ASX RELEASE 24 October 2022 ANNUAL REPORT 2022 HMC Capital (ASX: HMC) provides the attached Annual Report 2022. It is being dispatched today to those shareholders who have elected to receive a hard copy. This announcement is authorised for release by the Board. Will McMicking Group Chief Financial Officer +61 451 634 991 william.mcmicking@hmccapital.com.au INVESTORS Misha Mohl Group Head of Strategy & IR +61 422 371 575 misha.mohl@hmccapital.com.au MEDIA ENQUIRIES John Frey Corporate Communications Counsel +61 411 361 361 john@brightoncomms.com.au About HMC Capital HMC Capital is an ASX-listed diversified alternative asset manager which invests in high conviction and scalable real asset strategies on behalf of individuals, large institutions, and super funds. HMC Capital is the manager of HomeCo Daily Needs REIT (ASX: HDN), HealthCo Healthcare and Wellness REIT (ASX: HCW) and HMC Capital Partners Fund I with external AUM of $5.8 billion. In August 2022, HMC established HMC Capital Partners Fund I, an open-ended unlisted fund providing exposure to a high-conviction investment strategy seeking to generate superior risk-adjusted returns. HMC Capital Partners Fund I targets public and private companies in Australia and New Zealand with real asset backing where there is potential to unlock ‘trapped’ value through improved capital allocation and portfolio management. Home Consortium Limited (ACN 138 990 593) (trading as HMC Capital) P. 1300 466 326 E. info@hmccapital.com.au Level 7, 1 Macquarie Place, Sydney NSW 2000 www.hmccapital.com.au Home Consortium Limited ACN 138 990 593 2022 Annual Report For the year ended 30 June 2022 2 4 8 12 45 46 52 104 105 110 113 Table of Contents FY22 Highlights HMC Capital Track Record Chair and Chief Executive Officer’s Letter Directors’ Report Auditor’s Independence Declaration Financial Report Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report Security Holder Information Corporate Directory HMC Capital ABN 94 138 990 593 Our ambition is to be Australia’s leading diversified alternative asset manager 1 HMC Capital | Annual Report 2022 FY22 Highlights “HMC is committed to sustainable practices that drive long term value creation and achieve a positive impact on our communities” FINANCIAL 31.0cps / $91.0m FY22 PRE-TAX FFO +126% increase on FY21 pre-tax FFO per share 12.0cps FY22 DPS (100% FRANKED) Payout ratio of 39% supports strong growth outlook and high ROE opportunities Net Cash STRONG BALANCE SHEET Divested 2 remaining LFR assets on balance sheet at 38% premium to book value FUNDS MANAGEMENT $5.8bn EXTERNAL AUM1 +321% growth vs Jun 21 $4.6bn FY22 GROSS TRANSACTIONS2 Record year of deployment highlighted by the acquisition of Aventus HMC Capital Partners Fund I ~$300m First Close First investment in Sigma Healthcare up ~22%3 Established unlisted fund capability ASX:HDN HOMECO DAILY NEEDS REIT 249% AUM growth1 30% FFO/unit growth vs FY21 ASX200 company $64.1m FUNDS MANAGEMENT REVENUES +490% YoY growth demonstrates ability to scale platform and generate meaningful fee income ASX:HCW HEALTHCO HEALTHCARE & WELLNESS REIT $650m IPO in Sep 21 Largest REIT IPO since 2014 Notes: 1. As at 30 Jun 22 for HDN and HCW. External AUM pro forma for HMC Capital Partners Fund I establishment post-balance date in Aug 22. 2. 3. As at 22 Aug 22. Includes acquisitions and disposals by the HMC Group settled in FY22. 2 FY22 Strategic Outcomes Our results demonstrate platform scalability and investment discipline OUR AMBITION IS TO BE AUSTRALIA’S LEADING DIVERSIFIED ALTERNATIVE ASSET MANAGER EXPAND & DIVERSIFY SOURCES OF CAPITAL GROW AND RETAIN ELITE TEAM SCALE EXISTING PLATFORM Successfully listed HCW in Sep 21 ($650m IPO) Expanding investment & distribution capability with key strategic hires in FY22 Established HMC Capital Partners unlisted fund in Aug 22 – now available on 3 platforms Victoria Hardie & Gavin Mullett – HMC-CP Building in-house distribution capability across retail, HNW and institutional wholesale channels Nick Harris – Institutional/ capital partnerships Two new real estate capital partnership opportunities announced today Chris Boyd – Retail distribution Vaughan Anderson – Risk management $5.8bn1 of external AUM growth underpinned by $4.6bn2 of gross transactions in FY22 Expanded value accretive development pipeline to >$1bn in listed funds Disciplined approach to corporate M&A opportunities and acquisitions for managed REITs Well positioned to maintain growth trajectory and grow AUM beyond $10bn by 2024 Notes: 1. As at 30-Jun-22 pro forma for HMC Capital Partners Fund I establishment post-balance date in Aug 22. 2. Includes acquisitions and disposals by the HMC Group settled in FY22. 3 HMC Capital | Annual Report 2022 HMC Capital Track Record Execution capability has accelerated evolution to a capital light alternative asset manager Acquisition of former Masters Home Improvement property portfolio Commenced process of redeveloping 500,000sqm of GLA Home Consortium (ASX: HMC) listed on the ASX at $3.35 with $925m investment portfolio HDN listed on the ASX via in-specie distribution and $300m IPO HDN listed with $844m of assets 2016 2017-2019 Oct 19 Jul 20 Nov 20 Dec 20 HMC establishes in-house asset management and development capability organically Home Consortium Daily Needs REIT HMC announces $140m institutional placement and $128m of acquisitions to seed the establishment of the HomeCo Daily Needs REIT (ASX: HDN) HMC announces $125m institutional placement and $131m of strategic acquisitions to seed establishment of new Healthcare REIT Notes: 1. 2. Includes settled and contracted acquisitions and disposals by the HMC Group. Includes equity capital raisings only. 4 HMC added to S&P/ASX 300 index HDN acquires $322m of acquisitions and announces $265m entitlement offer HMC and HDN announce proposed acquisition of Aventus Group for $2.3bn to create Australia’s leading Daily Needs REIT HDN added to S&P/ASX 200 index Apr 21 Sep 21 Oct 21 Mar 22 Apr 22 Aug 22 HealthCo (ASX: HCW) listed on the ASX following $650m IPO HDN acquires $222m of assets partially funded by $88m institutional placement HMC added to S&P/ASX 200 index HMC announces rebranding and change of name to HMC Capital HMC Capital Partners Fund 1 launched and seeded with ~14% strategic stake in Sigma Healthcare (ASX: SIG) 5 HMC Capital | Annual Report 2022 HMC Capital Funds Management Platform Today Scalable growth platforms underpinned by permanent capital sources and powerful megatrends Established Sector focus Capital Fund term Daily Needs REIT Partners Fund 1 Nov 20 Sep-21 Aug-22 Daily needs retail property Healthcare & wellness property High conviction strategic stakes & private equity ASX listed ASX listed Unlisted Open-ended Open-ended Open-ended HMC co-investment (%) 14.1% 20.9% $150m commitment4 Gross asset value ($bn)1 $4.9bn $0.7bn ~$0.3bn FY22 AUM growth (%)2 Gearing (%)3 249% 30.6% 16% Net cash Available liquidity ($m)3 $380m $413m nm nm nm Over time HMC Capital will seek a relatively balanced split of external AUM across its target alternative asset classes Notes: 1. As at 30-Jun-22 pro forma for HMC Capital Partners Fund I establishment post-balance date in Aug-22. 2. AUM growth since IPO in Sep-21 for HCW. 3. As at 30 Jun-22 pro forma for announced disposals. 4. Subject to the qualifications set out in the Fund information memorandum dated July 2022. 6 Growth Strategy Well positioned to maintain growth trajectory and grow AUM beyond $10bn by 2024 Listed REITs l ASX-listed REITs providing high quality and growing income streams via exposure to attractive megatrends Daily Needs REIT l Strong commitment to market leading governance and manager alignment to support long-term cost of capital l Strong balance sheets and liquidity to capitalise on >$1bn value enhancing development pipeline across both REITs l Disciplined approach to acquisitions to capitalise on large addressable markets and fragmented ownership l Today announcing two new unlisted institutional funds/capital partnerships Unlisted Real Estate New fund opportunities — ~$1bn last mile logistics value-add fund targeting undervalued assets with repositioning upside — Capital partnering opportunity for HMC’s interest in the Camden healthcare precinct1 $8bn+ AUM target by 2024 HMC Capital Partners Partners Fund 1 l Unlisted fund targeting high conviction strategic stakes and private equity investments l Situational capital targeting asset rich companies with trapped value where we can influence positive change l Targeting to grow total funds raised to over $500m over the next 6 months and $1.5bn over time with ability to leverage investments and co-invest with institutional wholesale capital l Engaged domestic and offshore placement agents to support institutional capital partnering strategy $1.5bn+ AUM target by 2024 Corporate activity l M&A opportunities which provide new scalable platforms in target alternative sectors l Capital partnerships for value-add opportunities including large-scale take private transactions $10bn+ AUM We are currently tracking 6-12 months ahead of our previously stated AUM growth target of $10bn by the end of 2024 Notes: 1. Stages 2 & 3. 