CONTENTS
P. 2
Chairman’s Report
P. 6
Managing Director’s Report
P. 9
Completed Projects
P. 12
Projects Under Construction
P. 14
Future Projects
P. 21
Investment Properties
P. 23
Financial Report
chairman’s REPORT
Dear Shareholder,
It is a great honour to present you with
Finbar’s 25th Annual Report as a property
development company and to announce its
24th year of consecutive profit.
Finbar has this year delivered an after-tax
net profit of $7.1 million for the financial
year ending June 30th 2020.
While market commentary covering the
past financial year can not help but factor
in and reference the unprecedented
impact of a global pandemic, we have
been encouraged by improved sales
activity since June buoyed by Western
Australia’s faster than expected recovery
and its strong performance in terms of
managing and mitigating COVID-19
related impacts.
While it represents a lower than
anticipated profit for the period, we believe
it remains a significant achievement given
the nature of the external environment
as a result of COVID-19 and its ongoing
impact on buyer behaviour, consumer
sentiment and the broader economy.
We have managed to successfully
preserve our strong balance sheet with no
borrowings on development assets as a
result of judicious economic management
in order to ensure we are better positioned
to take advantage of the next upswing in
the local market.
The pandemic’s impact, which continues
to be felt across the globe, comes on
top of what was already one of the most
challenging periods in the company’s 25
year history and at a stage when many in
the industry were beginning to see signs
of a clear and sustained recovery in the
local market. We are proud to have again
delivered shareholders with a profit, albeit
less than anticipated in light of the trading
conditions, and to have maintained our
position as Western Australia’s leading
apartment developer with 6402 lots
delivered over the course of our
25-year history.
The ongoing sound management of the
company by its board and management
team has seen Finbar retain a strong cash
position of $30.6 million despite global
uncertainty and ongoing subdued local
market activity, and we are buoyed by the
pipeline of diverse stock that we are able
to offer. Our ability to continue to deliver
significant profits at times of global and
local uncertainty is a testament to the
quality and experience of our team and
has placed us in the enviable position
of being debt free on all current and
completed stock.
During the past financial year, Finbar
has completed both the low rise Palmyra
East and One Kennedy Maylands projects
as well as the 167 unit mixed use Sabina
project in Applecross with a combined
total of 418 units across all projects
representing an end value in excess of
$223 million.
Despite ongoing challenging conditions,
the company is nearing construction
completion of the 125 unit Riverena
Apartments in inner city Rivervale and has
commenced construction of the 128 unit
development in Dianella. The company is
expected to commence construction on
the landmark Civic Heart project in South
Perth and AT238 on Adelaide Terrace in
the 2020/2021 financial year.
Over the course of the last financial
year we have sold 200 units across all
of our projects with an end value of
$109.3 million which again, represents a
significant achievement during a period
in which we have had to manage the
impact of a global pandemic on significant
buying decisions and ongoing instability in
financial markets as a result.
JOHN CHAN
Message from
The Chairman
2
FINBAR GROUP LIMITED ANNUAL REPORT 2020 Our track record and reputation for delivering complex projects on
time and on budget, and the ongoing strength of our commercial
relationships has also underpinned our ability to deliver consecutive
profits in the face of considerable external pressures.
The completion of the 30 level Sabina
apartment project in March this year,
with an average unit price of more than
$700,000, marked a significant milestone
for the company and was the largest
contributor to second half results for the
financial year. Located in the growing
Canning Bridge precinct, the key driver
for sales continues to be demand
from owner occupiers largely drawn
from within a five-kilometre radius of
its location and with significant sales
also attributed to the slowly returning
investor market.
Our track record and reputation for
delivering complex projects on time and
on budget, and the ongoing strength
of our commercial relationships has
also underpinned our ability to deliver
consecutive profits in the face of
considerable external pressures. This
has also been boosted by a continued
focus on our core business activity
of delivering projects of scale in the
Perth CBD and selected, strategically
located suburbs which satisfy Finbar’s
prerequisite for access to key amenities,
transport and infrastructure.
While the market remains somewhat
unpredictable in terms of the impact
of COVID-19 restrictions which are
currently having a marked impact on
interstate and international travel, we
remain cautiously optimistic about the
continued recovery and improvement
in sales throughout the course of
the calendar year. Finbar’s ability to
remain agile and responsive under
such conditions has underpinned the
company’s ongoing resilience and
success while other operators have
fallen by the wayside and again is
testament to the prudent and strategic
management of the company’s assets
and resources.
Our commitment as a company to
ongoing agility and responsiveness
to prevailing market conditions and
evolving buyer behaviour continues to
impact the location and markets we
target and which we believe will deliver
ongoing shareholder value.
The Perth residential market continues
to evolve in line with global trends,
with an increasing diversity of buyer
demographics swapping the demands
of larger free standing homes on
more substantial lots for the relative
convenience and sociability that
apartment living offers and which
continues to stimulate and underpin
buyer demand.
First home buyers and empty nesting
down sizers continue to drive the bulk
of the growth in demand for apartments
across Perth, with a large proportion
looking for the ease of moving from
a family home to a high amenity
apartment in suburbs familiar to them
or of opting to sample city life after years
in the suburbs.
While first home buyers have dominated
sales at Finbar’s One Kennedy and
Palmyra East low rise developments,
demand and competition in this
sector has directly impacted margins
achieved on these projects with higher
specifications at each needed to drive
sales in this particular market which has
impacted profit levels this financial year.
Finbar also this year welcomed the
approval of its landmark Civic Heart
project in one of South Perth’s most
iconic locations after a prolonged
period of reviews and delays. I would
personally like to take this opportunity
to thank the WA Minister for Planning,
Ms Rita Saffioti, who approved the
project in February this year following
a comprehensive review of the Joint
Development Assessment Panel’s
previous decision.
FINBAR GROUP LIM IT ED AN NU A L R EP O R T 2020
3
As a largely CBD focused developer
we are keen to see the revitalisation of
the Perth CBD which has continued to
struggle economically and socially and
which is a key focus of the forthcoming
Perth City Council elections.
Thriving city centres require a
concentration of residents that
apartment living is able to facilitate.
Making the city attractive to those
seeking a more urban lifestyle is
key to Perth’s ongoing growth and
development and when managed
in a thoughtful and considered way,
sensible density will ensure Perth
transforms into a thriving urban centre
open for business and investment.
While we are seeing the cautious
return of investors to the market as
rental vacancy rates across the city
continue to drop, Perth’s persistent
status as one of the country’s most
affordable markets will help drive the
return of investors in more significant
numbers and provide a much needed
boost to the local market. The
establishment of Finbar to Rent last
year at a time when investor numbers
in terms of overall purchaser figures
remained low, has enabled it to
successfully embed its offering to
capitalise on an anticipated upswing in
investor activity.
As the Perth market continues
to show signs of growth, despite
the March quarter’s COVID-19
related impairment, Finbar’s strong
balance sheet and agility in terms
of responsiveness ensures we are
perfectly positioned to take advantage
of the next upswing in market activity
and a real return in consumer
confidence.
We are very pleased to be able
to deliver continued value to our
shareholders despite the impact of
global recession and uncertainty
backed by a multi-billion dollar
pipeline of approved projects in some
of Perth’s most sought after locations.
Our fully franked dividend payment
this year of $0.01 per share is designed
to conserve our cash balance ahead
of the anticipated commencement of
construction of the capital-intensive
Civic Heart project and AT238 project.
On behalf of the Board of Directors
and Shareholders, I would like to
thank the Finbar management team
for their continued hard work and
dedication to the ongoing success
of the company during what has
been an unprecedented period in our
State’s history.
I would also like to take this
opportunity to thank our joint venture
partners, our primary building partner
– Hanssen, relationship architect –
SS Chang Architects, as well as our
marketing and sales agents, suppliers,
consultants and banking partners.
Ours is a relationship based business
and it is the efforts of the broader team
that underwrite our ongoing success.
J O H N C H A N
Executive Chairman
The Minister’s approval of the project,
which has an estimated end value of
more than $400 million, reinforces the
findings of an independently appointed
expert Design Review Panel which
found the project to be of exemplary
design and an exceptional entry
statement to this iconic and highly
visible precinct.
We remain committed to delivering
the people of South Perth a high
quality project with a sophisticated
range of resort style amenities and
significant and inclusive communal
spaces in an iconic and convenient
location boasting some of the best
views the city has to offer.
The approval which came as part of the
State Government’s recent overhaul of
the development approval process in
Western Australia, marks a significant
step forward for sensible development
in Perth and is part of its efforts
to streamline what was an overly
bureaucratic and convoluted process
and is part of an ongoing effort to help
rebuild the economy in the wake of the
impact of COVID-19.
The greatest contributor to the
overall costs of our projects remains
the labour cost, which accounts for
approximately 60% of overall costs
and without strong construction
partnerships that Finbar has, provides
a potential barrier to developers’
abilities to remain financially
competitive, deliver a diversity of
housing options and employ potentially
thousands of Western Australians.
The continued upswing and strong
performance of the State’s resource
sector continues to underpin both
WA and Australia’s economic
resilience and is a key factor in our
ability to withstand some of the most
challenging economic conditions in
recent memory.
4
FINBAR GROUP LIMITED ANNUAL REPORT 2020 FINBAR GROUP LIM IT ED AN NU A L R EP O R T 2020
5
MANAGING DIRECTOR’S REPORT
In last year’s report, I referenced the
previous financial year as one of the
most challenging in our company’s
24-year history. Few could have foreseen
or indeed planned for a global pandemic
that would dominate our 25th year and
impact virtually every aspect of our
personal and working lives.
While it is important to acknowledge the
impact of COVID-19 on our fourth quarter
performance this financial year, our
underlying stable financial base leading
into the pandemic and the agility of our
compact team has helped mitigate many
of the risk factors. In addition to this,
there have also been some unexpected
positive effects for Western Australia
as a result of the pandemic which
are supporting many of the business
fundamentals through population growth.
While we acknowledge that there is still
much to play out and be learned in terms
of the current and ongoing crisis and
the impact of the various government
stimulus measures, our ability to remain
profitable despite considerable economic
turmoil is certainly something we, as a
company, are proud of.
There have been a raft of Federal and
State government stimulus measures
and incentives released in the wake of
the pandemic that have had a material
effect on the WA property sector. While
the bulk of the Federal measures have
been pitched primarily at stimulating
house and land building activity rather
than the apartment sector directly, the
State Government stamp duty concession
is playing a part in supporting all sectors
of the residential property market, with
the overall effect of reducing the ‘in-cost’
to help stimulate buyer activity.
Our sales levels took a direct hit in March
and April as we experienced peak COVID-
related uncertainty and restrictions,
however we saw consumer confidence lift
considerably across June, July and August
as the impact of stimulus measures began
to be felt and life in WA began to return
to a ‘new normal’, with sales offices and
display apartments once again open to
the public.
Remarkably, Finbar achieved an average
of just under one sale per day during
this three-month period, resulting in
$44 million worth of sales – the highest
monthly sales average in two years.
Another factor contributing to the slow
recovery of our sector is the ongoing
repatriation of West Australians from
overseas and other Australian States as
a result of COVID-19, which is having a
positive effect on population growth for the
State. This is driving an increase in rental
demand therefore improving investment
returns for residential property, in turn
increasing investor interest, or making
ownership a more attractive proposition to
existing tenants.
COVID-related travel restrictions have
impacted the number of people travelling
to Western Australia, which has impacted
on settlement times for foreign buyers,
but we do see definite future opportunities
in the wake of pandemic as WA’s isolation
becomes a key selling point.
The continued upswing in the resources
sector and persistently high commodity
prices are also beginning to impact the
local property market in a more significant
way, with a longer-term reversal in the
erosion of the median house and unit price
now looking far more optimistic.
The resource led recovery, coupled
with WA’s relatively low case numbers
and absence of onerous restrictions on
business, has helped fuel consumer
confidence and remove some of the fear
and insecurity around Western Australians
making significant financial decisions
such as the purchase of apartments.
The combination of all of these factors
has underwritten the resilience of the
sector in the face of heightened economic
uncertainty and paved the way for a far
swifter recovery than many anticipated in
March and April of this year.
Once again, Finbar has finished the
financial year with a solid $30.6 million
in cash and we remain in the fortunate
position of having no project related debt
and $164 million in completed stock to
fund future project commencements
on selldown.
DARREN PATEMAN
Message from the
Managing Director
6
FINBAR GROUP LIMITED ANNUAL REPORT 2020 Finbar achieved an average of just under one sale per day during
this three-month period, resulting in $44 million worth of sales – the
highest monthly sales average in two years.
Finbar’s net profit of $7.07 million for
the full financial year ended June 30
2020, although less than anticipated
pre-pandemic, marks 24 consecutive
years of profit in what has proved to be
one of the most challenging years in our
Nation’s economic history.
The figure was lower than originally
predicted, due in part to the impact of
COVID-19 on buyer behaviour and sales
in the fourth quarter, but also because
of the lower than anticipated margins
on our low-rise Maylands and Palmyra
projects. This primarily occurred due to
a specification lift, conducted to ensure
these projects remained competitive
against the traditional entry level house
and land package market that was
offering significant incentives.
The temporary closure of sales offices
also impeded buyer engagement and
activity while government imposed
restrictions were in place, as did
interstate and international travel bans
which delayed foreign settlements, most
notably at Sabina in Applecross during
the current reporting period.
The completion of our Palmyra
East, One Kennedy in Maylands and
Sabina projects this financial year has
significantly boosted our pipeline of
completed stock with settlements at
Sabina noted as the largest contributor
to our second half results.
One of our key successes during the
past financial year has undoubtedly
been receiving development approval
for our landmark South Perth Civic
Heart project. The iconic project, which
has an estimated end value of $400m
and comprises two towers of 39 and 22
storeys respectively, was ultimately given
approval by The Minister for Planning in
February this year after years of
protracted delays and disruptions.
Civic Heart will be a gateway to South
Perth linking the foreshore to the
Perth Zoo and will create thousands
of direct and indirect jobs for Western
Australians during construction and into
the future. Our pre-sales, launched in
the midst of the pandemic, have been
encouraging and we anticipate this
momentum to continue as we head into
the full marketing campaign which will
take place around the time this report
goes to print.
The recovery of WA’s rental market,
which recently recorded the lowest
vacancy rates in eight years after a
prolonged period of subdued pricing and
activity, will also help underpin and drive
the recovery in the residential market,
further complemented by ongoing low
interest rates and government stimulus
measures. We believe these combined
factors have the potential to push us
further ahead in the recovery journey
than we might otherwise have been if
the Coronavirus had not been a factor in
Western Australia.
The ongoing reduction in vacancy rates
across the Perth metropolitan area is
also resulting in the cautious return of
investors to the market, a factor we see
as absolutely crucial to returning to the
sorts of sales activity and profit levels we
achieved ahead of the downturn in the
WA property sector.
The successful establishment last year
of Finbar to Rent, an in house division
dedicated to providing a streamlined
management service exclusive to owners
of Finbar properties, has ensured
the company is well placed to take
advantage of an upswing in the investor
market and has grown from a standing
start to now having 266 residential
properties under management along
with the management of Finbar’s own
commercial office assets.
The subsequent establishment of
a dedicated in house Finbar Sales
team, focused exclusively on the sales
and marketing of a select number of
Finbar properties, has further added to
our offering and provides a continuity
of service and professionalism to our
client base.
Another by-product of the resurgence in
the WA resources sector has been the
ongoing improvement of our Karratha
asset, which continues to operate at
full occupancy and is seeing continued
growth in rental rates in line with the
upswing in the resource sector. While it
has never been Finbar’s intention to hold
7
FINBAR GROUP LIMITED ANNUAL REPORT 2020 the asset long term, its performance
continues to be a valued investment
income source for the business.
The Company acknowledges the
tireless work of the WA Property
Council, led by chief executive
Sandra Brewer, and their continued
advocacy for key reforms across the
sector. They have been instrumental
in assisting the reform process and
have worked closely with both the
Premier, Treasurer, and the Minister
for Planning to help stimulate the WA
property sector and economy more
broadly via strategically positioned
stimulus measures.
While the changes to stamp duty as
part of the WA Government’s stimulus
measures have been well received,
we welcome the further reforms and
continue to advocate for dispensations
to stimulate growth.
The impact of the foreign
buyers’ surcharge remains a
significant deterrent to foreign
investment and the continued recovery
of the local property market, therefore
we continue to work with other key
sector figures to lobby the government
for its removal. Its imposition in
Western Australia in response to
similar moves on the east coast has
failed to generate any significant
revenue for the State Government.
Foreign buyers are one of the key
drivers in terms of achieving pre-sale
targets to commence construction on
major projects and in turn help drive
our local economic recovery.
The WA State Government’s recent
overhaul of the development approval
process, designed to stimulate the
sector in the wake of COVID-19, is also
a significant and welcome move and
will assist developers through what
was previously an overly complex and
risky bureaucratic maze that was a
disincentive to anyone looking to invest
in more complex developments in WA.
Our key focus remains on areas
where we are able to achieve density
and scale, notably the Perth CBD,
Applecross and South Perth, which
have traditionally been where we have
focused our efforts.
As alluded to previously, we remain
open to opportunities in Perth’s
Western Suburbs where significant
demand has been identified in the
local downsizer market, however
we remain judicious in our choice of
location and our involvement in any
opportunity will require scale
to progress.
While there continues to be no
shortage of development sites
presented to us on a daily basis, the
softer market conditions ensure we
continue to focus on projects that will
allow us to deliver margin and scale in
areas that are familiar to us.
Typically, these are city-based projects
where height limits allow us to use
the available density to best utilise our
competitive advantages.
We believe our focus and track record
of development in the Perth CBD
ideally positions us to continue to be a
significant contributor to the growth of
the city block residential population.
A thriving CBD underpins the
economic sustainability of Western
Australia, drives tourism and growth
and we are keen to help deliver on this
identified economic potential.
I would like to also take this
opportunity to thank our long-term
joint venture partners, many of whom
have been working alongside us for
decades. Their loyalty and commitment
further underpin our success in often
challenging markets and allows us
to continue to develop through these
markets and we thank them for their
long-term loyalty and partnership.
As well as focusing on working through
our current pipeline of product, our
key focus for the coming financial year
will be to commence construction of
both Civic Heart and AT238 on Adelaide
Terrace.
Finbar also acknowledges and
benefits from its loyal and consistent
shareholder base that has supported
us through the good and bad times. We
thank you for that ongoing support and
the trust you place in us.
In light of our desire to conserve cash
to fund our significant key projects
this year, the Board has resolved to
pay a final dividend of $0.01 per share,
fully franked, bringing the distribution
to $0.03 per share attributable to
the year.
D A R R E N P A T E M A N
Managing Director
These projects will involve significant
capital investment from Finbar and its
partners and therefore the continued
sell down of stock and the completion
of Riverena in October will remain our
primary short-term focus.
While we remain open to development
opportunities that satisfy our key
requirements in our core areas, our
existing pipeline ensures we are
under no pressure to actively source
additional development sites. We
remain in the fortunate position of
having an adequate land bank so that
our capital can be actively deployed
into the next projects we have
earmarked for launch, pending the
market conditions as they evolve.
We would also like to acknowledge
the signing of The Perth City Deal, a
joint State and Federal initiative
designed to activate the Perth city
centre and support small business and
local jobs as we look forward.
The recently announced initiative is
also underpinned by the desire for
a CBD-based university campus to
facilitate density and vibrancy in the
Perth City centre.
8
FINBAR GROUP LIMITED ANNUAL REPORT 2020 COMPLETED
PROJECTS
Pictured: Sabina Applecross
9
FINBAR GROUP LIMITED ANNUAL REPORT 2020 Palmyra
APARTMENTS EAST
PALMYRA APARTMENTS EAST
49 McGregor Road, Palmyra
43 McGregor Road Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 50%
Marketing Commenced
Construction Completed
Total Lots
Approximate Total Project
Sales Value
Value of Sales to Date
Lots Sold
Lots Unsold
Jan-18
Sept-19
128
$49.7m
$30.3m
81 (63%)
47 (37%)
Situated on the doorstep of the historic port city of
Fremantle, in the established community of Palmyra.
Palmyra Apartment Estate is a transformative, three-
storey gated residential community to be developed
in two stages. Palmyra Apartments East (Stage 1)
and Palmyra Apartments West (Stage 2) feature
contemporary architectural design in a beautifully
landscaped setting.
