GARDA Property Group
Annual Financial Report 2020
GARDA Property Group
Comprising the consolidated financial reports of
GARDA Holdings Limited (ABN 92 636 329 774)
and
GARDA Diversified Property Fund
(ARSN 104 391 273)
GARDA Property Group
Annual Financial Report
30 June 2020
CONTENTS
Directors' Report........................................................................................................................................................................................................................................................... 1
Remuneration Report (Audited) .............................................................................................................................................................................................................. 13
Auditor's Independence Declaration ................................................................................................................................................................................................ 22
Financial Report ........................................................................................................................................................................................................................................................ 23
Independent Auditor's Report .................................................................................................................................................................................................................. 70
Corporate Governance Statement ..................................................................................................................................................................................................... 76
Securityholder Information ......................................................................................................................................................................................................................... 77
Corporate Directory ............................................................................................................................................................................................................................................ 79
GARDA Property Group
Annual Financial Report
30 June 2020
Comprising the combined consolidated financial reports of
GARDA Holdings Limited
ABN 92 636 329 774
Level 21, 12 Creek Street
Brisbane QLD 4000
and
GARDA Diversified Property Fund
ARSN 104 391 273
GARDA Property Group
Annual Financial Report
30 June 2020
DIRECTORS' REPORT
GARDA Property Group (GARDA or the Group) is an ASX-listed stapled entity whereby shares in GARDA
Holdings Limited (GHL or the Company) are stapled to units in GARDA Diversified Property Fund (GDF or the
Fund) on a one-for-one basis.
Shares of the Company and units of the Fund cannot be traded separately and may only be traded together as
stapled securities.
The Directors of the Company and of GARDA Capital Limited as responsible entity for the Fund present their
report and the consolidated financial statements for the year ended 30 June 2020 for both:
the Group - comprising the Company, the Fund and their controlled entities; and
the Company - comprising only the Company and its controlled entities.
The parent entity of the Group is GDF and, other than where noted in the Remuneration Report, comparative
information for the 2019 financial year is for GDF.
DIRECTORS
The Directors of the Company and GARDA Capital Limited at any time during the financial year and up to the
date of this report are listed below. The Directors are also directors of all Group subsidiaries.
Matthew Madsen
Executive Chairman
Appointed September 2011
Matthew has more than 20 years’ experience in the funds management industry,
predominantly in director and management roles. He has significant property and
property finance experience, acting (including in his role for the GARDA Capital Group)
as a finance intermediary focused on larger construction and property investment
funding.
Matthew is Chair of the Advisory Board for residential land developer, Trask
Development Corporation.
Matthew holds a Diploma in Financial Services, a Diploma in Financial Markets and is an
affiliate member of the Securities Institute of Australia.
Interests in securities:
Ordinary securities – 8,108,755
ESP securities – 5,960,000
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GARDA Property Group
Annual Financial Report
30 June 2020
Paul Leitch
Independent Director
Appointed March 2020
Member of the Audit and Risk Committee
Chair of the Nomination and Remuneration Committee
Paul is an experienced senior executive, board member and advisor with public and
private sector organisations. He is the past Chief Operating Officer for QIC, the
Queensland based institutional fund manager. Most recently, he was Leader of the
Brisbane Office of the Nous Group, Australia’s largest privately-owned management
consultancy firm. Paul has a special interest in family-owned and operated companies
and is a director of Charles Porter and Sons and advisor to the Hewitt Group. He is also
Chair of Pathways to Resilience, a Queensland charitable organisation.
Paul holds a Bachelor of Arts (Music) and post graduate qualifications in education. He is
a member of the Australian Institute of Company Directors and the Australian Human
Resources Institute.
Interests in securities:
Ordinary securities – 24,411
Morgan Parker
Independent Director
Appointed December 2018
Member of the Audit and Risk Committee
Member of the Nomination and Remuneration Committee
Morgan has 25 years’ experience as a real estate investor, developer and banker.
Morgan is currently a non-executive director of SunCentral Maroochydore Pty Ltd, the
government-owned company responsible for development of Maroochydore City
Centre on Queensland’s Sunshine Coast, Newcastle Airport and Saudi Entertainment
Ventures. He has previously worked for Morgan Stanley, Lendlease and Macquarie Group,
and his most recent executive role was as Chief Operating Officer at Dubai Holding.
Interests in securities:
Nil
Philip Lee
Non-Executive Director
Appointed May 2015
Chair of the Audit and Risk Committee
Member of the Nomination and Remuneration Committee
Philip has over 33 years’ experience in stockbroking, equities research and corporate
finance. He joined Morgans in 1986 and has served as a Director of Morgans and Joint
Head of Corporate Finance. Philip currently holds the position of Executive Director
Corporate Advisory, primarily focused on raising capital for growing companies, and
chairs Morgans Risk and Underwriting Committees.
Philip holds a Bachelor of Commerce from the University of Canterbury and is a Member
of the Australian Institute of Company Directors, a Senior Fellow of Finsia and a Master
Practitioner Member of the Stockbrokers and Financial Advisers Association.
Interests in securities:
Ordinary securities – 216,828
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GARDA Property Group
Annual Financial Report
30 June 2020
Andrew Thornton
Non-Executive Director
Appointed March 2020
Member of the Audit and Risk Committee
Member of the Nomination and Remuneration Committee
Andrew is Joint Managing Director and major shareholder of Great Western Corporation,
a private group with
industrial property, general
manufacturing, agricultural equipment and investments.
in commercial and
interests
He joined Great Western Corporation in 1995 gaining experience in accounting, finance,
investment and management before becoming Joint Managing Director in 2010.
Andrew previously served as Treasurer of both the Volvo Truck & Bus Dealer Council
and the Daimler Truck Dealer Council. He is currently Company Secretary of HGT
Investments Pty Ltd, GARDA Property Group’s largest securityholder.
Andrew holds a Bachelor of Business and is a member of the Australian Institute of
Company Directors
Interests in securities:
Ordinary securities – 1,013,505
Mr Mark Hallett
Executive Director
Appointed January 2011 (Executive Director from February 2020)
Mark has more than 30 years’ industry and legal experience. A qualified solicitor, he has
a range of diverse industry experiences across all aspects of corporate litigation,
restructuring and commercial property. Mark was legal practice director of Hallett Legal
and is now a consultant at Macpherson Kelley.
Mark has managed successful property syndicates for business associates and continues
to advise participants in the industry on property investment, legal and corporate
restructuring.
Interests in securities:
Ordinary securities – 1,302,469
ESP securities – 1,000,000
Page 3 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
COMPANY SECRETARY
Mr Lachlan Davidson
Company Secretary
Appointed July 2016
Lachlan joined GARDA in 2014 and is a member of the senior leadership team. He is
responsible for the legal, company secretarial and compliance monitoring activities of the
Group.
Lachlan has over 20 years’ experience in corporate law, fundraising and managed
investments. He has worked for Minter Ellison, and both Linklaters and McDermott Will &
Emery in London. Lachlan was General Counsel at Golding Contractors, one of Australia’s
largest private civil and mining contractors. Before that, he was General Counsel of the
largest independent investment bank in the Middle East and was involved in multi-
jurisdiction fundraisings of over $US5 billion across IPOs and managed private equity
funds.
Lachlan holds a Law degree, a BSc in Genetics and Biochemistry, and an MBA. He is a JP
(Qualified), and a Graduate of the AICD Directors Course.
Interests in securities:
Ordinary securities – 213,330
ESP securities – 560,000
MEETINGS OF DIRECTORS
Meetings of the Directors of the Company held since internalisation were as follows1:
Board of Directors
Nomination and
Remuneration Committee
Audit and Risk
Committee
Meetings
attended
Meetings
eligible to
attend
Meetings
attended
8
8
4
4
8
8
8
8
4
4
8
8
2
2
1
1
2
2
Meetings
eligible to
attend
invited
2
1
1
2
invited
Meetings
attended
2
2
1
1
2
2
Meetings
eligible to
attend
invited
2
1
1
2
invited
Matthew Madsen2
Morgan Parker
Paul Leitch
Andrew Thornton
Philip Lee
Mark Hallett
PRINCIPAL ACTIVITIES
GARDA is an internally managed real estate investment, development and funds management group. The Fund
invests in, owns, manages and develops commercial and industrial real estate in accordance with the provisions
of the Fund’s constitution. The Company, through its subsidiaries, acts as the responsible entity of the Fund.
1 Pursuant to the internalisation transaction, the Company was incorporated on 20 September 2019 and GARDA Capital Limited was acquired
by the Group on 29 November 2019.
2 Matthew Madsen and Mark Hallett were not members of the Nomination and Remuneration Committee or the Audit and Risk Committee
however attended meetings by invitation.
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GARDA Property Group
Annual Financial Report
30 June 2020
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Changes in the state of affairs of GARDA during the financial year are set out within the financial report. There
were no significant changes in the operating activities of the Group (including controlled entities) during the year
but, as discussed below, there was a fundamental change in corporate structure.
On 29 November 2019, GARDA was constituted in its current form when two ASX listed entities, GARDA
Diversified Property Fund (previously defined as GDF or the Fund) (ASX: GDF) and GARDA Capital Group (ASX:
GCM), were combined pursuant to the internalisation.
Prior to the internalisation:
1. GDF was an externally managed real estate investment trust; and
2. GARDA Capital Group was a stapled entity comprising:
GARDA Capital Limited, the responsible entity for GDF; and
GARDA Capital Trust, a unit trust whose primary asset was an 11.8% equity interest in GDF.
The internalisation transaction involved two concurrent events:
1.
the establishment of the Group through the stapling of GDF units to shares in the newly created GHL
on a one for one basis; and
2.
the acquisition by the Group of 100% of GARDA Capital Group.
GARDA is now an ASX-listed, internally managed, stapled, real estate group that trades under the ASX ticker
“GDF”. GARDA continues to undertake the operations that were performed by its predecessor entities prior to
the internalisation.
DIVIDENDS AND DISTRIBUTIONS
The table below provides details of dividend and distributions paid by GARDA and the Fund in respect of the
financial year:
Dividend
per security
Distribution
per security
Total per
security
Total
$000
Franked
amount
Record
date
Payment
date
2020
Interim
Interim
Interim3
Interim3
Final3
2019
Interim
Interim
Interim
Final
-
-
-
-
-
-
-
-
-
-
-
2.25c
1.50c
0.75c
2.25c
1.80c
8.55c
2.25c
2.25c
2.25c
2.25c
9.00c
2.25c
1.50c
0.75c
2.25c
1.80c
8.55c
2.25c
2.25c
2.25c
2.25c
9.00c
3,664
2,782
1,517
4,704
3,763
16,430
3,115
3,565
3,565
3,565
13,810
26 Sep 19
16 Oct 19
19 Nov 19
4 Dec 19
31 Dec 19
22 Jan 20
23 Mar 20
16 Apr 20
30 Jun 20
15 Jul 20
28 Sep 18
23 Oct 18
31 Dec 18
21 Jan 19
29 Mar 19
16 Apr 19
28 Jun 19
20 Aug 19
-
-
-
-
-
-
-
-
-
-
-
3 Total distributions exclude distributions paid to treasury securities held by the Group.
Page 5 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
REVIEW OF OPERATIONS AND RESULTS
The following discussion is in respect of the operations and results of the Group for the year ended 30 June
2020.
Strategy
GARDA’s objective is to deliver enduring value to our stakeholders through our expertise in real estate. GARDA
currently has a particular strategic focus on equity investment into the industrial and commercial office sectors
and debt investment into residential developments.
GARDA’s size provides it with the scale necessary to compete in its target markets but also the agility to adjust
its investment focus in anticipation of, or in response to, changing market conditions. Recent active decisions
taken by the Group in support of its strategy include:
acquisitions in the Brisbane industrial market;
buying and developing prime industrial and commercial sites rather than acquiring completed buildings
on unattractive pricing and leasing metrics;
deploying debt capital into residential developments; and
optimally managing its corporate and capital structure to enhance returns per security.
Operational Highlights
Throughout the financial year, GARDA continued to execute its strategy:
$31,345,000 (plus costs) was spent to acquire four industrial properties in Acacia Ridge and
Archerfield adjacent to the Acacia Ridge Intermodal Rail Terminal;
$41,000,000 (plus costs) secured two industrial and warehousing distribution assets in Morningside;
a new 5,702m2 whole-of-building lease was executed at Box Hill for a seven-year term commencing
in December 2020;
favourable leasing outcomes were achieved in Cairns and Morningside with positive engagement with
prospective tenants occurring at other buildings;
development works commenced at the Berrinba and Wacol industrial sites with completion expected
early in the 2021 financial year;
$5,155,000 in capital expenditure was invested pursuant to the Group’s capital improvements program,
with the majority spent on 7-19 Lake Street, Cairns;
$37,500,0000 of new equity was raised; and
$200,000,000 new syndicated debt facility structure, $100,000,000 of interest rate swap protection
was secured and the internalisation transaction was successfully completed.
Financial Performance
Statutory Profit and FFO
GARDA recorded statutory net profit after tax for the year of $5,567,000 (2019: $28,780,000).
The profit for the year includes items which are non-cash in nature, incur infrequently and/or relate to realised
or unrealised changes in the values of assets and liabilities. Accordingly, in the opinion of the Directors, statutory
Page 6 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
profit should be adjusted to allow securityholders to gain a better understanding of GARDA’s operating profit or
funds from operations (FFO) 4.
The following table provides a reconciliation of GARDA’s statutory profit and FFO:
FFO5
Fair value movement in investment properties
Increase in independent valuations6
Acquisition costs7
Capital additions and capitalised costs8
Other9
$000
4,110
(4,494)
(5,614)
(998)
2020
$000
16,622
(6,996)
2019
$000
13,192
17,100
(786)
(6,380)
(940)
Fair value movement of derivative financial instrument
(1,425)
(1,951)
Gain on sale of investment properties
Lease cost and incentives amortisation
Rent free income
Straight-lining of rental income
Depreciation – Property, plant and equipment
Movements in right to use assets and lease liabilities
Capitalisation of interest of development properties10
Non-underlying and non-recurring revenue11
Non-underlying and non-recurring expenses12
Distributions on treasury stock and unvested GARDA ESP securities5
Profit after tax for the year
Income tax benefit
Profit before income tax13
Distributions paid
Distribution payout ratio – FFO
-
(864)
222
1,372
(22)
36
(724)
-
(1,712)
(942)
5,567
(93)
5,474
17,372
104.5%
1,550
(981)
279
1,077
-
-
-
8,000
(1,380)
-
28,780
-
28,780
13,810
104.7%
4 FFO is the Group’s underlying and recurring earnings from its operations. It is determined by adjusting statutory net profit (under AIFRS) for
certain non-cash and other items. FFO has been determined based on guidelines established by the Property Council of Australia and is
intended as a supplementary measure of operating performance. FFO is not calculated in accordance with Australian Accounting Standards
and has not been audited or reviewed by the auditor of the Group.
5 FFO has been adjusted to present on a fully diluted basis and adjusts for the distributions paid and received for treasury stock and GARDA
ESP securities. Adjustments to reflect FFO on a diluted basis, together with adjustments for Botanicca 9 interest expense (refer footnote 10
below) and corporate expense allocations for segments as per AASB, result in FFO differing from segment profit in note 3. FFO has been
reconciled to statutory profit as per table above and segment profit has been reconciled to statutory profit in note 3.
6 Relates to gross movement in independent valuations between 30 June 2019 and those performed in December 2019 and June 2020.
7 Relates to due diligence costs and stamp duty for Acacia Ridge and Morningside properties acquired during the year.
8 Relates to capital expenditure and other capitalised costs on properties prior to independent valuation.
9 Refer note 10. The net amount relates to leasing costs, rent free income and straight-lining of rent.
10 Bot 9 borrowing costs expensed in statutory profit but added back for FFO purposes. The accounting standards require borrowing cost
capitalisation to cease on substantial completion of projects with no allowance for a period of time for leasing up of property. The expense
added to FFO represents borrowings cost capitalisation benefit for the leasing up period which is a critical component for project completion.
11 Prior year amount relates to cash of $8,000,000 from settlement of litigation matter.
12 Relates to security-based payment expense of $444,000 and internalisation expense of $1,268,000. Prior year amounts relate to litigation
costs of $680,000 in relation settlement of a litigation matter and $700,000 for internalisation expenses.
13 Refer note 3 for segment profit reconciliation to net profit before income tax.
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GARDA Property Group
Annual Financial Report
30 June 2020
COVID-19
COVID-19 had minimal impact on GARDA’s revenue in the financial year with insignificant amount of rent
waived and less than $330,000 deferred but still expected to be received. Since the end of the financial year,
this favourable rental collection profile has continued.
Financial Position
Key Metrics
Total assets ($000)
Net assets ($000)
Net tangible assets ($000)
Net debt ($000)14
Gearing15
Stapled securities issued16 (000)
NAV per stapled security
NTA per stapled security
Issued Capital
GDF units at 1 July 2019
Acquisition – Acacia Ridge and Archerfield ($1.36 per security)
Placement ($1.40 per security)
Internalisation ($1.40 per security)
GARDA stapled securities
2020
2019
477,269
356,334
280,558
246,972
217,096
217,096
167,627
108,300
36.7%
32.2%
208,571
158,445
1.35
1.18
1.37
1.37
2020
158,444,594
4,411,765
22,500,000
42,288,002
227,644,361
At the commencement of the financial year, GDF had 158,444,594 issued units. As a result of the Acacia Ridge
and Archerfield acquisitions, a $31,500,000 placement and the subsequent internalisation transaction, the
Group had 227,644,361 stapled securities on issue at 30 June 2020.