7 HMC Capital | Annual Report 2022 Chair and Chief Executive Officer’s Letter Our strategy and ambition to create Australia’s leading ASX-listed diversified alternative asset manager is now well underway following a period of transformational growth in FY22. We delivered 143% growth in FFO and 321% growth in external AUM which was underpinned by $4.6bn1 of gross transactions. As a manager we also demonstrated strong discipline and alignment through our proactive response to the rising interest rate environment and market volatility in the second half of the financial year. We strengthened the capital position of our real estate funds through opportunistic asset sales which took advantage of the disconnect between property and global capital markets. HomeCo Daily Needs REIT completed its transformational merger with Aventus in March 2022. The $2.3bn merger represented a step change for the HMC Capital Group and cemented HDN’s position as Australia’s leading Daily Needs REIT. The integration of management platforms, systems and teams has been successfully completed with strong operational momentum maintained and increased focus on unlocking the combined portfolio’s $500m+ development pipeline. The successful listing of our HealthCo Healthcare and Wellness REIT in September 2021 marked the largest real estate IPO since 2014 and demonstrated the significant investor demand for a diversified healthcare REIT in Australia. HCW exceeded its FY22 PDS FFO per unit forecast and is well capitalised for growth with no debt and significant liquidity to take advantage of attractive investment opportunities including its $500m+ development pipeline. We also invested in our funds management platform and capability with a number of strategic hires which have expanded our in-house investment and distribution teams. In August 2022, we established our third investment vehicle – HMC Capital Partners Fund I – and our first unlisted product after successfully raising ~$300m in challenging market conditions. FY22 HIGHLIGHTS Financial highlights l FY22 pre-tax FFO of $91.0m, up 143% on FY21 l FY22 pre-tax FFO per share of 31.0 cents, up 126% on FY21 l Funds management revenues of $64.1m versus $10.9m in FY21 (+490%) l Net cash balance sheet following successful sell-down of remaining direct property2 l Undrawn debt facilities and cash of $332.6m to support growth strategy3 Operational highlights l External assets under management (AUM) of $5.8bn, up 321% on FY211 l $4.6bn of gross transactions in FY224 highlighted by the $2.3bn acquisition of Aventus in Mar 22 and IPO of HealthCo Healthcare & Wellness REIT in Sep 21 l Successfully launched HMC Capital Partners Fund I in Aug 22 with ~$300m first close fund raising l First investment for HMC Capital Partners Fund I in Sigma Healthcare (ASX: SIG) 1. As at 30 Jun 22 pro forma for HMC Capital Partners Fund I establishment post-balance date in Aug 22. 2. Excluding HMC Capital’s direct interest in the Camden healthcare development. Including up to $150m sponsor commitment to HMC Capital Partners Fund I. 3. Includes acquisitions and disposals by the HMC Group settled in FY22. 4. 8 FUNDS MANAGEMENT UPDATE Listed REITs Daily Needs REIT HomeCo Daily Needs REIT HealthCo Healthcare and Wellness REIT Strong FY22 results l Successful merger integration with Aventis l Delivered FY22 FFO of 8,85cpu, up 30% on FY21 l Strong operational intensity driving portfolio performance — >99% rent collection — >99% occupancy — +5.7% leasing spreads l Exceeded upgraded FY22 FFO guidance and delivered FY22 DPU in line with PDS forecast l Strong operational intensity driving portfolio performance — 100% rent collection — >99% occupancy Proactive capital management l Disciplined approach to acquisitions in l Disciplined approach to acquisitions in competitive environment competitive environment l Fortified balance sheet with the sale of Sunshine l Fortified balance sheet with pro forma Coast Home for $140m representing a 6% premium, to Dec 21 book value l Decreased gearing to 30.6% and increased hedging to 73.5% — Dry powder of ~$500m Jun 22 net cash position — Dry powder of ~$413m l Sale of St Mary’s for 71% premium to Dec 21 book value l Announced on-market unit buy-back Compelling growth outlook and megatrends l Progressing $0.5bn development pipeline l Progressing $0.5bn development pipeline l More compelling acquisition opportunities l Actively working with major healthcare starting to emerge l Shift to omnichannel retailing is increasing the strategic value of HDN’s last mile logistics real estate l Asset class is attracting greater interest from institutional capital which is driving down cap rates operators to establish strategic property partners l Exposed to favourable structural tailwinds supporting long-term demand for healthcare services and infrastructure l Significant institutional demand for healthcare real estate HMC Capital’s two managed REITs are well capitalised and positioned to take advantage of attractive opportunities HMC Capital Partners HMC Capital Partners Fund I will target undervalued asset rich companies where we can influence positive change. The fund will pursue a high conviction strategy targeting executable situations where we can help unlock ‘trapped value’. The fund recently made its first investment in Sigma Healthcare, a national pharmaceutical wholesaler, and has increased its strategic stake to 17%. 9 HMC Capital | Annual Report 2022 Chair and Chief Executive Oficerrs Leeer OUTLOOK HMC Capital is well positioned moving into FY23 with strong momentum and a more established and diversified platform. Our two REITs have strong balance sheets to take advantage of compelling investment opportunities including their value enhancing development pipelines. HMC Capital Partners expands our platform into new alternative sectors including private equity and gives us greater flexibility to deploy capital during times of market volatility and dislocation. Targeting the launch of two new unlisted real estate fund strategies targeting daily needs and healthcare sectors will further diversify our sources of capital and increase out exposure to these high conviction sectors. On behalf of the Board of Directors we would like to thank our securityholders for your ongoing support of HMC Capital. Chris Saxon Chair David Di Pilla Managing Director and Chief Executive Officer 10 Directors’ Report and Financial Statements — 30 June 2022 11 HMC Capital | Annual Report 2022 Directors’ Report The directors of Home Consortium Limited (referred to hereafter as the ‘Company’ or ‘parent entity’ or ‘HCL’) present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘group’, ‘HMC Capital’ or ‘HMC’) consisting of HCL and the entities it controlled at the end of, or during, the year ended 30 June 2022. The comparative period results are for the stapled group comprising of Home Consortium Limited (ACN 138 990 593) and Home Consortium Developments Pty Limited (ACN 635 859 700) (formerly Home Consortium Developments Limited (‘HCDL’). As detailed in note 2 of the notes to the financial statements, the shares of HCL and HCDL were destapled on 24 December 2021. As a result, the current year results are for the stapled group until 24 December 2021 and for the destapled group from 25 December 2021 to 30 June 2022. Directors The following persons were directors of HCL during the whole of the financial year and up to the date of this report, unless otherwise stated: Chris Saxon David Di Pilla Zac Fried Greg Hayes Jane McAloon Brendon Gale Kelly O’Dwyer Independent Non-Executive Chair Managing Director and Chief Executive Officer Non-Executive Director Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Principal activities The principal activities of the Group during the year was funds management via the ownership and management of real asset focused funds. Dividends Dividends paid during the financial year were as follows: Final dividend to shareholders registered on 3 September 2021 of 6.0 cents (2020: 7.5 cents) per ordinary security Interim dividend for the year ended 30 June 2022 of 6.0 cents (2021: 6.0 cents) per ordinary security Consolidated 30 June 2022 $’000 30 June 2021 $’000 17,416 17,416 19,292 17,407 34,832 36,699 On 23 August 2022, the directors determined to pay a fully franked dividend of 6.0 cents per ordinary share. The dividends will be paid on 7 October 2022 to eligible shareholders on the register on 2 September 2022. 12 Significant changes in the state of affairs During the year, the Group completed or announced a number of strategic transactions to progress its funds management initiatives. Such transactions included the following: HealthCo Healthcare and Wellness REIT (HCW) l Establishment of the HealthCo Healthcare and Wellness REIT (HCW), a real estate investment trust with a mandate to invest in hospitals, aged care, childcare, government, life sciences and research and primary care and wellness property assets, as well as other healthcare and wellness property adjacencies. l HCW raised $650.0 million in equity and was listed on the ASX on 6 September 2021 with part of the proceeds being used to acquire all of HMC Capital’s existing healthcare and wellness property portfolio for $480.5 million. l HCW is externally managed by HMC Capital via its subsidiary HCW Funds Management Limited (ACN 104 438 100) (AFSL 239882) which is also the responsible entity of HCW. l The Group has retained a direct investment in HCW of 20.9% as at 30 June 2022. Aventus Group transaction l On 18 October 2021, HCL and HomeCo Daily Needs REIT (HDN) announced that HMC Capital and HDN had entered into a binding Scheme Implementation Deed (‘SID’) with Aventus Group (AVN) to acquire all AVN securities comprising units in Aventus Retail Property Fund and shares in Aventus Holdings Limited via schemes of arrangement subject to certain conditions. l The Schemes were approved by the Supreme Court of New South Wales on 22 February 2022 with the implementation date of 4 March 2022. Refer to note 37 for details of assets and liabilities acquired by the Group and settlement of consideration. The purchase consideration was partly settled via the issuance of 9,351,451 shares in HCL. l Aventus Group managed a large format retail portfolio comprising of 19 properties with a fair value of $2.5 billion as at 31 December 2021 which was transferred to HDN as part of the merger. HMC Funds Management Limited, a subsidiary of the Group, has continued, and will continue its role as the responsible entity and trustee of the merged HDN group. l The group received an acquisition fee of $22.3 million on completion of the transaction which was received as scrip in HDN. The group owns approximately 14.1% of the merged HDN group following the completion of the transaction which includes the acquisition fee units. Capital recycling In addition to the establishment of HCW and the HDN asset sales announced in April 2021 that completed on 1 July 2021, the Group completed $217.8 million of asset disposals during the financial year. This included the sale of 4 large format retail assets at Coffs Harbour, Lismore, North Lakes and Gregory Hills as well as a parcel of vacant land at Richlands to HDN. In addition, the sale of large format retail assets at Wagga Wagga, Knoxfield and Roxburgh Park were completed during the period. The group has now disposed of all investment properties and no longer holds a direct property portfolio. Destapling of HCL and HCDL shares In November 2021, HMC Capital proposed a simplification of the structure of the Group from a stapled