ONE KENNEDY
1 Kennedy Street, Maylands
241 Railway Parade Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 50%
Marketing Commenced
Oct-18
Construction Completed May-20
Total Lots
Approximate Total Project
Sales Value
Value of Sales to Date
Lots Sold
Lots Unsold
$54.5m
$24.5m
61 (50%)
62 (50%)
123
One Kennedy comprises 120 one, two, and three
bedroom residential three storey walk-up apartments
and 3 commercial lots. One Kennedy capitalises on its
proximity to public transport, located only 200 metres
from Maylands railway station, and connecting directly
to the Central Business District 4.5 kilometres away.
10
FINBAR GROUP LIMITED ANNUAL REPORT 2020 SABINA APPLECROSS
908 Canning Highway, Applecross
Finbar Applecross Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 50%
Marketing Commenced
Construction Completed
Total Lots
Approximate Total Project
Sales Value
Value of Sales to Date
Lots Sold
Lots Unsold
Feb-18
Feb-20
167
$120.0m
$69.7m
96 (57%)
71 (43%)
Located only metres from the Swan River and
approximately 700 metres to the Canning Bridge
Train Station. Sabina is the first stage of a three stage
development and consists of 164 residential apartments
and 3 ground floor commercial tenancies within a
podium and 30 storey tower built form. Featuring a
central shared lane and public amenity piazza.
11
FINBAR GROUP LIMITED ANNUAL REPORT 2020 UNDER
CONSTRUCTION
Pictured: Riverena
12
Images are artist impressions only and are subject to change.
FINBAR GROUP LIMITED ANNUAL REPORT 2020 RIVERENA
5 Rowe Avenue, Rivervale
Lot 1001-1003 Rowe
Avenue Pty Ltd
Equity Accounted Investee
Project Company
Entity Type
Finbar’s Ultimate Interest 50%
Marketing Commenced
Estimated Completion
Total Lots
Approximate Total Project
Sales Value
Value of Sales to Date
Lots Sold
Lots Unsold
Feb-19
Nov-20
125
$52.1m
$18.8m
48 (38%)
77 (62%)
Riverena is the second stage of the Arbor development
in the Springs precinct, which will comprise 125 one,
two, and three bedroom residential apartments.
DIANELLA APARTMENTS
36 Chester Avenue, Dianella
36 Chester Avenue Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 100%
Construction Commenced Aug-20
Estimated Completion
Total Lots
Approximate Total Project
Sales Value
Value of Sales to Date
Lots Sold
Lots Unsold
FY22
128
$63.3m
$11.5m
24 (19%)
104 (81%)
Conveniently located next to Dianella Plaza, this new
development combines 128 stylish apartments with
resort style facilities, unique to this established and
loved suburb.
13
FINBAR GROUP LIMITED ANNUAL REPORT 2020
FUTURE
PROJECTS
Pictured: Civic Heart
14
FINBAR GROUP LIMITED ANNUAL REPORT 2020 CIVIC HEART
1 Mends Street, South Perth
1 Mends Street Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 50%
Targeted Commencement FY21
Estimated Completion
FY23
Total Lots
335
Approximate Total Project
Sales Value
Value of Sales to Date
Lots Sold
Lots Unsold
$400m
$30m
27
321
This iconic site bounded by Mends Street, Labouchere
Road and Mill Point Road brings luxurious apartments,
world-class facilities and a thriving ground floor
commercial precinct to the historic suburb of South
Perth.
15
FINBAR GROUP LIMITED ANNUAL REPORT 2020 AT238
238 Adelaide Terrace, Perth
240 Adelaide Terrace
Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 50%
Estimated Completion
TBC
Total Lots
121
Approximate Total Project
Sales Value
$89m
AT238 comprises of 119 Apartments & 2 commercial
lots, and is set to become Finbar’s 10th Development
comprising of 1502 lots developed along Adelaide
Terrace.
AURORA APPLECROSS
3 Kintail Road, Applecross
Finbar Applecross Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 50%
Construction Commenced TBC
Estimated Completion
TBC
Total Lots
121
Approximate Total Project
Sales Value
Value of Sales to Date
Lots Sold
Lots Unsold
$143.1m
$670k
1 (1%)
120 (99%)
The second stage of three in the Canning bridge
precinct, Aurora combines luxurious apartment finishes
& world-class facilities within an affluent Applecross
address. Featuring a central shared lane and public
amenity piazza.
16
FINBAR GROUP LIMITED ANNUAL REPORT 2020
CANNING HWY APPLECROSS
STAGE 3
912 Canning Highway, Applecross
Project Company
Entity Type
Finbar’s Ultimate Interest
Estimated Completion
Total Lots
Approximate Total Project
Sales Value
Finbar Applecross Pty Ltd
Fully Owned Subsidiary
50%
TBC
154
$103m
Located only metres from the Swan River and
approximately 600 metres to the Canning Bridge Train
Station, this 2,620sqm site fronting Canning Highway
received DA approval in April 2017 as the third of 3
stages comprising 151 residential apartments and 3
ground floor commercial tenancies within a podium and
26 storey tower built form.
Palmyra
APARTMENTS WEST
PALMYRA APARTMENTS WEST
45 McGregor Road, Palmyra
43 McGregor Road Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 50%
Estimated Completion
TBC
Total Lots
130
Approximate Total Project
Sales Value
$52m
Palmyra Stage 2 will commence to coincide with
the completion of Stage 1 and will consist of 130
apartments comprised of one, two, and three bedroom
apartments in a walkup low-rise structure with below
ground parking over 13,421 square metres and has an
anticipated end value of approximately $52 million. Both
stages of the project are aligned with the Company’s
strategy of providing entry level product in prime
locations to appeal to the younger owner-occupier and
broader investor market.
17
FINBAR GROUP LIMITED ANNUAL REPORT 2020 THE POINT
31 Rowe Avenue, Rivervale
31 Rowe Avenue Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 50%
Estimated Completion
TBC
Total Lots
176
Approximate Total Project
Sales Value
$90m
The Point development is located 200 metres from
Finbar’s highly successful Spring View Towers project
and 350 metres from Finbar’s Arbor projects. The
development is located on a 4,000 square metre site
situated on the corners of Brighton Road, Rowe Avenue,
and Great Eastern Highway in the Springs precinct
in Rivervale. The Point will comprise of 167 one, two,
and three bedroom apartments and 9 commercial lots
on the ground floor and will be situated at the main
entrance to the Springs precinct, opposite the Aloft
Hotel.
239 GREAT EASTERN HIGHWAY
239 Great Eastern Highway
Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 100%
Estimated Completion
Total Lots
Approximate Total Project
Sales Value
TBC
TBC
$75m
The 239 Great Eastern Highway project has an approved
DA for 194 one and two bedroom apartments and
154sqm of ground floor commercial.
18
FINBAR GROUP LIMITED ANNUAL REPORT 2020
LOT 1000
32 Riversdale Road, Rivervale
32 Riversdale Road Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 50%
Estimated Completion
TBC
Total Lots
150
Approximate Total Project
Sales Value
$65m
Lot 1000 is the seventh development site to be secured
by Finbar and its respective development partners
within the Springs precinct. Whilst detailed design
works will not commence for some time, and the
ultimate yield is yet to be negotiated through formal
development application with approval authorities, it is
anticipated that the end project will yield approximately
150 residential apartments with an end sales value of
approximately $65 million.
2 HOMELEA COURT
Cnr Rowe Avenue & Homelea Court,
Rivervale
2 Homelea Court Springs
Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 100%
Estimated Completion
Total Lots
Approximate Total Project
Sales Value
TBC
185
$83m
Acquired in 2016, the 3,770 square metres of land
located on the corners of Rowe Avenue and Homelea
Court opposite Finbar’s Spring View Towers and is
proposed to be developed into a project consisting of
approximately 185 apartments within a 10 level building.
The proposed apartment project has an estimated end
value of approximately $83 million.
19
FINBAR GROUP LIMITED ANNUAL REPORT 2020
FORMER ABC STUDIOS
187 Adelaide Terrace, East Perth
Finbar Sub 104 Pty Ltd
Fully Owned Subsidiary
Project Company
Entity Type
Finbar’s Ultimate Interest 100%
Estimated Completion
Total Lots
Approximate Total Project
Sales Value
TBC
TBC
TBC
The former ABC Radio Studios heritage building with a
GFA of 3,711sqm over 3 levels. Finbar acquired the final
stage from the JV partner to better leverage potential
future development outcomes.
LOT 888
2 Hawksburn Road, Rivervale
Rowe Avenue Pty Ltd
Equity Accounted Investee
Project Company
Entity Type
Finbar’s Ultimate Interest 50%
Estimated Completion
TBC
Total Lots
TBC
Approximate Total Project
Sales Value
$40m
The current approved DA comprises a 6 level office
building with 6,250sqm NLA. A concept has been
developed for a residential outcome of 86 apartments
and 1,200sqm of commercial. An alternative concept
of a wholly commercial building is being explored that
reflects current commercial office market demand.
20
FINBAR GROUP LIMITED ANNUAL REPORT 2020 INVESTMENT
PROPERTIES
Pictured: Fairlanes
21
FINBAR GROUP LIMITED ANNUAL REPORT 2020 FAIRLANES
181 Adelaide Terrace, East Perth
Total Sqm
Office Sqm
Retail Sqm
FY21 Forecasted Rent
Sqm Leased
7582
7112
470
$2.2m
6810 (90%)
PELAGO
Sharpe Avenue, Karratha
Total Lots
Residential Lots
Commercial Lots
FY21 Forecasted Rent
Lots Leased
Residential Lots Leased
Commercial Lots Leased
124
102
22
$4.76m
108 (87%)
96 (94%)
13 (59%)
AURELIA
1 Harper Terrace, South Perth
Total Sqm
Estimated sales value
Estimated income value
929
$5.605m
$366,000 p.a.
22
FINBAR GROUP LIMITED ANNUAL REPORT 2020 FINANCIAL
REPORT
Pictured: One Kennedy
23
FINBAR GROUP LIMITED ANNUAL REPORT 2020 FINANCIAL REPORT
For the Year Ended 30 June 2020
CONTENTS
Directors’ Report (including Corporate Governance Statement)
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Lead Auditor’s Independence Declaration
ASX Additional Information
PAGE
25
42
43
44
45
46
80
81
86
87
24
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT
For the Year Ended 30 June 2020
The Directors present their report together with the consolidated financial report of the Group, comprising Finbar Group Limited (‘the
Company’), its subsidiaries and the Group’s interest in equity accounted investees for the financial year ended 30 June 2020 and the
independent auditor’s report thereon.
CONTENTS OF DIRECTORS’ REPORT
PAGE
1
2
3
4
5
6
7
8
9
10
11
12
13
Directors
Company Secretary
Directors’ Meetings
Corporate Governance Statement
4.1
4.2
4.3
Board of Directors
Remuneration Committee
Remuneration Report - Audited
4.3.1
4.3.2
4.3.3
4.3.4
4.3.5
Principles of Remuneration - Audited
Directors’ and Executive Officers’ Remuneration - Audited
Analysis of Bonuses included in Remuneration Report - Audited
Directors’ and Executives Interests
Equity Instruments - Audited
4.4
4.5
4.6
4.7
4.8
Audit Committee
Risk Management
Ethical Standards
Communication with Shareholders
Diversity
Principal Activities
Operating and Financial Review
Dividends
Events Subsequent to Reporting Date
Likely Developments
Directors’ Interests
Indemnification and Insurance of Officers and Auditors
Non-audit Services
Lead Auditor’s Independence Declaration
26
27
27
28
28
28
29
29
31
32
33
33
34
34
35
35
36
36
36
39
40
40
40
40
41
41
25
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
1
Directors
The Directors of the Company at any time during or since the end of the financial year are:
Executive Director and Chairman
John CHAN - BSc, MBA, MAICD
Director since 27 April 1995
Chairman since 15 July 2010
John Chan is Executive Director and Chairman of Finbar, and a Director of its Subsidiaries and equity accounted investees.
John was appointed director in 1995 and was instrumental in re-listing Finbar on the ASX as a property development company.
Prior to joining Finbar, John headed several property and manufacturing companies both in Australia and overseas.
John holds a Bachelor of Science from Monash University in Melbourne and a Master of Business Administration from the
University of Queensland. John is a Member of the Australian Institute of Company Directors, is a Trustee for the Western
Australian Chinese Chamber of Commerce, and is a former Senate Member of Murdoch University.
Managing Director
Darren John PATEMAN - EMBA, GradDipACG, ACSA, AGIA, MAICD
Director since 6 November 2008
Managing Director since 15 July 2010
Darren Pateman is the Managing Director of Finbar and a Director of Finbar’s Subsidiaries and equity accounted investees.
Darren commenced with Finbar prior to its relisting on the ASX as a property development company in 1995 and in this time has
played a primary role in developing Finbar’s systems, strategy and culture.
Darren has held several positions in his 25 years with the company which has given Darren an intimate knowledge of the key
aspects of Finbar’s business. Darren was formerly Company Secretary from 1996 to 2010, Chief Executive Officer from 2008 to
2010, and was appointed Managing Director on 15 July 2010.
Darren is a Chartered Secretary and holds an Executive Master of Business Administration from the University of Western
Australia and a Graduate Diploma in Applied Corporate Governance (GradDipACG). Darren is an Associate of the Institute of
Chartered Secretaries and Administrators and a Member of the Australian Institute of Company Directors.
Executive Director and Chief Operations Officer
Ronald CHAN
Director since 24 February 2017
Ronald Chan is the Chief Operations Officer of Finbar and a Director of Finbar’s Subsidiaries and equity accounted investees.
Ronald joined the Board as an Executive Director on 24 February 2017. Ronald brings 16 years of experience in Finbar’s Company
operations where he has worked in several roles in the organisation including marketing, contract administration, and in 2013
was appointed Chief Operations Officer. In this role Ronald has gained an intimate understanding of the Company’s relationships
and systems and managed the Company’s transition to digital and online marketing strategies.
Non-executive Director
Kee Kong LOH - B Acc, CPA
Director since 28 April 1993
Kee Kong Loh joined the Board in April 1993 and has substantial experience in the governance of companies in property
development, marine transportation, and electronics manufacturing sectors. He has a degree in accountancy from the University
of Singapore and is a member of the Institute of Certified Public Accountants of Singapore.
26
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
1
Directors (continued)
Non-executive Director
Terence Siong Woon PEH - B.Comm, M.Comm
Director since 24 April 2018
Terence Peh joined the Board on 24 April 2018. Terence is Chief Executive Officer and Executive Director of Chuan Hup Holdings
Limited, an investment company listed on the Singapore Stock Exchange, and Finbar’s largest corporate shareholder.
Terence has over 21 years of experience in property development investment and project management in Asia Pacific, and
management experience in finance in the marine and electronics manufacturing services industries.
Terence obtained his Bachelor of Commerce in Marketing from Curtin University and a Master of Commerce in Finance from the
University of New South Wales.
Non-executive (Independent) Director
Lee VERIOS - LLB, MAICD
Director since 6 December 2011
Lee Verios joined the Board in December 2011. He is a well credentialed commercial lawyer having practised in Western Australia
for over 40 years.
Until his retirement from practising law in 2012, Lee was partner in the international law firm of Norton Rose and the leader of
their Commercial Property division in Perth. Throughout his legal career, Lee has held senior management roles in each of the
firms of which he has been a member.
In addition to his legal practice, Lee is an experienced company director, having held positions in a variety of public and private
enterprises. He has been a director of privately owned investment company Wyllie Group Pty Ltd since July 2004.
Lee is a member of the Australian Institute of Company Directors, the Law Society of WA and was previously Chairman of the
Australian Indonesian Business Council (WA Branch).
2
Company Secretary
The Company Secretary of the Company at any time during or since the end of the financial year is:
Edward Guy BANK - B Bus, ASCPA
Company Secretary since 2 December 2016
Edward Bank is the Company Secretary of Finbar, and of Finbar’s Subsidiaries and equity accounted investees. Ed is a Certified
Practicing Accountant with 28 years experience in private practice including 8 years as the Company’s external accountant. Ed
joined the Company in 2005 in the capacity of Chief Financial Officer.
Ed continues to hold the position of Chief Financial Officer.
3
Directors’ Meetings
The number of Directors’ meetings attended by each of the Directors of the Company, whilst being a Director, during the financial
year are:
Director
John CHAN
Darren John PATEMAN
Ronald CHAN
Kee Kong LOH
Lee VERIOS
Terence Siong Woon PEH
Board
Meetings
Held
Board
Meetings
Attended
Resolutions
Without
Meetings
Audit
Committee
Meetings Held
Audit
Committee
Meetings
Attended
Remuneration
Committee
Meetings
Held
Remuneration
Committee
Meetings
Attended
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
1
4
1
N/A
N/A
N/A
2
2
2
N/A
N/A
N/A
2
2
2
2
N/A
N/A
2
2
2
2
N/A
N/A
2
2
2
27
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
4
Corporate Governance Statement
The Board (‘Board’) of Finbar Group Limited (‘Finbar’ or ‘the Company’), its subsidiaries and equity accounted investees
(collectively the Group) is committed to maintaining a high standard of corporate governance in the conduct of the organisation’s
business in order to create and deliver value to shareholders. In this regard, Finbar has established a corporate governance
framework, including corporate governance policies and charters to assist in this commitment. A copy of these policies and
charters are available from the governance page of Finbar’s website, www.finbar.com.au and are referenced throughout this
document where relevant.
The framework is reviewed and revised in response to changes to law, developments in corporate governance best practice and
changes to the Finbar business environment.
As a listed entity, Finbar is required to comply with Australian laws including the Corporations Act 2001 (Cth) and the
Australian Securities Exchange Listing Rules, and to report against the ASX Corporate Governance Council’s Principles and
Recommendations.
4.1
Board of Directors
Role of the Board
The Board Charter sets out the Board’s role, powers and duties, and establishes the functions reserved for the Board and those
which are delegated to the management. The Board’s primary role is the protection and enhancement of long-term shareholder
value. To fulfil this role, the Board is responsible for the overall corporate governance of the Group.
The Board has delegated responsibility for the operation and administration of the Group to the Executive Chairman, the
Managing Director and Senior Executives.
Composition of Board
The Board recognises the importance of ensuring that Directors are free from interests and relationships that could, or could
reasonably be perceived to materially interfere with the Director’s ability to exercise independent judgement and act in the
Group’s best interests.
Accordingly, the Board has adopted guidelines, set out in the Board Charter, which are used to determine the independence of
the Directors.
Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the
Group. Where the Board believes that a significant conflict exists for a Director on a Board matter, the Director concerned will be
restricted from receiving materials, discussing or voting on the matter.
Details of each of the non-executive Directors (Independent) are set out in the Directors Report (page 27).
4.2
Remuneration Committee
The Remuneration Committee Charter sets out the Remuneration Committee’s role, powers and duties, and establishes the
functions delegated to the Committee by the Board. The Remuneration Committee reviews and makes recommendations to the
Board on remuneration packages and policies applicable to the Executive Officers and Directors themselves of the Company and
of other Group Executives. It is also responsible for share option schemes, incentive performance packages, superannuation
entitlements, retirement and termination entitlements, fringe benefits policies and professional indemnity and liability insurance
policies.
The following directors serve on the Remuneration Committee:
» Kee Kong LOH (Chairman) - Non-executive Director
»
»
»
John CHAN - Executive Director and Chairman
Lee VERIOS - Non-executive Independent Director
Terence Siong Woon PEH - Non-executive Director
The Remuneration Committee Charter sets out the process for the periodical evaluation of the performance of the Executive
Chairman and Managing Director. These evaluations have been conducted during the period.
The Remuneration Committee Charters sets out the process for the periodical evaluation of the performance of the Senior
Executives. The Remuneration Committee in consultation with the Executive Chairman and Managing Director are responsible for
the periodical evaluation of the performance of the Senior Executives. These evaluations have been conducted during the period.
Finbar has a written agreement, either in the form of an employment contract or letter of employment, with each Executive
Director and Senior Executive which sets out the terms of their appointment.
A copy of the Remuneration Committee Charter is available on Finbar’s website www.finbar.com.au.
28
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
4
4.3
Corporate Governance Statement (continued)
Remuneration Report - Audited
4.3.1 Principles of Remuneration
Remuneration of Directors and Executives is referred to as remuneration as defined in AASB 124 Related Party Disclosures and
Section 300A of the Corporations Act 2001.
Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Group,
including Directors of the Company and other Executives. Key management personnel comprise the Directors of the Company
and Executives for the Company and the Group including the Section 300A Executives.