Included in GARDA’s 227,644,361 issued securities at 30 June 2020 are 9,233,693 stapled securities (treasury
securities) held by the Group itself. Immediately following the internalisation there were 21,900,363 treasury
securities but 6,666,670 were used to extinguish a loan facility and another 6,000,000 were transferred under
the GARDA employee security plan (with securityholder approval).
Pursuant to Australian Accounting Standards, treasury securities have been deducted from equity in GARDA’s
Statement of Financial Position, as detailed in note 18. Further, distributions received by the Group from treasury
securities have been eliminated from income in GARDA’s Statement of Profit or Loss and Other Comprehensive
Income.
Also included in GARDA’s 227,644,361 issued securities are 9,840,000 securities issued under the GARDA
employee security plan. Further details are provided in the Remuneration Report.
14 Calculated as total debt less cash.
15 Calculated as (total debt less cash) / (total assets less cash).
16 Refer Contributed Equity note 18 – issued capital excludes 9,233,693 treasury securities and 9,840,000 securities issued under the GARDA
ESP (including ESP securities that have vested).
Page 8 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
Investment Properties
As at 30 June 2020, the Group held 1817 industrial and commercial investment properties along the eastern
seaboard of Australia. Five of these properties were externally valued at June 2020, representing 27.8% of the
property portfolio by value.
The balance of the portfolio was at Directors’ valuation having regard to previous external valuations (the most
recent being in December 2019), value-accretive capital expenditure and comparable sales evidence.
Established properties
Acacia Ridge 38 Peterkin Street
Archerfield 839 Beaudesert Rd
Box Hill 436 Elgar Road
Cairns 9-19 Lake Street
Cairns 26-30 Grafton Street
Heathwood 67 Noosa Street
Lytton 142-150 Benjamin Place
Mackay 69-79 Diesel Drive
Morningside 326 & 340 Thynne Road
Pinkenba 70-82 Main Beach Road
Richmond 572-576 Swan Street
Richmond 588A Swan Street
Varsity Lakes 154 Varsity Parade
Wacol 41 Bivouac Place
Projects
Acacia Ridge 56 Peterkin Street
Acacia Ridge 69 Peterkin Street
Berrinba 1-9 Kellar St
Wacol 498 Progress Road
Value Accretive Additions
GHL properties
Townsville 30 Palmer Street
Total investment properties
Industrial
Industrial
Office
Office
Land
Industrial
Industrial
Industrial
Industrial
Industrial
Office
Office
Office
Industrial
Industrial
Industrial
Industrial
Industrial
2020
$000
2019
$000
6,000
6,000
33,250
58,563
2,000
11,250
8,725
30,100
41,625
20,500
53,688
59,042
12,000
39,000
-
-
31,500
55,000
2,000
10,500
9,500
30,000
-
20,000
53,000
62,800
12,750
35,250
381,743
322,300
2020
$000
6,808
11,079
7,346
9,221
34,454
-
2019
$000
-
-
3,000
6,500
9,500
1,006
1,250
-
417,447
332,806
The weighted average capitalisation rate (WACR) was 6.60% across the portfolio at June 2020, compared with
6.79% at June 2019.
17 The Group also owns a block of land in Townsville, independently valued at $1,250,000 that was acquired as part of the internalisation
transaction.
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GARDA Property Group
Annual Financial Report
30 June 2020
The total value of GARDA’s investment properties increased by $84,641,000 during the financial year to
$417,447,000 (2019: $332,806,000). This 25 % increase is primarily attributed to:
acquisition of four industrial properties in Acacia Ridge and Archerfield for $31,000,000 plus costs;
acquisition of two industrial warehousing and distribution assets in Morningside for $41,000,000 plus
costs; and
development works at Berrinba and Wacol for $6,770,000.
Borrowings
The Group’s total borrowings at 30 June 2020 were $188,115,000 (2019: $128,517,000) leaving headroom of
$11,885,000 on existing $200,000,000 debt facilities with ANZ Banking Group and St.George Bank.
The debt facilities with ANZ and St.George were secured in March 2020 providing GARDA with additional
borrowing capacity under a common terms structure. The tenor of the facilities is three years (expiring March
2023).
Two debt facilities totaling $11,970,000 were assumed by the Group as a result of the internalisation. These
facilities were repaid during the financial year:
1.
a $10,000,000 facility was repaid through the transfer of 6,666,670 stapled securities out of treasury
stock and a cash repayment of $1,000,000; and
2. a $1,970,000 facility was repaid with cash, after receiving approval from ASIC.
As at 30 June 2020, GARDA’s all in cost of debt was approximately 2.40% (2019: 3.75%) and its gearing18 was
36.7% (2019: 32.5%).
Derivatives
On 4 March 2020, GARDA replaced its existing $60,000,000, 2.68%, July 2022 interest rate swap with a new
$100,000,000 hedge comprising:
a $70,000,000 interest rate swap for a term of seven years at a rate of 0.81%; and
a $30,000,000 interest rate swap for as term of 10 years at a rate of 0.98%.
Outlook
The Group will continue to execute its strategy in the 2021 financial year with key objectives including:
leasing the 7,109m² Botanicca 9 commercial office building in Richmond;
completing the development and leasing the balance of the new 5,660m² industrial property at
Berrinba;
completion of the development of the new 6,000m² industrial property at Wacol;
commencing development of the Acacia Ridge industrial property;
deploying additional capital into the Group’s residential development debt financing operations;
managing ongoing capital requirements and gearing levels; and
being vigilant for strategically consistent, value accretive, acquisition opportunities.
18 Calculated as (total debt less cash) / (total assets less cash)
Page 10 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
SUBSEQUENT EVENTS
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has a minimal impact to the Group
up to 30 June 2020, it is not practicable to estimate the full potential of any impact, positive or negative, after
the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian
Government and other countries, such as maintaining social distancing requirements, quarantine, travel
restrictions and any further economic stimulus that may be provided.
USG Boral has committed to a five year lease for approximately half of the building (2,925m²) currently under
construction at 1-9 Kellar Street, Berrinba. The lease will commence in November 2020 following anticipated
construction completion in September 2020.
YHI Corporation has committed to a 10 year lease for the building (6,000 m²) currently under construction at
498 Progress Road, Wacol. The lease will commence upon completion of construction which is expected to be
in the first half of 2021.
Austrans, an existing tenant at 38 Peterkin Street, Acacia Ridge, has committed to a new seven year lease for
approximately half of Stage 1 of Acacia Ridge to be built at 69 Peterkin Street.
The Queensland Department of Transport and Main Roads has been a tenant in Cairns Corporate Tower since
2002 and has recently committed to a new 10 year lease across 3,456m² representing 24% of Cairns Net
Lettable Area.
Otherwise, there are no matters or circumstances that have arisen since the end of the financial year that have
significantly affected, or may significantly affect:
GARDA’s operations in future financial years;
the results of those operations in future years; or
the state of affairs of GARDA in future years.
ENVIRONMENTAL ISSUES
The Group’s operations were not subject to any significant environmental regulations under either
Commonwealth or State legislation. However, the Directors believe GARDA has adequate systems in place for
the management of its environmental requirements and are not aware of any breach of those environmental
requirements.
INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITOR
GARDA has agreed to indemnify current and former directors and certain key officers against all liabilities to
another person (other than the Group or a related entity) that may arise from their position as director or
employee of the Group, except where the liability arises out of conduct involving lack of good faith. The
agreement stipulates that the Group will meet the full amount of any such liabilities, including costs and
expenses.
The indemnities were limited as required under the Corporations Act 2001.
The Group has paid insurance premiums on behalf of its officers for liability and legal expenses for the year
ended 30 June 2020. The relevant insurance contracts insure against certain liability (subject to specified
exclusions) for persons who are or have been directors or officers of the Group. Details of the nature of the
liabilities covered or the amount of the premium paid have not been included, as such disclosure is prohibited
under the terms of the relevant contracts.
The Group has not indemnified its auditor.
Page 11 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purposes of taking responsibility on behalf of the Group for all
or any part of those proceedings.
ROUNDING
The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument
2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to
the nearest $1,000, or in certain cases, to the nearest dollar.
AUDIT AND NON-AUDIT SERVICES
The Group’s auditor is Pitcher Partners. Prior to their appointment as auditors in December 2019, Pitcher Partners
provided an Independent Limited Assurance Report in relation to the internalisation transaction.
Non-audit services in the form of regulatory services and business advisory services were provided by the
Group’s auditor, Pitcher Partners, during the year (refer to note 21 for details).
The Directors are satisfied that the provision of non-audit services during the year by the auditor is compatible
with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors
are satisfied that the provision of non-audit services by the auditor did not compromise the auditor
independence requirements of the Corporations Act 2001 for the following reasons:
all non-audit services have been reviewed by the audit committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
none of the services undermines the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants (including Standards).
AUDITOR'S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 may be
found following the Remuneration Report.
Page 12 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
REMUNERATION REPORT (Audited)
NOMINATION AND REMUNERATION COMMITTEE
The Board has appointed a Nomination and Remuneration Committee (NRC). The NRC oversees GARDA’s
remuneration framework and monitors remuneration outcomes. In doing so, it takes into account the interests
of securityholders and the behaviours the Group wishes to promote.
The Board approves and reviews the remuneration of GARDA’s Key Management Personnel (KMP) on the
recommendation of the NRC.
During the financial year the members of the NRC were:
Director
Paul Leitch
Morgan Parker
Philip Lee
Andrew Thornton
Mark Hallett
Role
Independent Director, Chair of NRC
Appointed March 2020
Independent Director, Member of NRC
Non-executive Director, Member of NRC
Non-executive Director, Member of NRC
Executive Director, Member of NRC
Appointed March 2020
Resigned February 202019
The NRC operates independently of GARDA management and may engage remuneration advisers directly.
Management makes recommendations to the NRC in relation to the development and implementation of
reward strategy and structure.
REMUNERATION POLICY
Objective
The objective of the Group’s remuneration framework is to ensure rewards for performance are competitive
and appropriate for the results delivered. The framework aligns individual remuneration and rewards with
achievement of strategic objectives and creation of value for securityholders and conforms with market
practice.
The Directors ensure that executive remuneration and rewards satisfy the following key criteria:
competitive and reasonable;
acceptable to securityholders;
alignment of performance and compensation;
transparency; and
capital management.
GARDA strives to create a remuneration framework that drives a performance culture, ensuring there is a strong
link between executive pay and the achievement of Group strategies and value to securityholders.
19 Mr Hallett resigned from the NRC on his status changing from Non-executive to Executive Director.
Page 13 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
Relationship to Securityholder Wealth
The short and long-term components, including financial and non-financial measure, of KMP remuneration are
designed to create long-term, sustained securityholder value. When setting performance targets, potential
quantum of remuneration and the split between fixed and variable remuneration, the Board has regard to factors
including the following:
specific role and responsibilities of the KMP;
execution of Group strategy;
value of investment portfolio, net asset value (NAV) and NTA;
funds from operations; and
total securityholder returns.
Group Performance in 2020
The overall level of KMP compensation considers the performance of the Group20 and takes into consideration:
2020
2019
2018
2017
2016
Assets under management
$’000
477,269
356,334
290,609
200,644
156,371
NTA per security
NAV per security
FFO
Distributions
Distributions per security21
$
$
$’000
$’000
cents
1.18
1.35
16,622
16,430
8.55
1.37
1.37
13,192
13,810
9.00
1.28
1.28
11,210
11,284
9.00
1.21
1.21
10,730
10,124
9.40
1.13
1.13
9,076
8,497
9.00
For the financial year ended 30 June 2020, the NRC has taken into consideration that GARDA completed
significant, strategic transactions and undertakings including:
$72,000,000 of real estate acquisitions with the total value of the portfolio increasing from
$332,806,000 to $417,447,000;
$37,500,000 of new equity being raised via placement;
the internalisation transaction;
strong leasing outcomes in Box Hill, Cairns and Morningside;
commencement of development works at Berrinba and Wacol totalling $6,770,000 and capital
improvement expenditure of $5,155,000;
structuring of debt facilities into a single, $200,000,000 syndicated loan facility; and
securing $100,000,000 of interest rate swap protection at historically low rates.
While GARDA’s security price has, like most other REITs, been negatively impacted by COVID-19 sentiment,
GARDA’s FFO and distributions have been minimally impacted. Securityholders have received distributions of
8.55 cents per security for the financial year representing a payout ratio of 104.5% based on the FFO for the
year.
20 Since internalisation on 29 November 2019. Date for prior periods is in respect of the former standalone entities, GDF and GARDA Capital
Group.
21 Actual distribution rate per security assuming holding of security from 1 July 2019 to 30 June 2020.
Page 14 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
ELEMENTS OF REMUNERATION – NON-EXECUTIVE DIRECTORS
Fees and payments to Non-executive Directors (including Independent Directors) reflect the market in line with
the demands that are made on, and the responsibilities of, the Directors. The Board determines remuneration
of Non-executive Directors within the maximum amount approved by securityholders from time to time. This
maximum currently stands at $600,000 per annum in total for fees to be divided among the Non-executive
Directors in such a proportion and manner as they agree. Fees are set so that:
GARDA Non-executive Directors are remunerated fairly for their services, recognising the workload
and levels of skills and experience required for the role;
GARDA can attract and retain talented Non-executive Directors; and
Fees are in line with market practice.
Non-executive Directors are paid a fixed remuneration comprising base fees and superannuation. Non-
executive Directors do not receive bonus payments or participate in security-based compensation plans and
are not provided with retirement benefits other than statutory superannuation.
ELEMENTS OF REMUNERATION – EXECUTIVES
Fixed Remuneration
All employees receive a remuneration package that includes a fixed pay component. The fixed remuneration
comprises, cash salary, superannuation and other salary sacrificed benefits.
The fixed pay is a set amount to reflect the role complexity, responsibilities and skill levels required, with
cognisance to the market.
Short Term Incentives
Short term incentives are cash payments, without forfeiture provisions, that may be made at the discretion of
the Board.
The purpose of short term incentives is to reward individuals for assisting with the achievement of GARDA’s
strategic objectives. No short term incentives are based on profit measures only.
Long Term Incentives
The establishment of the GARDA Employee Security Plan (GARDA ESP) was approved by securityholders at
the Group’s 2019 annual general meeting on 6 March 2020. It replaces the former GARDA Capital Group
employee security plan.
The GARDA ESP is designed to:
assist with the attraction and retention of Executive Directors, senior managers and employees;
motivate and drive performance at both the individual and Group level; and
strengthen alignment between participants and securityholder interests.
All Executive Directors and employees of GARDA are considered for participation in the GARDA ESP. Grants
to Executive Directors are subject to securityholder approval.
Participation in the GARDA ESP is at the Board’s discretion and no individual has a contractual right to participate
in the plan or to receive any guaranteed benefits. The vesting of securities occurs over a two to three-year
period, subject to the participant remaining an employee of the Group.
Page 15 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
The KMP who participated in the issue of securities under the ESP were provided limited recourse loans on the
grant date of an amount equal to the application price of the securities (market price per security on grant date).
Interest on the limited recourse loans for any particular year is equal to the Australian Tax Office FBT benchmark
interest rate. Interest is serviced through distributions and dividends payments with any excess applied to
reduce the principal of the loan.
KEY MANAGEMENT PERSONNEL - 2020
The Remuneration Report outlines remuneration for those people considered to be KMP of the Group during the
year ended 30 June 2020. KMP are employees with the authority and responsibility for planning, directing and
controlling the activities of GARDA and include:
Independent Directors
Non-executive Directors;
Executive Directors, including the Executive Chairman; and
Senior executives.
Details of the KMP who held office with GARDA during the reporting period are summarised below:
KMP
Title
Appointment Date
Independent Directors and Non-executive Directors
Paul Leitch
Morgan Parker
Philip Lee
Andrew Thornton
Executive Directors
Matthew Madsen
Mark Hallett22
Senior Executives
Lachlan Davidson
David Addis
Mark Scammells
Independent Director
Independent Director
Non-executive Director
Non-executive Director
Executive Chairman
Managing Director
Executive Director
20 March 2020
13 December 2018
21 May 2015
20 March 2020
23 January 2017
22 September 2011
31 January 2011
General Counsel
Company Secretary
Chief Operating Officer
13 January 2014
28 July 2016
18 March 2019
Director, Projects and Acquisitions
30 September 2019
Remuneration balances disclosed in the Remuneration Report are effective from 29 November 2019,
representing the internalisation transaction occurring on 29 November 2019. For the period from 1 July 2019 to
the internalisation date, GDF was externally managed by GARDA Capital Limited and KMP were employed and
remunerated by GARDA Capital Limited.
22 Mr Hallett’s status changed from Non-executive Director to Executive Director in February 2020.
Page 16 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
REMUNERATION OF KMP
Summary
The table below outlines the total remuneration received by KMP as employees of GARDA Holdings Limited in
the year ended 30 June 2020. The Remuneration Report is effective from 29 November 2019 (date of
internalisation) to 30 June 2020.
GARDA
ESP
Total
Perform.