company structure to a single company structure. The proposal was approved by shareholder vote and the shares of HCL and HCDL were destapled on 24 December 2021. HMC Capital Partners Fund I In June 2022, HMC Capital lodged an initial substantial holder notice in Sigma Healthcare Limited (ASX: SIG) disclosing a relevant and economic interest of 11.1% which has subsequently increased to 13.9%. The investment is being acquired as a seed asset for the HMC Capital Partners Fund I (refer to matters subsequent to the end of the financial year for additional disclosure). There were no other significant changes in the state of affairs of the Group during the financial year. 13 HMC Capital | Annual Report 2022 Directorsr Report Review of operations and financial performance A summary of the financial performance of the Group for the financial year ended 30 June 2022 is outlined below. Total revenue including share of profit/loss of associates Net profit/(loss) for the year Funds from operations (‘FFO’) Weighted average securities on issue (million) FFO per security (cents) Consolidated 30 June 2022 $’000 30 June 2021 $’000 150,094 78,832 107,262 (85,904) 89,013 293.3 30.3 35,785 273.2 13.1 The group recorded total revenue (including share of profit/loss of associates) of $150.1 million (30 June 2021: $78.8 million) and a statutory profit after tax for the current financial year of $107.3 million compared to a loss of $85.9 million for the financial year ended 30 June 2021. The statutory profit is primarily attributable to share of associate profit from investments in HDN and HCW of $71.1 million and gain on sale of investment property of $28.0 million. FFO was $89.0 million for the current financial year compared to FFO of $35.8 million for the financial year ended 30 June 2021. FFO is a financial measure which is not prescribed by Australian Accounting Standards and represents the Group’s underlying and recurring earnings from its operations and is determined by adjusting the statutory net profit after tax for items that are non-cash, unrealised or capital in nature. The directors consider FFO to represent the core earnings of the Group. Funds from operations The table below provides a reconciliation between the net profit/(loss) after tax for the year and FFO: Statutory profit/(loss) after tax Profit before tax on discontinued operations Deferred income tax expense Depreciation expenses Net fair value movements Acquisition and transaction costs Impairment expenses Amortisation of borrowing costs Straight-lining of rental income Share of associate profit to FFO Gain on investment in associates Loss on demerger Other adjustments FFO 14 Consolidated 30 June 2022 $’000 30 June 2021 $’000 107,262 (85,904) — 12,105 520 (725) 11,376 21,339 1,788 563 (48,316) (16,900) — — 89,013 (9,883) 87,680 — 21,954 1,945 — 2,976 3,503 (2,846) — 15,446 914 35,785 Summary of financial position A summary of the Group’s financial position as at 30 June 2022 is outlined below: Assets Investment properties Total assets Net assets Net tangible assets* Adjusted net tangible assets ** Number of securities on issue (million) Net tangible assets ($ per security)* Adjusted net tangible assets ($ per security)** Capital management Debt facility limit Drawn debt Cash and undrawn debt Gearing ratio (%) Hedged debt (%) Cost of debt (% p.a.) Consolidated 30 June 2022 $’000 30 June 2021 $’000 — 188,100 912,950 982,412 846,002 710,979 659,228 710,979 691,327 691,344 299.6 2.20 2.31 290.1 2.45 2.38 275,000 315,000 — 254,750 332,555 71,944 — — nm 25.6% 68.7% 2.5% * Net tangible assets include deferred tax assets and liabilities, right-of-use assets and lease liabilities. ** Adjusted net tangible assets exclude the following: right-of-use assets, lease liabilities, provisions and deferred tax assets and liabilities. Financing On 29 July 2021, the Group completed an upsize and extension of its existing three-year senior secured syndicated debt facility to a $375.0 million senior secured syndicated debt facility expiring in November 2023 which was used to provide and guarantee acquisition financing for the establishment of HCW. Following the establishment of HCW, the drawn debt facilities were repaid. There were no outstanding borrowings as at 30 June 2022 and the Group reduced its facility limit to $275.0 million in December 2021. Property portfolio As at 30 June 2022, the Group no longer holds a direct property portfolio (30 June 2021: $188.1 million). The reduction in freehold investment properties was driven by the disposal of assets for $217.8 million, with capital additions and straight lining during the period of $10.9 million and fair value adjustments of $18.8 million. 15 HMC Capital | Annual Report 2022 Directorsr Report Matters subsequent to the end of the financial year HMC Capital Partners Fund I On 4 July 2022, HMC Capital’s wholly owned subsidiary HMC Investment Management Pty Limited (Manager) launched HMC Capital Partners Fund I (the Fund), an Australian domiciled unlisted wholesale fund providing exposure to a high- conviction investment strategies. The Fund will target public and private companies in Australia and New Zealand with real assets. HMC Capital has committed to investing $150.0 million of equity into the Fund subject to the qualifications set out in the Fund information memorandum dated July 2022. As part of an early commitment incentive program, initial investors into the Fund will receive rebated management fees and be eligible to subscribe for options in HMC Capital, subject to receiving (and making a valid application order) a prospectus in respect of such options and compliance with relevant law. The options are proposed to be issued following approval at HMC Capital’s next AGM which is expected to be held in November 2022. Following HMC Capital lodging an initial substantial holder notice in Sigma Healthcare Limited (ASX: SIG) in June 2022, HMC Capital increased its combined relevant and economic interest to 13.9%. The investment is being acquired as a seed asset for the Fund. No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years. Likely developments and expected results of operations HMC Capital objectives The group’s objective is to provide securityholders with above average risk-adjusted returns via its funds management strategy. The group intends to achieve this objective by investing in high conviction and scalable real asset strategies on behalf of securityholders and HMC Capital managed funds (third party capital). The group will undertake these activities whilst maintaining an appropriate capital structure and approach to sustainability. Risk considerations Financial risks The group’s performance is linked to the performance of its funds under management and property assets held by those funds, which derive their income through leasing arrangements with tenants. The group has sought to protect this property income by having a diversified group of national tenants that operate sustainable business models, maintaining high occupancy rates and setting sustainable rents with its tenants. The key economic risk for the Group’s managed property assets relates to interest rate movements and the impact of this on property capitalisation rates and the cost of debt funding. The group seeks to mitigate this risk by investing in quality properties through the managed funds, maintaining an appropriate capital structure with a target gearing ratio of 30% — 40% within managed funds and having adequate interest rate hedging in place. Sustainability and climate-related and environmental risks Sustainability is a key element of HMC Capital’s business approach, driven by the belief that sustainable investments are aligned to long-term value creation and should not be dilutive to returns. HMC Capital has established a sustainability subcommittee of the HMC Capital Board that governs the Group’s sustainability strategy and initiatives across its managed funds. The group became a signatory to the UNPRI and a GRESB participating member in February 2021. These two organisations will provide an investment and reporting framework to help shape the Group’s future strategies and risk framework. The geographic diversity of the Group’s managed property portfolio limits the exposure to physical climate events to localised occurrences. The group also undertakes detailed due diligence on property acquisitions to assess environmental risks including contamination as well as any potential exposure to climate-related events. 16 Environmental regulation The directors are satisfied that adequate systems are in place to manage the Group’s environmental responsibility and compliance with regulations. The directors are not aware of any material breaches of environmental regulations and, to the best of their knowledge and belief, all activities have been undertaken in compliance with environmental requirements. Information on directors Name: Title: Chris Saxon Independent Non-Executive Chair Experience and expertise: Chris is a leading Australian lawyer and was, until 2019, a partner with Baker McKenzie. Chris’s practice included large-scale mergers and acquisition (‘M&A’) transactions across a range of sectors, notably energy (gas, electricity, renewable), industrials, infrastructure and mining. He has consistently been ranked as one of Australia’s foremost project and M&A lawyers and has been lead adviser on government restructuring transactions and privatisations, major trade sales and infrastructure projects. Chris served as Chair of Baker McKenzie Australia for five years (2012-2017) and has held numerous leadership roles within the firm. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Chair of the Remuneration and Nomination Committee Interests in shares: 226,863 ordinary shares Interests in rights: 24,083 share rights over ordinary shares Name: Title: David Di Pilla Managing Director and Chief Executive Officer Experience and expertise: David led the team that founded and established HMC Capital in 2016. David is the founder, a director and the major shareholder of the Aurrum Aged Care group. From 2014 to 2016, he was also a strategic advisor and director to operating subsidiaries of the Tenix Group of Companies. David has over 20 years of experience in investment banking. From 2004 to 2015, he was Managing Director and Senior Adviser at UBS Australia and during this time he advised some of Australia’s largest corporations on mergers and acquisitions, debt and equity capital market transactions. Other current directorships: Non-Executive Director of HomeCo Daily Needs REIT (ASX: HDN) — appointed on 18 September 2020 and Non-Executive Director of HealthCo Healthcare and Wellness REIT (ASX: HCW) appointed on 28 July 2021. Former directorships (last 3 years): None Interests in shares: 40,053,372 ordinary shares Interests in rights: 911,949 share rights over ordinary shares 17 HMC Capital | Annual Report 2022 Directorsr Report Name: Title: Zac Fried Non-Executive Director Experience and expertise: Zac worked closely with David Di Pilla and the team who founded and established the consortium to acquire the Group in 2016. Zac is the Executive Deputy Chairman of the Spotlight Group (‘SGH’). Established in 1973, SGH owns a number of major and iconic Australian retail brands: Spotlight, Anaconda, Mountain Designs and Harris Scarfe. SGH also controls one of Australia’s largest privately-owned property portfolios, Spotlight Property Group, and operates a significant family office engaged in extensive investment and philanthropic activities. With over 10,000 employees and 260 big box retail outlets across four countries with large greenfield redevelopment opportunities, SGH is one of Australia’s leading retail and property industry participants. Zac’s focus at SGH includes the oversight of SGH’s property development and leasing portfolio. He has almost 30 years of retail and property industry experience and a demonstrable track record of successful site identification, property value creation, and the fostering of many longstanding and close lessee relationships. Zac has played the central role at SGH in the development of many of Australia and New Zealand’s premier retail, office, and homemaker centres. In addition to his role at SGH, Zac is the President of the Large Format Retail Association (‘LFRA’). The LFRA is the preeminent industry association responsible for representing the Australian retail industry interests of operators, investors, property owners, developers and service providers that collectively generate approximately $80 billion or 25% of all retail sales in Australia. Other current directorships: None Former directorships (last 3 years): None Interests in shares: 26,126,717 ordinary shares Interests in rights: 13,156 share rights over ordinary shares Name: Title: Greg Hayes Non-Executive Director Experience and expertise: Greg is currently a Non-Executive Director of HomeCo Daily Needs REIT (ASX: HDN); Non- Executive Director of Ingenia Communities (ASX: INA) & Non-Executive Director of Aurrum Holdings Pty Ltd. Having worked across a range of industries including property, infrastructure, energy and logistics, Greg's skills and experience include strategy, finance, mergers and acquisitions and strategic risk management, in particular in listed companies with global operations. Greg was previously Chief Financial Officer and executive director of Brambles Limited, Chief Executive Officer and Group Managing Director of Tenix Pty Ltd, Chief Financial Officer and later interim Chief Executive Officer of the Australian Gaslight Company, Chief Financial Officer Australia and New Zealand of Westfield Holdings, Executive General Manager, Finance of Southcorp Limited. Greg has also held Non-Executive Director roles at Incitec Pivot Limited and The Star Entertainment Group Ltd. Greg has a Master of Applied Finance, a Graduate Diploma in Accounting, a Bachelor of Arts, completed an Advanced Management Programme (Harvard Business School, Massachusetts) and is a Member of Chartered Accountants Australia and New Zealand. Other current directorships: Non-Executive Director of Ingenia Communities (ASX: INA); Non-Executive Director of HomeCo Daily Needs REIT (ASX: HDN) — appointed on 16 October 2020. Former directorships (last 3 years): None Special responsibilities: Member of the Audit and Risk Committee Interests in shares: 10,978,088 ordinary shares Interests in rights: 14,473 share rights over ordinary shares 18 Name: Title: Jane McAloon Independent Non-Executive Director Experience and expertise: Other current directorships: Jane is Chair and Non-Executive Director of Energy Australia, United Malt Group, Newcrest Mining, Allianz Australia and is a member of the Advisory Board of Allens Linklaters. She is also Chairman of Monash University Foundation. Jane has worked in the natural resources, energy, infrastructure and utility industries for over 25 years. She was President Governance and Group Company Secretary at BHP Billiton for nine years during which she worked on key strategic issues, corporate transactions, as well as market, regulatory and reputational matters. Prior to this she was a senior executive at AGL Energy Limited. Jane worked in executive leadership roles with the NSW Government Cabinet Office and the Energy, Rail and Natural Resources Departments. She previously worked in private legal practice. Her previous appointments include Viva Energy, Port of Melbourne, Civil Aviation Safety Authority, Cogstate Limited, Healthscope Limited, Bravery Trust, Defence Reserves Services Council, Referendum Council on Constitutional Recognition for Aboriginal and Torres Strait Islander Peoples and the Australian War Memorial. Jane has a Bachelor of Economics (Hons) and Bachelor of Laws from Monash University, a Grad Dip Corporate Governance and was awarded a Monash University Fellowship in 2018. Non-Executive Director of Energy Australia — appointed 19 December 2012, United Malt Group — appointed 13 February 2020, Allianz Australia Ltd — appointed 1 July 2020, Newcrest Mining Limited — appointed 1 July 2021. Former directorships (last 3 years): Special responsibilities: Viva Energy Group Limited (ASX: VEA) — retired in August 2021, GrainCorp Limited (ASX: GNC) — 23 March 2020; Cogstate Limited (ASX: CGS) — 21 October 2019. Chair of the Audit and Risk Committee, member of the Remuneration and Nomination Committee and member of the Sustainability Committee Interests in shares: 200,888 ordinary shares Interests in rights: 16,109 share rights over ordinary shares Name: Title: Brendon Gale Independent Non-Executive Director Experience and expertise: Brendon is a leading Australian sporting administrator and is the current Chief Executive Officer and Executive Director of the Richmond Football Club, one of the largest and most diversified sports businesses in Australia. He is also an experienced company director, having previously served on the board of the Victorian Equal Opportunity and Human Rights Commission and is a current director of the Richmond Football Club Ltd and Aligned Leisure Pty Ltd. Brendon is experienced in leading high performing and profitable consumer businesses, operating in multi stakeholder environments, involving significant public investment. He has a proven track record in shaping positive corporate culture and setting the tone from the top through the alignment of purpose, values and strategy. Brendon holds a Master’s Degree in Arts and Bachelor of Laws from Monash University, has completed the Advanced Management Program at Harvard Business School and is a Graduate of the Australian Institute of Company Directors. Other current directorships: None Former directorships (last 3 years): Special responsibilities: None Chair of the Sustainability Committee and member of the Remuneration and Nomination Committee Interests in shares: 250,307 ordinary shares Interests in rights: 14,274 share rights over ordinary shares 19 HMC Capital | Annual Report 2022 Directorsr Report Name: Title: Kelly O'Dwyer Independent Non-Executive Director Experience and expertise: Kelly is a Non-Executive Director of Equity Trustees, HealthCo Healthcare and Wellness REIT and Barrenjoey Capital Partners Group Holdings Pty Ltd. Kelly previously served in the Australian Parliament as a Senior Cabinet Minister holding several key economic portfolios including Minister for Jobs and Industrial Relations; Minister for Revenue and Financial Services; Minister for Small Business; and Assistant Treasurer. She also served on the Cabinet’s Budget Committee (the Expenditure Review Committee) and held the portfolios of Minister for Women; as well as Minister Assisting the Prime Minister with the Public Service. Prior to entering Parliament, Kelly worked in law, government and finance and brings insights across a range of sectors including funds management, superannuation, workplace relations, foreign investment, law and banking. Kelly is a member of the School Council at Caulfield Grammar School and a member of the Hospice Rebuild Capital Fundraising Committee for Very Special Kids. Kelly holds a Bachelor of Laws (Hons) and Bachelor of Arts from The University of Melbourne. Other current directorships: Non-Executive Director of EQT Holdings Limited (ASX:EQT) and Non-Executive Director of HealthCo Healthcare and Wellness REIT (ASX: HCW) appointed on 1 August 2021. Kelly became a director of EQT Holdings Limited (ASX: EQT) in March 2021. Equity Trustees Limited (which is a subsidiary of EQT Holdings Limited) (ETL) is the custodian of assets of HomeCo Daily Needs REIT and the HealthCo Healthcare and Wellness REIT (both of which are managed by HMC Capital) under custody agreements for arm’s length market-based fees. Equity Trustees Wealth Limited (ETWL), another subsidiary of EQT, is also assisting HMC Capital on taking steps to advance the establishment of the HMC Capital Foundation for arm’s length market-based fees. With respect to both engagements, Kelly did not participate in the decision to appoint an Equity Trustees subsidiary. Former directorships (last 3 years): None Special responsibilities: Member of the Audit and Risk Committee and member of the Sustainability Committee. Interests in shares: 39,066 ordinary shares Interests in rights: 9,569 share rights over ordinary shares ‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. ‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 20 Company secretary Andrew Selim joined the Group in 2017 and is Group General Counsel and Company Secretary. He is responsible for all legal, compliance and governance activities of the Group. Andrew has over 20 years of local and international experience in real estate and corporate law. Before joining the