Remuneration levels for key management personnel and the secretary of the Company, and key management personnel and
secretaries of the Group, are competitively set to attract and retain appropriately qualified and experienced Directors and
Executives. The Remuneration Committee periodically obtains independent advice on the appropriateness of remuneration
packages of both the Company and the Group given trends in comparative companies both locally and internationally and the
objectives of the Company’s remuneration strategy.
The remuneration structures explained below are designed to attract suitably qualified candidates, reward the achievement of
strategic objectives and achieve the broader outcome of creation of value for shareholders. The remuneration structures take into
account:
»
»
»
»
»
»
the capability and experience of the key management personnel;
the key management personnel’s ability to control the Group’s performance;
the key management personnel’s contribution to revenue and future earnings potential;
project outcomes;
the key management personnel’s length of service; and
the Group’s performance including:
· the Group’s earnings;
· the growth in share price and delivering constant returns on shareholder wealth; and
· the amount of incentives within each key management person’s remuneration.
Remuneration packages include a mix of fixed and variable remuneration, short-term performance-based incentives and can
include long-term performance-based incentives.
Fixed Remuneration
Fixed remuneration consists of base remuneration (which is calculated on a total cost basis and includes any fringe benefit tax
charges related to employee benefits including motor vehicles), as well as employer contributions to superannuation funds.
Remuneration levels are reviewed annually through a process that considers individual, segment and overall performance of
the Group. In addition, where appropriate, external consultants provide analysis and advice to ensure the Directors’ and Senior
Executives’ remuneration is competitive in the market place. A Senior Executive’s remuneration is also reviewed on promotion.
Performance Linked Remuneration
Performance linked remuneration includes short-term incentives (STI) and can include long-term incentives (LTI), which are
designed to reward key management personnel for meeting or exceeding their financial and personal objectives. The short-term
incentive is an ‘at risk’ bonus provided in the form of cash, whilst the long-term incentive is provided as shares or options over
ordinary shares of the Company under the rules of the Employee Incentive Plan 2013 and Director Share Plan 2014. As at 30 June
2020, there were no options on issue.
Short-term Incentive
The Remuneration Committee has elected to set the primary financial performance objective of ‘profit before tax’ as the key
measure for the calculation of the short term incentives of key management personnel. The non-financial objectives vary with
position and responsibility and include measures such as those outlined above. The STI for the current period was wholly based
on a percentage of ‘profit before tax’. Contractual amounts are accrued in the current year and discretionary amounts are
accounted for in the year of payment. The contractual amount is set at 3.3% of ‘profit before tax’ for 2020 financial year.
At the end of the financial year the Remuneration Committee assess the actual performance of the Group, the relevant segment
and the individual key management personnel contribution to the Group. The performance evaluation in respect of the year ended
30 June 2020 has taken place in accordance with this process.
29
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
4
4.3
Corporate Governance Statement (continued)
Remuneration Report - Audited (continued)
4.3.1 Principles of Remuneration (continued)
Long-term Incentive
Incentive shares or options issued under the Employee Incentive Plan 2013 or Director Share Plan 2014 are made in accordance
with thresholds set in the plans approved by shareholders at the relevant Annual General Meeting, subject to the Board’s
discretion.
Short-term and Long-term Incentive Structure
The Remuneration Committee considers that the above performance-linked remuneration structure is generating the desired
outcome. The evidence of this is in respect to the long term historical profit and dividend growth of the Company, coupled with the
long term retention of key management personnel resulting in the retention of Company intellectual property.
Consequences of Performance on Shareholders Wealth
In considering the Group’s performance and benefits for shareholder wealth, the Remuneration Committee has regard to the
following indices in respect of the current financial year and the previous four financial years:
Total comprehensive income
$7,068,000 $11,372,000 $13,760,000 $5,059,000 $8,127,000
2020
2019
2018
2017
2016
Profit before tax
Dividends paid
Change in share price
Return on capital employed
Return on total equity
$10,488,000 $15,947,000 $18,786,000 $10,369,000 $10,687,000
$13,606,000 $16,302,000 $13,874,000 $16,219,000 $20,686,000
-$0.14
-$0.10
4.47%
2.92%
5.58%
4.58%
$0.14
6.24%
5.46%
-$0.03
-$0.36
4.76%
2.34%
4.26%
3.57%
Profit before tax is considered as one of the financial targets in setting the STI.
Dividends, changes in share price, and return of capital are included in the total shareholder return (TSR) calculation which is one
of the performance criteria assessed for the LTI. The other performance criteria assessed for the LTI is growth in earnings per
share, which takes into account the Group’s net profit.
The overall level of key management personnel’s remuneration takes into account the performance of the Group over a number of
years.
Directors
Total base remuneration for all Directors, last voted upon by shareholders at the November 2013 AGM, is not to exceed $360,000
per annum. Directors’ base fees are presently $197,790 per annum. In line with industry practice, as from 1 July 2017 executive
salaries were varied to be inclusive of all directors duties and responsibilities.
30
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
4
4.3
Corporate Governance Statement (continued)
Remuneration Report - Audited (continued)
4.3.2 Directors’ and Executive Officers’ Remuneration
Details of the nature and amount of each major element of remuneration of each Director of the Company and of the named
Group Executives who received the highest remuneration are:
Short-Term
Post - Employment
Directors
Fees and
Committee
Fees
$
Salary
$
STI Cash
Bonus (A)
$
Non
Monetary
Benefits
$
Total
$
Super-
annuation
$
Other Long
Term
$
Total
$
-
532,130
134,694
-
666,824
26,817
(72,997)
620,644
-
668,906
134,694
90,556
894,156
21,173
11,026
926,355
-
373,257
67,347
-
440,604
21,173
23,048
484,825
76,105
65,930
69,661
-
-
-
-
-
-
-
-
-
76,105
65,930
69,661
-
-
6,444
-
-
-
76,105
65,930
76,105
For the year ended
30 June 2020
Executive Directors
Mr John Chan, Executive
Chairman
Mr Darren John Pateman,
Managing Director
Mr Ronald Chan, Chief
Operating Officer*
Non-executive Directors
Mr Kee Kong Loh
Mr Terence Siong Woon Peh
Mr Lee Verios
Executives
Mr Edward Guy Bank, CFO*
-
290,901
67,347
-
358,248
21,173
4,695
384,116
211,696
1,865,194
404,082
90,556
2,571,528
96,780
(34,228)
2,634,080
For the year ended
30 June 2019
Executive Directors
Mr John Chan, Executive
Chairman
Mr Darren John Pateman,
Managing Director
Mr Ronald Chan, Chief
Operating Officer*
Non-executive Directors
Mr Kee Kong Loh
Mr Terence Siong Woon Peh
Mr Lee Verios
Executives
-
532,130
175,153
-
707,283
23,183
8,869
739,335
-
669,549
175,153
104,000
948,702
20,531
11,075
980,308
-
308,172
87,577
-
395,749
20,531
5,020
421,300
76,105
65,930
69,661
-
-
-
-
-
-
-
-
-
76,105
65,930
69,661
-
-
6,444
-
-
-
76,105
65,930
76,105
Mr Edward Guy Bank, CFO*
-
291,544
87,577
-
379,121
20,531
4,752
404,404
211,696
1,801,395
525,460
104,000
2,642,551
91,220
29,716
2,763,487
* Excludes total accrued annual leave balance of $161,000 (2019: $152,000).
31
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
4
4.3
Corporate Governance Statement (continued)
Remuneration Report - Audited (continued)
4.3.2 Directors’ and Executive Officers’ Remuneration (continued)
Notes in relation to the Table of Directors’ and Executive Officers’ Remuneration - Audited
(A) Short-term Incentive Cash Bonus:
The short-term incentive bonus is for performance during the respective financial years using the criteria set out on Page 29.
Details of the Group’s policy in relation to the remuneration that is performance related is discussed on Page 29.
On 29th October 2014, Finbar Group Limited issued 250,000 fully paid ordinary shares to Darren Pateman as Director Incentive
Shares under the rules of the Director Share Plan 2014. Payment was by way of an interest free loan of $360,000 which was repaid
by 14th October 2019. The related benefit is disclosed in table 4.3.2 on page 31.
On 31st August 2015, Finbar Group Limited issued 250,000 fully paid ordinary shares to Darren Pateman as Director Incentive
Shares under the rules of the Director Share Plan 2014. Payment was by way of an interest free loan of $290,000 which is
repayable by 31st August 2020. The related benefit is disclosed in table 4.3.2 on page 31.
On 25th August 2016, Finbar Group Limited issued 250,000 fully paid ordinary shares to Darren Pateman as Director Incentive
Shares under the rules of the Director Share Plan 2014. Payment was by way of an interest free loan of $207,500 which is
repayable by 25th August 2021. The related benefit is disclosed in table 4.3.2 on page 31.
On 13th September 2017, Finbar Group Limited issued 250,000 fully paid ordinary shares to Darren Pateman as Director Incentive
Shares under the rules of the Director Share Plan 2014. Payment was by way of an interest free loan of $202,500 which is
repayable by 13th September 2022. The related benefit is disclosed in table 4.3.2 on page 31.
4.3.3 Analysis of Bonuses included in Remuneration
Details of the vesting profile of the short term incentive bonuses awarded as remuneration to each Director of the Company and
each of the named Group Executives are detailed below.
Executive Directors
Mr John Chan
Mr Darren John Pateman
Mr Ronald Chan
Executives
Mr Edward Guy Bank
Short Term Incentive Bonus
Included in
Remuneration
$
% vested in year
%
134,694
134,694
67,347
67,347
404,082
100%
100%
100%
100%
100%
Amounts included in remuneration for the financial year represent the amount of entitlements in the financial year based on
achievement of personal goals and satisfaction of performance criteria, as per Short Term Incentives (page 29). No discretionary
bonus was paid to the Executives in the 2020 financial year (2019: NIL). Any discretionary amounts of executive bonuses relating
to 2020 financial year are yet to be determined, and therefore may impact future financial years.
32
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
4
4.3
Corporate Governance Statement (continued)
Remuneration Report - Audited (continued)
4.3.4 Directors’ and Executives Interests
Movement in Shares
The movement during the reporting period in the number of ordinary shares in Finbar Group Limited held, directly, indirectly or
beneficially, by each key management person, including their related parties, is as follows:
Directors
Mr John Chan*
Mr Darren John Pateman
Mr Ronald Chan**
Mr Kee Kong Loh
Mr Terence Siong Woon Peh***
Mr Lee Verios
Executives
Mr Edward Guy Bank
Directors
Mr John Chan*
Mr Darren John Pateman
Mr Ronald Chan**
Mr Kee Kong Loh
Held at
1 July 2019
Purchases
Sales
Held at
30 June
2020
26,617,520
414,031
-
27,031,551
3,609,493
-
-
3,609,493
5,074,074
10,406,987
-
15,481,061
2,000,904
55,837,175
72,393
300,000
-
-
-
-
-
2,000,904
-
55,837,175
-
72,393
-
300,000
Held at
1 July 2018
Purchases
Sales
Held at
30 June
2019
26,567,520
50,000
-
26,617,520
3,586,368
23,125
5,067,217
6,857
2,000,904
-
-
-
-
3,609,493
5,074,074
2,000,904
Mr Terence Siong Woon Peh***
54,932,348
904,827
-
55,837,175
Mr Lee Verios
Executives
Mr Edward Guy Bank
70,000
74,786
(72,393)
72,393
300,000
-
-
300,000
* John Chan has interests in Forward International Pty Ltd which holds shares in Finbar Group Limited.
** Ronald Chan has interests in Forward International Pty Ltd and Blair Park Pty Ltd (from 2020 financial year) which hold shares
in Finbar Group Limited.
*** Terence Peh is a Director and shareholder of Chuan Hup Holdings Limited which holds shares in Finbar Group Limited.
No options for shares were granted to key management personnel as remuneration during the reporting period.
4.3.5 Equity Instruments
All options refer to options over ordinary shares of Finbar Group Limited issued under the Employee Incentive Plan 2013 or
Director Share Plan 2014. As at 30 June 2020, there were no options on issue.
33
FINBAR GROUP LIMITED ANNUAL REPORT 2020
DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
4
4.4
Corporate Governance Statement (continued)
Audit Committee
The Audit Committee Charter sets out the Audit Committee’s role, powers and duties, and establishes the functions delegated
to the Audit Committee by the Board. The Audit Committee advises on the establishment and maintenance of a framework of
internal control and appropriate ethical standards for the management of the Group.
A copy of the Audit Committee Charter is available on Finbar’s website www.finbar.com.au.
The following directors serve on the Audit Committee:
»
Lee VERIOS (Chairman) - Non-executive Independent Director
» Kee Kong LOH - Non-executive Director
»
Terence Siong Woon PEH - Non-executive Director
4.5
Risk Management
Oversight of the Risk Management Procedures
The Board has elected not to establish a separate Risk Committee to oversee risk management and instead the overall
responsibility of risk management resides with the Board in its entirety. In this regard, risk management considerations form part
of the Board’s discussions at scheduled meetings.
The Board oversees the establishment, implementation, and annual review of the Group’s risk management procedures.
Management has established and implemented informal risk management procedures for assessing, monitoring and managing
all risks including operational, financial reporting and compliance risks for the Group. The Managing Director and Chief Financial
Officer provide assurance, in writing to the Board, that the financial risk management and associated compliance and controls
have been assessed and found to be operating effectively.
Risk Management and Compliance Control
Comprehensive practices have been established to ensure:
»
»
capital expenditure with respect to land acquisitions or development agreements obtain prior Board approval;
financial exposures are controlled, including use of derivatives. Further details of the Group’s policies relating to interest rates
management and credit risk are included in Notes 5 and 24 in the Notes to the Consolidated Financial Statements;
» management systems are monitored and reviewed to achieve high standards of performance and compliance with
regulations;
business transactions are properly authorised and executed;
the quality and integrity of personnel (see below);
financial reporting accuracy and compliance with the financial reporting regulatory framework (see below); and
environmental regulation compliance (see below).
»
»
»
»
Quality and Integrity of Personnel
Training and development and appropriate remuneration and incentives with regular performance reviews create an environment
of cooperation and constructive dialogue with employees and senior management.
Financial Reporting
The Managing Director and the Chief Financial Officer have provided assurance, in writing to the Board that the Group’s financial
reports are founded on a sound system of risk management and internal compliance and control which implements the policies
adopted by the Board.
There is a comprehensive accounting system. Monthly actual results are reported against budgets approved by the Directors and
revised forecasts for the year are prepared regularly. Procedures are in place to ensure price sensitive information is reported to
the Australian Securities Exchange (ASX) in accordance with Continuous Disclosure Requirements.
A review is undertaken at each half year end of all related party transactions.
Environmental Regulation
The Group’s operations are not subject to any significant environmental regulations under either Commonwealth or State
legislation.
Compliance with the requirements of environmental regulations and with specific requirements of site environmental licences
was substantially achieved across all operations with no instances of non-compliance in relation to licence requirements noted.
The Board is not aware of any significant breaches of environmental regulations during the period covered by this report.
34
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
4
4.6
Corporate Governance Statement (continued)
Ethical Standards
All Directors, Managers and Employees are expected to act with the utmost integrity and objectivity, striving at all times to
enhance the reputation and performance of the Group.
Conflict of Interest
Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Group.
Where the Board believes that a significant conflict exists for a Director on a Board matter, the Director concerned does not
receive the relevant Board papers and is not present at the meeting whilst the item is considered. Details of Director related entity
transactions with the Company and the Group are set out in Note 28 in the Notes to the Consolidated Financial Statements.
Code of Conduct
All Directors, Managers and Employees are expected to maintain high ethical standards including the following:
»
»
»
»
»
»
aligning the behaviour of the Board and Management with the code of conduct by maintaining appropriate core Group values
and objectives;
fulfilling responsibilities to shareholders by delivering shareholder value;
usefulness of financial information by maintaining appropriate accounting policies, practices and disclosure;
fulfilling responsibilities to clients, customers and consumers by maintaining high standards of product quality, service
standards, commitments to fair value, and safety of goods produced;
employment practices such as occupational health and safety, employment opportunity, training and education support,
community activities, sponsorships and donations;
responsibilities to the individual, such as privacy, use of privileged or confidential information, and conflict resolution;
» managing actual or potential conflicts of interest;
»
»
»
»
»
»
corporate opportunities such as preventing Directors and key executives from taking advantage of property, information or
position for personal gain;
confidentiality of corporate information;
fair dealing;
protection and proper use of the Group’s assets;
compliance with laws; and
reporting unlawful or of unethical behaviour including protection of those who report violations in good faith.
Trading in General Company Securities by Directors and Employees
The key elements of the Trading in Company Securities by Directors and Employees policy are:
»
identification of those restricted from trading - Directors and Senior Executives may acquire shares in the Company, but are
prohibited from dealing in Company shares or exercising options:
- within two trading days after either the release of the Company’s half-year and annual results to the Australian Securities
Exchange (‘ASX’), the Annual General Meeting or any major announcement;
- whilst in possession of price sensitive information not yet released to the market;
»
»
»
raising the awareness of legal prohibitions including transactions with colleagues and external advisers;
raising awareness that the Company prohibits those restricted from trading in Company shares as described above from
entering into transactions such as margin loans that could trigger a trade during a prohibited period; and
requiring details to be provided of the trading activities of the Directors of the Company.
4.7
Communication with Shareholders
The Board is committed to ensuring that the Company complies with its continuous disclosure obligations and to facilitate this,
has approved a Continuous Disclosure Policy that applies to all Group personnel, including the Directors and Senior Executives.
The Board seeks to promote investor confidence by seeking to ensure that trading in the Company’s shares take place in an
informed market.
Finbar provides information about itself, its activities and operations, and its governance via its website www.finbar.com.au.
A copy of the Group’s Market Disclosure Policy is available on Finbar’s website www.finbar.com.au.
35
FINBAR GROUP LIMITED ANNUAL REPORT 2020
DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
4
4.8
Corporate Governance Statement (continued)
Diversity
The Board has considered the recommendation to formulate strict measurable targets for the purposes of the assessment
of gender diversity within the organisation. Given the small size and relatively stable nature of its workforce it has formed the
view that at this time it would not be appropriate or practical to establish a written policy regarding gender diversity. The Board
will review this position at least annually. However, generally, when selecting new employees or advancing existing employees,
no consideration is given to gender, age or ethnicity, but instead selections are based upon individual achievements, skill and
expertise.
Gender representation
Board
Key Management Personnel
Senior Management
Group
5
Principal Activities
2020
2019
Female
-
-
50%
53%
Male
100%
100%
50%
47%
Female
-
-
60%
48%
Male
100%
100%
40%
52%
The principal activities of the Group during the course of the financial year continued to be property development and investment.
The Group’s focus is the development of medium to high-density residential buildings and commercial developments in Western
Australia by way of direct ownership, ownership through fully owned Subsidiaries or by equity accounted investees (through
companies registered specifically to conduct the development).
The Group holds rental property through 175 Adelaide Terrace Pty Ltd, Finbar Karratha Pty Ltd and Finbar Commercial Pty Ltd.
There were no significant changes in the nature of the activities of the Group during the financial year.
6
Operating and Financial Review
Operating Results
Total comprehensive income attributable to Owners of the Group
2020
2019
$7,068,000 $11,372,000
Total comprehensive income attributable to Owners of
the Group
Basic EPS
Diluted EPS
Dividends paid
Dividends paid per share
Market price per share
Change in share price
Return on capital employed attributable to Owners of the Group
Return on total equity attributable to Owners of the Group
2020
2019
2018
2017
2016
$7,068,000 $11,372,000 $13,760,000 $5,062,000 $8,130,000
$0.02
$0.02
$0.04
$0.04
$0.06
$0.06
$0.02
$0.02
$0.04
$0.04
$13,606,000 $16,302,000 $13,874,000 $16,219,000 $20,686,000
$0.05
$0.70
$0.06
$0.84
-$0.14
-$0.10
4.47%
2.92%
5.58%
4.58%
$0.06
$0.94
$0.14
6.24%
5.46%
$0.07
$0.80
$0.09
$0.83
-$0.03
-$0.36
4.76%
2.34%
4.26%
3.57%
Dividends for 2020 were fully franked and it is expected that dividends in future years will continue to be fully franked.
Key transactions that contributed to the consolidated net profit of the Company for the 2020 financial year were the completion of
Sabina in Applecross, Palmyra East Apartments in Palmyra and One Kennedy in Maylands, sales and settlements of completed
stock held at 30 June 2019 as well as the ongoing rental of the Company’s commercial properties. See below for further
information on the Company’s project completions.