Related
2020
Non-executive Directors
P Leitch24
2020
M Parker25
P Lee
A Thornton24
Executive Directors
M Madsen
2020
2020
2020
M Hallett
Executives
D Addis
L Davidson26
M Scammells
2020
2020
2020
2020
Salary &
Fees23
Non-Cash
Benefits
Short
Term
Incentive
20,899
36,881
36,881
20,899
435,342
43,750
184,981
135,682
144,231
-
-
-
-
3,945
-
3,945
-
3,945
-
-
-
-
-
-
40,000
40,000
-
Super
1,985
3,504
3,504
1,985
10,501
-
14,894
12,675
14,786
Long
Service
Leave
-
-
-
-
-
-
-
-
22,884
40,385
40,385
22,884
358
349,609
799,756
-
3,240
46,990
379
5,373
166
30,460
274,660
6,491
16,577
200,221
179,705
Total
1,059,546
11,835
80,000
63,834
6,276
406,377
1,627,870
Equity Interests
As at the date of this report, the equity interests of each KMP in the Group were as follows:
Ordinary Securities
ESP Securities27
Non-executive Directors
P Leitch
M Parker
P Lee
A Thornton
Executive Directors
M Madsen
M Hallett
Executives
D Addis
L Davidson
M Scammells
Total
24,411
-
216,828
1,013,505
8,108,755
1,302,469
-
213,330
-
10,879,298
-
-
-
-
5,960,000
1,000,000
800,000
560,000
800,000
9,120,000
-
-
-
-
43.7%
6.9%
25.7%
23.2%
9.2%
Total
24,411
-
216,828
1,013,505
14,068,755
2,302,469
800,000
773,330
800,000
19,999,298
23 Includes any change in accruals for annual leave.
24 Mr Leitch and Mr Thornton were appointed to the Board on 20 March 2020.
25 Mr Parker was appointed to the Board on 13 December 2018.
26 100,000 GARDA Capital Group ESP securities issued to Mr Davidson on 13 November 2017 vested on the second anniversary of their issue
13 November 2019. The fair value for these securities were $0.11. Another 100,000 GARDA Capital ESP securities issued to Mr Davidson on
13 November 2017 with a vesting date of 13 November 2020 vested concurrently with the internalisation transaction, in accordance with the
terms of the ESP. The fair value of these securities was $0.13. All vesting securities participated in the internalisation transaction resulting in
320,000 vested securities.
27 Under Australian Accounting Standards, securities issued under the GARDA Property Group Employee Security Plan (ESP) are required to be
accounted for as options in the financial statements until such time as they vest. Refer note 20 for further details.
Page 17 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
Movement in Equity Interests
Movement during 2020
The table below shows the movement in number of securities held by KMP during the financial year.
Ordinary securities
P Lee
P Leitch
M Parker
A Thornton28
M Madsen
M Hallett29
D Addis
L Davidson30
M Scammells
GARDA ESP securities
P Lee
P Leitch
M Parker
A Thornton33
M Madsen
M Hallett34
D Addis
L Davidson35
M Scammells
1 July
61,628
-
-
-
146,401
48,698
-
-
-
Internalisation
Consideration
155,200
-
-
-
7,883,006
1,045,858
-
213,330
-
On Joining
Board
-
-
-
1,013,505
-
-
-
-
-
Net
Purchases
-
24,411
-
-
79,348
207,913
-
-
-
30 June
216,828
24,411
-
1,013,505
8,108,755
1,302,469
-
213,330
-
256,727
9,297,394
1,013,505
311,672
10,879,298
1 July
-
-
-
-
-
-
-
-
-
-
Internalisation
Consideration31
-
-
-
-
960,000
-
800,000
560,000
800,000
New ESP
Grants32
-
-
-
-
5,000,000
1,000,000
-
-
-
30 June
-
-
-
-
5,960,000
1,000,000
800,000
560,000
800,000
3,120,000
6,000,000
9,120,000
Internalisation Transaction
The GARDA ESP replaced the former GARDA Capital Group employee security plan at the time of the
internalisation transaction. 3,840,000 new GARDA stapled securities were issued to replace the GARDA Capital
group securities that had issued under the former employee security plan. Further, the limited recourse loans
previously provided by GARDA Capital Group were replaced with loans on equivalent terms.
480,000 GARDA ESP securities in total vested concurrently with the internalisation while 3,360,000 remained
unvested.
28 Mr Thornton is also Company Secretary of HGT Investments Pty Ltd which holds 35,893,918 securities in GARDA.
29 Mr Hallett is also a director of M3SIT Pty Ltd which currently holds 180,000 securities which are not included in his holding of 2,302,469.
30 100,000 GARDA Capital Group ESP securities issued to Mr Davidson on 13 November 2017 vested on the second anniversary of their issue
13 November 2019. Another 100,000 GARDA Capital ESP securities issued to Mr Davidson on 13 November 2017 with a vesting date of 13
November 2020 vested concurrently with the internalisation transaction, in accordance with the terms of the ESP. All vesting securities
participated in the internalisation transaction resulting in 320,000 vested securities.
31 The GARDA ESP replaced the former GARDA Capital Group employee security plan at the time of the internalisation transaction. All but
480,000 ESP securities remain unvested.
32 All new ESP securities remain unvested.
33 Mr Thornton is also Company Secretary of HGT Investments Pty Ltd which holds 35,893,918 securities in GARDA.
34 Mr Hallett is also a director of M3SIT Pty Ltd which currently holds 180,000 securities which are not included in his total holding of 2,302,469.
35 100,000 GARDA Capital Group ESP securities issued to Mr Davidson on 13 November 2017 vested on the second anniversary of their issue
13 November 2019. Another 100,000 GARDA Capital ESP securities issued to Mr Davidson on 13 November 2017 with a vesting date of 13
November 2020 vested concurrently with the internalisation transaction, in accordance with the terms of the ESP. All vesting securities
participated in the internalisation transaction resulting in 320,000 vested securities.
Page 18 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
Subsequent GARDA ESP Grants
On 16 April 2020, 6,000,000 GARDA ESP securities were granted to the Executive Chairman and Executive
Director following securityholder approval at the Annual General Meeting on 6 March 2020, taking the total
number of unvested securities to 9,360,000, of which 8,800,000 are held by KMP:
Grant date
13 Nov 2017
3 Jun 2019
23 Aug 2019
16 Apr 2020
Securities
960,000
480,000
1,920,000
6,000,000
9,360,000
Price36
$0.63
$1.08
$1.22
$1.00
Limited recourse
loan balance
$538,052
$516,195
$2,332,181
$6,060,159
$9,446,587
Vesting date
13 Nov 2020
3 Jun 2021
23 Aug 2021
16 Apr 2023
Details of the KMP participants37 in the GARDA ESP are set out in the following table:
Participant
Issue date
Securities
granted
Exercise
Price
Fair value at
grant date
Matthew Madsen
13 Nov 2017
960,000
16 Apr 2020
5,000,000
David Addis
3 Jun 2019
320,000
23 Aug 2019
23 Aug 2019
240,000
240,000
Lachlan Davidson
23 Aug 2019
240,000
Mark Scammells
23 Aug 2019
400,000
23 Aug 2019
400,000
Mark Hallett
16 Apr 2020
1,000,000
$0.63
$1.00
$1.08
$1.22
$1.22
$1.22
$1.22
$1.22
$1.00
$0.70
$0.06
$0.24
$0.11
$0.10
$0.11
$0.11
$0.10
$0.06
Loan value
30 June 20
Vesting date
$538,052
13 Nov 2020
$5,050,132
16 Apr 2023
$349,727
3 Jun 2021
$291,827
23 Aug 2021
$291,827
23 Aug 2022
$290,914
23 Aug 2021
$486,378
23 Aug 2021
$486,378
23 Aug 2022
$1,010,026
16 Apr 2023
Total
8,800,000
$8,795,261
EMPLOYMENT CONTRACTS AND TERMINATION PROVISIONS
Executive Chairman
The Executive Chairman, Matthew Madsen, entered into an executive services agreement effective 1 January
2020 whereby he became a full-time employee of GARDA. Prior to 1 January 2020, Mr Madsen provided
services to GARDA through a contract with Madsen Advisory Pty Ltd.
Mr Madsen’s executive services agreement may be terminated by the Group with one year’s notice (or
immediately for fraud, gross negligence, misconduct or criminal offence), or by Mr Madsen providing one year’s
notice. There is a restraint on Mr Madsen competing with the Group or interfering with the relationship between
the Group and its staff, customers, suppliers or contractors for one year following termination.
Other major provisions of the executive services agreement include:
term of agreement: commencing 1 January 2020 with no fixed termination date;
base salary, exclusive of superannuation, of $695,000, to be reviewed annually by the NRC;
entitlement to participate in short term incentives, expected to be in the form of cash bonus, and
subject to achievement of strategic, operational and financial hurdles set by the Board; and
entitlement to participate in the GARDA ESP, at the discretion of the Board.
36 The number and exercise price of employee security plan securities issued under the former GARDA Capital Group plan (ie before 29
November 2019) have been adjusted for the internalisation exchange ratio of 1.6x.
37 560,000 unvested GARDA ESP securities are held by non-KMP employees.
Page 19 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
Directors
The contracts with GARDA’s Non-executive Directors, Messrs Lee, Leitch, Parker and Thornton, provide the
following key terms:
Term: ongoing with no fixed termination date;
Remuneration: $70,000 per annum (including superannuation) as at 30 June 2020, to be reviewed
annually; and
Termination: 90 days’ notice period.
The contract with Mr Hallett, Executive Director, is largely identical to the contracts of the Non-executive
Directors with two exceptions:
Remuneration: $75,000 per annum plus GST, reviewed annually; and
Entitlement to participate in the GARDA ESP, at the discretion of the Board.
Executives
Remuneration and other terms of employment for other KMP executives are contained under standard
employment contracts.
It is Group policy that service contracts for salaried KMP are unlimited in term but capable of termination, with
notice, by either party. The Group retains the right to terminate a service contract immediately and without
notice if the KMP is at any time guilty of serious, willful or persistent misconduct. On termination, salaried KMP
are entitled to receive their statutory entitlements of accrued annual and long service leave, together with any
superannuation benefits.
Other than the Executive Chairman, the notice period for termination of a service contract by a KMP is three
months.
TRANSACTIONS WITH KMP AND THEIR RELATED PARTIES
KMP or their related parties hold positions in other entities that result in them having control or joint control over
the financial and operating policies of those entities.
A number of these entities transacted with the Group during the year. The terms and conditions of the
transactions with Directors and their related parties as disclosed below were no more favorable than those
available, or which might reasonably be expected to be available, on similar transactions to non-director related
entities on an arm’s length basis.
A $1,970,000 loan facility advanced to the Company by a securityholder, M3SIT Pty Ltd as trustee for the M3
Solutions Investment Trust, was repaid on 5 of May 2020 following consent by ASIC. Mr Hallett is a director of
the trustee. Interest of $132,556 was paid during the year.
A $10,000,000 loan facility advanced to the GARDA Capital Trust by syndicate lenders, some of whom were
related parties, was repaid on 24 February 2020 through transfer of 6,666,670 treasury securities valued at
$9,000,000 (at $1.35 per security) and a cash payment of $1,000,000. The recipient of the cash payment of
$1,000,000 was M3SIT Pty Ltd as trustee for M3 Solutions Investment Trust (Mr Hallett is a director of the
trustee). Interest paid during the year was $46,219.
A related party of Mr Thornton, Non-executive Director, participated with GARDA as prior ranking lender in a
number of syndicated senior loans provided to third party borrowers. These loans were provided prior to Mr
Thornton becoming a Non-executive Director. The participation of Mr Thornton’s related party was in its
capacity as a provider of finance to third-party borrowers on arm’s length terms and did not involve the receipt
of any consideration from GARDA or the provision of any consideration to GARDA.
Page 20 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
Payments of $71,000 (GST exclusive) were made to an entity related to Mr Scammells, Director, Acquisitions
and Projects, in relation to project management services provided by a relative of Mr Scammells. The relevant
contract was assessed as being arm’s length and on usual commercial terms and conditions.
AUDIT
The Remuneration Report for the Group for the year ended 30 June 2020 has been audited in accordance with
section 300A of the Corporations Act 2001.
END OF REMUNERATION REPORT
The Directors’ Report, including the Remuneration Report, is signed in accordance with a resolution of the
Directors.
Matthew Madsen
Executive Chairman
20 August 2020
Page 21 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
AUDITOR'S INDEPENDENCE DECLARATION
Page 22 of 80
GARDA Property Group
Annual Financial Report
30 June 2020
FINANCIAL REPORT
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
GARDA Property Group
GARDA Holdings Limited
Notes
2020
$000
2019
$000
20201
$000
2019
$000
Year ended 30 June
Revenue and other income
Revenue from operations
Other income
Gain on bargain purchase on acquisition
Total revenue and other income
Expenses
Property expenses
Finance costs
Employee benefits expense
Corporate and trust administration expenses
Depreciation
Internalisation expenses
Security based payments expense
Net loss on financial instrument held at fair value
through profit and loss
Fair value movement in investment properties
Gain on sale of investment property
Total expenses
Profit before income tax
Income tax benefit (expense)
Profit after income tax
Other comprehensive income, net of tax
5
5
26
6
6
6
6
26
20
9
9
7
-
(2,066)
29,116
1,172
-
25,361
8,101
-
30,288
33,462
(6,368)
(3,801)
(1,520)
(2,836)
(155)
(1,269)
(444)
(5,940)
(2,934)
(3,701)
-
(700)
-
(1,425)
(1,951)
(6,996)
-
(24,814)
5,474
93
5,567
-
8,994
1,550
(4,682)
28,780
-
28,780
-
2,575
20
6,187
8,782
-
(79)
(656)
(155)
-
(444)
-
-
-
(3,400)
5,382
93
5,475
-
Total comprehensive income for the period
5,567
28,780
5,475
Total profit and total comprehensive income for
the period attributable to:
Securityholders of GARDA Property Group
Shareholders of GARDA Holdings Limited
Profit and total comprehensive income
Earnings per stapled security:
6,279
(712)
5,567
-
-
28,780
-
5,475
5,475
Basic earnings per stapled security / share (cents)
Diluted earnings per stapled security / share (cents)
15
15
2.90
2.85
18.9
18.9
2.41
2.41
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The above consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
1 Result reflects the Company performance from 29 November 2019 to 30 June 2020.
Page 23
GARDA Property Group
Annual Financial Report
30 June 2020
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at 30 June
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Investment properties
Deposits on investment properties
Property, plant and equipment
Right-of-use assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Distribution payable
Borrowings
Lease liabilities
Current tax liability
Total current liabilities
Non-current liabilities
Tenant security deposits
Borrowings
Derivative financial instrument
Provisions
Lease liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Security based payment reserve
Retained earnings/ (accumulated losses)
Total equity
GARDA Property Group
GARDA Holdings Limited
Notes
2020
$000
2019
$000
2020
$000
2019
$000
8
20,488
5,291
25,779
20,213
1,441
21,654
3,952
2,343
6,295
9
417,447
332,806
1,250
23
11
10
14
12
24
12
13
24
7
-
54
403
33,586
1,874
-
-
-
451,490
334,680
477,269
356,334
3,944
3,763
-
115
2
4,236
3,565
15,417
-
-
-
54
403
-
1,707
8,002
2,048
-
-
115
2
7,824
23,218
2,165
350
186,653
1,536
48
252
49
323
112,872
2,825
-
-
-
188,887
196,712
116,020
139,238
280,558
217,096
354,993
281,112
444
-
(74,879)
(64,016)
280,558
217,096
13
-
-
48
252
49
362
2,527
5,475
-
-
5,475
5,475
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The above consolidated Statements of Financial Position should be read in conjunction with the accompanying notes.
Page 24
GARDA Property Group
Annual Financial Report
30 June 2020
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Total transaction with owners in their capacity as owners
24,242
Balance at 30 June 2019
281,112
(64,016)
217,096
Contributed
Equity
Security
Based
Payments
Reserve
Retained
Earnings
$000
$000
$000
Total
Equity
$000
GARDA Property Group consolidated
Year ended 30 June 2019
Balance at 1 July 2018
Profit for the year
Transaction with owners in their capacity as owners
Security issue
Security issue transaction costs
Distributions paid or provided for
GARDA Property Group consolidated
Year ended 30 June 2020
Balance at 1 July 2019
Profit for the year
Transaction with owners in their capacity as owners
Security issue in relation to entitlement and placement offer
Security issue in relation to acquisition of properties
Securities issued as consideration for internalisation
Vested securities under ESP
Security issue transaction costs for internalisation
Security issue transaction costs
Share based payment expense
Contributed
Equity
Security
Based
Payments
Reserve
Accumulated
Losses
$000
$000
$000
Total
Equity
$000
256,870
-
256,870
25,000
(758)
-
281,112
-
281,112
31,500
6,000
58,992
(273)
(58)
(619)
-
(78,986)
28,780
177,884
28,780
(50,206)
206,664
-
-
(13,810)
(13,810)
25,000
(758)
(13,810)
10,432
-
-
-
-
-
-
-
-
-
444
-
-
-
(64,016)
217,096
5,567
5,567
(58,449)
222,663
-
-
-
-
-
-
-
-
-
31,500
6,000
58,992
(273)
(58)
(619)
444
(15,661)
(6,000)
(16,430)
(16,430)
Cancellation of treasury securities on consolidation
(15,661)
Cancellation of securities issued under GARDA ESP from
treasury securities on consolidation
Distributions paid and payable
(6,000)
-
Total transaction with owners in their capacity as owners
73,881
444
(16,430)
57,895
Balance at 30 June 2020
354,993
444
(74,879)
280,558
The above consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes to the
financial statements.