Group, Andrew was Senior Legal Counsel and Company Secretary at GPT Group. Prior to that, he was a Senior Associate at Allens Linklaters. Andrew holds a Master of Laws, Bachelor of Laws (Honours) and Bachelor of Science (Advanced), all from the University of Sydney. He is a Member of the Governance Institute of Australia, a Member of the Association of Corporate Counsel Australia and is a Member of the Australian Institute of Company Directors. He previously sat on the Law Society of NSW In-House Corporate Lawyers Committee. Andrew has also been recognised in The Legal 500 GC Powerlist and Doyles as a leading in-house lawyer. Meetings of directors The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during the year ended 30 June 2022, and the number of meetings attended by each director were: Full Board Attended Full Board Held Remuneration and Nomination Committee Attended Remuneration and Nomination Committee Held Audit and Risk Committee Attended Audit and Risk Committee Held Sustain- ability Committee Attended Sustain- ability Committee Held Chris Saxon David Di Pilla* Zac Fried Greg Hayes Jane McAloon Brendon Gale Kelly O’Dwyer 13 13 13 13 13 13 13 13 13 13 13 13 13 13 4 4 — — 4 4 — 4 4 — — 4 4 — — 6 — 6 6 — 6 — 6 — 6 6 — 6 — 4 — — 4 4 4 — 4 — — 4 4 4 Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee. * David Di Pilla attended remuneration and nomination, audit and risk and sustainability committee meetings by invitation. Shares under option There were no shares issued on the exercise of options or unissued ordinary shares of HCL under option outstanding at the date of this report. Shares under share rights There were 2,559,167 unissued ordinary shares of HCL under performance rights at the date of this report. The rights are exercisable at $Nil exercise price. No person entitled to exercise the share rights had or has any right by virtue of the share right to participate in any share issue of HCL or of any other body corporate. 21 HMC Capital | Annual Report 2022 Directorsr Report Shares issued on the exercise of options There were no ordinary shares of HCL issued on the exercise of options during the year ended 30 June 2022 and up to the date of this report. Shares issued on the exercise of performance rights 145,072 ordinary shares of HCL were issued on the exercise of performance rights during the year ended 30 June 2022 and up to the date of this report. The performance rights were exercised at an exercise price of $Nil per share. Indemnity and insurance of officers The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Indemnity and insurance of auditor The company has not, during or since the end of the financial year, agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. Proceedings on behalf of HCL No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of HCL, or to intervene in any proceedings to which HCL is a party for the purpose of taking responsibility on behalf of HCL for all or part of those proceedings. 22 Remuneration report Letter from the Chair of the Remuneration and Nomination Committee Dear Shareholders, On behalf of the Board of Directors (the ‘Board’) and as Chair of the Remuneration and Nomination Committee, I am pleased to present HMC Capital’s remuneration report for the year ended 30 June 2022 (‘FY22’). Remuneration Philosophy and Framework The Group’s executive remuneration philosophy is to ensure that reward for performance is competitive and appropriate for the results delivered. The remuneration framework is built on rewarding exceptional effort where value is created for shareholders and includes benchmarked total remuneration comprising fixed remuneration (‘FR’) (base salary and superannuation), short-term incentive plan (‘STIP’) and long-term incentive plan (‘LTIP’). The Board strives to ensure that executive reward satisfies key criteria consistent with good reward governance practices, such as competitiveness and fairness, acceptability to shareholders, performance alignment of executive compensation, sustainable asset management as well as transparency and clarity. Overview of FY22 Performance The Board considers that the Group has performed strongly in FY22 to execute its funds management initiatives and each member of the management team has contributed significantly to this strategy. Funds under external management increased by $4.16 billion or 299% during FY22 from $1.39 billion as at 30 June 2021 to $5.55 billion as at 30 June 2022. This increase was driven by two major transactions being: l Establishment of the HealthCo Healthcare and Wellness REIT (‘HCW’), a healthcare focused real estate investment trust that raised $650.0 million in equity and listed on the ASX in September 2021. HCW is externally managed by HMC Capital; and l Acquisition of the Aventus property portfolio by HomeCo Daily Needs REIT (externally managed by HMC Capital). Aventus owns a national property portfolio of 19 properties which were valued at $2.5 billion as at 31 December 2021. The Group also delivered on its value accretive objectives with respect to financial performance and total shareholder returns with key highlights including: l FY22 FFO (pre-tax) of $91.0 million or 31.0 cents per share, representing a 126% increase vs. FY21 FFO (pre-tax) per share. This materially exceeded FY22 FFO (pre-tax) guidance of 18.5 cents per share provided in August 2021; and l 73% total shareholder return from inception (HMC Capital’s ASX listing in October 2019) to 30 June 2022, representing 80% outperformance versus the S&P/ASX 200 A-REIT index and 62% outperformance versus the S&P/ASX 200 index*. * TSR methodology based on 30-day closing start and end price. HMC start price based on ASX IPO share price of $3.35. FY22 Remuneration Outcomes During FY22 the Board again reviewed the remuneration structure of the Executive KMP to ensure remuneration continued to align and reflect the rapid increase in the size of the Company and the complexity of the Group’s business, including the increased emphasis on the development of the Group’s diversified alternative asset management business, HMC Capital Partners. Benchmarking continued to show that FR for some Executive KMP was positioned well below the median of the key comparator groups and their incentive opportunity was also positioned below the median of comparable organisations. To ensure key executives were retained, and that they were appropriately incentivised to continue to grow the Company, the following key remuneration changes were made during FY22. They continue to demonstrate the strong alignment between Group performance and executive remuneration outcomes. l The FR to the Managing Director and Chief Executive Officer (MD&CEO) increased by 37%, but his FR remains significantly below benchmarked comparator groups. l The FR to the Chief Operating Officer (COO) and Chief Financial Officer (CFO) increased by 14% and 13% respectively. l Both the CFO and COO have had their target STIP increased to 50% with an opportunity of 75% at stretch, and LTIP opportunity increased to 50%. 23 HMC Capital | Annual Report 2022 Directorsr Report l As in FY20 and FY21 the Managing Director and Chief Executive Officer did not participate in the STIP in FY22. l STIP outcomes for the other Executive KMP were assessed relative to delivery of the Group’s FFO per share and a number of individual KPIs which were determined to have been successfully met, resulting in STIP payments of 91% of target to the COO (61% of his maximum opportunity) and 91% of target to the CFO (61% of his maximum opportunity). This demonstrates the stretch nature of the STIP KPIs that apply to the COO and CFO. l No LTIP awards vested during FY22 as the first LTIP awards were made in post IPO of the Group in FY20 and have a three-year performance period. l The only change to Non-Executive Director fees was an increase to Committee Chair fees to reflect increased workload from $20,000 to $30,000 (except for the Remuneration & Nominations Committee where the Board Chair holds this role). Looking Forward to FY23 Each year the Board benchmarks the Executive KMP roles against comparator groups based on both market capitalisation and industry comparators. To reflect these findings, to better align with market, and to reflect the increased size and complexity of the business in terms of market capitalisation, FUM and expansion of the business into alternative asset management the Board has determined to make the following changes to Executive KMP for FY23: l An increase in the Fixed Remuneration (FR) of the Managing Director and Chief Executive Officer by 32%. This increase reflected that Mr Di Pilla’s fixed remuneration is significantly below the median of both comparator groups (despite an increase in FY22). The Board is determined to increase the MD&CEO’s fixed remuneration closer to the median of the market, given his critical role in the Company and the value he brings to the Group. There is no change to his STIP opportunity as it has been Mr Di Pilla’s practice to decline participation in the STIP. Mr Di Pilla’s LTIP opportunity in FY23 will remain unchanged as a percentage of FR; l The COO, Mr Sharma will receive a 9% increase in his fixed remuneration, and target STI and maximum LTI opportunities will increase from 50% to 60% of fixed remuneration. This change reflects Mr Sharma’s new role as Chief Executive Officer of the HomeCo Daily Needs REIT, from 1 July 2022, whose size significantly increased in March 2022 with the acquisition by HDN of 100% of the units of the Aventus Trust. l The CFO, Mr McMicking will receive an 11% increase in his fixed remuneration, and his target STI and maximum LTI opportunities will increase from 50% to 60% of fixed remuneration. The increase to fixed remuneration reflects the benchmarking undertaken by the Board which showed the CFO’s fixed remuneration and total target remuneration well below median of both market capitalisation and industry comparator groups. It also reflects the increased complexity of the Group, post-merger with Aventus and the development of HMC Capital Partners. l There will be no increase to any director board or committee fees for FY23. l The Board is reviewing the introduction for STI deferral for a portion of the FY23 STIP for Executive KMP. The final quantum and terms of the STI deferral will be set out in the FY23 Remuneration Report. l