36
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
6
Operating and Financial Review (continued)
Review of Operations
Finbar Group Limited’s (‘Finbar’ or ‘the Company’) core business lies in the development of medium to high density residential
apartments and commercial property within the state of Western Australia. Finbar carries out its development projects in its own
right or through incorporated special purpose entities and equity accounted investees, of which the Company either directly or
indirectly holds interests in project profitability ranging between 50% and 100%.
The Company operates predominantly within the Perth CBD and surrounding areas.
Finbar’s business model involves the acquisition of suitable development land either directly or by way of an incorporated Special
Purpose Vehicle or by development agreements with Land Owners. Equity partners are sought to allow the Company to leverage
into larger development projects to take advantage of the benefits of economies of scale, and to help spread project risk.
Finbar outsources its design, sales and construction activities to external parties. Finbar established an internal sales team in
May 2020.
The administration of the companies along with the operating, investment, and acquisitions decisions are made by Finbar’s Board
and Management. The Company employs 26 staff in its corporate offices in East Perth, Western Australia and 1 member of staff
in its office in the Pilbara.
This outsourcing model ensures that the Company is and remains scalable, efficient and agile in a market where acquisition and
project timing is critical in maintaining a competitive advantage, helping to protect margins and enhancing the returns Finbar can
generate for its shareholders.
There have been no significant changes in the Company’s operating model that occurred during the relevant reporting period
and the Company continued to develop and invest in built-form projects within Western Australia throughout the year as its core
business. During financial year 2020, Finbar Commercial Pty Ltd acquired 2 commercial investment properties at the Aurelia and
Vue Tower development.
There is less demand for investment property, however, a low interest rate environment coupled with weakened housing prices is
helping drive owner occupier activity for company product.
Factors that may affect the Company’s profit are generally restricted to items that would be considered to reside outside of the
control of the Board and Management and are, in general, movements in interest rates, government rebates and incentives,
changes in taxation and superannuation laws, banking lending policies and their regulatory changes, global economic factors,
resources sector activity, and employment rates.
The outbreak of COVID-19 globally and in Australia in the second half of the year ended 30 June 2020 was a significant risk event.
The full impact on the Australian economy, travel restrictions and period of recovery is yet to be known. While the measures
implemented by the Federal and State Governments were effective in reducing the impact of the virus, there may be ongoing
outbreaks of COVID-19 which will require further government response.
The COVID-19 pandemic resulted in a significant reduction in March and June 2020 quarter sales resulting in reduced settlement
revenue for the reporting period. Delayed settlements in the Sabina project also contributed to the result with foreign buyers
unable to travel to conclude settlement affairs. Apart from those tenants that were required by the government to close their
business (e.g.: food and beverages tenancies), the major tenants have been able to stay open and trade safely during the
pandemic. Rent abatements and/or rent deferrals have been and are still being provided to affected tenants in accordance to the
relevant Code of Conduct legislation.
The Company’s Management has remained diligent in ensuring it maintains a strong balance sheet to protect and improve the
Company’s market position through this crisis. The launch of Civic Heart and construction commencement at Dianella positions
the Company to benefit from the opportunities that may arise from decreased competition and general industry stress. The ability
to source new viable development opportunities is central to Finbar’s ongoing success and the Board and Management has
demonstrated a long track record of this ability.
The Board and Management control the Company’s key risks through the implementation of control measures which include;
land acquisitions generally secured without the use of debt funding, development funding which is carried out utilising senior
bank funding (no mezzanine) from major Australian banks, and the Company’s small and agile structure which can rapidly adapt
to changes in market conditions.
There were no significant changes in the composition of overall assets and liabilities, with movements in assets from non-current
to current and movements in liabilities from non-current to current as projects reach completion. The Company continued to
focus on the generation of sales and rental revenue through property development and investment.
The Board and Management do not currently have the view that there is a requirement to reposition the Company’s overall
business model. The Board and Management continuously monitor market fluctuations and conditions and implement
appropriate strategies to benefit from and insulate the Company against changing market conditions.
37
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
6
Operating and Financial Review (continued)
Completed Projects
Motive - 172 Railway Parade, West Leederville: 14 units have settled in the reporting period. 8 units remain for sale in the 143 unit
development.
Concerto - 189 Adelaide Terrace, East Perth: 13 units settled in the reporting period. 4 units remain for sale in the 227 unit
development.
Aurelia - 96 Mill Point Road, South Perth: 22 units have settled in the reporting period. The 138 unit development is fully sold.
Aire West Perth - 647-659 Murray Street, West Perth: 21 units have settled in the reporting period. The 244 unit development is
fully sold.
Reva - 5 Harper Terrace, South Perth: 13 units have settled in the reporting period. 13 units remain for sale in the 59 unit
development.
Vue Tower - 63 Adelaide Terrace, East Perth: 44 units have settled in the reporting period. 40 units remain for sale in the 250 unit
development.
Palmyra East Apartments - 49 McGregor Road, Palmyra: Construction of the Palmyra East Apartments project completed in the
first half of the financial year. 74 units have settled in the reporting period. 47 units remain for sale in the 128 unit development.
Sabina - 908 Canning Highway, Applecross: Construction of the Sabina project completed in the second half of the financial year.
78 units have settled in the reporting period. 75 units remain for sale in the 167 unit development.
One Kennedy - 1 Kennedy Street, Maylands: Construction of the One Kennedy project completed in the second half of the financial
year. 52 units have settled in the reporting period. 62 units remain for sale in the 123 unit development.
Currently Under Construction
Riverena - 5 Rowe Avenue, Rivervale: Construction works continue to progress well at Riverena, with completion expected during
the financial year ending 30 June 2021. To date 43 sales have been achieved in the development of 125 residential apartments.
Dianella Apartments - 36 Chester Avenue, Dianella: Construction works continue to progress well at Dianella, with completion
expected during the financial year ending 30 June 2022. To date 24 sales have been achieved in the development of 128 residential
apartments.
Future Projects
Civic Heart - 1 Mends Street, South Perth: Marketing of the Civic Heart project continues to progress, with construction expected
to commence in the financial year ending 30 June 2021. To date 11 sales have been achieved in the development of 309 residential
apartments and 26 commercial units.
Aurora Applecross - 3 Kintail Road, Applecross (Stage 2): Marketing of the Aurora project continues to progress, with construction
expected to commence in the financial year ending 30 June 2022. To date 1 sale has been achieved in the development of 118
residential apartments and 3 commercial units.
240 Adelaide Terrace, Perth: Development Approval has been received for 119 residential apartments and 2 commercial units.
Marketing and construction are expected to commence in the financial year ending 30 June 2021.
912 Canning Highway, Applecross (Stage 3): Development Approval has been received for 151 residential apartments and 3
commercial units.
Palmyra West Apartments - 43 McGregor Road, Palmyra (Stage 2): Development Approval has been received for 130 residential
apartments.
239 Great Eastern Highway, Belmont: Development Approval has been received for a development of 194 residential apartments
and 2 commercial units.
The Point - 31 Rowe Avenue, Rivervale: Development Approval has been received for a development of 167 apartments and 9
commercial units.
2 Homelea Court, Rivervale: Finbar through a wholly owned subsidiary holds an additional four abutting parcels of land in the
Springs precinct in Rivervale for a combined value of $5.15m. The four vacant sites are located on the corners of Rowe Avenue
and Homelea Court and comprise a total of 3,770 square metres of land which Finbar intends to amalgamate to develop a project
consisting of approximately 185 apartments within a 10 level building.
Lot 1000 - 32 Riversdale Road, Rivervale: Development options are currently being explored.
187 Adelaide Terrace, East Perth: Development options are currently being explored.
38
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
6
Operating and Financial Review (continued)
Investment Property
Fairlanes - 175 Adelaide Terrace, East Perth: The Fairlanes property has been revalued during the reporting period. The
valuation resulted in a $6,086,000 increase to the value of the property. The company continues to benefit from the investment
income generated from the leased property. The property is currently 91% leased. The company continues to actively market the
remaining tenancies for rental.
Pelago Commercial - 23 & 26 Sharpe Avenue, Karratha: The Pelago commercial property has been revalued during the reporting
period. The valuation resulted in a $938,000 reduction to the value of the property. The company continues to benefit from the
investment income generated from the leased property. The property is currently 65% leased. The company continues to actively
market the remaining tenancies for rental.
Pelago Residential - 23 & 26 Sharpe Avenue, Karratha: The Pelago residential property has been revalued during the reporting
period. The valuation resulted in a $1,055,000 increase to the value of the property. The company continues to benefit from the
investment income generated from the leased property. The property is currently 98% leased. The company continues to actively
market the remaining tenancies for rental.
Vue Tower Commercial - 63 Adelaide Terrace, East Perth: Lot 4 at Vue Tower was acquired in December 2019 under Finbar
Commercial Pty Ltd. The purchase price was $200,000. The property is leased to a non-profit organisation at $1 per annum until
13 June 2029.
Aurelia Commercial - 96 Mill Point Road, South Perth: Lots 132-138 at Aurelia was acquired in June 2020 under Finbar
Commercial Pty Ltd. The fair value of the properties was recorded at $5,605,000. The company is actively marketing the tenancies
for rental.
Significant Changes in State of Affairs
Other than set out in this report, in the opinion of the Directors there were no significant changes in the state of affairs of the
Group that occurred during the financial year under review.
7
Dividends
Dividends paid or declared by the Company to members since the end of the previous financial year were:
Dividends Paid During the Year 2020
Final 2019 ordinary
Interim 2020 ordinary
Total Dividends Paid
Cents per
Share
Total
Amount
$’000
Franked /
Unfranked
Date of Payment
3.00
2.00
8,164
Franked
12 September 2019
5,442
Franked
26 March 2020
13,606
Franked dividends declared or paid during the year were franked at the rate of 30%.
Proposed Dividend
After the balance date the following dividend has been proposed by the Directors. The dividend has not been provided for and
there are no income tax consequences.
Final 2020 ordinary
Total Dividend Proposed
1.00
2,721 Franked
21 September 2020
2,721
The financial effect of this dividend has not been brought to account in the financial statements for the year ended 30 June 2020
and will be recognised in subsequent financial reports.
Dealt with in the financial report as - Dividends
Dividend Reinvestment Plan
Note
19
$’000
13,606
In accordance with Rule 13 of the Company’s Dividend Reinvestment Plan (DRP), the Directors have elected to suspend the DRP
in the 2020 financial year until further notice. As such the DRP will not be active for the above mentioned dividend.
39
FINBAR GROUP LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
8
Events Subsequent to Reporting Date
36 Chester Avenue Pty Ltd entered into a construction contract with Hanssen Pty Ltd on 1 July 2020. The capital commitment on
the Dianella Apartments project totalled to $32,369,000.
With continuing economic uncertainty from the COVID-19 pandemic, the Company may require to grant further rent abatements
and/or rent deferrals in accordance to the relevant Code of Conduct legislation. Further mandatory closures and government
mandated restrictions will influence the Australian economy and property market which may have a future impact on property
valuations.
Other than mentioned, there has not arisen in the interval between the end of the financial year and the date of this report
any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect
significantly the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial
years.
9
Likely Developments
The Group will continue to pursue its policy of increasing the profitability and market share of its major business sectors during
the next financial year.
The Group will continue planned development projects on existing land and will continue to assess new development
opportunities for the acquisition of land for future development.
Further information about likely developments in the operations of the Group and the expected results of these operations in
future years have not been included in this report as the disclosure of such information would, in the opinion of the Directors, be
likely to result in unreasonable prejudice to the Group.
10
Directors’ Interests
The relevant interest of each Director in the shares and options over such instruments by the companies within the Group, as
notified by the Directors to the Australian Stock Exchange Limited in accordance with S205G(1) of the Corporations Act 2001, as at
the date of this report is as follows:
Director
Mr John Chan
Mr Darren John Pateman
Mr Ronald Chan
Mr Kee Kong Loh
Mr Terence Siong Woon Peh
Mr Lee Verios
Ordinary
Shares
27,031,551
3,609,493
15,481,061
2,000,904
55,837,175
72,393
11
Indemnification and Insurance of Officers and Auditors
Indemnification
The Company has agreed to indemnify the current Directors of the Company, its Subsidiaries and Equity Accounted Investees,
against all liabilities to another person (other than the Company or related body corporate) that may arise from their position as
Directors of the Company, its Subsidiaries and Equity Accounted Investees, except where the liability arises out of the conduct
involving a lack of good faith.
Insurance Premiums
During the financial year the Company has paid insurance premiums of $38,000 (2019: $30,000) in respect of Directors and
Officers liability and legal expenses insurance contracts for Directors and Officers, including Executive Officers of the Company.
The insurance premiums relate to:
» Costs and expenses incurred by the relevant Officers in defending proceedings, whether civil or criminal and whatever their
outcome; and
» Other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty or improper
use of information or position to gain a personal advantage.
40
FINBAR GROUP LIMITED ANNUAL REPORT 2020
DIRECTORS’ REPORT (Continued)
For the Year Ended 30 June 2020
12
Non-audit Services
During the year KPMG, the Group’s auditor, has performed certain other services in addition to their statutory duties.
The Board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of
those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence
requirements of the Corporations Act 2001 for the following reasons:
»
»
all non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed to
ensure they do not impact the integrity and objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting
in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and
rewards.
Details of the amounts paid to the auditor of the Group, KPMG, and its related practices for audit and non-audit services provided
during the year are set out below:
Audit Services:
Auditors of the Company
Audit and review of the financial reports
Audit and review of the financial reports of equity accounted investees
Services Other Than Statutory Audit:
Taxation compliance services
Consolidated
2020
$
2019
$
126,697
141,083
-
169
126,697
141,252
20,286
34,929
20,286
34,929
13
Lead Auditor’s Independence Declaration
The Lead Auditor’s Independence Declaration is set out on Page 86 and forms part of the Directors’ Report for the financial year
ended 30 June 2020.
Signed in accordance with a resolution of the Board of Directors:
Darren Pateman
Managing Director
Dated at Perth this Twenty-fifth day of August 2020.
41
FINBAR GROUP LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the Year Ended 30 June 2020
Revenue
Cost of sales
Gross Profit
Other income
Administrative expenses
Advertising expenses
Revaluation increase of investment property
Revaluation increase of property, plant and equipment
Rental expenses
Results from Operating Activities
Finance income
Finance costs
Net Finance Income
Share of profit of Equity Accounted Investees (net of income tax)
Profit before Income Tax
Income tax expense
Profit for the year
Other comprehensive income
Items which will not be reclassified to profit or loss:
Revaluation increase/(decrease) of property, plant and equipment
Tax on items that will not be reclassified to profit or loss
Other comprehensive income for the year, net of income tax
Total comprehensive income for the year
Earnings per Share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Consolidated
2020
$’000
2019
$’000
154,307
154,690
(132,076)
(126,263)
22,231
28,427
278
60
(7,159)
(6,918)
(7,779)
(4,083)
6,203
627
964
114
(4,525)
(4,152)
9,876
14,412
970
(332)
638
(26)
1,890
(781)
1,109
426
10,488
15,947
(3,864)
(4,560)
6,624
11,387
635
(191)
444
(21)
6
(15)
7,068
11,372
2.43
2.43
4.18
4.18
Note
7
8
10
10
14
11
11
20
20
The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the Notes to the
Financial Statements set out on Pages 46 to 79.
42
FINBAR GROUP LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Year Ended 30 June 2020
Balance as at 1 July 2018
Total comprehensive income for the year
Profit
Other comprehensive income
Transactions with owners, recognised directly in equity
Issue of ordinary shares
Buyback of shares
Note
Share
Capital
$’000
Retained
Earnings
$’000
Asset
Revaluation
Reserve
$’000
Total
Equity
$’000
193,242
58,910
15
252,167
11,387
11,387
(15)
(15)
2,036
(794)
2,036
(794)
(16,302)
Dividends to shareholders
19
(16,302)
Balance as at 30 June 2019
194,484
53,995
-
248,479
Balance as at 1 July 2019
Total comprehensive income for the year
Profit
Other comprehensive income
Transactions with owners, recognised directly in equity
194,484
53,995
-
248,479
6,624
6,624
444
444
Dividends to shareholders
19
(13,606)
(13,606)
Balance as at 30 June 2020
194,484
47,013
444
241,941
Amounts are stated net of tax
The Consolidated Statement of Changes in Equity is to be read in conjunction with the Notes to the Financial Statements set out on
Pages 46 to 79.
43
FINBAR GROUP LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Investments in Equity Accounted Investees
Other assets
Total Current Assets
Non Current Assets
Trade and other receivables
Inventories
Investment property
Investments in Equity Accounted Investees
Property, plant and equipment
Deferred Tax Assets
Other assets
Total Non Current Assets
Total Assets
Current Liabilities
Trade and other payables
Loans and borrowings
Current tax payable
Employee benefits
Total Current Liabilities
Non Current Liabilities
Trade and other payables
Loans and borrowings
Deferred tax liabilities
Employee benefits
Total Non Current Liabilities
Total Liabilities
Net Assets
EQUITY
Share capital
Retained earnings
Reserves
Total Equity
Consolidated
2020
$’000
2019
$’000
Note
18a
30,591
45,490
17
16
14
17
16
12
14
13
15
23
21
15
22
23
21
15
22
19
19
10,341
18,354
58,803
129,925
-
746
55
55
3,044
20
100,536
196,888
26,911
16,123
95,798
62,808
97,331
85,307
1,368
9,396
6,313
149
1,496
9,629
6,177
81
237,266
181,621
337,802
378,509
24,284
40,838
55,504
34,665
1,116
3,060
490
488
81,394
79,051
1,766
3,320
8,478
44,943
4,179
2,687
44
29
14,467
50,979
95,861
130,030
241,941
248,479
194,484
194,484
47,013
53,995
444
-
241,941
248,479
The Consolidated Statement of Financial Position is to be read in conjunction with the Notes to the Financial Statements set out on
Pages 46 to 79.
44
FINBAR GROUP LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended 30 June 2020
Cash Flows from Operating Activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from/(used in) Operating Activities
Interest paid
Income tax paid
Consolidated
2020
$’000
2019
$’000
Note
265,611
203,660
(235,864)
(225,952)
29,747
(22,292)
(1,231)
(1,735)
(4,643)
(4,739)
Net Cash generated from/(used in) Operating Activities
18b
23,873
(28,766)
Cash Flows from Investing Activities
Interest received
Dividends received from Equity Accounted Investees
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisition of investment property
Loans to Equity Accounted Investees
Proceeds from loans to Equity Accounted Investees
Cash held by subsidiary at acquisition*
Net Cash (used in)/provided by Investing Activities
Cash Flows from Financing Activities
Buyback of shares
Proceeds from borrowings
Repayment of borrowings
Dividends paid (net of DRP)
Net Cash (used in)/provided by Financing Activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and Cash Equivalents at 30 June
13
13
21
21
19
200
1,674
2,401
(91)
325
(4,142)
217
(38)
12
-
(10,515)
(298)
2,779
10,459
-
4
(9,043)
12,030
-
(794)
64,264
99,993
(80,387)
(80,456)
(13,606)
(14,267)
(29,729)
4,476
(14,899)
(12,260)
45,490
57,750
18a
30,591
45,490
* As at 30 June 2019, the Group acquired 36 Chester Avenue Pty Ltd’s remaining 50% interest from the joint venture partner. 36 Chester
Avenue Pty Ltd is a wholly owned subsidiary of Finbar Group Limited from the 2019 financial year.
The Consolidated Statement of Cash Flows is to be read in conjunction with the Notes to the Financial Statements set out on Pages 46
to 79.