Page 25
GARDA Property Group
Annual Financial Report
30 June 2020
Consolidated Statements of Changes in Equity (continued)
GARDA Holdings Limited
Year ended 30 June 2019
Balance at 29 November 2019
Profit for the period
Balance at 30 June 2020
Contributed
Equity
Retained
Earnings
$000
$000
Total
Equity
$000
-
-
-
-
5,475
-
5,475
5,475
5,475
The above consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes to the
financial statements.
Page 26
GARDA Property Group
Annual Financial Report
30 June 2020
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended 30 June
Cash flows from operating activities
Receipts from customers (includes GST)
Receipts from rental guarantees
Litigation Proceeds
GARDA Property Group
GARDA Holdings Limited
Notes
2020
$000
2019
$000
202038
$000
2019
$000
32,128
2,000
100
27,903
-
8,000
2,361
-
-
Payments in the course of operations (includes GST)
(14,141)
(15,282)
(2,618)
Interest received
Finance costs
Income tax paid
Net GST (paid)/ refund
Net cash provided by / (used in) operating activities
25
Cash flows from investing activities
Cash acquired at internalisation
26
Acquisition costs relating to internalisation
Payments for property, plant and equipment
Payments for investment properties
Due diligence costs and deposits
Payment of commission on sale of property
Proceeds on disposal of investment properties
Payments for leasing fees
Net cash (used in) / provided by provided by
investing activities
Cash flows from financing activities
Proceeds of intra-stapled loans from parent entity
Repayment of intra-stapled loan receivable by a
subsidiary of a parent
Repayment of loan receivable from external parties
Loan advances to external parties
Proceeds of borrowings
Repayment of borrowings
Repayment of lease liabilities
Payments for borrowing transaction costs
Payments for interest rate swap costs
Repayment of related party loans
19
Proceeds from issue of additional equity
Equity transaction costs
Dividends paid (declared pre-internalisation)
Distributions paid
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at end of financial year
25
40
(5,109)
(544)
(482)
13,992
4,375
(1,718)
(28)
101
(4,088)
-
3,960
20,594
-
-
-
(81,133)
(52,583)
(115)
(259)
-
(247)
(1,874)
-
16,416
(557)
20
(79)
(544)
(218)
(1,078)
4,318
(80)
(28)
-
-
-
-
-
(79,125)
(38,598)
4,210
-
-
838
(1,491)
75,020
-
-
-
-
57,561
(15,418)
(34,749)
(169)
(1,641)
(2,714)
(2,970)
31,500
(619)
(697)
(16,231)
65,408
275
20,213
20,488
-
-
-
-
25,000
(758)
-
(13,360)
33,694
15,690
4,523
20,213
1,005
1,813
838
-
-
-
(169)
-
-
(1,970)
-
-
(697)
-
820
3,952
-
3,952
The above consolidated Statements of Cash Flows should be read in conjunction with the accompanying notes.
38 Cash flows reflect the Company’s operations from internalisation on 29 November 2019 to 30 June 2020.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 27
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 1
GENERAL INFORMATION
Basis of preparation
The consolidated annual financial statements for GARDA Property Group (GARDA or the Group), comprising GARDA
Diversified Property Fund (GDF or the Fund) and GARDA Holdings Limited (GHL or the Company), have been jointly presented
in accordance with ASIC Corporations (Stapled Group Reports) Instrument 2015/838 and the requirements of the Australian
Securities Exchange.
These financial statements have also been prepared in accordance with Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit
oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board ('IASB').
Pursuant to Australian Accounting Standards, GDF is the deemed parent entity of GHL. Supplementary information about the
parent entity is disclosed in note 27.
Compliance with IFRS
The financial statements also comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of investment properties and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 2.
Internalisation and stapling
On 29 November 2019, GARDA was constituted in its current form when two ASX listed entities, GARDA Diversified Property
Fund (previously defined as GDF or the Fund) (ASX: GDF) and GARDA Capital Group (ASX: GCM), were combined pursuant
to the internalisation.
Prior to the internalisation:
1.
GDF was an externally managed real estate investment trust; and
2. GARDA Capital Group was a stapled entity comprising:
GARDA Capital Limited (previously defined as Fund RE), the responsible entity for GDF; and
GARDA Capital Trust, a unit trust whose primary asset was an 11.8% equity interest in GDF.
The internalisation transaction involved two concurrent events:
1.
the establishment of GARDA through the stapling of GDF units to shares in the newly created GHL on a one for one
basis; and
2.
the acquisition by GARDA of 100% of GCM.
GARDA is now an ASX-listed, internally managed, stapled, real estate group that trades under the ASX ticker “GDF”. GARDA
continues to undertake the operations that were performed by its predecessor entities prior to the internalisation.
Page 28
GARDA Property Group
Annual Financial Report
30 June 2020
Comparative information
For GARDA, the comparative information provided is from GDF’s prior period financial statements. For GHL, comparative
information has not been provided due to the Company only forming part of GARDA for the nine-month period from
incorporation on 20 September 2019 and 30 June 2020.
Operations and principal activities
GARDA is an internally managed real estate investment, development and funds management group.
The Fund invests in, owns, manages and develops commercial and industrial real estate in accordance with the provisions of
the Fund’s constitution. The Fund through its subsidiaries also invests into real estate via debt positions in conjunction with
third parties. The Company, through its subsidiaries, acts as the responsible entity of the Fund.
Registered office
The registered office and principal place of business of the Group is situated at Level 21, 12 Creek Street, Brisbane QLD 4000.
Authorisation of financial report
This financial report was authorised for issue on 20 August 2020 in accordance with a resolution of the Directors. The
following is a summary of the material accounting policies adopted by the Group in the preparation of these financial
statements. The accounting policies have been consistently applied, unless otherwise stated.
Page 29
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all new or amended Accounting Standards and Interpretations issued by the Australian Accounting
Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards
or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations are most relevant to the Group:
AASB 16 Leases
GHL has an operating lease for the registered office of the Group at Level 21, 12 Creek Street, Brisbane QLD 4000.
The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the
classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-
use assets and corresponding lease liabilities are now recognised in the statement of financial position. Straight-line operating
lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and
an interest expense on the recognised lease liabilities (included in finance costs).
In the earlier periods of a lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. For classification within the statement of cash flows, the interest portion is disclosed in operating
activities and the principal portion of the lease payments is separately disclosed in financing activities.
For lessor accounting, as applicable to GDF, the standard does not substantially change how a lessor accounts for leases.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been restated. When
adopting AASB 16 from 1 July 2019, the consolidated entity has applied the following practical expedients:
to recognise the right-of use asset at the initial application at an amount equal to the lease liability, adjusted by the
amount of any prepaid or accrued lease payments relating to the lease recognised in the statement of financial
position immediately before the date of initial application;
to not recognise a right-of-use asset and a lease liability for leases for which the underlying asset is of low value;
excluding any initial direct costs from the measurement of right-of-use assets; and
using hindsight in determining the lease term when the contract contains options to extend or terminate the lease.
The application of AASB 16 resulted in the recognition of a right-of-use asset with an aggregate carrying amount of $536,000
and a corresponding lease liability with an aggregate carrying amount of $547,000. The incremental borrowing rate applied in
the calculation of the initial carrying amount of lease liabilities was 2.5%. The net impact on retained earnings was nil.
The impact on the consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June
2020 in relation to the adoption of AASB 16 is summarised as follows:
Depreciation expense
Finance costs
Operating expenses
The impact on the consolidated Statements of Financial Position is disclosed in notes 23 and 24.
Increase/
(decrease)
$000
133
12
(181)
Page 30
GARDA Property Group
Annual Financial Report
30 June 2020
Accounting policies
Principles of consolidation and business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired. The consideration transferred for an acquisition comprises the fair value of the assets transferred,
the liabilities incurred and the equity interests issued by GARDA. The consideration transferred also includes the fair value of
any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited
exceptions, measured initially at their fair values at the acquisition date. GARDA recognises any non-controlling interest in an
acquired entity on an acquisition-by acquisition basis either at fair value or at the non-controlling interest’s proportionate share
of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred, with the exception of incremental costs incurred in relation to the issue
of additional equity which are deducted against equity.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquired entity and the
acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of GARDA’s share of the net
identifiable assets acquired are recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets
of the subsidiary acquired, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at
which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and recognises additional assets or liabilities during the measurement period based on new information
obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on the earlier
of: (i) 12 months from the date of the acquisition; or (ii) when the acquirer receives all the information possible to determine
fair value.
Goodwill
Goodwill arising from acquisitions is included in intangible assets. Goodwill is not amortised but it is tested for impairment
annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost
less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of annual impairment testing. The allocation is made to those
cash-generating units, or groups of cash-generating units, that are expected to benefit from the business combination from
which the goodwill arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for
internal management purposes, being the operating segments.
Income tax
Income tax for Trusts
Under the current income tax legislation, the Fund is not liable for Australian income tax, provided its taxable income and
taxable realised gains are fully distributed to security holders each financial year. The Fund distributes its distributable income,
calculated in accordance with its Constitution and the applicable taxation legislation, to security holders who are presently
entitled to the income under the Constitution.
Income tax for GHL
Income tax is payable at the applicable income tax rate on the current period’s taxable income adjusted for changes in
deferred tax assets and liabilities attributable to temporary differences and for unused tax losses. The current income tax
charge is calculated by reference to the tax laws enacted or substantively enacted at the end of the reporting period.
Page 31
GARDA Property Group
Annual Financial Report
30 June 2020
Deferred income tax is provided in full, using the liability method, on temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from
the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of
the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income
tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary
differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset
where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this situation, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
Tax consolidation legislation for GHL
GHL and its wholly owned subsidiaries have implemented the tax consolidation legislation. The head entity, GHL, and the
controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts
are measured as if each entity in the tax consolidated group continued to be a stand-alone taxpayer in its own right.
In addition to its own current and deferred tax amounts, GHL also recognises the current tax liabilities (or assets) and the
deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax
consolidated group.
The entities have entered into a tax funding agreement under which wholly-owned subsidiaries compensate GHL for any
current tax liability assumed and are compensated by GHL for any current tax receivable and deferred tax assets relating to
unused tax losses or unused tax credits that are transferred to GHL under the tax consolidation legislation. The funding
amounts are determined by reference to the amounts recognised in the wholly-owned subsidiaries’ financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head
entity. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments.
Revenue recognition
The summary below presents information about the disaggregation of key revenue items from the Group’s revenue contracts
or other activities with customers.
Lease revenue
The Group’s main revenue stream is property rental revenue and is derived from holding investment properties over time.
Rental revenue is recognised on a straight-line basis over the lease term for leases with fixed rent review clauses. Rental
revenue not received at reporting date is reflected in the Statement of Financial Position as a receivable or, if paid in advance,
as rent in advance (unearned income). Contingent rents based on the future amount of a factor that changes other than with
the passage of time, including turnover rents and CPI linked rental increases, are only recognised when contractually due.
Prospective tenants may be offered incentives to enter operating leases. The cost of incentives is recognised as a reduction
of rental revenue on a straight-line basis from the lease commencement date to the end of the lease term.
Recoverable outgoings
Revenue from outgoings and other related services is recognised at an amount that reflects the consideration to which the
Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract, the Group;
identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction
price, taking into account estimates of variable consideration and the time value of money; allocates the transaction price to
the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to
be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer
to the customer of the goods or services promised.
Page 32
GARDA Property Group
Annual Financial Report
30 June 2020
Debt advisory services revenue
Contracts with customers in relation to debt advisory services are specialised in nature and the customer does not benefit
from the process undertaken, but rather the outcome. The Group is only entitled to payment for services upon the successful
completion of the contract. Hence, revenue is recognised upon completion of the service at a point in time.
Lending business income
Revenue from lending contracts with customers is recognised over-time using the effective interest method.
Non-lending Interest income
Interest income is recognised using the effective interest method.
Investment properties
Investment properties comprise properties held for long-term rental yields and/ or capital appreciation and properties being
constructed or developed for future use as investment properties.
Investment properties are initially recognised at cost, including transaction costs.
Subsequently to initial recognition, investment properties are carried at fair value which is measured using the capitalisation
approach and discounted cash flows as primary valuation methodologies. Gains and losses arising from changes in fair values
of investment properties are included in profit or loss in the year in which they arise.
Subsequent development and refurbishment costs (other than repairs and maintenance) are capitalised to the investment
property when they result in an enhancement in the future economic benefits of the property.
Investment properties under construction are carried at fair value, or at cost where fair value cannot be reliably determined
and the construction is incomplete.
Fair values
Fair values may be used for financial and non-financial asset and liability measurement as well as sundry disclosures.
Fair value is the price that would be received on sale of an asset, or paid to transfer a liability, in an orderly transaction between
market participants at the measurement date. It is based on the presumption that the transaction takes place either in the
principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market. The principal
or most advantageous market must be accessible to, or by, the Group.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they are acting in their best economic interest.
The fair value measurement of a non-financial asset takes into account the market participant's ability to generate economic
benefits by using the asset at its highest and best use, or by selling it to another market participant that would use the asset at
its highest and best use.
In measuring fair value, the Group uses valuation techniques that maximise the use of observable inputs and minimise the use
of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers
between levels are determined based on a reassessment of the lowest level input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is
undertaken, including verification of the major inputs applied in the latest valuation and a comparison, where applicable, with
external sources of data.
Derivative financial instruments
The Group used derivative financial instruments (interest rate swaps) during the year to hedge risks associated with interest
rate fluctuations on its bank loans.
Page 33
GARDA Property Group
Annual Financial Report
30 June 2020
Interest rate swaps are initially measured at fair value on the date of contract and are subsequently measured at fair value at
each reporting date. The net fair value of derivative financial instruments outstanding at the reporting date is recognised in
the statement of financial position as either a financial asset or liability. Changes in the fair value of the interest rate swaps are
recognised immediately in profit or loss.
Impairment of non-financial assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there
is any indication that those assets may have been impaired. If such indication exists, the recoverable amount of the asset,
being the higher of the asset’s fair value less costs to sell and its value in use, is compared to the asset’s carrying value. Any
excess of the asset’s carrying value over its recoverable amount is expensed to profit or loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions and other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of change in value.
Trade receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the
end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which remain
unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are
presented as current liabilities unless payment is due more than 12 months after the reporting date.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any differences between the proceeds (net of transaction costs) and the redemption amounts are recognised
in profit or loss over the period of the loans and borrowings using the effective interest method.
Fees paid for establishing loan facilities are recognised as transaction costs and amortised over the period to which the facility
relates.
Lease liabilities
A lease liability is recognised at the commencement of a lease. The lease liability is initially recognised as the present value of
lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate
cannot be readily determined, the consolidated entity's incremental borrowing rate.
Page 34
GARDA Property Group
Annual Financial Report
30 June 2020
Lease payments comprise fixed payments less any lease incentives receivable, variable lease payments that depend on an
index or a rate, amounts expected to be paid under residual value guarantees, exercise prices of purchase options when the
exercise of the option is reasonably certain to occur, and any anticipated termination penalties. Variable lease payments that
do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if
there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee;
lease term; or certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is
made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written
down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
A qualifying asset is an asset under development or construction where such development or construction takes a substantial
period of time. To the extent that funds are borrowed generally to fund development, the amount of borrowing costs to be
capitalised to qualifying assets is determined by using an appropriate capitalisation rate. Interest payments in respect of
financial instruments classified as liabilities are included in finance costs.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled
wholly within 12 months of reporting date are measured at the amounts expected to be paid when the liabilities are settled.
At 30 June 2020, all Group annual leave liabilities are expected to settled wholly within 12 months and therefore were
recognised as current liabilities.
Long-term employee benefits
Liabilities for annual leave and long service leave not expected to be settled within 12 months of reporting date are measured
at the present value of expected future payments using the projected unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee departures and periods of service. At 30 June 2020, all long service
leave liabilities were recognised as non-current liabilities.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Security based payments expense
The costs of equity-settled transactions, including loan funded security issues, are determined by their fair values at grant
date using the Black Scholes option pricing model and are recognised as security-based payment expenses proportionately
over the vesting period with a corresponding increase in share based payments reserve.
No expense is recognised for securities that do not ultimately vest other than for equity-settled transactions for which vesting
is conditional upon a market or non-vesting condition. Such securities are treated as vesting irrespective of whether the market
or non-vesting conditions are satisfied, provided that all other performance and/or service conditions are satisfied.
Should the terms of equity-settled securities be modified, the minimum expense recognised is the expense that would have
been recognised had the terms not been modified. An additional expense is recognised for any modification that increases
the total fair value of the security-based payment transaction or is otherwise beneficial to the employee as measured at the
date of modification.
When an equity-settled security is cancelled, it is treated as if it vested on the date of cancellation and any unrecognised
expense recognised immediately. This includes any security where non-vesting conditions within the control of either the
entity or the employee are not met.
Dividends and distributions to securityholders
Provision is made for any dividend or distribution declared, being appropriately authorised and no longer at the discretion of
the Board of Directors, on or before the end of the financial year but not distributed as at balance date.