HMC Capital will introduce a new Mandatory Shareholding Policy for Non-Executive Directors, Executive KMP and selected senior management. Details of the new Policy will be set out in the FY23 Remuneration Report. Overall, the Board aims to ensure that the Group’s remuneration platform is market competitive, aligns performance measures with the achievement of the Group’s strategic objectives, reflects the growing complexity of the Group’s operations and is fair to all stakeholders. We will continue to review and assess the effectiveness of our remuneration framework in order to motivate and retain our Executive KMP and other senior executives. Chris Saxon Chair of the Board Chair of the Remuneration and Nomination Committee 23 August 2022 24 Remuneration report (audited) 1. Key Management Personnel The remuneration report details the key management personnel (‘KMP’) remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations. KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the HMC Capital Group, directly or indirectly, including all directors. The Managing Director and Chief Executive Officer (MD&CEO) and other senior executives considered KMP are collectively referred to as the Executive KMP of HMC Capital. All KMP were KMP for the full year unless noted otherwise. Non-Executive Directors Role Chris Saxon Zac Fried Chair and Non-Executive Director Non-Executive Director Brendon Gale Independent Non-Executive Director Greg Hayes Non-Executive Director Jane McAloon Independent Non-Executive Director Kelly O’Dwyer Independent Non-Executive Director Executive KMP Role David Di Pilla Sid Sharma Managing Director and Chief Executive Officer Chief Operating Officer Will McMicking Chief Financial Officer 25 HMC Capital | Annual Report 2022 Directorsr Report 2. Executive Remuneration Governance and Structure The following diagram illustrates HMC Capital’s remuneration governance: SHAREHOLDERS BOARD The Board reviews, challenges and approves the recommendations of the Remuneration and Nomination Committee around policy, performance, and remuneration arrangements for Non-Executive Directors and Executive KMP of the Group. REMUNERATION AND NOMINATION COMMITTEE EXTERNAL ADVISORS The Board and Committee may seek advice from independent experts and advisors if required. In FY22 no remuneration recommendation, as defined in the Corporations Act, relating to Executive KMP remuneration was received from external advisors. Members Three independent Non-Executive Directors who are all independent of management: l Chris Saxon (Committee Chair) l Jane McAloon l Brendan Gale Role To support and advise the Board in fulfilling its responsibilities to shareholders and employees of the Group by ensuring that: l Non-Executive Directors and Executive KMP of the Group are remunerated fairly, appropriately and transparently; l Remuneration policies and outcomes of the Group strike an appropriate balance between the interests of the Group’s shareholders and rewarding and motivating executives and employees in order to secure the long-term benefits from their energy, drive and loyalty; and l Short-and long-term incentives are linked to the achievement of key financial metrics, creation of sustainable shareholder returns and achievement of the Company’s sustainability objectives. 26 3. Executive Remuneration Principles and Structure The diagram below shows the principles used to determine the nature and amount of executive remuneration paid as well as how remuneration is structured to reward executives with a mix of both fixed (FR) and variable (STIP and LTIP) components. REMUNERATION PRINCIPLES Be strategically aligned Be market competitive Enhance shareholders’ interests: Enhance executives’ interests: l Focus on sustained growth in shareholder wealth, l Reward capability and experience. consisting of dividends and growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value including sustainability goals; and l Attract, reward and retain high calibre executives. l Reflect competitive reward for contribution to growth in shareholder wealth; and l Provide a clear structure for earning rewards. FIXED VARIABLE Fixed remuneration Short-term incentive Long-term incentive Base salary plus superannuation Annual cash payment opportunity Rights to shares DELIVERY METHOD REWARDS FOR Performance, skills, and capabilities Performance over a 12-month period against agreed key business objectives Growth in total shareholder return relative to key comparators and achieving forecast FFO over three-year performance period IS Fixed At risk At risk LINKED TO PERFORMANCE HOW MEASURED Market aligned (both by market capitalisation and industry comparator groups) base salary commensurate with role size and complexity Performance against key attributes of position Key performance metric combination of critical business measures and individual achievement of key performance indicators (‘KPIs’). FFO and behavioural gateways must be met before any STI is payable Performance against critical key business metric FFO per share targets and individual KPIs. Key performance conditions aligned with long-term business goals and shareholder value creation 50% – Relative TSR vs ASX300 A-REIT comparator group 50% – aggregate FFO1 per share vs 3 year target pool 1. FFO excludes leasehold FFO prior to the sale in FY21. 27 HMC Capital | Annual Report 2022 Directorsr Report Executive KMP have their remuneration benchmarked regularly by the Remuneration and Nomination Committee. In benchmarking these roles, the Committee typically uses benchmarks comprising several groups of comparable companies. In FY22 these included: l A Market Capitalisation comparator group — companies in the S&P/ASX 200 with comparable average market cap in the range of 50%-200% of HMC Capital’s market capitalisation; and l A selected industry specific comparator group comprising 11-12 ASX listed companies who are a mix of diversified financial and A-REIT companies. These are companies with whom HMC Capital competes for capital and people. It also now includes a number of companies with whom the Company competes in the area of alternative asset management. Each of the relevant Executive KMP’s total remuneration is made up of a mix of Fixed Remuneration and Variable Remuneration, as set out below. The remuneration structures for executives and Non-Executive Directors are structured and disclosed separately, in alignment with the fourth edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations. Remuneration Mix — FY22 Executive KMP total target remuneration is broken down into the following three remuneration elements. Table 1: Executive KMP remuneration mix for FY22 David Di Pilla 33% 0% Sid Sharma Will McMicking 50% 50% 25% 25% 67% 25% 25% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ¢ FR – Cash ¢ STI – Cash ¢ LTI - Equity 28 4. Executive Short-term Incentive Plan (‘STIP’) Term Rationale Eligibility Details The HMC Capital STIP is designed to attract, motivate and retain the Executive KMP and key employees who participate by providing an opportunity to be rewarded for outperformance based on performance against key critical business metrics over the FY22 financial year All Executive KMPs are eligible to participate in the STIP. The Board may also invite other selected employees to participate from time to time. Opportunity The MD&CEO has elected not to participate in the FY22 STIP (as in prior years). Other Executive KMP have a target opportunity of 50% and a maximum opportunity of 75% of their annual fixed remuneration (base salary + superannuation). Performance Period The performance period for the Plan is the 12 months ending 30 June 2022. Gateways Unless the below Gateways are met, no STI is payable for Executive KMP: 1. HMC Group FFO Gateway FY22 FFO per share of 18.5 cents (pre-tax) 2. HDN & HCW Fund FFO Gateways HDN FY22 FFO per unit of 8.3 cents HCW FY22 FFO per unit of 4.32 cents 3. Behavioural gateway Every STIP eligible employee must demonstrate they have met and continue to comply with HMC Group values as set out in the Code of Conduct. Performance conditions The FY22 STIP is subject to the following performance conditions tested over the performance period: l the Group’s FFO per share guidance; and l individual KPIs agreed with each member of the KMP. KPIs vary according to the areas of responsibility for each STIP participant. In determining STIP performance the Board will consider performance against the HMC Capital Sustainability Commitments. Failure to achieve appropriate progress will result in the dial-down of STI outcomes for some or all employees. Vehicle STIP awards are typically delivered in cash unless the Board determines otherwise. Discretion The Board retains the right to apply discretion when determining annual STI outcomes. No such overriding discretion was applied in FY22. FY22 Executive KMP STIP Performance and outcomes For the FY22 all performance gateway metrics for Executive KMP participating the in the STIP were met as follows: Performance category Metric FY22 Performance Outcome Met/Not met 1. HMC Group FFO Gateway FY22 FFO per share of 18.5 cents (pre-tax) 31.0 cents per share 2. HDN & HCW Fund Gateways HDN FY22 FFO per unit of 8.3 cents HCW FY22 FFO per unit of 4.32 cents 8.85 cents per unit 5.10 cents per unit 3. Behavioural gateway Every STIP eligible employee must demonstrate they have met and continue to comply with HMC Group values as set out in the Code of Conduct. Met Met Met 29 HMC Capital | Annual Report 2022 Directorsr Report All Executive KMP, aside from the MD&CEO (who does not participate in the STIP), share the same KPI of ensuring the Group performs in accordance with or exceeds ASX FFO per share guidance. In addition, each Executive KMP eligible for an STI has metrics that are specific to their role. The following tables sets out the role-specific metrics and performance outcomes. Where metrics are commercially sensitive an appropriate overview of the metric has been provided. Chief Operating Officer, Sid Sharma Performance category Metric FY22 STIP Outcome 91% of target 1. Financial l Delivery of FFO per unit growth above gateway across HMC Group entities HMC Capital FFO (pre-tax) Performance of 31.0c per share significantly exceeded target of 18.5c per share. 