45
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended 30 June 2020
Index to Notes to the Financial Statements
NOTE
PAGE
NOTE
PAGE
1. Reporting Entity
2. Basis of Preparation
3. Significant Accounting Policies
4. Determination of Fair Values
5. Financial Risk Management
6. Operating Segments
7. Revenue
8. Other Income
9. Personnel Expenses
10. Finance Income and Finance Costs
11. Income Tax Expense
12. Investment Property
13. Property, Plant and Equipment
14. Investments in Equity Accounted Investees
15. Tax Assets and Liabilities
16. Inventories
48
48
49
55
56
57
60
60
60
60
61
62
63
65
67
67
17. Trade and Other Receivables
18. Cash and Cash Equivalents
19. Capital and Reserves
20. Earnings per Share
21. Loans and Borrowings
22. Employee Benefits
23. Trade and Other Payables
24. Financial Instruments
25. Operating Leases
26. Capital and Other Commitments
27. Contingencies
28. Related Parties
29. Group Entities
30. Subsequent Events
31. Auditor’s Remuneration
32. Parent Entity Disclosures
67
68
68
70
71
72
73
73
75
76
76
77
78
79
79
79
46
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
Index to Significant Accounting Policies (Note 3)
NOTE
(a) Basis of Consolidation
(b) Financial Instruments
(c) Property, Plant and Equipment
(d) Investment Property
(e) Inventories
(f) Impairment
(g) Employee Benefits
(h) Provisions
(i) Revenue
(j) Finance Income and Finance Costs
(k) Income Tax
(l) Goods and Services Tax
(m) Earnings per Share
(n) Segment Reporting
(o) New Standards and Interpretations
PAGE
49
50
50
51
51
52
52
53
53
54
54
54
54
54
55
47
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
1
Reporting Entity
Finbar Group Limited (‘the Company’) is a public company domiciled in Australia. The address of the Company’s registered
office is Level 6, 181 Adelaide Terrace, East Perth, WA 6004. The consolidated financial statements of the Group as at and for
the year ended 30 June 2020 comprise the Company, its Subsidiaries (together referred to as ‘the Group’ and individually as
‘Group entities’) and the Group’s interest in equity accounted investees. The Group is a for-profit entity and is primarily involved in
residential property development and property investment (see Note 6).
2
(a)
Basis of Preparation
Statement of Compliance
The consolidated financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act
2001. These consolidated financial statements of the Group comply with International Financial Reporting Standards (IFRSs) and
interpretations adopted by the International Accounting Standards Board (IASB).
The consolidated financial statements were approved by the Board of Directors on 25th August 2020.
(b)
Basis of Measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following:
· financial instruments recognised through profit or loss are measured at fair value; and
· investment property is measured at fair value.
The methods used to measure fair values are discussed further in Note 4.
(c)
Functional and Presentation Currency
These consolidated financial statements are presented in Australian dollars which is the functional currency for the Group. In
accordance with ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191, amounts in the consolidated
financial statements and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.
(d)
Use of Estimates and Judgements
The preparation of consolidated financial statements in conformity with AASBs requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods affected.
(i)
Assumptions and estimation uncertainties
Information about assumptions made in measuring fair values and estimation uncertainties that have a significant risk of
resulting in a material adjustment within the year ending 30 June 2020 are included in the following notes:
» Note 12 - Valuation of investment property;
» Note 13 - Property, plant & equipment; and
» Note 24 - Valuation of financial instruments.
(ii)
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-
financial assets and liabilities.
The Group has an established control framework with respect to the measurement of fair values. This includes the CFO who has
overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values.
Significant valuation issues are reported to the Audit Committee.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
»
»
»
Level 1: quoted prices (unadjusted) in active markets 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)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest
level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the
change occurred.
48
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
2
(e)
Basis of Preparation (continued)
Changes in Accounting Policies
Except for the changes below, the Group’s accounting policies are consistent with those disclosed in the financial statements as
at and for the year ended 30 June 2019.
The Group has initially adopted AASB 16 Leases from 1 July 2019. A number of other new standards, including IFRIC 23
Uncertainty over Income Tax Treatments, are effective from 1 July 2019 but they do not have a material effect on the Group’s
financial statements.
AASB 16 will result in almost all leases being recognised on the Balance Sheet, as the distinction between operating and finance
leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals
are recognised. Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation
expense on the right-of-use asset. The only exceptions are short-term and low-value leases. The accounting for lessors will not
change significantly.
The Group leases printing equipment. However, the Group has elected not to recognise right-of-use assets and lease liabilities for
the printing equipment (low-value assets). The Group recognises the lease payments associated with these leases as an expense
on a straight-line basis over the lease term.
The Group owns its business premises which are classified as Property, plant and equipment on Balance Sheet.
The Group leases out its investment property. The group has classified these leases as operating leases. The accounting
policies applicable to the Group as a lessor are not different from those under AASB 117. The Group is not required to make any
adjustments on transition to AASB 16 for leases in which it acts as a lessor.
As a result of initially applying AASB 16, there is no material effect on the Group’s financial statements.
3
Significant Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements, and have been applied consistently by Group entities.
(a)
(i)
Basis of Consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to or has rights to variable
returns from its investment with the entity and has the ability to affect those returns through its power over the entity. The
financial statements of Subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group.
(ii)
Equity Accounted Investees
Equity accounted investees are those entities over whose activities the Group has joint control, established by contractual
agreement and requiring unanimous consent for strategic and operating decisions. Investments in equity accounted investees are
accounted for using the equity method (Equity Accounted Investees) and are initially recognised at cost. The consolidated financial
statements include the Group’s share of the income and expenses and equity movements of Equity Accounted Investees, after
adjustments to align the accounting policies with those of the Group, from the date that the joint control commences until the
date the joint control ceases. When the Group’s share of losses exceeds its interest in an Equity Accounted Investee, the carrying
amount of that interest is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group
has an obligation or has made payments on behalf of the Equity Accounted Investee. Investments in equity accounted investees
are carried at the lower of the equity accounted amount and the recoverable amount. Investments in equity accounted investees
are treated as current assets where it is expected that the investment will be realised within a twelve month time frame.
(iii)
Joint Operations
A joint operation is carried on by each venturer using its own assets in pursuit of the joint operations. The consolidated financial
statements include the assets that the Group controls and the liabilities that it incurs in the course of pursuing the joint
operation, and the expenses that the Group incurs and its share of the income that it earns from the joint operation.
(iv)
Transactions Eliminated on Consolidation
Intra-group balances and transactions, and any unrealised gains and losses or income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with
Equity Accounted Investees are eliminated against the investment to the extent of the Group’s interest in the Equity Accounted
Investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of
impairment. Gains and losses are recognised as the contributed assets are consumed or sold by the Equity Accounted Investee
or, if not consumed or sold by the Equity Accounted Investee, when the Group’s interest in such entities is disposed.
49
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
3
(b)
(i)
Significant Accounting Policies (continued)
Financial Instruments
Non-derivative Financial Instruments
Non-derivative financial assets
Trade and other receivables and debt securities issued are initially recognised when they are originated. All other financial assets
(including assets designated at fair value through profit or loss – FVTPL) are initially recognised when the Group becomes a party
to the contractual provisions of the instrument.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
»
»
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it
transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of
ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks
and rewards of ownership and it does not retain control of the financial asset. Any interest in transferred financial assets that is
created or retained by the Group is recognised as a separate asset or liability.
Accounting for finance income and expense is discussed in Note 3(j).
Non-derivative financial liabilities
Trade and other payables, commercial bills and subordinated liabilities are initially recognised when they are originated at fair
value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at
amortised cost using the effective interest rate method. All other financial liabilities (including liabilities designated at fair value
through profit or loss) are initially recognised when the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only
when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and
settle the liability simultaneously.
(ii)
Share Capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options
are recognised as a deduction from equity, net of any tax effects.
Repurchase of share capital
When share capital recognised in equity is repurchased, the amount of the consideration paid, which includes directly attributable
costs, net of any tax effects, is recognised as a deduction from equity.
Dividends
Dividends are recognised as a liability in the period in which they are declared.
(c)
(i)
Property, Plant and Equipment
Recognition and Measurement
Items of plant and equipment are measured at cost or deemed cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets include
the cost of materials, direct labour, any other costs directly attributable to bringing the asset to a working order for its intended
use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing
costs (see below).
Items classified as property are measured at fair value. Refer Note 3(c)(iv).
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.
Gains on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the
carrying amount of property, plant & equipment and are recognised net within “Other income” in profit or loss.
Losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the
carrying amount of property, plant & equipment and are recognised net within “Administrative expenses” in profit or loss.
When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings.
In respect to borrowing costs relating to qualifying assets, the Group capitalises costs directly attributable to the acquisition,
construction or production of a qualifying asset as part of the cost of the asset.
50
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
3
(c)
(ii)
Significant Accounting Policies (continued)
Property, Plant and Equipment (continued)
Reclassification to Investment Property
Property that is being constructed for future use as investment property is accounted for as property, plant and equipment until
construction or development is complete, at which time it is remeasured to fair value and reclassified as investment property. Any
gain or loss arising on remeasurement is recognised in profit or loss.
When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and
reclassified as investment property. Any loss is recognised in the revaluation reserve to the extent that an amount is included
in revaluation reserve for that property, with any remaining loss recognised immediately in profit or loss. Any gain arising on
revaluation is recognised in profit or loss to the extent the gain reverses a previous impairment loss on the property, with any
remaining gain recognised in a revaluation reserve in equity.
(iii)
Subsequent Costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the Group and its cost can be reliably measured.
The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment
are recognised in profit or loss as incurred.
(iv)
Revaluation Model for Property
After recognition as an asset, the Group has elected to carry an item of property whose fair value can be reliably measured shall
be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated impairment
losses. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that
which would be determined using fair value at the end of the reporting period.
If an item of property is revalued, the entire class of property to which that asset belongs shall be revalued. Any gain or loss
arising on remeasurement is recognised in other comprehensive income and asset revaluation reserve. Refer Note 4.
(v)
Depreciation and Amortisation
Depreciation and amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each
part of an item of property, plant and equipment. Assets are depreciated or amortised from the date of acquisition. Land is not
depreciated.
The estimated useful lives in the current and comparative periods are as follows:
» Office property
» Office furniture and equipment, fixtures and fittings
» Plant and equipment
40 years
5 - 25 years
1 - 10 years
Depreciation and amortisation rates and methods are reviewed at each reporting date. When changes are made, adjustments are
reflected prospectively in the current and future periods only.
(d)
Investment Property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the
ordinary course of business, used in the production or supply of goods and services or for administrative purposes. Investment
property is measured at fair value (see Note 4) with any change therein recognised in profit or loss.
Cost includes expenditure that is directly attributable to the acquisition of the investment property. The self-constructed
investment property transferred from inventory are recognised at fair value.
When the use of a property changes such that it is reclassified as property, plant or equipment, its fair value at the date of
reclassification becomes its cost for subsequent accounting.
(e)
Inventories
Inventories and work in progress, including land held for resale, are stated at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and
selling expenses.
Cost includes the cost of acquisition, development costs, holding costs and directly attributable interest on borrowed funds
where the development is a qualifying asset. Capitalisation of borrowing costs is ceased during extended periods in which active
development is interrupted. When a development is completed and ceases to be a qualifying asset, borrowing costs and other
costs are expensed as incurred.
51
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
3
(e)
Significant Accounting Policies (continued)
Inventories (continued)
Current and Non-current Inventory Assets
Inventory is classified as current when it satisfies any of the following criteria:
»
»
»
it is expected to be realised in, or is intended for sale or consumption in, the entity’s normal operating cycle;
it is held primarily for the purpose of being traded; or
it is expected to be realised within twelve months of the reporting date.
All other inventory is treated as non-current.
(f)
(i)
Impairment
Financial Assets
Under the expected credit losses (ECL) model in accordance with AASB 9 Financial Instrument, the Group calculates the
allowance for credit losses by considering on a discounted basis the cash shortfalls it would incur in various default scenarios for
prescribed future periods and multiplying the shortfalls by the probability of each scenario occurring. The allowance is the sum of
these probability-weighted outcomes.
At each reporting period, the Group assess whether the credit risk on a financial instrument has increased significantly since
initial recognition, by analysing reasonable and supportable information that is available without undue cost or effort about past
events, current conditions and forecasts of future economic conditions.
Except for purchased or originated credit-impaired financial assets, trade receivables, AASB 15 contract assets and lease
receivables, at each reporting date:
· the Group measures the loss allowance for a financial instrument at an amount equal to the ‘lifetime expected credit losses’ if
the credit risk on that financial instrument has increased significantly since initial recognition; and
· if the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measure the loss
allowance for that financial instrument at an amount equal to ‘12 month expected credit loss’.
The allowance and any changes in the expected credit loss are recognised as impairment gain and losses in profit or loss.
(ii)
Non-financial Assets
The carrying amounts of the Group’s non-financial assets other than investment property, inventories and deferred tax assets, are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the
asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to
sell. 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 asset. For the purpose
of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that
generates cash flow from continuing use that are largely independent of the cash flows of other assets or groups of assets (the
“cash generating unit”).
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in profit or loss.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(g)
(i)
Employee Benefits
Superannuation Contributions
Obligations for contributions to superannuation funds are recognised as an expense in profit or loss.
(ii)
Long-term Employee Benefits
The Group’s obligation in respect of long-term service benefits is the amount of future benefit that employees have earned in
return for their service in the current and prior periods plus related on costs; that benefit is discounted to determine its present
value, and the fair value of any related assets is deducted. The discount rate is the yield at the reporting date on AA credit-rated
or government bonds that have maturity dates approximating the terms of the Group’s obligations. The calculation is performed
using the projected unit credit method. Any actuarial gains or losses are recognised in profit or loss in the period in which they
arise.
52
FINBAR GROUP LIMITED ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
3
(g)
(iii)
Significant Accounting Policies (continued)
Employee Benefits (continued)
Termination Benefits
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of
withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination
benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are
recognised as an expense if the Group has made an offer encouraging voluntary redundancy, it is probable that the offer will be
accepted, and the number of acceptances can be reliably estimated.
(iv)
Short-term Employee Benefits
Short term employee benefits are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group
has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the
obligation can be recognised reliably.
(v)
Share-based Payment Transactions
At the grant date, fair value of options granted to employees is recognised as an employee expense, with a corresponding
increase in equity, over the period in which the employees become unconditionally entitled to the options. The amount recognised
is adjusted to reflect the actual number of share options that vest, except for those that fail to vest due to market conditions not
being met.
(h)
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be
reliably estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability.
(i)
Revenue
Under AASB 15, Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts
collected on behalf of third parties. The Group recognises revenue when it transfers control over a product or service to a
customer.
(i)
Property Sales
Revenue from property sales include:
· Sale of residential and commercial property;
· Development costs fees which represent the fees charged to recoup project development costs from the Land Owners; and
· Profit Share fees which represent percentage profit sharing revenue based on net project profit.
Revenue is recognised when control of the assets is transferred and the amount of revenue is measured based on the contracted
amount. The timing of transfer of control vary depending on the individual terms of the contract of sale.
For projects with an external landowner when the Group is engaged as a property developer of the land, the Group is deemed to
be acting as the principal in the transaction and as such, property sales revenue and cost of sale are grossed up by the land cost
base.
The cost of sales allocated to individual units is based on the estimated overall selling price for the project and is updated at each
reporting date.
(ii)
Supervision Fees
Supervision fees represents the management fees charged to the Equity Accounted Investees. Revenue is recognised in profit or
loss in proportion to the stage of project completion which is by reference to an assessment of the costs incurred and the costs to
be incurred. Revenue is measured based on the contracted amount and constrained to the amount that is highly probable.
(iii)
Management Fee
Management fees represents the management fee charged to the Equity Accounted Investees shareholders. Revenue is
recognised in profit or loss at project completion and is measured based on the contracted amount and constrained to the
amount that is highly probable.
(iv)
Rental Income
Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease in
accordance with AASB 117. Lease incentives granted are recognised as an integral part of the total rental income, over the term
of the lease.
53
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
3
(j)
Significant Accounting Policies (continued)
Finance Income and Finance Costs
Finance income comprises interest income on funds invested (including available-for-sale financial assets), interest on loans to
Equity Accounted Investees, dividend income, gains on the disposal of available-for-sale assets, changes in the fair value of financial
assets at fair value through profit or loss, and gains on hedging instruments that are recognised in profit or loss. Interest income is
recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the
date that the Group’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
Finance costs comprise interest expense on borrowings, changes in fair value of financial assets at fair value through profit or
loss, impairment losses recognised on financial assets, and losses on hedging instruments that are recognised in profit or loss.
Borrowing costs that are not directly attributable to the acquisition or production of a qualifying asset are recognised in profit or
loss using the effective interest method.
(k)
Income Tax
Income tax expense comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the
extent that it relates to items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary
differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and equity accounted
investees to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not
recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax
rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted
or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and
they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is
probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income tax expenses that arise from the distribution of dividends are recognised at the same time as the liability to pay
the related dividend is recognised. The Group does not distribute non-cash assets as dividends to its shareholders.
(l)
Goods and Services Tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST
incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as part of the
cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the
ATO is included as a current asset or liability in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing
and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
(m)
Earnings per Share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares
outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which
comprise share options granted to employees.
(n)
Segment Reporting
Determination and Presentation of Operating Segments
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating
segment’s operating results are regularly reviewed by the Chief Operating Decision Maker (CODM) to make decisions about
resources to be allocated to the segment and assess its performance, and for which discrete information is available.
Segment results that are reported to the CODM include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Group’s headquarters), head
office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible
assets other than goodwill.
54
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
3
(o)
(i)
Significant Accounting Policies (continued)
New Standards and Interpretations
New accounting standards and interpretations effective from 1 July 2019
The Group’s financial statements have been prepared on the basis of accounting policies consistent with those in the prior year
except for the adoption of AASB 16 Leases issued by the AASB which have been applied for the first time in the 30 June 2020
reporting period. Refer to Note 2(e) for the impact of new standards.
(ii)
New Standards and Interpretations
A number of new standards are effective for annual periods beginning after 1 July 2020 and earlier application is permitted;
however, the Group has not early adopted the new or amended standards in preparing these consolidated financial statements.
The potential impact of the new standards, amendments to standards and interpretations has been considered and they are not
expected to have a significant impact on the financial statement.
4
Determination of Fair Values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-
financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the
following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in
the notes specific to that asset or liability.
(a)
Investment Property and Property carried at fair value
An external, independent valuation company, having appropriately recognised professional qualifications and recent experience
in the location and category of the property being valued, values the Group’s investment property portfolio and property no less
than once every three years. The fair values are based on market values, being the estimated amount for which a property could
be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper
marketing wherein the parties had each acted knowledgeably and willingly.
In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the estimated
cash flows expected to be received from renting out the property. A yield that reflects the specific risks inherent in the net cash
flows is then applied to the net annual cash flows to arrive at the property valuation.
Valuations reflect, where appropriate: the type of tenants actually in occupation or responsible for meeting lease commitments
or likely to be in occupation after letting vacant accommodation, the allocation of maintenance and insurance responsibilities
between the Group and the lessee, and the remaining economic life of the property. When rent reviews or lease renewals are
pending with anticipated reversionary increases, it is assumed that all notices and where appropriate counter-notices, have been
served validly and within the appropriate time.
Properties that have not been independently valued as at the balance sheet date are carried at fair value by way of directors
valuation.
(b)
Trade and Other Receivables
The fair value of trade and receivables, excluding construction work in progress, is estimated as the present value of future cash
flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes.
(c)
Share-based Payment Transactions
The fair value of employee stock options is measured using the Black-Scholes (or similar) option-pricing model. Measurement
inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average
historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the
instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest
rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken
into account in determining fair value.
(d)
Financial Guarantees
For financial guarantee contracts liabilities, the fair value at initial recognition is determined using a probability weighted
discounted cash flow approach. This method takes into account the probability of default by the guaranteed party over the term
of the contract, the loss given default (being the proportion of the exposure that is not expected to be recovered in the event of
default) and exposure at default (being the maximum loss at the time of default).
55
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
5
Financial Risk Management
Overview
The Group has exposure to the following risks from their use of financial instruments:
»
»
credit risk
liquidity risk
» market risk
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for
measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout these
consolidated financial statements.
Risk Management Framework
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The
Board is responsible for developing and monitoring risk management policies.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits
and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and
obligations.
The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and
procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers and investment securities.
Trade and Other Receivables
The nature of the Group’s business means that most sales contracts occur on a pre-sales basis, before significant expenditure
has been incurred on the development. All pre-sale contracts require a deposit at the point of entering into the contract, these
funds being held in trust independently of the Group. Generally, pre-sale contracts are executed on an unconditional basis.
Possession of a development property does not generally pass until such time as the financial settlement of the property has
been completed, and title to a development property does not pass until the financial settlement of the property has been
completed. Where possession of the development property is granted prior to settlement, title to the property remains with the
Group until financial settlement of the property has been completed.
The demographics of the Group’s customer base has little or no influence on credit risk. Approximately 2.31% (2019: 10.92%) of
the Group’s revenue is attributable to multiple sales transactions with single customers.