Page 35
GARDA Property Group
Annual Financial Report
30 June 2020
Earnings per security
Basic earnings per security is calculated by dividing the profit attributable to securityholders, by the weighted average number
of ordinary securities outstanding during the financial year, adjusted for bonus elements in ordinary securities issued during
the year.
Diluted earnings per security adjusts the figures used in the determination of basic earnings per unit to take into account the
weighted average number of additional ordinary securities that would have been outstanding assuming the conversion of all
dilutive potential ordinary securities.
Treasury Securities
Treasury securities are deducted against equity or eliminated on consolidation. Any distributions related to treasury securities
are also eliminated on consolidation.
Goods and Services Tax (GST)
Revenues and expenses are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from
the Australian Taxation Office. If it is not recoverable, it is recognised in the cost of acquisition of the asset or as an expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the Australian Taxation Office is included in other receivables or other payables in the
Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the Australian Taxation Office, are presented as operating cash flows. Net GST paid
or refunded to/from Australian Tax Office is shown separately in the operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the Australian
Taxation Office.
Rounding of amounts
GARDA is an entity of the kind referred to in ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument
2016/191. Accordingly, amounts contained in this report and in the interim financial statements have been rounded to the
nearest $1000, or in certain cases, to the nearest dollar.
Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect
reported amounts. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and
on other various factors, including expectations of future events that management believes to be reasonable in the
circumstances. The resulting accounting judgements and estimates will seldom equal actual results. The judgements,
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities (refer to the respective notes) within the next financial year are discussed below.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have,
on the Group based on known information. Other than as addressed in specific notes, there does not currently appear to be
either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions
which may unfavourably impact the consolidated entity as at the reporting date or subsequently as a result of the Coronavirus
(COVID-19) pandemic.
Goodwill
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
has suffered any impairment (refer note 1). The recoverable amounts of cash-generating units have been determined based
on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on
the current cost of capital and growth rates of the estimated future cash flows. Refer to note 11 for further information.
Investment property valuation
The Group makes key assumptions in determining the fair value of its investment property portfolio as at reporting date. The
assumptions thought to bear the most significant impact on the adopted fair value of each of the Group’s investment properties
are disclose in note 9, together with the carrying amount of each investment property asset measured at fair value.
Page 36
GARDA Property Group
Annual Financial Report
30 June 2020
Shared-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by using Black-Scholes model taking
into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions
relating to the equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities
within the next annual reporting period but may impact profit or loss and equity.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is
exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying
asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included
in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise
an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors
considered may include the importance of the asset to the consolidated entity’s operations; comparison of terms and
conditions to prevailing market rates; incurrence of significant penalties; existence of significant lease hold improvements;
and the costs and disruption to replace the asset. The consolidated entity reassesses whether it is reasonably certain to
exercise and extension option, or not exercise a termination option, if there is a significant event or significant change in
circumstances.
Page 37
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 3 OPERATING SEGMENTS
As a result of the change in internal reporting structure due to the internalisation transaction, the Group has identified three
core operating segments. These segments are regularly reviewed by the Executive Chairman, who is the Chief Operating
Decision Maker, in order to make decisions about resource allocation and to assess performance.
The three operating segments are: direct property investment, debt investments and external funds management.
The business activities of each of these operating segments are as follows:
Core Operating Segments
Business Activity
Direct property investment
Investment in Australian commercial and industrial property
Debt investments
Debt investment (loans) into residential real estate
External funds management
Establishment and management of investment funds for external investors
In the prior year, GDF operated as one operating segment, being investment in Australian commercial and industrial property.
The financial results from the segment are equivalent to the prior year financial statements and therefore no comparative
segment results are disclosed.
Reportable Segment Results for the year ended 30 June 2020
The external revenue and net profit contribution of the debt investment and funds management operating segment did not
meet the necessary quantitative threshold to be considered separate reportable segments and therefore have been combined
and disclosed in the “other segments” category.
Segment revenue and other income
Lease revenue
Recoverable outgoings
Fund and real estate management
Lending business income
Debt advisory services
Litigation proceeds
Other revenue
Total segment revenue
Total segment expense
Segment profit
Direct property
investment
$000
Other segments
$000
23,103
4,762
-
-
-
475
657
28,997
(12,161)
16,836
-
-
7
228
287
-
-
522
(183)
339
Total
$000
23,103
4,762
7
228
287
475
657
29,519
(12,344)
17,175
Segment results include items directly attributable to the segment as well as those that may be allocated on a reasonable
basis. They exclude non-segment specific non-cash expenses including fair value adjustments, security-based payments
expense and depreciation.
Corporate expenses pertaining to Group level functions such as finance and tax, legal, risk and compliance, company
secretarial, marketing and other corporate services are also not allocated to core operation segments. These expenses form
part of unallocated revenue and expenses in the reconciliation of segment profit to profit before income tax.
Segment results are also net of all internal revenue and expenses incurred post-internalisation.
Page 38
GARDA Property Group
Annual Financial Report
30 June 2020
Reconciliation of reportable segment revenues and profit become income tax
Total revenue for reportable segments
Unallocated amounts
Lease straight-lining revenue
Lease costs and incentive amortisation
Rent free income
Non-operating interest income
Total revenue
Reconciliation of reportable segment profit before income tax to profit before tax
Reportable segment profit before income tax
Unallocated amounts
Lease straight-lining revenue
Lease costs and incentive amortisation
Rent free income
Non-operating interest income
Finance costs
Employee benefit expense
Corporate and trust administration expenses
Depreciation
Internalisation expenses
Security based payments expense
Net loss on financial instrument held at fair value through profit and loss
Fair value movement in investment properties
Profit before income tax
Reportable segment assets and liabilities as at 30 June 2020
Segment Assets
Segment Liabilities
Net Assets
Segment assets and liabilities are net of all internal loan balances.
Note
2020
$000
29,519
1,372
(865)
222
40
5
30,288
2020
$000
17,175
1,372
(864)
222
40
(84)
(1,403)
(695)
(155)
(1,269)
(444)
(1,425)
(6,996)
5,474
Direct
Property
Investment
$000
Other
Segments
$000
Total
$000
468,732
(194,071)
274,661
6,584
475,316
-
(194,071)
6,584
281,245
Page 39
GARDA Property Group
Annual Financial Report
30 June 2020
Reconciliation of reportable segment assets
Reportable segment assets
Unallocated amounts
Other receivables
Investment properties39
Corporate fixed assets
Right-of-use assets
Total assets
Reconciliation of reportable segment liabilities
Reportable segment liabilities
Unallocated amounts
Trade and other payables
Tenant security deposits
Provisions
Derivative financial instrument
Lease liability
Deferred tax liabilities
Total liabilities
2020
$000
475,316
246
1,250
54
403
477,269
2020
$000
194,071
627
14
48
1,536
367
49
196,712
NOTE 4
DISTRIBUTIONS
Distributions provided for and/or paid during the financial year were as follows:
Year ended 30 June
September distribution 2.25 cents per security (2019: 2.25 cents)
November distribution 1.50 cents per security (2019: nil)
December distribution 0.75 cents per security (2019: 2.25 cents)
March distribution 2.25 cents per security (2019: 2.25 cents)
June distribution 1.80 cents per security (2019: 2.25 cents)41
Distribution on treasury securities post internalisation
Net distributions
GARDA Property Group GARDA Holdings Limited40
2020
$000
3,664
2,782
1,682
5,046
3,929
17,103
(673)
16,430
2019
$000
3,115
-
3,565
3,565
3,565
13,810
-
13,810
2020
$000
2019
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Distributions declared for the quarter ended 30 June 2020 of $3,763,000 (net of treasury security distribution) but not paid
until after year end have been provided for.
39 Relates to land held by the GHL consolidated group.
40 No dividends have been declared or paid by GHL since the implementation of internalisation on 29 November 2019.
41 June distribution declared includes amounts for treasury securities. As a result, the distribution payable per the consolidated Statement of
Financial Position excludes the amount for treasury securities.
Page 40
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 5
REVENUE
Year ended 30 June
Revenue recognised under AASB 16 Leases
Lease revenue
Lease costs and incentive amortisation
Fund and real estate management
Recoveries and other fees
Debt advisory services
Lending business income
Other income
Non-operating interest income
Litigation proceeds
Sundry income
Revenue recognised under AASB 15 Revenue from contracts with customers
Recoverable outgoings - non-lease component
4,762
4,164
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
24,696
(864)
23,832
22,178
(981)
21,197
25
-
25
-
1,532
568
287
163
7
-
287
228
-
-
-
-
5,284
4,164
2,550
40
475
657
1,172
101
8,000
-
8,101
20
-
-
20
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total revenue and other income
30,288
33,462
2,595
Disaggregation of revenue from contracts with customers
GARDA Property Group
Recoverable outgoings – non-lease component
Fund and real estate management
Lending business income
Debt advisory services
Total
GARDA Holdings Limited
Recoveries and other fees
Fund and real estate management
Lending business income
Debt advisory services
Total
2020
2019
Point in
Time
Over
Time
Total
Point in
Time
Over
Time
Total
$000
$000
$000
$000
$000
$000
-
-
-
287
287
-
-
-
287
450
4,762
4,762
7
228
-
7
228
287
4,997
5,284
568
568
1,532
1,532
163
-
163
287
2,100
2,550
-
-
-
-
-
-
-
-
-
-
4,164
4,164
-
-
-
-
-
-
4,164
4,164
-
-
-
-
-
-
-
-
-
-
Page 41
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 6
EXPENSES
Year ended 30 June
Corporate and trust administration expenses
Management fees
Professional fees and other administration expenses
Property expenses
Recoverable expenses
Direct expenses
Non-recoverable expenses
Finance costs
Interest expense
Borrowing cost amortisation
Interest expense on lease liabilities
Interest capitalised to properties under construction42
Depreciation
IT equipment and fittings
Buildings right-of-use assets
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
1,099
1,737
2,836
5,513
581
274
6,368
5,074
414
12
(1,699)
3,801
22
133
155
2,067
2,334
4,401
5,038
658
244
5,940
4,123
175
-
(1,364)
2,934
-
-
-
2020
$000
-
656
656
-
-
-
-
67
-
12
-
79
22
133
155
2019
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
42 The capitalisation rate used to determine the amount of borrowing costs capitalised during the financial year was the weighted average
interest rate applicable to the Group’s general borrowings. The weighted average rate during the year ranged from 2.40% - 3.20% (2019:
3.50%- 3.80%).
Page 42
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 7
INCOME TAX
Year ended 30 June
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
The components of income tax expense/benefit comprise:
Current income tax benefit
Deferred income tax benefit
Income tax benefit
Deferred income tax expense included in income tax benefit
(Decrease)/ increase in deferred tax assets
(Increase)/ decrease in deferred tax liabilities
Total deferred tax benefit
-
93
93
243
(150)
93
-
-
-
-
-
-
The prima facie tax on profit before income tax is reconciled to income tax as follows:
Profit before income tax
Less profit attributed to Trusts not subject to tax
5,474
28,780
(6,278)
(28,780)
Profit/(loss) subject to income tax
Prima facie tax at 27.5%
Tax effect of amounts which are not deductible/
(assessable) in calculating taxable income:
Share based payment expense
Gain on bargain purchase
Other non-deductible (income)/ expense
Restate income tax benefit to 26%
Income tax expense/ (benefit)
(804)
(221)
122
-
1
5
(93)
-
-
-
-
-
-
-
-
93
93
243
(150)
93
5,382
-
5,382
1,480
122
(1,701)
1
5
(93)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 43
GARDA Property Group
Annual Financial Report
30 June 2020
Year ended 30 June
Composition of deferred tax assets
Provision for employee benefits
Accrued expenses
Lease incentive liability
Capital raising and transaction costs
Tax losses
Lease liabilities
Other
Deferred tax asset
Movements
Balance acquired at business combination
Movement in deferred tax asset from temporary differences
(Charged) / credited to profit and loss
(Charged) / credited to equity
Closing balance at the end of the year
Composition of deferred tax liabilities
Right to use asset
Investment property
Other
Deferred tax liabilities
Movements
Balance acquired at business combination
Movement in deferred tax liabilities - temporary differences
(Charged) / credited to profit and loss
(Charged) / credited to equity
Closing balance at the end of the year
Net deferred tax liabilities
Deferred tax assets
Deferred tax liabilities
Net deferred tax liabilities
Franking credits
Franking credits available
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
55
57
10
115
86
95
49
467
225
242
-
467
105
325
86
516
367
149
-
516
467
516
49
4,208
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55
57
10
115
86
95
49
467
225
242
-
467
105
325
86
516
367
149
-
516
467
516
49
4,208
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
a)
b)
c)
franking credits that will arise from the payment of the amount of the provision for income tax;
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
Page 44
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 8
TRADE AND OTHER RECEIVABLES
Year ended 30 June
Current
Fund management fees receivable
Rent and outgoings receivable
Litigation proceed receivable
Other receivables
Prepayments
Rental guarantees/incentives receivable
GST receivable
Provision for expected credit loss
Commercial loans to external third parties
Analysis of provision for doubtful receivables
Opening balance
Provision/ (reversal) for doubtful receivables
Closing balance
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
-
756
375
129
697
-
-
-
3,334
5,291
382
(382)
-
-
604
-
-
593
517
109
(382)
-
1,441
382
-
382
245
-
-
205
117
-
-
-
1,776
2,343
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The loans to external parties are each secured by a first registered mortgage and a general security agreement. All other
receivables are non-interest bearing. Refer to note 16 for details on credit risk exposure.
Page 45
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 9
INVESTMENT PROPERTIES
Year ended 30 June
GARDA Property Group
Investment properties at independent valuation
Investment properties acquired at directors’ valuation
Investment properties at directors’ valuation
Investment properties under construction at directors’ valuation
Investment properties under construction at independent valuation
Movements during the year:
Balance at 1 July
Acquisition of investment properties via business combination
Acquisition of tenanted investment properties
Purchase price adjustment for rental guarantee
Capital expenditure on tenanted investment properties
Acquisition and capital expenditure of properties under construction
Disposal of property
Straight-lining of rental income
Net movement in leasing fees and incentives
Movements in fair value comprised of:
Increase in independent valuations43
Acquisition costs44
Capital additions and capitalised costs45
Leasing costs
Rent free income
Straight-lining of rental income
Balance at the end of the year
GARDA Holdings Limited
Land at Palmer Street, Townsville
Movements during the year
Balance at the date of internalisation
Movements in fair value
Balance at end of the year
2020
$000
2019
$000
116,100
322,300
1,250
265,643
34,454
-
1,006
-
-
9,500
417,447
332,806
332,806
283,932
1,250
56,591
(2,000)
5,155
29,643
-
10,292
-
8,550
34,851
-
(14,753)
1,372
(374)
4,110
(4,494)
(5,614)
596
(222)
(1,372)
1,077
(137)
17,100
(786)
(6,380)
416
(279)
(1,077)
417,447
332,806
1,250
1,250
-
1,250
-
-
-
-
The registered titles to all GDF and GARDA Capital Trust assets are held by The Trust Company (Australia) Limited, as
custodian. This is an ASIC regulatory requirement.
43 Relates to gross movement in independent valuations between FY19 and FY20, plus the $2,000,000 Acacia Ridge rental guarantee.
44 Relates to due diligence costs and stamp duty for Acacia Ridge and Morningside properties acquired during the year.
45 Relates to capital expenditure and other capitalised costs on properties prior to independent valuation.
Page 46
GARDA Property Group
Annual Financial Report
30 June 2020
Valuations
For the year ended 30 June 2020, the adopted values for five of the Group’s properties are based on independent external
valuations, with the balance of the portfolio subject to Directors’ valuation.
Independent external valuations are undertaken by qualified and suitably experienced certified practicing external valuers
using capitalisation and discounted cash flow valuation methodologies. The results of these primary valuation methodologies
are checked by the direct comparison approach and analysed on a rate per square metre of total lettable area. Land is valued
using the direct comparison approach using data of recent sales and analysed on a rate per square metre.
Directors’ valuations are based on the most recent independent valuations, and take into account all capital expenditure
incurred since the last independent valuation which is deemed by Directors to be capital accretive.