2. Developments l Delivery of existing projects, increasing Development pipeline met. 3. Systems development pipeline and delivery of accretive acquisitions l Delivery of operating systems to support growth (especially designed to improve returns for the REITs) Systems delivered and metrics met. 4. Other l Variety of other KPIs including metrics relating to growth and ESG strategy Metrics largely met, but some tracking slightly behind schedule. Chief Financial Officer, Will McMicking Performance category Metric FY22 STIP Outcome 91% of target 1. Financial l Delivery of FFO per unit growth above gateway across HMC Group entities HMC Capital FFO (pre-tax) Performance of 31.0c per share significantly exceeded target of 18.5c per share. 2. FUM l Increase in FUM across HMC Group Stretch FUM target not reached despite funds under external management increasing by $4.16 billion. 3. Systems 4. Other l Delivery of operating systems to support growth (including in the finance, IT and reporting areas) Systems delivered and metrics met. l Variety of other KPIs including those relating to people, growth in capability in key areas. Significant progress made in a number of key areas but targets not fully met. The Board views the FY22 STIP outcomes as appropriate. They reflect the extremely strong FFO performance, but also the stretch nature of the KPIs that apply in the STIP program. The following table shows the actual STI outcomes for Executive KMP as a percentage of their maximum STIP opportunity. Table 2: Executive KMP Executive KMP Sid Sharma Will McMicking 30 STIP awarded / Forfeited % FY22 FY21 61% / 39% 100% / 0% 61% / 39% 100% / 0% In addition to the above KPIs, the Board has also taken into account performance against the HMC Capital Sustainability Commitments. The Board has reviewed the progress noted below against the Commitments, which supports the FY22 STIP outcomes (with no dial-down of FY22 outcomes required). Category Commitment Environment Climate Action — To actively minimise carbon emissions l Decarbonisation strategy has progressed: — An additional 19 assets have the Smart Energy Management installation progressing, and investigations across more assets progressing. — Solar photovoltaics feasibilities progressing, following completed installation at Marsden Park asset. — Data management system implemented. Green future — To champion the preservation and restoration of the natural environment l Green Building ratings instituted across new developments as appropriate including, Green Star, and NABERS. WELL building rating system under review for new HCW assets. l NABERS Energy and Water ratings completed across 11 operational assets, and an additional 7 underway. l Minimum sustainability design standards being finalized across developments. l Waste management strategy under development. Social Connection — To respond to local and regional essential community needs as they relate to health, wellness and daily services l Social Impact Framework “Needs Assessment” incorporated into acquisition due diligence process. l Establishment of the “HMC Capital Foundation” is well progressed with Equity Trustees to be appointed as Trustee, and the trust deed to be finalised for registration shortly. l Needs assessments across HMC Capital Group managed assets defined, with a focus on our communities “Young People under 18”. Respect — To respect the inherent dignity, safety, diversity and human rights of all people we touch l Progress towards our 50% FY25 diversity targets across our workforce, leadership and Boards as follows, have been met: from FY21 of 43% to 51% in FY22. Governance Alignment — To have the skills, environment and culture that support and propel HMC Capital’s ambition and Sustainability Commitments l ESG KPI’s introduced for the leadership team. l Upskilling on ESG across the workforce through lunch and learns. Accountability — To earn and keep the trust of our key stakeholders through transparent communication, processes and by doing what we say we will do l FY21 Sustainability commitments produced l FY21 Sustainability report published l Response to the GRESB Benchmark for HDN submitted. l Green Labels being rolled out progressively across portfolios as appropriate. 31 HMC Capital | Annual Report 2022 Directorsr Report 5. Executive Long-term Incentive Plan (‘LTIP’) Term Plan Rationale Eligibility Instrument Opportunity Details FY22 LTIP awards are made under the HMC Capital Employee Equity Plan (EEP). The EEP is designed to align executive rewards with shareholder expectations and to incentivise and retain the Executive KMP and key employees by providing an opportunity to be rewarded based on performance. All Executive KMPs are eligible to participate in the EEP. The Board may also invite other selected employees to participate from time to time. Performance rights are granted by the Company for nil consideration. Each performance right is a right to receive one fully paid share in the Company. The LTIP opportunity is set as a percentage of Fixed Remuneration (FR). The MD&CEO received a grant of performance rights based on a maximum stretch value of 200% of his FR. Other Executive KMP grants are based on 50% of FR. Allocation Methodology The number of performance rights awarded is determined by dividing the maximum opportunity by the five-day volume weighted average price of a share over the 5 trading days following announcement of the Company’s FY21 full-year results. Performance Period The performance period for the FY22 awards is the three-year period commencing 1 July 2021 to 30 June 2024. Performance conditions For the FY22 awards the performance measures are 50% relative TSR and 50% aggregate FFO per share. Relative TSR Relative TSR is measured against a comparator group of S&P/ASX 300 A-REITs. The vesting schedule is as follows. Performance scale Below 50th percentile At the 50th percentile (threshold) At or above the 75th percentile (maximum) Percentage of rights to vest Nil 50% 100% Rights will vest on a straight-line basis if the Company’s TSR performance is between the 50th and 75th percentile of the comparator group. Company’s FFO The FFO condition is measured by the aggregate of the annual FFO pool tested against the aggregated disclosed annual FFO target pool. The vesting schedule is as follows. Performance scale Below 97.5% of target FFO At the 97.5% of target FFO (threshold) At or above 100% of target FFO (maximum) Percentage of rights to vest Nil 50% 100% Rights will vest on a straight-line basis if the Company’s FFO performance is between 97.5% and 100% of target. 32 Term Details Performance conditions continued Vesting Date Disclosure of performance outcomes In the FY24 Remuneration Report the Board will set out how HMC Capital has performed against these targets. The FY22 FFO (pre-tax) target component is 18.5c per share, and the FY23 FFO target will be disclosed in the FY23 Remuneration Report. Performance rights will vest when the Board determines the performance relative to the performance conditions (around the release of the FY24 results to the ASX). Rights are exercisable the day after vesting and each participant will have until one month after the full-year results are announced for FY26 to exercise their rights. Service condition Unless the Board determines a different treatment: i. If a participant ceases to be an employee due to resignation (or termination for cause) all unvested rights will automatically lapse. ii. If a participant ceases employment for any other reason, all unvested rights (which may be pro-rated by the Board for time elapsed since the start of the Performance Period) will remain “on-foot” and will be performance tested at the end of the relevant Performance Period. To the extent that the relevant performance conditions are satisfied, the Rights will vest at the original Vesting Date. Dividends Rights do not carry a right to vote or to dividends. Change of control In the event of change of control, unless the Board determines otherwise, a pro-rata number of the participant’s unvested awards will vest to the extent that the conditions have been satisfied. Clawback The EEP provides the Board with broad clawback powers if the Board considers the participant’s conduct, capability or performance justifies the variation. No clawback power has been exercised to date. Securities Trading Policy The HMC Capital Group’s Securities Trading Policy prevents participants from entering into transactions or arrangements, including by way of derivatives or similar financial products which operate to limit the economic risk relating to awards made under the EEP which either have not vested or have vested but remain subject to a holding lock or other restriction on dealing. Recognition awards To reward employee performance in relation to the establishment of the HomeCo Daily Needs REIT and the HealthCo Healthcare and Wellness REIT the Group made a one-off grant of rights to all Executive KMP (other than the MD&CEO), executives and other staff in March 2022. Non-executive Directors did not participate in the grant. The rights were capped at $750,000 in total value with the allocation price based on the VWAP of HMC Capital securities for the five (5) trading days commencing 1 September 2021. The maximum value of any rights award to any employee (including to Executive KMP) was $50,000. The rights vested on 30 June 2022, although will not be capable of being exercised until after the release of the FY22 full-year results (in August 2022). Participants will have until 30 September 2023 to exercise their vested rights and acquire the relevant number of HMC Capital shares. If a participant ceases employment with HMC Capital prior to the vesting date (30 June 2022) as a result of voluntary resignation or termination for cause, the unvested rights will lapse. 