The Board of Directors has established a credit policy which undertakes an analysis of each sale. Purchase limits are established
on customers, with these purchase limits being reviewed on each property development.
The Group’s trade and other receivables relate mainly to the Group’s loans to Equity Accounted Investees (within which the Group
holds no more than a 50% interest) and Goods and Services Tax refunds due from the Australian Taxation Office. The loans to
Equity Accounted Investees are repaid from proceeds on settlement and bear interest at BBSY plus agreed margin.
The Group has not established an allowance for impairment, as no losses are expected to be incurred in respect of trade and
other receivables.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group uses project by project costing to cost its products and services, which assists it in monitoring cash flow requirements
and optimising its cash return on investments. Typically the Group ensures that it has sufficient cash on demand to meet expected
operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of
extreme circumstances that cannot reasonably be predicted, such as natural disasters.
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, whilst optimising the return.
Interest Rate Risk
The Group continuously reviews its exposure to changes in interest rates and where it is considered prudent will enter into
borrowings on a fixed rate basis.
56
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
5
Financial Risk Management (continued)
Capital Management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business. The Board of Directors monitors the return on capital, which the Group defines as total
comprehensive income attributable to the group divided by total shareholders’ equity, excluding non-controlling interests. The
Board of Directors also monitors the level of dividends to shareholders.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and
the advantages and security afforded by a sound capital position. The Group’s target is to achieve a return on assets of between
6.00% and 8.00%; for the year ended 30 June 2020 the return was 3.39% (2019: 4.41%). In comparison the weighted average
interest expense on interest-bearing borrowings (excluding liabilities with imputed interest) was 1.74% (2019: 2.84%).
The Group’s debt-to-capital ratio at the end of the financial year was as follows:
Interest-bearing debt
Market Capitalisation as at 30 June
Total Capital
Debt-to-capital ratio at 30 June
Note
2020
$’000
2019
$’000
21
42,854
49,829
190,486
228,583
233,340
278,412
18%
18%
From time to time the Company purchases its own shares on the market; the timing of these purchases depends on market
prices and availability of unallocated company cash resources where not required for core business activity. Shares purchased are
cancelled from issued capital on purchase. The intention of the Board of Directors in undertaking such purchases is to enhance
the capital return to the shareholders of the Company. Buy decisions are made on a specific transaction basis by the Board of
Directors.
In accordance with Rule 13 of the Company’s Dividend Reinvestment Plan (DRP), the Directors have elected to suspend the DRP
in the 2020 financial year until further notice. As such the DRP will not be active for the above mentioned dividend.
6
Operating Segments
The Group operates predominantly in the property development sector and has identified 4 reportable segments, as described
below, which are the Group’s three strategic business units, as well as the Corporate office. The strategic business units offer
different products, and are managed separately because they require different technology, marketing strategies and have different
types of customers. For each of the strategic business units, the Chief Operating Decision Maker (CODM) reviews internal
management reports on a regular basis. The following describes the operations in each of the Group’s reportable segments:
» Residential apartment development in Western Australia;
» Commercial office/retail development in Western Australia;
» Rental of property in Western Australia; and
» Corporate costs includes supervision fees, management fees and net assets attributable to the corporate office.
57
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
6
Operating Segments (continued)
Information about Reportable Segments
For the Year ended 30 June 2020
Residential
Apartment
Development
$’000
Commercial
Office/Retail
Development
$’000
Rental of
Property
$’000
Corporate
$’000
Total
$’000
External Revenues - Company and Subsidiaries
136,630
10,458
7,127
370
154,585
External Revenues - Equity Accounted Investees
4,171
-
16
-
4,187
External Revenues - Total
140,801
10,458
7,143
370
158,772
Reportable Segment Profit before Income Tax - Company and
Subsidiaries
Reportable Segment Profit before Income Tax - Equity Accounted
Investees
7,241
(3,811)
2,202
4,573
10,205
(24)
4
10
(27)
(37)
Reportable Segment Profit before Income Tax - Total
7,217
(3,807)
2,212
4,546
10,168
Reportable Segment Assets - Company and Subsidiaries
145,852
17,701
98,285
23,369
285,207
Reportable Segment Assets - Equity Accounted Investees
Reportable Segment Liabilities - Company and Subsidiaries
Reportable Segment Liabilities - Equity Accounted Investees*
Capital Expenditure
18,012
51,653
11,195
-
2,016
-
-
20,028
1,959
36,108
846
90,566
44
-
-
-
1
87
11,240
87
For the Year ended 30 June 2019
External Revenues - Company and Subsidiaries
141,550
6,019
6,875
306
154,750
External Revenues - Equity Accounted Investees
11,546
-
30
-
11,576
External Revenues - Total
153,096
6,019
6,905
306
166,326
Reportable Segment Profit before Income Tax - Company and
Subsidiaries
Reportable Segment Profit before Income Tax - Equity Accounted
Investees
Reportable Segment Profit before Income Tax - Total
10,806
68
2,723
6,655
20,252
643
11,449
9
77
24
(11)
665
2,747
6,644
20,917
Reportable Segment Assets - Company and Subsidiaries
184,548
28,130
85,477
18,708
316,863
Reportable Segment Assets - Equity Accounted Investees
8,171
2,083
-
-
10,254
Reportable Segment Liabilities - Company and Subsidiaries
83,541
1,386
37,783
1,572
124,282
Reportable Segment Liabilities - Equity Accounted Investees*
Capital Expenditure
3,055
-
34
-
-
-
-
43
3,089
43
* Excludes Liabilities payable to Finbar Group.
The Group’s share of revenues from equity accounted investees are reported in this table as they are managed by Finbar and reported
to the CODM. Revenues from equity accounted investees are not reported in the statement of profit or loss and other comprehensive
income.
58
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
6
Operating Segments (continued)
Reconciliation of Reportable Segment Revenues, Profit or Loss, Assets and Liabilities
Revenues
Total revenue for development reportable segments
Total revenue for rental segments
Total revenue for other reportable segments
Consolidated Revenue
Total revenue for development reportable segments - Equity Accounted Investees
Total revenue for rental segments - Equity Accounted Investees
Total Reportable Segments Revenue
Profit or Loss
Total profit or loss for reportable segments
Finance income - Company and Subsidiaries
Finance costs - Company and Subsidiaries
Unallocated amounts:
Administrative expenses
Revaluation of investment property
Revaluation of property, plant and equipment
Income tax applicable to share of profit of Equity Accounted Investees
Consolidated Profit before Income Tax
Assets
Total assets for reportable segments
Cash and cash equivalents
Investments in Equity Accounted Investees
Other assets**
Consolidated Total Assets
Liabilities
Total liabilities for reportable segments
Other liabilities
Consolidated Total Liabilities
** Includes receivables due to Finbar Group Limited from Equity Accounted Investees.
Geographical information
The Group operates predominantly in the one geographical segment of Western Australia.
2020
$’000
2019
$’000
147,089
147,570
7,127
6,875
369
305
154,585
154,750
4,171
11,546
16
30
158,772
166,326
10,168
20,917
970
(332)
1,890
(781)
(7,159)
(6,918)
6,203
627
11
964
114
(239)
10,488
15,947
285,207
316,863
30,591
45,490
2,113
4,540
19,890
11,615
337,802
378,508
90,566
124,282
5,295
5,748
95,861
130,030
59
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
7
Revenue
Property development sales
Rental Income
Supervision fees
Gain on transfer to investment property
Total Revenue
8
Other Income
Administration fees
Management fees
Other
Total Other Income
9
Personnel Expenses
Wages and salaries
Superannuation contributions
Increase in liability for annual leave
(Decrease)/Increase in liability for long service leave
Directors and committee fees
Non Executive Directors - superannuation contributions
Total Personnel Expenses
10
Finance Income and Finance Costs
Recognised in Profit or Loss
Interest income on loans to Equity Accounted Investees
Interest income on loans
Interest income on bank deposits
Interest income on property settlements
Total Finance Income
Interest expense
Bank charges
Total Finance Costs
Net Finance Income
Analysis of Finance Costs
Total finance costs
Less: Finance costs capitalised to inventory
Add: Finance costs relating to property developments sold
Made up of:
Finance costs relating to property developments sold
Finance costs relating to administration
Finance costs relating to rental properties
60
2020
$’000
2019
$’000
145,410
147,570
7,127
6,875
91
1,679
245
-
154,307
154,690
60
217
1
278
53
5
2
60
4,029
3,946
260
26
(10)
212
6
236
5
68
212
6
4,523
4,473
319
482
109
60
970
326
6
332
638
608
458
616
208
1,890
775
6
781
1,109
1,518
1,785
(1,126)
(1,004)
492
884
552
7
325
884
626
1,407
626
9
772
1,407
FINBAR GROUP LIMITED ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
11
Income Tax Expense
Recognised in Income Statement
Current Tax Expense
Current year
Income tax recognised directly to equity
Write off and reversal of previously recognised tax assets
Non-recoverable amounts
Deferred Tax Expense Movement
Origination and reversal of temporary differences
Income Tax Expense excluding share of Income Tax on Equity Accounted Investees
Income tax relating to components of other comprehensive income
2020
$’000
2019
$’000
1,801
5,426
58
281
426
58
(138)
40
2,566
5,386
1,298
1,298
3,864
191
(826)
(826)
4,560
(6)
Total Income Tax Expense excluding share of Income Tax on Equity Accounted Investees
4,055
4,554
Numerical Reconciliation between Tax Expense and Pre-tax Net Profit
Profit for the year
Total income tax expense
Profit before Income Tax
Income tax using the domestic rate of 30% (2019: 30%)
Increase in income tax expense due to:
Non-deductible expenses
Non-recoverable amounts
Write off and reversal of previously recognised tax assets
Decrease in income tax expense due to:
Tax effect of share of equity accounted investees loss
Total Income Tax Expense
Made up of:
Income Tax Expense excluding share of Income Tax on Equity Accounted Investees
Income tax relating to components of other comprehensive income
Income Tax Recognised Directly in Equity
Decrease in income tax expense due to:
Tax incentives not recognised in income statement
Total Income Tax Recognised Directly in Equity
6,624
11,387
3,864
4,560
10,488
15,947
3,147
4,784
2
426
281
2
40
(138)
8
3,864
(128)
4,560
3,864
4,560
191
(6)
4,055
4,554
(58)
(58)
(58)
(58)
61
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
12
12a
Investment Property
Reconciliation of Carrying Amount
Balance at 1 July
Sale of Investment Property
Acquisition of Investment Property
Change in fair value
Balance at 30 June
2020
$’000
2019
$’000
85,307
84,769
-
(425)
5,821
6,203
-
963
97,331
85,307
Investment property comprises commercial properties at five developments and residential properties at two developments which are
leased to third parties (see Note 25). During the year ended 30 June 2020, Finbar Commercial Pty Ltd acquired 2 investment properties at
the Aurelia and Vue Tower development.
The increase in the revaluation was a result of a significant extension of the weighted average lease term from prior year, offset by
COVID-19 impacts.
12b
Measurement of fair values
(i) Fair Value Hierarchy
The fair value of investment property was determined by external, independent property valuers, having appropriate recognised
professional qualifications and recent experience in the location and category of the property being valued or by director’s valuation.
In accordance with the Company’s policy, independent valuations were undertaken in December 2019 on all existing properties at the
time of valuation. At June reporting period, a Directors’ valuation was undertaken which assessed the negative impact on valuation of
the properties due to the uncertainty from the COVID-19 pandemic. Factors considered include longer letting up allowance and potential
mandatory rent relief post 30 June 2020 in accordance to the Code of Conduct legislation.
The fair value assessment of the Company as at the reporting date includes the best estimate of the impacts of COVID-19 pandemic
using information available at the time of preparation of the financial statements and appropriate forward looking assumptions.
The fair value measurement for investment property of $97,331,000 has been categorised as a Level 3 fair value based on the inputs to
the valuation technique used (see Note 2(d)).
(ii) Level 3 Fair Value
Note 12a shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.
(iii) Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in measuring the fair value of investment property, as well as the significant
unobservable inputs used.
Valuation Technique
Significant unobservable inputs
Inter-relationship between key
unobservable inputs and fair value
measurement
Discounted cash flows: The valuation model considers
the present value of net cash flows able to be generated
from the property taking into account expected rental
growth rate, void periods, occupancy rate, lease incentive
costs, such as rent-free periods and other costs not paid
by tenants. The expected net cash flows are discounted
using risk-adjusted discount rates. Among other factors,
the discount rate estimation considers the quality of a
building and its location (prime vs secondary), tenant
credit quality and lease terms.
Expected market rental growth 0.00%
- 5.00%;
Weighted average 2.76%;
Void periods (average 7.8 months
after the end of each lease);
Occupancy rate 89.82%;
Rent-free periods (21 - 57 month
period on certain new leases); and
Risk-adjusted discounted rates
(weighted average 7.75%).
The estimated fair value would
increase (decrease) if:
Expected market rental growth were
higher (lower);
Void periods were shorter (longer);
Occupancy rate were higher (lower);
Rent-free periods were shorter
(longer); or
Risk-adjusted discount rate were
lower (higher).
Capitalisation of income valuation: The capitalisation
of income valuation method capitalises the current
rent received, at a rate analysed from the most recent
transactions of comparable property investments.
The capitalisation rate used varies across properties.
Valuations reflect, where appropriate, lease term
remaining, the relationship of current rent to the
market rent, location and prevailing investment market
conditions.
Adopted capitalisation rate 7.25% -
10.00%;
Gross rent per annum $450 - $600
per sqm;
Occupancy rate 56.35% - 99.02%; and
Lease term remaining (years) 0.01 -
8.01.
The estimated fair value would
increase (decrease) if:
Adopted capitalisation rate were
higher (lower);
Gross rent per annum were higher
(lower);
Occupancy rate were higher (lower);
or
Lease term remaining were longer
(shorter).
62
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
13
Property, Plant and Equipment
Cost or Valuation
Balance at 1 July 2018
Additions
Change in fair value
Disposals
Balance at 30 June 2019
Balance at 1 July 2019
Additions
Change in fair value
Disposals
Balance at 30 June 2020
Depreciation
Balance at 1 July 2018
Revaluation
Depreciation and amortisation charge for the year
Balance at 30 June 2019
Balance at 1 July 2019
Disposals
Revaluation
Depreciation and amortisation charge for the year
Balance at 30 June 2020
Carrying Amounts
At 1 July 2018
At 30 June 2019
At 1 July 2019
At 30 June 2020
Office
Furniture
and
Equipment
$’000
Property
$’000
Plant and
Equipment
$’000
Fixtures and
Fittings
$’000
Total
$’000
6,229
-
(79)
-
773
43
-
-
10,102
91
17,195
-
-
(12)
-
-
-
43
(79)
(12)
6,150
816
10,090
91
17,147
6,150
-
1,091
-
816
87
-
-
10,090
91
17,147
-
-
(2,407)
-
-
-
87
1,091
(2,407)
7,241
903
7,683
91
15,918
-
556
5,960
-
42
-
888
598
6,848
67
-
5
72
6,583
(172)
1,107
7,518
(172)
172
-
-
-
(171)
171
-
6,229
6,150
6,150
7,241
598
6,848
72
7,518
-
-
107
705
217
218
218
198
(1,762)
-
655
-
-
4
(1,762)
(171)
937
5,741
76
6,522
4,142
3,242
3,242
1,942
24
19
19
15
10,612
9,629
9,629
9,396
For each revalued class the carrying amount that would have been recognised had the assets been carried on historical cost basis are as
follows:
Revalued assets at deemed cost
Cost
Less accumulated depreciation
Net book value at 30 June 2020
Property
$’000
6,871
(1,403)
5,468
63
FINBAR GROUP LIMITED ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
13
Property, Plant and Equipment (continued)
Measurement of fair values
(i) Fair Value Hierarchy
The fair value of property was determined by external, independent property valuers, having appropriate recognised professional
qualifications and recent experience in the location and category of the property being valued or by director’s valuation.
In accordance with the Company’s policy, independent valuations were undertaken in December 2019 on all existing properties at the
time of valuation. At June reporting period, a Directors’ valuation was undertaken which assessed the negative impact on valuation of
the properties due to the uncertainty from the COVID-19 pandemic. Factors considered include longer letting up allowance and potential
mandatory rent relief post 30 June 2020 in accordance to the Code of Conduct legislation.
The fair value assessment of the Company as at the reporting date includes the best estimate of the impacts of COVID-19 pandemic
using information available at the time of preparation of the financial statements and appropriate forward looking assumptions.
The fair value measurement for property of $7,241,000 has been categorised as a Level 3 fair value based on the inputs to the valuation
technique used (see Note 2(d)).
(ii) Level 3 Fair Value
The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.
Balance at 1 July
Revaluation increase included in ‘profit or loss’
Revaluation increase/(decrease) included in ‘other comprehensive income’
Depreciation
Balance at 30 June
(iii) Valuation technique and significant unobservable inputs
2020
$’000
2019
$’000
6,150
6,229
627
635
(171)
7,241
114
(21)
(172)
6,150
The following table shows the valuation technique used in measuring the fair value of investment property, as well as the significant
unobservable inputs used.
Valuation Technique
Significant unobservable inputs
Inter-relationship between key
unobservable inputs and fair value
measurement
Discounted cash flows: The valuation model considers
the present value of net cash flows able to be generated
from the property taking into account expected rental
growth rate, void periods, occupancy rate, lease incentive
costs, such as rent-free periods and other costs not paid
by tenants. The expected net cash flows are discounted
using risk-adjusted discount rates. Among other factors,
the discount rate estimation considers the quality of a
building and its location (prime vs secondary), tenant
credit quality and lease terms.
Expected market rental growth 0.00%
- 5.00%;
Weighted average 2.76%;
Void periods (average 7.8 months
after the end of each lease);
Occupancy rate 89.82%;
Rent-free periods (21 - 57 month
period on certain new leases); and
Risk-adjusted discounted rates
(weighted average 7.75%).
The estimated fair value would
increase (decrease) if:
Expected market rental growth were
higher (lower);
Void periods were shorter (longer);
Occupancy rate were higher (lower);
Rent-free periods were shorter
(longer); or
Risk-adjusted discount rate were
lower (higher).
Capitalisation of income valuation: The capitalisation
of income valuation method capitalises the current
rent received, at a rate analysed from the most recent
transactions of comparable property investments.
The capitalisation rate used varies across properties.
Valuations reflect, where appropriate, lease term
remaining, the relationship of current rent to the
market rent, location and prevailing investment market
conditions.
Adopted capitalisation rate 7.25% -
10.00%;
Gross rent per annum $450 - $600
per sqm;
Occupancy rate 56.35% - 99.02%; and
Lease term remaining (years) 0.01 -
8.01.
The estimated fair value would
increase (decrease) if:
Adopted capitalisation rate were
higher (lower);
Gross rent per annum were higher
(lower);
Occupancy rate were higher (lower);
or
Lease term remaining were longer
(shorter).
64
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
14
Investments in Equity Accounted Investees
Equity Accounted Investees
The Group accounts for investments in Equity Accounted Investees using the equity method.