Valuation
Basis at 30
June 2020
Date of last
Independent
Valuation
Capitalisation
Rate
Independent
Valuation
2020
Carrying
Value
2019
Carrying
Value
$000
$000
$000
Established properties
Acacia Ridge, 38 Peterkin St
Directors’
Dec 2019
Archerfield, 839 Beaudesert Rd
Directors’
Dec 2019
Box Hill, 436 Elgar Rd
Independent
Jun 2020
Cairns, 7-19 Lake Street
Directors’
Dec 2019
Cairns, Land at 26-30 Grafton Street
Directors’
Dec 2019
Heathwood, 67 Noosa Street
Directors’
Dec 2019
Lytton, 142-150 Benjamin Place
Independent
Jun 2020
Mackay, 69-79 Diesel Drive
Directors’
Dec 2019
Morningside, 326&340 Thynne Rd
Independent
Jun 2020
Pinkenba, 70-82 Main Beach Rd
Independent
Jun 2020
Richmond, 572-576 Swan Street
Directors’
Dec 2019
Richmond, 588 Swan Street
Directors’
Dec 2019
Varsity Lakes, 154 Varsity Parade
Independent
Jun 2020
Wacol, 41 Bivouac Place
Directors’
Dec 2019
Properties under construction
Acacia Ridge, 56 Peterkin St
Directors’
Dec 2019
Acacia Ridge, 69 Peterkin Street
Directors’
Dec 2019
Berrinba, 1-9 Kellar Street
Directors’
Dec 2019
Wacol, 498 Progress Road
Directors’
Dec 2019
7.50%
7.50%
6.00%
8.25%
n/a
6.75%
7.25%
7.50%
5.75%
6.75%
5.75%
5.75%
8.50%
5.75%
6,000
6,000
33,250
56,000
2,000
11,250
8,725
6,000
6,000
33,250
58,563
2,000
11,250
8,725
-
-
31,500
55,000
2,000
10,500
9,500
30,000
30,100
30,000
41,625
41,625
-
20,500
20,500
20,000
53,500
53,688
53,000
59,000
59,042
62,800
12,000
12,000
12,750
39,000
39,000
35,250
378,850
381,743
322,300
7.25%
7.25%
n/a
n/a
6,700
10,900
3,130
6,330
6,808
11,079
7,346
9,221
27,060
34,454
-
-
3,000
6,500
9,500
Value accretive additions
Value accretive additions
Directors’
n/a
GHL properties
Townsville, 30 Palmer Street
Directors’ Dec 2019
n/a
-
-
-
-
1,006
1,006
1,250
1,250
1,250
1,250
-
-
Total investment properties
407,160
417,447
332,806
Page 47
GARDA Property Group
Annual Financial Report
30 June 2020
Contractual obligations
Contractual obligations to develop or construct investment properties at 30 June 2020 are as follows:
Properties
Berrinba, 1-9 Kellar Road
Wacol, 498 Progress Road
Total
Leasing arrangements
$000
3,965
2,128
6,093
Investment properties listed above (excluding land at 26-30 Grafton Street, Cairns, land at 30 Palmer Street, Townsville and
properties under construction) are typically leased to tenants under long-term operating leases with rentals payable monthly.
Minimum lease payments receivable on leases of investment properties are disclosed in note 22. Any impacts on tenant
credit risk due to COVID-19 have been disclosed in note 16.
Amount recognised in profit or loss for investment properties
Revenue and direct expenses relating to investment properties are disclosed in note 5 and note 6.
NOTE 10 TRADE AND OTHER PAYABLES
Year ended 30 June
Current
Trade and other payables
Loan payable to parent entity
Rental guarantees/incentives payable
Contract liabilities (recoverable outgoings received in
advance)
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
3,339
2,972
-
-
605
3,944
-
517
747
615
1,433
-
-
4,236
2,048
-
-
-
-
-
Page 48
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 11
INTANGIBLE ASSETS
Year ended 30 June
Goodwill
GARDA Property Group
GARDA Holdings Limited
2020
$000
33,586
2019
$000
-
2020
$000
-
2019
$000
-
Intangible assets comprise goodwill on the acquisition of GARDA Capital Group in the internalisation transaction.
The acquisition of GARDA Capital Limited by GHL resulted in a gain on bargain purchase amount of $6,187,000 which has
been recognised as income in GHL’s Statement of Profit or Loss and Other Comprehensive Income. On consolidation, GHL’s
gain on bargain purchase amount has been offset against the goodwill arising on the acquisition of GARDA Capital Trust by
GDF, resulting in GARDA’s net goodwill on acquisition of $33,586,000.
Further details of the internalisation transaction and acquisition accounting are disclosed in note 26.
Impairment testing
Goodwill has an indefinite useful life and must be tested annually for impairment, or when there are indicators of impairment.
Goodwill shall be considered to be impaired if its recoverable amount is less than the carrying amount. No impairment expense
was recognised in relation to goodwill for the year ended 30 June 2020.
The recoverable amount of goodwill has been determined using the value-in-use approach and valued by discounting
estimated future cash flows. Cash flow projections were based on financial budgets including the board approved budget for
the year ending 30 June 2021. Cash flows beyond the projected period are extrapolated using estimated growth rates.
Key assumptions adopted in the discounted cash flow valuation are as follows:
cash flows projections being for 5 years;
terminal growth rate of 2.50%; and
discount rate of 6.75% applied to cash flow projections.
These assumptions are considered by the Directors to be reasonable in the context of GARDA’s future prospects, the discount
rates adopted in the valuation of its Investment Properties, its weighted average cost of capital, and prevailing market and
economic conditions.
The recoverable amount of goodwill would equal its carrying amount if the terminal growth rate decreased from 2.50% to
1.88%, or the discount rate increased from 6.75% to 7.28%.
A significant change in the timing of the proposed development and leasing outcomes of GARDA’s properties may reduce
forecast cash inflows and result in a lower recoverable amount in future years. In addition, assuming no changes to forecast
cashflows, if the discount rates adopted in the valuation of Investment Properties are reduced from the current range of 6.75%
- 9.00% (as set out in note 17), then there is a risk of goodwill impairment in the absence of a corresponding reduction in
GARDA’s overall discount rate.
Page 49
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 12 BORROWINGS
Current
Bank Loans (secured)
Non-Current
Bank Loans (secured)
Less: amortised transaction costs
Syndicated Debt Facility
Amount and Tenor
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
-
15,417
188,115
(1,462)
113,096
(224)
186,653
128,289
-
-
-
-
-
-
-
-
On 4 March 2020, the Group achieved financial close on the restructuring of a new syndicated bank debt facility, increasing
borrowing capacity by $19,300,000 to $200,000,000.
At 30 June 2020, GARDA had $11,886,000 of borrowing capacity available:
Facility
St.George Bank
ANZ Banking Group
Facility Limit
$000
Amount Drawn
$000
Amount Available
$000
2020
100,000
100,000
2019
138,073
30,650
2020
94,057
94,057
188,114
2019
97,863
30,650
128,513
2020
5,943
5,943
11,886
2019
40,210
-
40,210
Total facilities
200,000
168,723
The tenor of the new revolving cash advance facility is three years, expiring on 3 March 2023. Loan repayments are interest
only with a lump sum payment of all amounts outstanding due at maturity. There is a fixed line fee on the facilities and interest
is based on the applicable BBSY rate plus margin.
At 30 June 2020, GARDA’s gearing was 36.7%46 (2019: 32.5%).
Security
The syndicated bank debt facility is secured by:
a)
b)
c)
a first registered general security deed in respect of all assets and undertakings of GARDA;
a first registered real property mortgage in respect of each property in the GDF portfolio;
a first registered general security deed in respect of all assets and undertakings of GHL and its secured subsidiaries;
and
d)
a specific security agreement over restricted cash accounts of GARDA.
Notwithstanding the terms of the facility, the registered title to all the assets of GCT and GDF, including the properties, are
held by The Trust Company (Australia) Limited, as custodian, who holds title for the relevant fund. This is an ASIC regulatory
requirement.
46 Gearing ratio is calculated as group bank debt less cash divided by total assets less cash.
Page 50
GARDA Property Group
Annual Financial Report
30 June 2020
Covenants
Key financial covenants and other metrics under the syndicated bank debt facility include:
a)
b)
c)
interest cover ratio is to remain above 2.50 times;
loan to value ratio (LVR) must remain under 50%; and
adjusted gearing ratio47 is to remain under 1.20 times.
The Group complied with these financial covenants during the financial year.
Financial undertakings
Financial undertakings under the syndicated bank facility include the following:
a)
the aggregate earnings before interest taxes depreciation and amortisation (EBITDA) of the obligors represents at
least 90% of the aggregate EBITDA of the Group; and
b)
the aggregate total assets of the obligors represent at least 90% of the aggregate total assets of the Group.
NOTE 13 DERIVATIVE FINANCIAL INSTRUMENTS
Year ended 30 June
Non-Current
Interest rate swap contracts
Interest rate Swaps
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
1,536
2,825
-
-
On 26 February 2020, the Group cash settled the exit from its existing $60,000,000, 2.68%, July 2020 expiry interest swap.
Concurrently, it entered into new interest rate swap agreements on 4 March 2020 totaling $100,000,000, including
$70,000,000 for a term of 7 years at a rate of 0.81% and $30,000,000 for a term of 10 years at a rate of 0.98%.
NOTE 14 DISTRIBUTIONS PAYABLE
Year ended 30 June
Current
Provision for distribution
Movement in provisions:
Opening balance at beginning of year
Distributions provided for
Distributions paid
Balance at end of year
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
3,763
3,565
3,565
16,430
3,115
13,810
(16,232)
(13,360)
3,763
3,565
-
-
-
-
-
-
-
-
-
-
47 Adjusted gearing ratio is calculated as adjusted total liabilities divided by adjusted total assets. Adjustments made to the total liabilities and
total assets include certain non-cash items and goodwill in accordance with GARDA’s syndicated facility agreement.
Page 51
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 15 EARNINGS PER STAPLED SECURITY
Year ended 30 June
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
Earnings used in calculating earnings per stapled security
Net profit after tax attributable to security holders
Basic earnings per stapled security (cents)
Diluted earnings per stapled security (cents)
5,567
2.90
2.85
28,780
18.90
18.90
5.475
2.41
2.41
WANOS 48- basic earnings per stapled security
191,658,317
152,406,238
227,644,361
WANOS - diluted earnings per stapled security
195,142,591
152,406,238
227,644,361
-
-
-
-
-
NOTE 16 FINANCIAL RISK MANAGEMENT
Financial Risk Management Policies
The Directors’ overall risk management strategy seeks to assist the Group in meeting its financial targets, while minimising
potential adverse effects on financial performance. Risk management policies are approved and reviewed by the Board on a
regular basis.
Specific Financial Risk Exposures and Management
The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk relating to interest rate risk.
The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the Group. The Group uses different methods to measure the
different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate risk and
maturity analysis for liquidity risk.
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The overall
objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s
competitiveness and flexibility. There have been no substantive changes in the types of risks to which the Group is exposed,
how these risks arise, or the Board’s objectives, policies and processes for managing or measuring the risks from the previous
period. Further details regarding these policies are set out below:
Credit Risk
Credit risk is the risk that the counterparty to a financial instrument will fail to discharge its obligations, resulting in the Group
incurring a financial loss.
The maximum exposure to credit risk, excluding the value of any collateral or other security, are recognised as financial assets
net of provisions for impairment of those assets in the statement of financial position and notes to the financial statements.
The Group also holds security deposits of $349,000 (2019: $300,000) and also has bank guarantees in the Group’s favour
of $9,695,000 (2019: $9,200,000) not recorded in the statement of financial position, which may be drawn upon in the
event of default (subject to federal government guidelines due to COVID-19 pandemic).
Credit risk is managed through procedures designed to ensure, to the extent possible, customers and counterparties to
transactions are of sound credit worthiness and includes monitoring of the financial stability of significant customers and
counterparties. Such monitoring is used in assessing receivables for impairment.
Credit risk is also minimised by investing surplus funds in financial institutions that maintain a high credit rating. Where the
Group is unable to ascertain a satisfactory credit risk profile in relation to a customer or counterparty, the risk may be further
managed through obtaining security by way of personal or commercial guarantees over assets of sufficient value.
The credit quality of cash and cash equivalents held by the Group is considered strong. Credit risk related to balances with
banks is managed in accordance with approved Board policy. Such policy requires that surplus funds are only invested with
counterparties which are large financial institutions with strong credit ratings.
48 Weighted average number of securities.
Page 52
GARDA Property Group
Annual Financial Report
30 June 2020
Credit risk exposures
The Group applies the AASB 9 simplified approach to measuring expected credit losses. This approach uses a lifetime
expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix with
fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the consolidated
entity based on recent sales experience, historical collection rates and available forward-looking information.
To measure the expected credit losses, trade receivables and contract assets are grouped based on shared credit risk
characteristics and the days past due. Amounts are considered as ‘past due’ when the debt has not been settled within the
terms and conditions agreed between the Group and the customer or counterparty to the transaction.
Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where
there are specific circumstances indicating that the debt may not be fully repaid to the Group.
Additionally, at each reporting date, the Group assesses whether financial assets carried at amortised cost are “credit-
impaired”. A financial asset is “credit-impaired” when one or more events that have a detrimental impact on the estimated
future cash flows of the financial asset have occurred.
Due to the COVID-19 pandemic, the Group has a tenant credit risk exposure of $330,649 as at 30 June 2020. The balance
owed is within pre-agreed rental deferral terms. Management closely monitors the receivable balance on a monthly basis
and is in regular contact with the tenant. At the date of report, there were no loss recognised as result of tenants not paying
as per pre-agreed rental deferral terms.
All of the Group’s fully secured debt investments are considered to have low credit risk. Financial assets are considered to be
low credit risk when they have a low risk of default and the customer has a strong capacity to meet its contractual cash flow
obligations in the near term.
Generally, receivables are written off by management when there is no reasonable expectation of recovery. Indicators include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than one year.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its
obligations related to financial liabilities. The Group manages this risk through the following mechanisms:
preparing forward-looking cash flow analyses in relation to its operational, investing and financing activities;
monitoring undrawn credit facilities;
maintaining a reputable credit profile;
managing credit risk related to financial assets;
only investing surplus cash with major financial institutions; and
comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
The table below reflects the contractual maturity of fixed and floating rate financial liabilities. Cash flows for financial liabilities
without fixed amount or timing are based on the conditions existing at 30 June 2020. The amounts disclosed represent
undiscounted cash flows.
The remaining contractual maturities of the financial liabilities are set out in the following table.
Page 53
GARDA Property Group
Annual Financial Report
30 June 2020
Less than one year
Trade and other payables49
Loan to parent entity
Distribution payable
Interest on loans
Between one and five years
Bank loans
Interest on loans
Derivative financial instruments
Market (or Interest Rate) Risk
GARDA Property Group
GARDA Holdings Limited
Note
2020
$000
2019
$000
2020
$000
2019
$000
10
10
14
12
13
3,901
-
3,763
4,524
12,188
4,236
-
3,565
3,786
11,587
188,115
7,557
1,536
128,513
4,289
2,825
197,208
135,627
615
1,433
-
-
2,048
-
-
-
-
-
-
-
-
-
-
-
-
-
Interest rate risk is the risk that the fair value of the cash flows of a financial instrument will fluctuate due to changes in market
interest rates. The Group’s main interest rate risk arises from borrowings with variable interest rates.
The Group manages interest rate risk by using interest rate swaps which have the effect of converting a portion of borrowings
from variable to fixed rates.
On 26 February 2020, the Group cash settled the exit from its existing $60,000,000, 2.68%, July 2020 expiry interest swap.
Concurrently, it entered into new interest rate swap agreements on 4 March 2020 totaling $100,000,000, including
$70,000,000 for a term of 7 years at a rate of 0.81% and $30,000,000 for a term of 10 years at a rate of 0.98%.
Interest rate risk sensitivity
The net interest rate exposure of the Group is $100,000,000 being the Group debt facility of $200,000,000 less the notional
principal of amount of the interest rate swap of $100,000,000. The impact of 0.5% increase/decrease in market interest rates
at balance date would be result in a $500,000 decrease/increase in profit or loss per annum.
NOTE 17 FAIR VALUE MOVEMENT
The following assets and liabilities are recognised and measured at fair value on a recurring basis:
Financial assets: Derivative financial instruments at fair value through profit and loss
Non-financial assets: Investment properties
There are various methods used in estimating the fair value of a financial instrument:
Level 1: fair value is calculated using quoted prices in active markets.
Level 2: fair value is estimated using inputs that are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices).
Level 3: fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The following table sets out GARDA’s assets and liabilities that are measured and recognised at fair value in the financial
statements.
49 These amounts exclude GST payable balances at year end in accordance with AASB 132.
Page 54
GARDA Property Group
Annual Financial Report
30 June 2020
30 June 2020
Assets
Investment properties
Liabilities
Derivative financial instruments
30 June 2019
Assets
Investment properties
Liabilities
Derivative financial instruments
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
-
-
-
-
-
-
-
-
-
-
417,447
417,447
417,447
417,447
1,536
1,536
-
-
1,536
1,536
-
-
332,806
332,806
332,806
332,806
2,825
2,825
-
-
2,825
2,825
There were no transfers during the year between Level 1 and Level 2 for recurring fair value measurements.
GARDA’s policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or change
in circumstances that caused the transfer occurred.
Disclosed fair values
The carrying amounts of financial assets and liabilities approximate their net fair value, unless otherwise stated. The carrying
amounts of financial assets and liabilities are disclosed in the Statement of Financial Position and in the notes to the financial
statements.
The following table sets out the valuation techniques used to measure fair value within Level 3, including details of the
significant unobservable inputs used and the relationship between unobservable inputs and fair value.
Investment properties
Investment properties are valued using the Income approach based on estimated rental value of the property. Discount rates,
terminal yields, expected vacancy rates and rental growth rates are estimated by an external valuer (or in the case of directors’
valuations, directors) based on comparable transactions and industry data.
Unobservable inputs
Range of inputs
2020
2019
Discount rate
6.75% - 9.00%
6.50% - 9.00%
Relationship between
unobservable inputs and fair value
Capitalisation rate
5.75% - 8.50%
5.75% - 8.25%
Terminal yield
6.00% - 8.50%
6.00% - 8.75%
The higher the discount rate, terminal yield and expected
vacancy rate, the lower the fair value.
Expected vacancy rate
0 - 5%
0%
Rental growth rate
2.26% - 3.04%
2.26% - 2.80%
The higher the rental growth, the higher the fair value.
