which describes
the equity accounted investment in ASK as at 30
June 2024.
Our audit procedures included the following:
•
We assessed the appropriateness of the
accounting treatment of the investment in ASK
as an equity accounted investment with
reference to AASB 128 Investment in Associates
and Joint Ventures.
•
We agreed the loss on the deconsolidation to the
supporting calculation prepared by management
and performed procedures to assess the
accuracy of the calculation.
•
We assessed the adequacy of disclosures of the
de-stapling transaction and the Group’s
investment in ASK in the financial report.
•
We performed procedures to assess the fair
value of investment properties held within ASK.
The procedures we performed were consistent
with the procedures outlined in the Investment
Properties key audit matter section.
•
We have reviewed the recognition of the equity
accounted result for the period and
management’s assessment of the year-end
carrying value of the investment in ASK.
Information other than the financial report and auditor’s report thereon
The directors of the Company are responsible for the other information. The other information
comprises the information included in the Group’s 2024 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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:
a)
the financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001;
b)
the consolidated entity disclosure statement that is true and correct in accordance with the
Corporations Act 2001; and
for such internal control as the directors determine is necessary to enable the preparation of:
i)
the financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view and are free from material misstatement, whether due to fraud or error; and
ii)
the consolidated entity disclosure statement that is true and correct and is free of 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.
►
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
►
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.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 19 to 50 of the directors’ report for the
year ended 30 June 2024.
In our opinion, the Remuneration Report of Abacus Group Holdings Limited for the year ended 30
June 2024, complies with section 300A of the Corporations Act 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Responsibilities
The directors 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
23 August 2024
ADDITIONAL INFORMATION
Number of holders of ordinary full paid securities
9,117
Number of holders holding less than a marketable parcel or ordinary fully paid stapled securities
1,166
Voting rights attached to ordinary fully paid stapled securities.
One vote per security
Top 20 largest security holdings as at 31 July 2024
HOLDER NAME
NUMBER OF
SECURITIES
% ISSUED
SECURITIES
CALCULATOR AUSTRALIA PTY LIMITED
395,545,894
44.26%
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
120,953,746
13.53%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
102,481,708
11.47%
CITICORP NOMINEES PTY LIMITED
61,732,816
6.91%
CALCULATOR AUSTRALIA PTY LIMITED
51,192,965
5.73%
ARYM INVESTMENT HOLDINGS PTY LTD
14,600,000
1.63%
BNP PARIBAS NOMS PTY LTD
11,200,337
1.25%
NATIONAL NOMINEES LIMITED
6,870,813
0.77%
CHARTER HALL WHOLESALE MANAGEMENT LIMITED
5,750,000
0.64%
BNP PARIBAS NOMINEES PTY LTD
5,257,999
0.59%
BNP PARIBAS NOMINEES PTY LTD
4,064,295
0.45%
SOLIUM NOMINEES (AUS) PTY LTD
3,876,701
0.43%
CHARTER HALL WHOLESALE MANAGEMENT LIMITED
3,597,461
0.40%
CITICORP NOMINEES PTY LIMITED
1,838,065
0.21%
IOOF INVESTMENT SERVICES LIMITED
1,417,835
0.16%
NETWEALTH INVESTMENTS LIMITED
1,051,734
0.12%
QUIXLEY FINANCE PTY LIMITED
938,439
0.11%
CHARTER HALL WHOLESALE MANAGEMENT LTD
775,000
0.09%
MR STEVEN CRAIG SEWELL
763,108
0.09%
AKAT INVESTMENTS PTY LIMITED