The Group has the following investments in Equity Accounted Investees (all stated at 100% of the values) :
Equity Accounted Investees Assets
2019
36 Chester Avenue Pty Ltd*
647 Murray Street Pty Ltd
Axis Linkit Pty Ltd
Finbar Sub 5050 Pty Ltd
Lot 1001 - 1003 Rowe Avenue Pty Ltd
Rowe Avenue Pty Ltd
Roydhouse Street Subiaco Pty Ltd
Equity Accounted Investees Liabilities
2019
36 Chester Avenue Pty Ltd*
647 Murray Street Pty Ltd
Axis Linkit Pty Ltd
Finbar Sub 5050 Pty Ltd
Lot 1001 - 1003 Rowe Avenue Pty Ltd
Rowe Avenue Pty Ltd
Roydhouse Street Subiaco Pty Ltd
Equity Accounted Investees Assets
2020
240 Adelaide Terrace Pty Ltd (Formerly Finbar Sub 106 Pty Ltd**)
647 Murray Street Pty Ltd
Axis Linkit Pty Ltd
Finbar Sub 5050 Pty Ltd
Lot 1001 - 1003 Rowe Avenue Pty Ltd
Rowe Avenue Pty Ltd
Roydhouse Street Subiaco Pty Ltd
Ownership
Current
Assets
$’000
Non-current
Assets
$’000
Total
Assets
$’000
0.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
-
-
-
10,328
1,327
11,655
-
-
10
1
3
-
1
7,495
4,024
-
-
1
7,505
4,025
3
10,342
12,847
23,189
Ownership
Current
Liabilities
$’000
Non-current
Liabilities
$’000
Total
Liabilities
$’000
0.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
-
5,247
-
-
51
13
3
-
321
1
4
-
5,568
1
4
8,019
8,070
450
-
463
3
5,314
8,795
14,109
Ownership
Current
Assets
$’000
Non-current
Assets
$’000
Total
Assets
$’000
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
3
7,239
1,649
-
-
-
-
1
7,242
1,649
-
1
543
28,321
28,864
10
2
4,094
4,104
-
2
2,207
39,655
41,862
65
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
14
Investments in Equity Accounted Investees (continued)
Equity Accounted Investees Liabilities
2020
240 Adelaide Terrace Pty Ltd (Formerly Finbar Sub 106 Pty Ltd**)
647 Murray Street Pty Ltd
Axis Linkit Pty Ltd
Finbar Sub 5050 Pty Ltd
Lot 1001 - 1003 Rowe Avenue Pty Ltd
Rowe Avenue Pty Ltd
Roydhouse Street Subiaco Pty Ltd
Ownership
Current
Liabilities
$’000
Non-current
Liabilities
$’000
Total
Liabilities
$’000
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
17
141
-
-
7,226
7,243
19
1
4
160
1
4
1,654
28,033
29,687
17
1
522
-
539
1
1,830
35,805
37,635
Profit/(Loss) Before Income Tax Recognised from Equity Accounted Investees
2019
Ownership
36 Chester Avenue Pty Ltd*
647 Murray Street Pty Ltd
Axis Linkit Pty Ltd
Finbar Sub 5050 Pty Ltd
Lot 1001-1003 Rowe Avenue Pty Ltd
Rowe Avenue Pty Ltd
Roydhouse Street Subiaco Pty Ltd
0.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
Profit/(Loss) Before Income Tax Recognised from Equity Accounted Investees
2020
Ownership
240 Adelaide Terrace Pty Ltd (Formerly Finbar Sub 106 Pty Ltd**)
647 Murray Street Pty Ltd
Finbar Sub 5050 Pty Ltd
Lot 1001 - 1003 Rowe Avenue Pty Ltd
Rowe Avenue Pty Ltd
Roydhouse Street Subiaco Pty Ltd
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
Revenues
$’000
Expenses
$’000
Profit/(Loss)
before
income tax
$’000
-
-
-
23,164
21,152
2,012
-
-
-
-
12
-
1
-
(1)
410
(410)
5
13
(5)
(1)
23,176
21,581
1,595
Revenues
$’000
Expenses
$’000
-
1
8,342
7,809
-
-
-
8
1
369
(3)
3
Profit/(Loss)
before
income tax
$’000
(1)
533
(1)
(369)
3
5
8,350
8,180
170
* As at 30 June 2019, 36 Chester Avenue Pty Ltd is a wholly owned subsidiary of Finbar Group Limited (Note 29). The Group acquired the
remaining 50% interest from the joint venture partner. Acquisition of the net liability has been included under Share of profit of Equity
Accounted Investees in Consolidated Statement of Profit and Loss.
** Finbar Sub 106 Pty Ltd was a fully owned subsidiary as at 30 June 2019. Refer to Note 29.
66
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
15
Tax Assets and Liabilities
The current tax liability for the Group of $1,116,000 (2019: $3,060,000) represents the amount of income taxes payable in respect of
current and prior periods.
Recognised Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are attributable to the following:
Inventories
Interest bearing loans and borrowings
Revaluation of investment property
Other items
Tax value of carry-forward losses recognised
Tax assets/(liabilities)
Set off of tax
Net Tax
16
Inventories
Current
Work in progress
Completed stock
Total Current Inventories
Non Current
Work in progress
Completed stock
Total Non Current Inventories
17
Trade and Other Receivables
Current
Trade receivables
Other receivables
Amounts receivable from equity accounted investees
Total Current Trade and Other Receivables
Non Current
Trade receivables
Other receivables
Amounts receivable from equity accounted investees
Total Non Current Trade and Other Receivables
Assets
Liabilities
2020
$’000
2019
$’000
2020
$’000
2019
$’000
(1,164)
(1,164)
(9,902)
(8,069)
30
112
2,065
2,383
859
7,248
9,038
511
6,302
-
(504)
3,502
-
-
-
3,415
-
8,144
(6,904)
(4,654)
(2,725)
(1,967)
2,725
1,967
6,313
6,177
(4,179)
(2,687)
2020
$’000
2019
$’000
-
70,549
58,803
59,376
58,803
129,925
50,651
40,238
45,147
22,570
95,798
62,808
9,632
15,713
709
-
782
1,859
10,341
18,354
5,382
7,952
13,577
4,302
8,242
3,579
26,911
16,123
67
Amounts receivable from equity accounted investees bear interest at BBSY plus agreed margin.
The Group’s exposure to credit risk and impairment losses to trade and other receivables are disclosed at Note 24.
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
18a
Cash and Cash Equivalents
Bank balances
Cash and Cash Equivalents in the Statement of Cash Flows
Note
2020
$’000
2019
$’000
30,591
45,490
30,591
45,490
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities is disclosed at Note 24.
18b
Reconciliation of Cash Flows from Operating Activities
Cash Flows from Operating Activities
Profit for the year
Adjustments for:
Depreciation and amortisation
Loss on Disposal of Assets
Revaluation of investment property
Revaluation of property, plant & equipment
Gain on transfer to investment property
Net financing income
Share of net profit/(loss) of equity accounted investees
Income tax expense
Operating Profit before Changes in Working Capital and Provisions
Change in trade and other receivables
Change in inventories
Change in prepayments
Change in provision for employee benefits
Change in trade and other payables
Cash generated from/(used in) Operating Activities
Interest paid
Income taxes paid
Net Cash generated from/(used in) Operating Activities
13
11
16
22
6,624
11,387
937
320
1,107
-
(6,203)
(963)
(627)
(1,679)
-
-
(560)
(1,117)
26
3,864
(426)
4,560
2,702
14,548
6,945
15,408
38,132
(47,821)
55
17
107
73
(18,104)
(4,607)
29,747
(22,292)
(1,231)
(1,735)
(4,643)
(4,739)
23,873
(28,766)
The increases and decreases in trade and other receivables as well as trade and other payables reflect only those changes that relate to
operating activities. The remaining increases and decreases relate to investing activities.
19
Capital and Reserves
Share Capital
On issue at 1 July
Issued under Dividend Reinvestment Plan
Bought back for cash
On Issue at 30 June - Fully Paid
Company
Ordinary Shares
2020
2019
272,123,142 270,769,961
-
-
2,319,774
(966,593)
272,123,142 272,123,142
The Company does not have authorised capital or par value in respect of its issued shares.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
68
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
19
Capital and Reserves (continued)
Dividends
Dividends recognised in the current year by the Group are:
Dividends Paid During the Year 2020
Final 2019 ordinary
Interim 2020 ordinary
Total Amount
Dividends Paid During the Year 2019
Final 2018 ordinary
Interim 2019 ordinary
Total Amount
Cents per
Share
Total
Amount
$’000
Franked /
Unfranked
Date of Payment
3.00
2.00
3.00
3.00
8,164
Franked
12 September 2019
5,442
Franked
26 March 2020
13,606
8,123
Franked
14 September 2018
8,179
Franked
12 March 2019
16,302
Franked dividends declared or paid during the year were franked at the rate of 30%.
After 30 June 2020 the following dividend has been proposed by the Directors. The dividend has not been provided. The declaration and
subsequent payment of dividends has no income tax consequences.
Proposed Dividend
Dividend proposed by the Group are:
Final 2020 ordinary
Total Amount
Cents per
Share
Total
Amount
$’000
Franked /
Unfranked
Date of Payment
1.00
2,721
Franked
21 September 2020
2,721
The financial effect of this dividend has not been brought to account in the financial statements for the financial year ended 30 June 2020
and will be recognised in subsequent financial reports.
Dividend Reinvestment Plan
The Company has a dividend reinvestment plan under which holders of ordinary shares may elect to have all or part of their dividend
entitlements satisfied by the issue of new ordinary shares rather than by being paid in cash.
In accordance with Rule 13 of the Company’s Dividend Reinvestment Plan (DRP), the Directors have elected to suspend the DRP in the
2020 financial year until further notice. As such the DRP will not be active for the above mentioned dividend.
Dividend Franking Account
Company
2020
$’000
2019
$’000
30% franking credits available to shareholders of Finbar Group Limited for subsequent financial years
8,311
10,531
The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:
(a) franking credits that will arise from the payment of current tax liabilities;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the year-end;
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the year-end; and
(d) franking credits that the entity may be prevented from distributing in subsequent years.
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. The impact
on the dividend franking account of dividends proposed after the balance sheet date but not recognised as a liability is to reduce it by
$1,166,000 (2019: $3,499,000).
Nature and purpose of reserve
Asset revaluation reserve
The revaluation reserve relates to the revaluation of non investment property carried at fair value.
69
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
20
Earnings per Share
Basic Earnings per Share
The calculation of basic earnings per share at 30 June 2020 was based on the profit attributable to ordinary shareholders of $6,624,000
(2019: $11,387,000) and a weighted average number of ordinary shares on issue during the year ended 30 June 2020 of 272,123,142 (2019:
272,316,724), calculated as follows:
Profit Attributable to Ordinary Shareholders
Weighted Average Number of Ordinary Shares
Issued ordinary shares at 1 July
Effect of share issue - Dividend Reinvestment Plan
14 September 2018
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
70
24 January 2019
25 January 2019
29 January 2019
30 January 2019
31 January 2019
1 February 2019
7 February 2019
8 February 2019
11 February 2019
12 February 2019
5 March 2019
6 March 2019
13 March 2019
14 March 2019
18 March 2019
21 March 2019
25 March 2019
28 March 2019
2 April 2019
4 April 2019
8 April 2019
9 April 2019
10 April 2019
11 April 2019
12 April 2019
15 April 2019
16 April 2019
24 April 2019
7 May 2019
14 May 2019
2020
$’000
2019
$’000
6,624
11,387
Ordinary Shares
2020
2019
272,123,142 270,769,961
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,843,108
(42,088)
(16,635)
(12,946)
(16,289)
(24,822)
(10,274)
(15,781)
(15,671)
(15,342)
(15,233)
(10)
(909)
(12,055)
(2,252)
(11,507)
(10,244)
(16,110)
(1,442)
(8,620)
(1,199)
(16)
(9,096)
(8,986)
(130)
(133)
(7,073)
(113)
(883)
(753)
(4,603)
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
20
Earnings per Share (continued)
Weighted Average Number of Ordinary Shares (continued)
Effect of share buyback
Effect of share buyback
Effect of share buyback
Effect of share buyback
15 May 2019
16 May 2019
17 May 2019
20 May 2019
Ordinary Shares
2020
2019
-
-
-
-
(5,151)
(1,023)
(4,932)
(4,024)
Weighted Average Number of Ordinary Shares at 30 June
272,123,142 272,316,724
Basic Earnings per Share (cents per share)
2.43
4.18
Diluted Earnings per Share
The calculation of diluted earnings per share at 30 June 2020 was based on the profit attributable to ordinary shareholders of $6,624,000
(2019: $11,387,000) and a weighted average number of ordinary shares on issue during the year ended 30 June 2020 of 272,123,142 (2019:
272,316,724), calculated as follows:
Profit Attributable to Ordinary Shareholders (Diluted)
Weighted Average Number of Ordinary Shares (Diluted)
Weighted average number of ordinary shares at 30 June
Diluted Earnings per Share (cents per share)
21
Loans and Borrowings
2020
$’000
2019
$’000
6,624
11,387
272,123,142 272,316,724
2.43
4.18
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For more information
about the Group’s exposure to interest rate risk see Note 24.
Current
Commercial bills (Secured)
Investor loans to subsidiaries (Unsecured)
Total Current Loans and Borrowings
Non Current
Commercial bills (Secured)
Investor loans to subsidiaries (Unsecured)
Total Non Current Loans and Borrowings
2020
$’000
2019
$’000
35,858
28,364
19,646
6,301
55,504
34,665
-
21,465
8,478
8,478
23,478
44,943
71
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
21
Loans and Borrowings (continued)
Terms and debt repayment schedule
Terms and conditions of outstanding loans are as follows:
Current
Commercial bills (Secured)*
Commercial bills (Secured) **
Commercial bills (Secured)
Investor loans to subsidiaries (Unsecured)
Investor loans to subsidiaries (Unsecured)***
Investor loans to subsidiaries (Unsecured)***
Investor loans to subsidiaries (Unsecured)***
Total Current Loans and Borrowings
Non Current
Commercial bills (Secured)
Investor loans to subsidiaries (Unsecured)***
Investor loans to subsidiaries (Unsecured)***
Total Non Current Loans and Borrowings
Nominal Interest Rate
Financial Year of
Maturity
BBSY+2.00%
BBSY+2.00%
BBSY+1.70%
BBSY+1.50%
BBSY+2.00%
2021
2021
2020
2021
2021
2020
2020
2021
2023
2021
2020
2019
Carrying
Amount
$’000
Carrying
Amount
$’000
14,393
15,893
21,465
-
-
12,471
6,996
12,650
-
-
-
-
4,218
2,083
55,504
34,665
-
21,465
8,478
8,478
-
15,000
8,478
44,943
* At the maturity of the commercial bill on 6 April 2021, the Company intentions to extend the facility on Pelago investment property with
the current lender. As at 30 June 2019, due to a breach of debt covenant, the commercial bill on the Pelago investment property was
classified as a current liability. Subsequent to the finacial year ended 30 June 2019, the bank agreed to waive the breach.
** At the maturity of the commercial bill on 30 April 2021, the Company intentions to extend the facility on Fairlanes investment property
with the current lender.
*** These are loans from land owners which are non interest bearing.
Financing Arrangements
Commercial bills
Commercial bills (refer Note 24) are denominated in Australian dollars.
The commercial bill loans of the Subsidiaries are secured by registered first mortgages over the investment property land and buildings
of the Controlled entity as well as a registered mortgage debenture over the Controlled entity’s assets and undertakings.
Investor Loans
Investor Loans are repayable upon the completion of the project.
22
Employee Benefits
Current
Liability for annual leave
Liability for long-service leave
Total Current Employee Benefits
Non Current
Liability for long-service leave
Total Non Current Employee Benefits
72
2020
$’000
2019
$’000
51
439
490
44
44
25
463
488
29
29
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
23
Trade and Other Payables
Current
Trade and other payables
Other payables and accrued expenses
Total Current Trade and Other Payables
Non Current
Trade and other payables
Other payables and accrued expenses
Total Non Current Trade and Other Payables
2020
$’000
2019
$’000
23,581
39,478
703
1,360
24,284
40,838
1,765
3,240
1
80
1,766
3,320
At 30 June 2020, Consolidated trade and other payables include retentions of $264,000 (2019: $436,000) relating to construction contracts
in progress.
The Group’s exposure to liquidity risk related to trade and other payables is disclosed at Note 24.
24
Financial Instruments
Credit Risk
Exposure to Credit Risk
The carrying amount of the Group’s financial assets represent the maximum credit exposure. The
Group’s maximum exposure to credit risk at the reporting date was:
Trade and other receivables - current
Trade and other receivables - non-current
Cash and cash equivalents
The Group’s maximum exposure to credit risk for trade and other receivables at the reporting
date by receivable category was:
Equity Accounted Investees
GST refunds due and other trade debtors
Other receivables
Working capital advances and bonds
Impairment Losses
Note
17
17
18a
Carrying Amount
2020
$’000
2019
$’000
10,341
18,354
26,911
16,123
30,591
45,490
67,843
79,967
13,577
5,438
10,229
10,063
8,661
18,245
4,785
730
37,252
34,476
None of the Group’s trade or other receivables are past due and based on historic default rates and security held the Group believes that
no impairment allowance is necessary in respect of trade or other receivables.
73
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
24
Financial Instruments (continued)
Liquidity Risk
The following are the contractual maturities of non-derivative financial liabilities, including estimated interest payments and excluding
the impact of netting agreements:
Non-derivative Financial Liabilities
Commercial bills*
Investor Loans*
Trade and other payables
Non-derivative Financial Liabilities
Commercial bills*
Investor Loans*
Trade and other payables
Note
21
21
23
Note
21
21
23
30 June 2020
Carrying
Amount
$’000
Contractual
Cash Flows
$’000
1 Year or
Less
$’000
1-3 Years
$’000
35,858
36,978
36,978
28,124
28,306
19,828
26,050
26,050
24,284
-
8,478
1,766
90,032
91,334
81,090
10,244
30 June 2019
Carrying
Amount
$’000
Contractual
Cash Flows
$’000
1 Year or
Less
$’000
1-3 Years
$’000
49,829
52,505
15,184
37,321
29,779
29,779
6,301
23,478
44,158
44,158
40,838
3,320
123,766
126,442
62,323
64,119
* Refer to Note 21 Loan and Borrowings for details on loan maturity.
Interest Rate Risk
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial assets and liabilities was:
Variable Rate Instruments
Financial Assets
Financial Liabilities
Carrying Amount
2020
$’000
2019
$’000
44,168
50,928
(42,854)
(49,829)
1,314
1,099
Cash Flow Sensitivity Analysis for Variable Rate Instruments
A change of 100 basis points in interest rates would have (decreased)/increased the Group’s equity and profit or loss by the amounts
shown below. This analysis assumes that all variables remain constant. The analysis is on the same basis for 2019.
30 June 2020
Variable rate instruments
30 June 2019
Variable rate instruments
74
Profit or Loss
Equity
100bp
Increase
$’000
100bp
Decrease
$’000
100bp
Increase
$’000
100bp
Decrease
$’000
(867)
867
(867)
867
100bp
Increase
$’000
100bp
Decrease
$’000
100bp
Increase
$’000
100bp
Decrease
$’000
(627)
627
(627)
627
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
24
Financial Instruments (continued)
Fair Values
Fair Values Versus Carrying Amounts
The fair values of financial assets and liabilities, as detailed below, are equal to the carrying amounts shown on the balance sheet:
Trade and other receivables
Cash and cash equivalents
Secured bank loans
Investor loans
Trade and other payables
Fair Values
2020
$’000
2019
$’000
37,252
34,477
30,591
45,490
(35,858)
(49,829)
(28,124)
(29,779)
(26,050)
(44,158)
Note
17
18a
21
21
23
The methods and assumptions used to estimate the fair value of financial instruments are as follows:
Unsecured shareholder loans
Due to the short term nature of these financial rights and obligations, their carrying values approximate to their fair values.
Long term loans are secured and interest bearing at bank business interest rates.
Cash and short term deposits
The carrying amount is fair value due to the liquid nature of these assets.
Bank loans
The carrying amount is a reasonable approximation of fair value.
25
Operating Leases
Leases as Lessor
The Group leases out its investment properties held under operating leases.
Rental income received from investment property
Other rental property income received
Future minimum lease receipts
At 30 June, the future minimum lease receipts under non-cancellable leases are receivable as follows:
Less than one year
Between one and five years
More than 5 years
Note
2020
$’000
2019
$’000
7,123
6,871
4
4
7
7,127
6,875
4,059
5,029
308
3,833
3,674
469
9,396
7,976
The COVID-19 mandatory closure by Federal and/or State governments have impacted some of our food and beverages and medical
tenancies. Majority of our tenants continued to operate during the pandemic. Rent abatements and/or rent deferrals has been and
are still being provided to affected tenants in accordance to the relevant Code of Conduct legislation. Rent relief totalling $60,000 was
recorded in the financial year ended 30 June 2020.
75
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
26
Capital and Other Commitments
Commitments and Contingent Liabilities
Property Development
Contracted but not provided for and payable:
Within one year
Later than one year
Total Property Development Commitments
Property Development - Equity Accounted Investees
Contracted but not provided for and payable:
Within one year
Later than one year
Total Property Development Commitments - Equity Accounted Investees
Group’s Share of Property Development - Equity Accounted Investees
Contracted but not provided for and payable:
Within one year
Later than one year
Total Share of Property Development Commitments - Equity Accounted Investees
Group’s Property Development Commitments including Equity Accounted Investees
Contracted but not provided for and payable:
Within one year
Later than one year
Total Property Development Commitments including Equity Accounted Investees
Note
2020
$’000
2019
$’000
-
-
-
51,065
-
51,065
9,343
-
9,343
4,672
-
4,672
-
-
-
-
-
-
4,672
51,065
-
-
4,672
51,065
Disclosed under Note 30 Subsequent event, 36 Chester Avenue Pty Ltd entered into a construction contract with Hanssen Pty Ltd on 1
July 2020. The capital commitment on the Dianella Apartments project totalled to $32,369,000.