Based on Gross Face Rental growth 10 year CAGR.
The Board considers the valuations of each property half-yearly and either ensures an external independent valuer has been
instructed or adopts a Directors’ valuation.
For derivative financial instruments (interest rate swap), fair value was determined by St.George Bank. The valuation models
used by banks are industry standard and mostly employ a Black-Scholes framework to calculate the expected future value
of derivative payments which are then discounted back to present value. Interest rate inputs into the models are benchmark
rates and as such input parameters into the models are deemed observable, thus these derivatives are categorised Level 2
instruments. There were no significant inter-relationships between unobservable inputs that materially affect fair values.
Page 55
GARDA Property Group
Annual Financial Report
30 June 2020
Reconciliation of Level 3 fair value movements
Refer to note 9 for the reconciliation of movements in investment properties. There have been no transfers to or from Level
1 or 2. There were no unrecognised gains/(losses) recognised in profit or loss for investment properties.
NOTE 18 CONTRIBUTED EQUITY
Year ended 30 June
GARDA Property Group
GARDA Holdings Limited
2020
2019
Securities
Securities
2020
Shares
2019
Shares
Ordinary securities/ shares
227,644,361
158,444,594
227,644,361
Movements during the year
Balance at beginning of year
158,444,594
138,444,594
Acquisition consideration investment properties50
4,411,765
-
Placement51
22,500,000
20,000,000
-
-
-
Securities issued at incorporation and on initial capitalisation
-
Securities issued as consideration for internalisation (note 26) 42,288,002
-
-
185,356,359
42,288,002
Total issued securities as per ASX
227,644,361
158,444,594
227,644,361
Treasury Securities (refer below)
(9,233,693)
Unvested securities on issue under GARDA ESP (refer below) (9,360,000)
Vested securities under GARDA ESP (refer below)
(480,000)
-
-
-
(9,233,693)
(9,360,000)
(480,000)
Total issued securities for financial statements
208,570,668
158,444,594 208,570,668
-
-
-
-
-
-
-
-
-
-
-
Treasury Securities
The internalisation resulted in GDF owning 100% of GARDA Capital Trust which, in turn, owned 21,900,363 stapled securities
in GARDA Property Group. In accordance with Australian Accounting Standards, these securities are designated as treasury
securities and have been deducted from equity and excluded from total issued securities of 227,644,361.
Since the internalisation, 12,666,670 Treasury Securities have been transferred in settlement of loans or in conjunction with
the GARDA ESP. The 6,666,670 securities that were issued to extinguish a loan are now included in equity and the number
of issued securities for reporting purposes.
Employee security plan securities
At internalisation, included in GARDA’s issued securities were 3,840,000 stapled securities issued to executive Directors and
employees. These securities replaced securities in GARDA Capital Group that had previously been issued as part of GARDA
Capital Group’s employee security plan (ESP).
480,000 GARDA ESP securities vested concurrently with the internalisation on 13 November 2019 while 3,360,000 remain
unvested. In accordance with Australian Accounting Standards, unvested ESP securities are accounted for as security-based
payment expenses until such time as the securities vest.
The Executive Directors and employees who participated in the GARDA Capital Group ESP had been provided with limited
recourse loans to finance the acquisition of their ESP securities. Following the internalisation and replacement of GARDA
Capital Group ESP securities with GARDA securities, participating executive Directors and employees have been provided
with equivalent loan terms.
Since internalisation, 6,000,000 GARDA ESP securities have been transferred to GARDA employees. These securities were
transferred from Treasury Stock and have attaching limited recourse loans.
Refer to note 20 for further details.
50 Securities issued to acquire the Acacia Ridge and Archerfield properties. Refer Directors’ Report.
51 Securities issued to fund the acquisition of the Morningside property. Refer Directors’ Report.
Page 56
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 19 RELATED PARTIES AND KEY MANAGEMENT PERSONNEL
Transactions between related parties occurred on standard commercial terms and conditions, unless otherwise stated.
KMP compensation
KMP receive compensation in the form of short-term benefits, post-employment benefits, long-term benefits, termination
benefits and security-based payments.
The aggregate remuneration paid to KMP of the Group is set out below:
Year ended 30 June
Short-term benefits
Post-employment benefits
Long-term benefits
Security based payments
Total remuneration paid
Pre internalisation
GARDA Property Group
GARDA Holdings Limited
2020
2019
2020
2019
1,151,383
63,834
6,276
406,377
1,627,870
-
-
-
-
-
1,151,383
63,834
6,276
406,377
1,627,870
-
-
-
-
-
GDF and GARDA Capital Group were related parties immediately prior to the internalisation transaction. As the responsible
entity and manager of GDF, GARDA Capital Limited and its controlled entities were entitled to receive the following fees
pursuant to GDF’s constitution:
a management fee of 0.65% per annum of gross asset value (GAV); and
a capital works fee amounting to 5% of the total capital costs incurred in relation to the investment properties.
Management and capital works fees paid by GDF to GARDA Capital Group up to the date of the internalisation were as follows:
Responsible Entity’s Fees
Management fee
Capital works fees
Procurement fees
Other transactions with the responsible entity
Recovery of professional expenses
Distributions paid or payable by GDF to GARDA Capital Trust
Administration costs reimbursed in accordance with the Fund’s Constitution
Period to 29
November
2019
30 June
2019
1,092,074
2,067,496
90,207
1,916,109
-
146,725
1,182,281
4,130,330
292,298
515,178
821,263
1,899,032
-
2,921
1,113,561
2,417,131
In addition, GARDA Capital Limited subsidiaries, GARDA Real Estate Services Pty Ltd, GARDA Facilities Management Pty Ltd,
GARDA Services Pty Ltd, and GARDA Finance Pty Ltd, provided property and facilities management services for GDF
properties and other services on behalf of the Responsible Entity. The fees paid for those services and administration costs
reimbursed for the period up the internalisation were as follows:
Page 57
GARDA Property Group
Annual Financial Report
30 June 2020
GARDA Real Estate Services Pty Ltd
GARDA Facilities Management Pty Ltd
GARDA Services Pty Ltd
GARDA Finance Pty Ltd
29 November
2019
$000
30 June
2019
$000
496,201
1,526,020
82,857
69,245
500,000
194,757
174,667
146,725
1,148,303
2,042,169
The following balances were payable by GDF to GARDA Capital Group as at the date of the internalisation:
GARDA Capital Limited
GARDA Real Estate Services Pty Ltd
GARDA Services Pty Ltd
GARDA Finance Pty Ltd
29 November
2019
$000
30 June
2019
$000
61,751
417,655
-
326,505
14,784
-
76,535
12,757
161,397
918,314
Amounts receivable from or payable to related entities as detailed above are all on standard 30-day credit terms. All amounts
are unsecured and are expected to be cash settled.
Post internalisation
Effective from the date of the internalisation, responsible entity, management and other fees paid by GDF to GARDA Capital
Group are internal charges between wholly-owned GARDA entities and are therefore not disclosed as related party payments.
Transactions with KMP and their related parties
A $1,970,000 loan facility advanced to the Group by a securityholder, M3SIT Pty Ltd as trustee for the M3 Solutions
Investment Trust, was repaid in cash on 5 of May 2020.
A $10,000,000 loan facility advanced to the Trust by syndicate lenders, some of whom were related parties of GCM, was
repaid on 24 February 2020. The loan was repaid through the transfer of 6,666,670 Treasury Securities valued at $9,000,000
(at $1.35 per security) and a cash payment of $1,000,000. The recipient of the cash payment of $1,000,000 was M3SIT Pty
Ltd as trustee for M3 Solutions Investment Trust (Mr Hallett is a director of the trustee). Interest paid during the year was
$46,219.
A related party of Mr Thornton, Non-executive Director, participated with GARDA as prior ranking lender in a number of
syndicated senior loans provided to third party borrowers. These loans were provided prior to Mr Thornton becoming a Non-
executive Director. The participation of Mr Thornton’s related party was in its capacity as a provider of finance to third-party
borrowers on arm’s length terms and did not involve the receipt of any consideration from GARDA or the provision of any
consideration to GARDA.
Payments of $71,000 (GST exclusive) were made to an entity related to Mr Scammells, Director, Acquisitions and Projects, in
relation to project management services provided by a relative of Mr Scammells. The relevant contract was assessed as being
arm’s length and on usual commercial terms and conditions.
Page 58
GARDA Property Group
Annual Financial Report
30 June 2020
Employee security plan
Details of the current KMP participants in the GARDA ESP are set out in the following table:
Participant
Issue date
Securities
granted
Exercise
Price
Fair value at
grant date
Loan value
30 June 20
Vesting date
Matthew Madsen
16 Apr 2020
5,000,000
13 Nov 2017
960,000
3 Jun 2019
23 Aug 2019
23 Aug 2019
David Addis
Lachlan Davidson
23 Aug 2019
23 Aug 2019
Mark Scammells
23 Aug 2019
320,000
240,000
240,000
240,000
400,000
400,000
Mark Hallett
16 Apr 2020
1,000,000
$0.63
$1.00
$1.08
$1.22
$1.22
$1.22
$1.22
$1.22
$1.00
$0.70
$0.06
$0.24
$0.11
$0.10
$0.11
$0.11
$0.10
$538,052
13 Nov 2020
$5,050,132
16 Apr 2020
$349,727
3 Jun 2021
$291,827
23 Aug 2021
$291,827
23 Aug 2022
$290,914
23 Aug 2021
$486,378
23 Aug 2021
$486,378
23 Aug 2022
$0.06
$1,010,026
16 Apr 2020
Total
8,800,000
$8,795,261
The GARDA ESP limited recourse loan balances are not accounted for in the statement of financial position.
NOTE 20 SECURITY BASED PAYMENTS EXPENSE
The establishment of the GARDA Capital Group ESP was approved by GARDA Capital Group securityholders at the 2017
annual general meeting. This ESP was replaced with the GARDA ESP on completion of the internalisation transaction with the
2,400,000 GARDA Capital Group ESP securities being replaced with 3,840,000 GARDA ESP securities.
The GARDA ESP securities are subject to equivalent loan terms, vesting conditions, transfer restrictions and other terms that
existed under the GARDA Capital Group ESP, as approved at the Annual General Meeting of the GARDA Property Group on 6
March 2020, except that 300,000 outstanding GARDA Capital Group ESP securities, which were exchanged for 480,000
GARDA ESP securities, vested at the date of the internalisation.
The GARDA ESP is designed to:
incentivise employees to deliver long-term securityholder value;
align the interests of employees and securityholders;
recognise individual performance; and
ensure the Group has a competitive remuneration structure.
Participation in the GARDA ESP is at the Board’s discretion and no individual has a contractual right to participate in the plan
or to receive any guaranteed benefits. The vesting of securities occurs over a two to three-year period, and subject to the
participant remaining an employee of the Group.
The employees who participated in the issue of securities under the GARDA ESP were provided limited recourse loans on the
grant date of an amount equal to the application price of the securities (market price per security on grant date).
Interest on the limited recourse loan for any particular year is equal to the Australian Tax Office fringe benefits tax benchmark
interest rate. The limited recourse loan for the participants has a term of eight years. The securities issued under the GARDA
ESP are subject to employee tenure conditions, however the overall ESP terms and conditions are at the discretion of the
Board.
The total non-cash expense arising from security-based payment transactions for the period was as follows:
Year ended 30 June
GARDA Property Group
GARDA Holdings Limited
2020
2019
2020
2019
Securities issued under employee security plan
444
-
444
-
Page 59
GARDA Property Group
Annual Financial Report
30 June 2020
Fair value of securities granted
The fair value at grant date is determined using the Black and Scholes option pricing model, taking into account the exercise
price, term of the security, security price at grant date and expected price volatility of the underlying security, expected
dividend yield, risk-free interest rate for the term of the security and certain probability assumptions.
The expected price volatility is based on the historic average volatility of peer group entities or similar entities compared to
GARDA Property Group, adjusted for any expected changes to future volatility due to publicly available information.
Details of securities under the limited recourse loan funded GARDA ESP including securities issues during the post-
internalisation period and the Black and Scholes option pricing model input for securities granted are set out in the following
table:
Grant date
Vesting
date
Share
price at
effective
grant date
Exercise
price
Fair value
at grant
date
Number of
securities
Limited
recourse
loan
Expected
volatility
Dist’n
yield
13/11/2017
13/11/2020
$1.395
$0.63
$0.70
960,000
$538,053
3/6/2019
3/6/2021
$1.395
$1.08
$0.24
480,000
$516,194
23/8/2019
23/8/2021
$1.395
$1.22
$0.11
1,520,000
$1,845,803
23/8/2019 23/8/2022
$1.395
$1.22
$0.10
400,000
$486,378
10%
10%
10%
10%
16/4/2020
16/4/2023
$0.87
$1.00
$0.06
6,000,000 $6,060,159
30%
6%
6%
6%
6%
9%
Risk
free
rate
2%
2%
2%
2%
1%
9,360,000 $9,446,587
The weighted average exercise price of securities granted during the year was $1.01. The weighted average remaining
contractual life of options outstanding at the end of period was 2.50 years. The expected price volatility is based on the historic
average volatility of GDF adjusted for any expected changes for future volatility due to publicly available information.
No securities were bought back and cancelled during the year.
NOTE 21 AUDITOR’S REMUNERATION
Year ended 30 June
Remuneration of the auditor for:
GARDA Property Group
GARDA Holdings Limited
2020
$
2019
$
2020
$
2019
$
Audit and review of the financial report (Pitcher Partners)
131,500
-
54,000
Audit and review of the financial report (BDO)
Total remuneration for audit service
-
131,500
57,000
57,000
-
54,000
Remuneration of the auditor for:
Independent Limited Assurance Report – internalisation
transaction (Pitcher Partners)
Business advisory services (BDO)
Review and audit of compliance plan (BDO)
109,560
-
-
Review and audit of compliance plan (Pitcher Partners)
19,000
75,000
99,684
13,400
-
Total remuneration for non-audit service
128,560
188,084
-
-
-
-
-
-
-
-
-
-
-
-
Page 60
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 22 COMMITMENTS
Year ended 30 June
Future minimum lease payments receivable:
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
Later than 5 years
NOTE 23 RIGHT-OF-USE ASSETS
Year ended 30 June
Non-current
Reconciliation
Opening balance
Additions
Depreciation
Carrying value
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
18,410
16,556
14,401
12,584
11,608
42,079
115,638
17,576
15,780
14,778
12,144
10,614
41,850
112,742
-
-
-
-
-
-
-
-
-
-
-
-
-
-
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
403
403
-
536
(133)
403
-
-
-
-
-
-
403
403
-
536
(133)
403
-
-
-
-
-
-
The consolidated group leases land and buildings for its office under agreement which commenced in July 2014
and continues for three years from reporting date. On renewal, the terms of the leases are renegotiated.
NOTE 24 LEASE LIABILITY
Year ended 30 June
Current
Non-current
GARDA Property Group
GARDA Holdings Limited
2020
$000
115
252
367
2019
$000
-
-
-
2020
$000
115
252
367
2019
$000
-
-
-
Page 61
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 25 CASH FLOW INFORMATION
Year ended 30 June 2020
Reconciliation of cash flow from operations with profit
GARDA Property Group
GARDA Holdings Limited
2020
$000
2019
$000
2020
$000
2019
$000
Profit
Adjustment for items in profit or loss
Share based payment expense
Gain on bargain purchase on acquisition
Depreciation
Capitalisation of interest and other fees
Change in fair value of investment properties
Change in fair value of derivative
Amortisation of borrowing costs
Gain on sale of investment properties
Capitalised interest expense
Movements in assets and liabilities
Trade and other receivables
Contract liabilities
Trade and other payables
Provisions
Current tax liability
Deferred tax balances
Lease incentives
5,567
28,780
5,474
444
-
155
(328)
6,996
1,425
414
-
(1,699)
1,947
(142)
485
17
(544)
(101)
(644)
-
-
-
-
(8,994)
1,951
175
(1,550)
(1,343)
(306)
537
1,772
-
-
-
(428)
444
(6,187)
155
(264)
-
-
-
-
-
(117)
-
45
17
(544)
(101)
-
Cash flow from operations
13,992
20,594
(1,078)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-Cash Movements
Non-cash financing and investing activities during the year related to the following:
On 5 July 2019, GDF settled the acquisitions of three adjacent transport orientated warehouse properties bordering
the Acadia Ridge Intermodal Rail Terminal and a nearby warehouse property in Archerfield. Total consideration of
$31,000,000 plus costs was funded through $17,300,000 of sale proceeds from the sale of a commercial building
in Murarrie, existing debt facilities and a placement to the vendors of 4,400,000 fully paid units at a price of $1.36
per unit.
On 26 September 2019, GDF successfully completed an institutional placement of 22,500,000 new units at an
issue price of $1.40, a 4.1% discount to the distribution adjusted closing price of $1.46 per unit on 19 September 2019.
The proceeds of the placement and existing debt facilities were utilised for the $41,000,000 (plus costs) acquisition
of two industrial warehousing and distribution assets in Morningside.
A total of 42,288,002 GARDA stapled securities were issued as consideration to acquire GARDA Capital Group
(see further details in note 26); and
GARDA Capital Trust repaying $9,000,000 (at $1.35 per security) of syndicate loan through conversion of
6,666,670 treasury securities valued at $9,000,000.
There were no non-cash financing and investing activities in the prior year.