27
Contingencies
The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of
economic benefits will be required or the amount is not capable of reliable measurement.
Guarantees
The Company has guaranteed the bank facilities of certain controlled entities
2020
$’000
2019
$’000
16,577
18,077
The Company has guaranteed the bank facilities of certain equity accounted investees
-
-
76
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
28
Related Parties
The key management personnel compensation included in ‘personnel expenses’ is as follows:
Short term employee benefits
Other long term benefits
Post employment benefits
Employee benefits
2020
$’000
2019
$’000
2,572
2,643
(34)
97
30
91
2,634
2,763
Individual Directors and Executives Compensation Disclosures
Information regarding individual directors and executives compensation are provided in the Remuneration Report section of the Directors’
report on pages 29 to 33.
On 29th October 2014, Finbar Group Limited issued 250,000 fully paid ordinary shares to Darren Pateman as Director Incentive Shares
under the rules of the Director Share Plan 2014. Payment was by way of an interest free loan of $360,000 which was repaid by 14th
October 2019. The related benefit is disclosed in table 4.3.2 on page 31.
On 31st August 2015, Finbar Group Limited issued 250,000 fully paid ordinary shares to Darren Pateman as Director Incentive Shares
under the rules of the Director Share Plan 2014. Payment was by way of an interest free loan of $290,000 which is repayable by 31st
August 2020. The related benefit is disclosed on table 4.3.2 on page 31.
On 25th August 2016, Finbar Group Limited issued 250,000 fully paid ordinary shares to Darren Pateman as Director Incentive Shares
under the rules of the Director Share Plan 2014. Payment was by way of an interest free loan of $207,500 which is repayable by 25th
August 2021. The related benefit is disclosed on table 4.3.2 on page 31.
On 13th September 2017, Finbar Group Limited issued 250,000 fully paid ordinary shares to Darren Pateman as Director Incentive Shares
under the rules of the Director Share Plan 2014. Payment was by way of an interest free loan of $202,500 which is repayable by 13th
September 2022. The related benefit is disclosed on table 4.3.2 on page 31.
Other Related Party Transactions
Equity Accounted Investees
Loans are made by the Group to equity accounted investees for property development undertakings. Loans outstanding between the
Group and joint ventures are interest bearing and are repayable at the completion of the equity accounted investees development project.
As at 30 June the balance of these loans were as follows:
240 Adelaide Terrace Pty Ltd (Formerly Finbar Sub 106 Pty Ltd*)
647 Murray Street Pty Ltd
Axis Linkit Pty Ltd
Finbar Sub 5050 Pty Ltd
Lot 1001 - 1003 Rowe Avenue Pty Ltd
Rowe Avenue Pty Ltd
* Refer to Note 14 Investments in Equity Accounted Investees.
2020
$’000
2019
$’000
274
(20)
1
2
-
1,859
1
2
13,252
3,537
68
39
13,577
5,438
In the financial statements of the Group, investments in equity accounted investees are carried at the lower of the equity accounted
amount and the recoverable amount.
Ventrade Australia Pty Ltd and Ventrade Maylands Pty Ltd are related parties of Chuan Hup Holdings Limited who owns 20.53% of Finbar
Group. The Company entered into a joint venture arrangement with Ventrade Australia Pty Ltd, under 240 Adelaide Terrace Pty Ltd,
during the financial year ended 30 June 2020. The project end value is estimated at $92 million. Development approval has been received
and construction is anticipated to commence in the financial year ended 30 June 2021.
Included within the trade and other payables balance is $2,802,000 (2019: NIL) owing to Ventrade Maylands Pty Ltd. Included within the
trade and other receivables balance is $520,000 (2019: $5,667,000 payable) receivable from Ventrade Australia Pty Ltd. The payables and
receivables are in relation to development projects, are at arms length, non-interest bearing and at call.
77
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
Country of
Incorporation
Shareholding/
Unit Holding
$
Ownership Interest
2020
2019
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
100%
100%
0%
100%
100%
0%
100%
100%
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
33
29
Group Entities
Parent Company
Finbar Group Limited
Subsidiaries
1 Mends Street Pty Ltd
2 Homelea Court Springs Pty Ltd
31 Rowe Avenue Pty Ltd
32 Riversdale Road Pty Ltd
36 Chester Avenue Pty Ltd
43 McGregor Road Pty Ltd
5-7 Harper Terrace Pty Ltd
63 Adelaide Terrace Pty Ltd
88 Terrace Road Pty Ltd
96 Mill Point Road Pty Ltd
172 Railway Parade West Leederville Pty Ltd
175 Adelaide Terrace Pty Ltd
239 Great Eastern Highway Pty Ltd
241 Railway Parade Pty Ltd
262 Lord Street Perth Pty Ltd
269 James Street Pty Ltd
280 Lord Street Perth Pty Ltd
Finbar Applecross Pty Ltd
Finbar Commercial Pty Ltd
Finbar Finance Pty Ltd
Finbar Fund Pty Ltd
Finbar Karratha Pty Ltd
Finbar Port Hedland Pty Ltd
Finbar Project Management Pty Ltd
Finbar To Rent Pty Ltd
Finbar Sales Pty Ltd
Finbar Sub 104 Pty Ltd
Finbar Sub 106 Pty Ltd*
Finbar Sub 107 Pty Ltd
Finbar Executive Rentals Pty Ltd
Lot 1 to 10 Whatley Crescent Pty Ltd
* Refer to Note 14 Investments in Equity Accounted Investees.
78
FINBAR GROUP LIMITED ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Year Ended 30 June 2020
30
Subsequent Events
36 Chester Avenue Pty Ltd entered into a construction contract with Hanssen Pty Ltd on 1 July 2020. The capital commitment on the
Dianella Apartments project totalled to $32,369,000.
With continuing economic uncertainty from the COVID-19 pandemic, the Company may require to grant further rent abatements and/
or rent deferrals in accordance to the relevant Code of Conduct legislation. Further mandatory closures and government mandated
restrictions will influence the Australian economy and property market which may have a future impact on property valuations.
Other than mentioned, there has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the
operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.
31
Auditors’ Remuneration
Audit Services:
Auditors of the Group
Audit and review of the financial reports
Audit and review of the financial reports of equity accounted investees
Services other than Statutory Audit:
Taxation compliance services
32
Parent Entity Disclosures
2020
$’000
2019
$’000
126,697
141,083
-
169
126,697
141,252
20,286
34,929
20,286
34,929
As at, and throughout the financial year ending 30 June 2020 the parent company of the Group was Finbar Group Limited.
Result of the Parent Entity
Profit for the year
Total Comprehensive Income for the year
Financial Position of the Parent Entity
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Total Equity of the Parent Entity comprising of:
Share capital
Retained earnings
Total Equity
Parent Entity Contingencies
2020
$’000
2019
$’000
7,846
7,846
4,739
4,739
29,391
33,397
212,270
218,802
815
859
1,600
1,630
194,483
194,483
16,928
22,689
211,411
217,172
The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of
economic benefits will be required or the amount is capable of reliable measurement.
79
FINBAR GROUP LIMITED ANNUAL REPORT 2020
Directors’ Declaration
1.
In the opinion of the Directors of Finbar Group Limited (‘the Company’):
a)
The Consolidated Financial Statements and notes that are contained in Pages 42 to 79 and the Remuneration report
in the Directors’ report, set out on Pages 29 to 33, are in accordance with the Corporations Act 2001, including:
i)
ii)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance
for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001; and
b)
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2.
3.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing Director
and the Chief Financial Officer for the financial year ended 30 June 2020.
The Directors draw attention to Note 2(a) to the consolidated financial statements, which contains a statement of compliance with
International Financial Reporting Standards.
Signed in accordance with a resolution of the Board of Directors:
Darren Pateman
Managing Director
Dated at Perth this Twenty-fifth day of August 2020.
80
FINBAR GROUP LIMITED ANNUAL REPORT 2020 Independent Auditor’s Report
To the shareholders of Finbar Group Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Finbar Group Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
•
giving a true and fair view of the
Group’s financial position as at 30
June 2020 and of its financial
performance for the year ended on
that date; and
•
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2020.
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of
cash flows for the year then ended
• Notes including a summary of significant accounting
policies
• Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 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 fulfilled our other ethical responsibilities in
accordance with the Code.
Key Audit Matters
The Key Audit Matters we identified are:
• Valuation of Investment Property
• Carrying Value of Inventory.
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in
our audit of the Financial Report of the current period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
81
FINBAR GROUP LIMITED ANNUAL REPORT 2020
Valuation of Investment Property ($97.3million)
Refer to Note 12 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Valuation of investment properties is a key
audit matter due to the:
•
•
•
•
Significance of the balance to the
financial statements
Judgement required in assessing the
capitalisation rates applied to the
projected income of individual
properties in the income valuation
model. A small percentage movement
in the capitalisation rate would result in
a significant financial impact to the
investment property balance and the
income statement.
Timing of the valuations performed by
the Group’s external valuer. It is the
Group’s policy when the valuation was
not performed at year end for the
directors to assess and confirm the
valuation to be adopted in the financial
report. We evaluated the external and
internal valuations
Judgemental valuation inputs with
respect to the Karratha investment
properties ($55.0million), as there is
limited availability of comparable sales
and leasing evidence due to the low
transaction levels in the Karratha region.
This results in a higher level of
judgement being applied by the Group
to the valuation of both commercial and
residential properties in that
development, increasing our audit effort
applied in this area.
Our procedures included:
• Understanding the Group’s process regarding the
valuation of investment property, including
specific considerations of the impact of COVID-
19.
• We assessed the scope, objectivity, competence
and capabilities of the Group’s external valuer.
• We compared the valuations prepared using the
income valuation model to the alternate
discounted cashflow method valuation where
prepared, as a comparator, by the external
valuers.
• We informed our evaluation of the external
valuations and the director’s internal valuations,
by comparing values to recent sales evidence and
other published reports of industry
commentators.
• We challenged the capitalisation rates applied,
particularly for the Karratha investment property,
based on our knowledge of the property portfolio
and other published reports of industry
commentators.
• We also compared, on a sample basis, the
following key inputs to the valuations to existing
lease contracts and published CPI statistics by the
Australian Bureau of Statistics:
− Gross rent;
− Occupancy rate;
− Lease term remaining; and
− CPI
• We assessed the appropriateness of the Group’s
•
Consideration of the economic impacts
of COVID-19 on valuations including
leasing and rental relief assumptions.
leasing and rental relief assumptions with
consideration of the industry sector of the
Group’s Tenants.
• We assessed the disclosures in the financial
report, using our understanding obtained from our
82
FINBAR GROUP LIMITED ANNUAL REPORT 2020 Valuation of Investment Property ($97.3million)
Refer to Note 12 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Valuation of investment properties is a key
Our procedures included:
audit matter due to the:
• Understanding the Group’s process regarding the
Significance of the balance to the
valuation of investment property, including
financial statements
specific considerations of the impact of COVID-
Judgement required in assessing the
19.
capitalisation rates applied to the
• We assessed the scope, objectivity, competence
projected income of individual
and capabilities of the Group’s external valuer.
•
•
properties in the income valuation
model. A small percentage movement
in the capitalisation rate would result in
a significant financial impact to the
investment property balance and the
income statement.
•
Timing of the valuations performed by
the Group’s external valuer. It is the
Group’s policy when the valuation was
not performed at year end for the
directors to assess and confirm the
valuation to be adopted in the financial
report. We evaluated the external and
internal valuations
• We compared the valuations prepared using the
income valuation model to the alternate
discounted cashflow method valuation where
prepared, as a comparator, by the external
valuers.
• We informed our evaluation of the external
valuations and the director’s internal valuations,
by comparing values to recent sales evidence and
other published reports of industry
commentators.
• We challenged the capitalisation rates applied,
particularly for the Karratha investment property,
based on our knowledge of the property portfolio
and other published reports of industry
•
Judgemental valuation inputs with
commentators.
respect to the Karratha investment
properties ($55.0million), as there is
limited availability of comparable sales
and leasing evidence due to the low
transaction levels in the Karratha region.
This results in a higher level of
judgement being applied by the Group
to the valuation of both commercial and
residential properties in that
• We also compared, on a sample basis, the
following key inputs to the valuations to existing
lease contracts and published CPI statistics by the
Australian Bureau of Statistics:
− Gross rent;
− Occupancy rate;
− Lease term remaining; and
development, increasing our audit effort
− CPI
applied in this area.
• We assessed the appropriateness of the Group’s
•
Consideration of the economic impacts
leasing and rental relief assumptions with
of COVID-19 on valuations including
consideration of the industry sector of the
leasing and rental relief assumptions.
Group’s Tenants.
• We assessed the disclosures in the financial
report, using our understanding obtained from our
testing, against accounting standards
requirements.
Carrying value of Inventory ($154.6million)
Refer to Note 16 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Valuation of inventory, being both
completed units and work in progress, is a
key audit matter due to the:
•
•
Significance of the balance to the
financial statements
Significant judgement and our effort
applied to assessing forecast selling
prices and costs to complete for work in
progress. These factors impact the
assessment of net realisable value, as in
accordance with accounting standards,
inventory must be carried at the lower
of cost and net realisable value.
Work in progress comprises developments
currently under construction and future
projects, which are long term in nature
where forecast costs could be negatively
impacted by issues encountered during
planning or construction. In addition,
forecast selling prices can fluctuate
significantly based on property market
conditions. This includes consideration of
economic impacts of COVID-19 on forecast
selling prices.
These factors increase the level of
forecasting judgement and audit complexity
when assessing forecast selling prices and
costs to complete for inventory.
Our procedures included:
• We selected a sample of significant
developments under construction and future
projects to understand project design complexity,
sub-contractor reliance, other project risks and
project funding which could negatively impact
costs to complete. This was done through
enquiry of senior management, and inspection of
documentation such as budgets, funding
agreements, supplier contracts and internal
reports.
• We compared a sample of actual to forecast
selling prices and actual to forecast construction
costs to inform our evaluation of forecast selling
prices and costs to complete respectively. We
have considered the impact of COVID-19 on the
forecast selling prices.
• We undertook sample testing of sales made
during the year and subsequent to year end to
sales contracts to assess sales margins achieved
during the year and post year end. This informs
our evaluation of the carrying value of inventory at
balance date against the Group’s policy for
recording inventory at the lower of cost and net
realisable value.
• We compared forecast selling prices to forecast
total costs for significant projects. We did this to
assess the carrying value of inventory against the
Group’s policy for recording inventory at the lower
of cost and forecast net realisable value.
Other Information
Other Information is financial and non-financial information in Finbar Group Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’
Report. The remaining Other Information consisting of Key Financial Metrics, Chairman’s Report,
Managing Directors’ Report, Finbar Overview, Key Achievements, Development Overview and
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FINBAR GROUP LIMITED ANNUAL REPORT 2020
Finbar’s Investment Properties are expected to be made available to us after the date of the Auditor’s
Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or 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. In doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
•
•
implementing necessary internal control to enable the preparation of a Financial Report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error
assessing the Group and Company’s ability to continue as a going concern and whether the
use of the going concern basis of accounting is appropriate. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group and Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
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 Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They 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 the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our Auditor’s
Report.
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FINBAR GROUP LIMITED ANNUAL REPORT 2020
Finbar’s Investment Properties are expected to be made available to us after the date of the Auditor’s
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Finbar Group Limited for the year ended 30
June 2020, complies with Section 300A of
the Corporations Act 2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration
Report in accordance with Section 300A of the
Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in
paragraph 4.3 of the Directors’ report for the year
ended 30 June 2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
KPMG
Derek Meates
Partner
Perth
25 August 2020
Report.
misstated.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or 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. In doing so, we 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
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error
assessing the Group and Company’s ability to continue as a going concern and whether the
use of the going concern basis of accounting is appropriate. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group and Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
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 Australian Auditing Standards will always detect a material misstatement when it
Misstatements can arise from fraud or error. They 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 the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our Auditor’s
•
•
•
•
exists.
Report.
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FINBAR GROUP LIMITED ANNUAL REPORT 2020
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Finbar Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Finbar Group Limited
for the financial year ended 30 June 2020 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPM_INI_01
R_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG Derek Meates
Partner
Perth
25 August 2020
86
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
FINBAR GROUP LIMITED ANNUAL REPORT 2020
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Finbar Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Finbar Group Limited
for the financial year ended 30 June 2020 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPM_INI_01
R_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG Derek Meates
Partner
Perth
25 August 2020
ASX Additional Information
Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below.
SHAREHOLDINGS (AS AT 30 JUNE 2020)
Substantial Shareholders
The number of shares held by substantial shareholders and their associates are set out below:
Shareholder Name
Chuan Hup Holdings Limited
Thorney Holdings Proprietary Limited
John Chan
Westoz Funds Management Pty Ltd
Voting rights
Ordinary shares
Refer to Note 19 in the Notes to the Financial Statements.
Distribution of Equity Security Holders
Range
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-over
Number
%
55,871,363
20.53
28,362,797
10.42
27,031,551
17,450,000
9.93
6.41
Number of
Holders
Ordinary
Shares
390
536
361
843
143
113,298
1,583,790
2,824,613
26,618,327
240,983,114
2,273
272,123,142
The number of shareholders holding less than a marketable parcel of ordinary shares is 311.
Stock Exchange
The Company is listed on the Australian Securities Exchange. The Home exchange is Perth.
ASX Code: FRI
Other Information
Finbar Group Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
87
FINBAR GROUP LIMITED ANNUAL REPORT 2020
ASX Additional Information (continued)
Twenty largest shareholders of ordinary shares as disclosed in the share register :
Chuan Hup Holdings Limited
HSBC Custody Nominees (Australia) Limited
Zero Nominees Pty Ltd
J P Morgan Nominees Australia Pty Limited
Blair Park Pty Ltd
RUBI HOLDINGS PTY LTD
FORWARD INTERNATIONAL PTY LTD
MR JAMES CHAN
3RD WAVE INVESTORS LTD
APEX INVESTMENTS PTY LTD
CITYCORP NOMINEES PTY LTD
HANSSEN PTY LTD
MRS SIEW ENG MAH
CHAN FAMILY SUPER (WA) PTY LTD
MILTON CORPORATION LIMITED
MR AH-HWA LIM
MS YI XIAN CHAN
DENSHIR PTY LTD
MR WAN SOON CHAN
NATIONAL NOMIEES LIMITED
TOP 20
Number of
Ordinary
Shares Held
%
53,837,175
19.78
33,376,190
12.27
17,604,343
15,570,038
8,497,045
7,912,358
6,472,922
6,231,290
6,100,000
5,798,876
5,793,967
5,000,000
4,820,000
4,100,000
3,642,464
3,155,770
2,892,126
2,839,322
2,435,137
2,366,761
6.47
5.72
3.12
2.91
2.38
2.29
2.24
2.13
2.13
1.84
1.77
1.51
1.34
1.16
1.06
1.04
0.89
0.87
198,445,784
72.92
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FINBAR GROUP LIMITED ANNUAL REPORT 2020 ASX Additional Information (continued)
Offices and Officers
Directors
Mr John Chan (Executive Chairman)
Mr Darren John Pateman (Managing Director)
Mr Ronald Chan (Chief Operations Officer)
Mr Kee Kong Loh
Mr Lee Verios
Mr Terence Siong Woon Peh
Company Secretary
Mr Edward Guy Bank (Chief Financial Officer)
Principal Registered Office
Finbar Group Limited
Level 6
181 Adelaide Terrace
EAST PERTH WA 6004
PO Box 3380
EAST PERTH WA 6892
Telephone: +61 8 6211 3300
Facsimile: +61 8 9221 8833
Email: info@finbar.com.au
Website: www.finbar.com.au
Share Registry
Computershare Investor Services Pty Ltd
Level 11
172 St Georges Terrace
PERTH WA 6000
Telephone: +61 8 9323 2000
Auditors
KPMG
235 St Georges Terrace
PERTH WA 6000
FINBAR GROUP LIM IT ED AN NU A L R EP O R T 2020
89
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finbar.com.au
FINBAR GROUP LIMITED ANNUAL REPORT 2020