Page 62
GARDA Property Group
Annual Financial Report
30 June 2020
Reconciliation of liabilities arising from financing activities
Liabilities arising from financing activities are liabilities for which cash flows are, or will be, classified as ‘cash flows from
financing activities’ in the statement of cash flows. Changes in the carrying amount of such liabilities, which comprise bank
borrowings, are summarised below.
Year ended 30 June
Balance at the beginning of the year
Cashflows
Non-cash changes capitalisation of interest and amortisation
Balance at the end of the year
GARDA Property Group
GARDA Holdings Limited
2020
$
2019
$
2020
$
2019
$
128,289
105,449
57,961
403
22,812
28
186,653
128,289
-
-
-
-
-
-
-
-
NOTE 26 BUSINESS COMBINATION
Internalisation Transaction
On 29 November 2019, GARDA was constituted in its current form when two ASX listed entities, GARDA Diversified Property
Fund (previously defined as GDF or the Fund) (ASX: GDF) and GARDA Capital Group (ASX: GCM), were combined pursuant
to the internalisation transaction.
Prior to the internalisation:
1. GDF was an externally managed real estate investment trust; and
2. GARDA Capital Group was a stapled entity comprising:
GARDA Capital Limited (previously defined as Fund RE), the responsible entity for GDF; and
GARDA Capital Trust, a unit trust whose primary asset was an 11.8% equity interest in GDF.
The internalisation transaction involved two concurrent events:
1.
the establishment of GARDA through the stapling of GDF units to shares in the newly created GHL on a one for one
basis; and
2.
the acquisition by GARDA of 100% of GCM.
GARDA is now an ASX-listed, internally managed, stapled, real estate group that trades under the ASX ticker “GDF”. GARDA
continues to undertake the operations that were performed by its predecessor entities prior to the internalisation.
GARDA Property Group
Consolidation Accounting
For consolidation accounting purposes, 29 November 2019 is the deemed acquisition date and GDF is the deemed acquiror.
Purchase Consideration
A total of 42,288,002 GARDA stapled securities were issued as consideration to acquire GARDA Capital Group:
GDF issued 42,288,002 units to acquire GARDA Capital Trust;
GHL issued 42,288,002 units to acquire GARDA Capital Limited; and then
All outstanding GDF units and GHL shares were stapled on a one-for-one basis.
The value of the purchase consideration was $58,991,763 based on a GDF unit price of $1.395 and an exchange ratio of 1.6x.
Page 63
GARDA Property Group
Annual Financial Report
30 June 2020
Goodwill
The fair values of the identifiable net assets acquired under the internalisation, and the resulting goodwill, are set out below:
Purchase Price
Assets
Cash and cash equivalent
Trade and other receivables
Investment property
Plant and equipment
Financial assets at fair value through profit or loss
Employee security plan loan receivables
Liabilities
Trade and other payables
Distribution and dividend payable
Current tax liabilities
Tenant security deposits
Borrowings
Provisions
Deferred tax liabilities
Total identifiable net assets at fair value acquired
Goodwill
$000
58,992
4,375
3,137
1,250
47
30,661
291
39,761
(764)
(889)
(546)
(13)
(11,970)
(31)
(142)
(14,355)
25,406
33,586
Goodwill of $33,586,000 represents the incremental value created in relation to GARDA’s investment properties by replacing
external management fees with an internalised cost structure.
In GARDA’s interim financial report for the period ended 31 December 2019, fair values (excluding cash) and goodwill were
reported based on provisional asset and liability values. Those provisional values have now been confirmed with no movement
in the value of goodwill since 31 December 2019.
Revenue and profit contributions
From the date of internalisation to 30 June 2020, the acquired businesses contributed external revenues of $522,227. The
internalisation resulted in the retention for security holders of various fees (both profit and capital related), and also retention
of trust distributions (which were not expensed pre internalisation for accounting purposes) paid to the former manager. These
retained amounts, however, were offset by employment and other costs (which are expensed post internalisation), and as
such disclosure of the net profit impact of the acquisition is not considered relevant nor practicable for security holders.
If the internalisation had taken place on 1 July 2019, the acquired businesses would have contributed additional external
revenues of $357,929.
The
Internalisation costs
Internalisation costs of $1,269,000 (2019: $700,000) are included in the Statement of Profit and Loss and Other
Comprehensive Income and other Internalisation costs of $58,000 are included in the Statement of Financial Position as a
deduction against equity.
Page 64
GARDA Property Group
Annual Financial Report
30 June 2020
GARDA Holdings Limited
Bargain Purchase
A total of 42,288,002 GHL shares were issued as consideration to acquire GARDA Capital Limited. As a newly created
company, the value of GHL’s shares was nil resulting in a gain on bargain purchase:
Purchase Price
Assets
Cash and cash equivalent
Trade and other receivables
Loan receivable from GARDA Capital Trust
Investment property
Plant and equipment
Liabilities
Trade and other payables
Distribution and dividend payable
Current tax liabilities
Tenant security deposits
Borrowings
Provisions
Deferred tax liabilities
Total identifiable net assets at fair value acquired
Gain on Bargain Purchase
$000
-
4,318
2,809
1,805
1,250
47
10,229
(643)
(697)
(546)
(13)
(1,970)
(31)
(142)
(4,042)
6,187
(6,187)
In GARDA’s interim financial report for the period ended 31 December 2019, fair values (excluding cash) and gain on bargain
purchase were reported based on provisional asset and liability values. Those provisional values have now been confirmed
with no movement in the value of gain on bargain purchase since 31 December 2019.
The gain on bargain purchase amount has been recognised as income in GHL’s Statement of Profit or Loss and Other
Comprehensive Income. On consolidation, GHL’s gain on bargain purchase amount offsets the goodwill arising on the
acquisition of GARDA Capital Trust by GDF, resulting in GARDA’s goodwill on acquisition of $33,586,000.
The GARDA Property Group Statement of Financial Position reflects GDF as the acquirer and deemed parent and therefore
consolidates GHL and its subsidiaries.
Page 65
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 27 PARENT ENTITY INFORMATION
Parent Entity
The Parent Entity of the Group is GARDA Diversified Property Fund.
GARDA Diversified Property Fund
ASSETS
Current assets
Non-current assets1
Total assets
LIABILITIES
Current liabilities
Non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity52
Reserve
Retained earnings
Total equity
Profit
Other comprehensive income
Total comprehensive income
2020
$000
2019
$000
20,532
21,654
475,189
334,680
495,721
356,334
7,853
188,525
196,378
23,218
116,020
139,238
299,343
217,096
370,945
281,112
444
-
(71,596)
(64,016)
299,343
217,096
9,073
28,780
-
-
9,073
28,780
The financial information for GDF has been prepared on the same basis as the consolidated financial statements.
52 Includes fair value of the securities issued as consideration for the internalisation transaction of $58,992,000.
Page 66
GARDA Property Group
Annual Financial Report
30 June 2020
Controlled Entities of the Parent Entity
The below controlled entities were acquired as part of the internalisation on 29 November 2019. The parent entity did not
have any controlled entities in the prior year.
GARDA Diversified Property Fund
Ownership Interest
Country of Incorporation
GARDA Capital Trust
GARDA Holdings Limited
GARDA SUBCO Pty Ltd
GARDA Capital Limited
GARDA Property Services Pty Ltd
GARDA Real Estate Services Pty Ltd
GARDA Facilities Management Pty Ltd
GARDA Services Pty Ltd
GARDA Funds Management Limited ATF GARDA Capital Trust
GARDA Finance Pty Ltd
GARDA TSV Pty Ltd ATF GARDA TSV Unit Trust
GARDA TSV Unit Trust
GARDA Property Finance Pty Ltd
GARDA REIT Holdings Pty Ltd ATF GARDA REIT Holdings Unit Trust
GARDA REIT Holdings Unit Trust
GARDA Capital RE Limited
GARDA Property Funds Limited
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
NOTE 28 CONTINGENT ASSETS AND LIABILITIES
Contingent assets
GARDA Capital Limited as responsible entity for GDF is continuing its claim under warranties and indemnities given by various
parties involved in the construction of the building Botanicca 7, at 572-576 Swan St, Richmond with respect to defects in the
building. The builder is defending and has joined additional third parties as defendants. The matter is proceeding through
disclosure and witness statement steps, and a trial date has been set down for 3 February 2021. As at 30 June 2020, it is not
practicable to estimate the financial effect of the matter therefore no amount has been disclosed.
GARDA Capital Limited as responsible entity for GDF filed a writ in the Victorian Supreme Court against two entities which
developed the Botanicca 7 building in July 2019 and served that writ on 15 July 2020. Under this new writ, GARDA Capital
Limited claims from the developer any shortfall not obtained in the existing claim described above. The proceeding is
dependent on and will be stayed until the primary matter is heard and it is therefore not practicable to estimate the financial
effect of the matter, so no amount has been disclosed.
Contingent liabilities
The Group did not have any material liabilities as at 30 June 2020 or 30 June 2019.
Page 67
GARDA Property Group
Annual Financial Report
30 June 2020
NOTE 29 EVENTS SUBSEQUENT TO THE END OF THE PERIOD
The impact of the COVID-19 pandemic is ongoing and while it had a minimal impact on the Group up to 30 June 2020, it is
not practicable to estimate the full potential impact, positive or negative, after the reporting date.
The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries,
such as maintaining social distancing requirements, quarantine, travel restrictions and any further economic stimulus that may
be provided.
USG Boral has committed to a five year lease for approximately half of the building (2,925m²) currently under construction
at 1-9 Kellar Street, Berrinba. The lease will commence in November 2020 following anticipated completion of construction
in September 2020.
YHI Corporation has committed to a 10 year lease for the full building (6,000 m²) currently under construction at 498 Progress
Road, Wacol. The lease will commence upon completion of construction which is expected to be in the first half of 2021.
Austrans, an existing tenant at 38 Peterkin Street, Acacia Ridge, has committed to a new seven year lease for approximately
half of Stage 1 of Acacia Ridge to be built at 69 Peterkin Street.
The Queensland Department of Transport and Main Road has been a tenant in Cairns Corporate Tower since 2002 and has
committed to a new 10 year lease across 3,456m² representing 24% of Cairns Net Lettable Area.
Otherwise, there are no matters or circumstances that have arisen since the end of the financial year that have significantly
affected, or may significantly affect:
GARDA’s operations in future financial years;
the results of those operations in future years; or
the state of affairs of GARDA in future years.
Page 68
GARDA Property Group
Annual Financial Report
30 June 2020
DIRECTORS’ DECLARATION
In the opinion of the Directors of GARDA Property Group:
(a)
the attached financial statements and notes are in accordance with the Corporations Act 2001, including:
(i)
complying with Australian Accounting Standards (including the Australian Accounting Interpretations),
the Corporations Regulations 2001; and
giving a true and fair view of GARDA Property Group’s financial position as at 30 June 2020 and of its
performance for the financial year ended on that date, and
(ii)
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in note 1;
(c)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable, and
The Directors have been given the declarations by the Chief Executive Officer and Chief Operating Officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors
Matthew Madsen
Executive Chairman
20 August 2020
Page 69
GARDA Property Group
Annual Financial Report
30 June 2020
INDEPENDENT AUDITOR'S REPORT
Page 70
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30 June 2020
Page 71
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Annual Financial Report
30 June 2020
Page 72
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30 June 2020
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30 June 2020
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GARDA Property Group
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30 June 2020
CORPORATE GOVERNANCE STATEMENT
Year Ended 30 June 2020
The Board and management of GARDA Property Group consider it is crucial for the long term performance and sustainability
of the Group, and to protect and enhance the interests of its securityholders and other stakeholders, that it adopts an
appropriate corporate governance framework pursuant to which it will conduct its operations with integrity, accountability and
in a transparent and open manner.
GARDA Property Group regularly reviews its governance arrangements as well as developments in market practice,
expectations and regulation. The governance arrangements were reviewed and updated twice in the reporting period - in
August 2019, and again in November 2019 upon internalisation.
The Corporate Governance Statement has been approved by the Boards of Garda Holdings Limited and GARDA Capital
Limited (as responsible entity) , and explain how the GARDA Property Group addresses the requirements of the Corporations
Act 2001, the ASX Listing Rules and the ASX Corporate Governance Council’s ‘Corporate Governance Principles and
Recommendations - 3rd Edition’ (the ‘ASX Principles and Recommendations’). It is current as at 30 June 2020.
The GARDA Property Group’s ASX Appendix 4G, which is a checklist cross-referencing the ASX Principles and
Recommendations to the relevant disclosures in this statement, the 2020 Annual Report of the GARDA Property Group and
other relevance governance documents and materials on the GARDA Property Group’s website (together the ‘ASX Appendix
4G’), is provided in the corporate governance section of our website at:
https://gardaproperty.com.au/who-we-are/corporate-governance/
The Corporate Governance Statement together with the ASX Appendix 4G and this Annual Report, were lodged with the ASX
on the same date.
The Board strives to meet the highest standards of corporate governance but recognises that it is also crucial that the
governance framework of the GARDA Property Group reflects the current size, operations and industry in which GDF and its
related entities operate.
GARDA Property Group has complied with the majority of recommendations of the ASX Principles and Recommendations.
The Board believes the areas of non-conformance, which are explained in the Corporate Governance Statement and the ASX
Appendix 4G, will not materially impact the ability of the Group to achieve the highest standards of corporate governance nor
its ability to meet the expectations of its securityholders and other stakeholders.
Page 76
GARDA Property Group
Annual Financial Report
30 June 2020
SECURITYHOLDER INFORMATION
The securityholder information set out below was applicable as at 18 August 2020.
Distribution of Equity Securities
Range
1 to 1,000
1,001 to 5,000
10,001 to 100,000
100,001 and Over
5,001 to 10,000
Total
Securities
No. of holders
128,684
3,348,290
50,009,498
169,064,818
5,093,071
227,644,361
229
1,173
1,599
167
679
3,847
%
0.06
1.47
21.97
74.27
2.24
100.00
The number of securityholdings held in less than marketable parcels of 500 is 0.
Equity Securityholders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
HGT INVESTMENTS PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
LONGHURST MANAGEMENT SERVICES PTY LTD
THE TRUST COMPANY (AUSTRALIA) LIMITED
MADSEN NOMINEES PTY LTD
MADSEN NOMINEES PTY LTD
MR PETER ZINN
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
GLENELG-PARK NOMINEES PTY LTD
EXTRA LARGE PTY LTD
MR PETER JOHN ZINN
ASIA UNION INVESTMENTS PTY LIMITED
CITICORP NOMINEES PTY LIMITED
JJG EQUITIES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
PINE FACTORY SF PTY LTD
ARDNAW PTY LTD
MR RICHARD EATON-WELLS & MS FRANCES CATHERINE ECONOMIDIS
PERRINS RAP PTY LTD
NATIONAL NOMINEES LIMITED
Number
Held
35,893,918
13,499,263
11,742,833
9,233,693
7,354,958
5,960,000
4,989,674
4,002,838
3,860,415
3,052,074
3,000,000
3,000,000
2,668,526
2,594,378
2,122,099
2,100,152
2,053,525
2,015,438
1,889,592
1,867,672
Percentage of
issued securities
(%)
15.77
5.93
5.16
4.06
3.23
2.62
2.19
1.76
1.70
1.34
1.32
1.32
1.17
1.14
0.93
0.92
0.90
0.89
0.83
0.82
122,901,048
53.99
Page 77
GARDA Property Group
Annual Financial Report
30 June 2020
Substantial Holders
The names of the substantial securityholders listed in the holding register are:
Name
HGT INVESTMENTS PTY LTD
MADSEN NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
LONGHURST MANAGEMENT SERVICES PTY LTD
Number
Held
35,893,918
14,068,755
13,499,263
11,742,833
75,204,769
Percentage of
issued securities
(%)
15.77
6.18
5.93
5.16
33.04
Voting Rights
Each securityholder confers the right to vote at meeting of Securityholders, subject to any voting restrictions imposed on a
Securityholder under the Corporations Act and the ASX Listing Rules.
On a show of hands, each Securityholder has one vote. On a poll, each Securityholder has one vote for each dollar value of
securities held. The Group will follow the ASX recommendation that all significant resolutions will be conducted by poll.
Page 78
GARDA Property Group
Annual Financial Report
30 June 2020
CORPORATE DIRECTORY
DIRECTORS
Matthew Madsen
Executive Chairman and Managing Director
Paul Leitch
Independent Director
Morgan Parker
Independent Director
Philip Lee
Non-executive Director
Andrew Thornton
Non-executive Director
Mark Hallett
Executive Director
COMPANY SECRETARY
Lachlan Davidson
General Counsel and Company Secretary
REGISTERED OFFICE
Level 21, 12 Creek Street
Brisbane QLD 4000
Ph: +61 7 3002 5300
Fax: +61 7 3002 5311
Web: www.gardaproperty.com.au
AUDITOR
Pitcher Partners
Level 38, 345 Queen St
Brisbane QLD 4000
Ph: +61 7 3222 8444
SHARE REGISTRY
Link Market Services
Level 12, 680 George Street
Sydney NSW 2000
Ph: +61 1300 554 474
F: +61 2 9287 0303
STOCK EXCHANGE LISTING
GARDA Property Group is listed as a stapled
security on the Australian Securities Exchange
Limited (ASX: GDF)
Page 79
gardaproperty.com.au