33 HMC Capital | Annual Report 2022 Directorsr Report Legacy Equity awards There have been no prior year LTIP awards vesting in FY22 given the listing of the Company from 11 October 2019 and the first LTIP awards were made in FY20. The current unvested LTIP awards are set out below. The key terms and vesting outcomes for the FY20 LTIP is discussed further in section 7 below. FY21 LTIP The FY21 LTIP awards were made in FY21 and have a three-year performance period from 1 July 2020 to 30 June 2023. The performance conditions and other key terms and conditions for the FY21 LTIP awards are the same as outlined above for the FY22 LTIP awards. FY20 COVID-19 Grant The Company provided a one-off grant of share rights as compensation for the reduction in FY20 cash remuneration for Executive KMP and director’s fees for Non-Executive Directors. The number of rights granted was calculated by dividing the cash remuneration forgone by the ‘VWAP’ of HMC Capital’s securities over the twenty trading days following HMC Capital’s ASX trading update on 7 May 2020. The FY20 COVID-19 Grant share rights have a two-year vesting period and vest on 30 September 2022. There is a service condition for rights for Non-Executive Directors requiring them to hold office on the vesting date. Rights held by Executive KMP have both a service and performance condition. Executive KMPs must continue to be employed on the vesting date and HMC Capital’s share price reaching a VWAP of $3.35 over a 20-trading day period following the Group’s FY22 full-year results announcement. The Rights are exercisable until August 2025. IPO Rights Allocation The Company awarded a one-off grant of Rights under the EEP in October 2019 to all HMC Capital employees (including all Executive KMP other than David Di Pilla and Will McMicking) to promote their retention upon listing, provide equity participation and enhance engagement over the longer term. The Rights have a vesting period of three years following the date of issue and vest on 14 October 2022. The rights are not subject to any performance conditions other than the participants’ continued employment over the vesting period. The Rights will vest and automatically convert to Shares (or the cash equivalent, at the discretion of the Board). Top-up awards in respect of the Capital Reduction for awards prior to FY22 Top-up awards for all unvested rights was approved by the Board, and, where required, approved by shareholders at the Company’s FY20 AGM. These awards were made to compensate Executive KMP and Non-Executive Directors for the capital reduction in the Company’s share capital approved by shareholders at the FY20 AGM associated with the establishment of the HomeCo Daily Needs REIT. Whilst shareholders received a distribution in specie of REIT units, rights holders were not entitled to participate in the Capital Reduction. Accordingly, to preserve the value of any unvested rights, additional rights were issued on the same terms and conditions as the original rights held by the participants. Top-up awards were made in respect of FY20 LTIP awards, FY20 COVID-19 Grant awards, the IPO Rights Allocation and the FY21 LTIP award made to the Managing Director and Chief Executive Officer. The top-up awards were all made in January 2021. The formulae used to determine the number of additional rights to be issued was as follows: The adjusted number of Rights following the grant of additional Rights will be calculated using the methodology approved by the Board by using the following formula: HomeCo VWAP following the Implementation Date + Unit VWAP following the Implementation Date HomeCo VWAP following the Implementation Date Where: “HomeCo WVAP” is the volume weighted average price of a HMC Capital share over 5 trading days “Unit VWAP” is the volume weighted average price of a HomeCo Daily Needs REIT unit over 5 trading days 34 Impact of Restructure and De-stapling on equity awards In December 2021 all necessary regulatory and securityholder approvals for the simplification of HMC Capital from a stapled company structure (being HCL and HCDL) to a single Company structure (HCL) were obtained. This resulted in the transfer of HCDL shares to HCL, with HCDL then delisted, so that the entire business of HMC Capital was held by HCL from that time. This required certain amendments to the EEP and Non-Executive Director Equity Plan (NEDEP) purely to reflect this restructure. However, following this simplification each participant holding awards under either the EEP or NEDEP otherwise held the same number of awards on the same terms (including any vesting conditions) as applicable to the participant’s relevant awards prior to the restructure. 6. Non-Executive Directors’ Remuneration Fees and payments to Non-Executive Directors reflect the demands and responsibilities of their role. Non-Executive Director’s fees and payments are reviewed annually by the Remuneration and Nomination Committee. The Remuneration and Nomination Committee may, from time to time, receive advice from independent remuneration consultants to ensure Non-Executive Director’s fees and payments are appropriate and in line with the market. Subject to ASX listing rules, HMC Capital may from time to time determine the maximum aggregate remuneration to be provided to the directors in a general meeting. In the 2020 Annual General Meeting shareholders approved an increase in the maximum director fee pool to $1,200,000 per annum. The FY22 Non-Executive Director fees are set out below. Table 3: Non-Executive Director fees Board Committee* Chair Member Committee Chair Member FY22 Fee** $250,000 $100,000 $30,000 $10,000 * Comprising the Audit and Risk Committee, Remuneration and Nomination Committee and Sustainability Committee. However, as the Board Chair is also the Chair of the Remuneration and Nomination Committee he did not receive any additional fee for chairing this Committee. ** Non-Executive Director fees are paid inclusive of 10% superannuation. In addition, HMC Capital Non-Executive Directors serving on the Boards of HMC Capital managed funds will be paid Board and Committee fees commensurate with other Board members (which are to be reimbursed by the respective HMC Capital managed fund). 35 HMC Capital | Annual Report 2022 Directorsr Report HMC Capital has established a Non-Executive Director Equity Plan (NEDEP) which was approved by shareholders at the 2020 Annual General Meeting. The key terms of the NEDEP are as follows: Term Plan Rationale Eligibility Instrument Opportunity Details Awards are made under the NEDEP. The purpose of the NEDEP is to provide the opportunity for Non-Executive Directors to acquire Rights to receive Shares through sacrificing a portion of their annual remuneration (Fee Sacrifice Rights) thereby: l allowing Non-Executive Directors to become shareholders and share in the success of the Company; l aligning the interests of Non-Executive Directors with those of shareholders; and l allowing Non-Executive Directors the opportunity to acquire Shares in a tax-effective manner. All Non-Executive Directors are eligible to participate in the NEDEP. Fee sacrifice rights are granted by the Company for nil consideration. Each right is a right to receive one fully paid share in the Company. Under the NEDEP Non-Executive Directors can voluntarily elect to acquire rights, in lieu of up to 50% of their annual Board fees in any 12-month period. Allocation methodology The following formulae is used to calculate the number of Fee Sacrifice Rights issued. No. of Rights = A/B Where: A = the amount of remuneration that a Non-Executive Director wishes to sacrifice for the relevant period. B = the volume weighted average price (VWAP) of a share over the 5 trading days following the Company’s half or full-year results announcement for the relevant period. Vesting period Fee Sacrifice Rights will automatically vest and Restricted Shares will then be allocated to the Non- Executive Director on or around the first trading day of the next available trading window after the Rights date of issue. Disposal restrictions The Restricted Shares issued to the Non-Executive Directors are subject to disposal restrictions until the Non-Executive Director retires from the Board. Mandatory share-holding requirement It is a requirement of appointment that Non-Executive Directors acquire a shareholding of HMC Capital shares equivalent to two times their annual Board fees within three years of appointment. Dividends Fee Sacrifice Rights do not carry any dividend or voting rights prior to vesting into Restricted Shares. 36 7. FY23 Remuneration Executive KMP remuneration The fixed remuneration (FR) of the Managing Director and Chief Executive Officer will increase by 32% in FY23. This increase reflected that Mr Di Pilla’s FR is significantly below the median of both comparator groups (despite an increase in FY22). The Board is determined to increase the MD&CEO’s fixed remuneration closer to the median of the market, given his critical role in the Company and the value he brings to the Group. There is no change to his STIP opportunity as it has been Mr Di Pilla’s practice to decline participation in the STIP. Mr Di Pilla’s LTIP opportunity in FY23 will remain unchanged as a percentage of FR (at 200%). The COO, Mr Sharma will receive a 9% increase in his FR, and his target STI and maximum LTI opportunities will increase from 50% to 60% of FR. This change reflects Mr Sharma’s new role as CEO of the HomeCo Daily Needs (HDN) REIT, from 1 July 2022, whose size significantly increased in March 2022 with the acquisition by HDN of 100% of the units of the Aventus Trust. The CFO, Mr McMicking will receive an 11% increase in his FR, and his target STI and maximum LTI opportunities will increase from 50% to 60% of FR. The increase to FR reflects the benchmarking undertaken by the Board which showed the CFO’s FR and total target remuneration well below median of both market capitalisation and industry comparator groups. It also reflects the increased complexity of the Group, post-merger with Aventus and the development of HMC Capital Partners. Executive Short-term incentive Plan The Board is currently reviewing the structure of the FY23 STI Plan. Any changes to the structure of the FY23 plan for the CEO of the HDN REIT and the CFO will be disclosed in the FY23 Remuneration Report. Executive Long-term incentive Plan The FY20 LTIP awards will vest in August 2022 (after the FY22 results are released to the ASX), based on performance from 14 October 2020 to 30 June 2022. This award is split into two equal tranches, each with a separate performance hurdle. Fifty percent (50%) of the award has a relative TSR hurdle and 50% a FFO hurdle measuring aggregate FFO performance over the performance period. The relative TSR hurdle measures the performance of HMC Capital against a comparator group of S&P/ASX 300 A-REITS as at the commencement of the performance period. During this period the HMC Capital TSR was 73%, putting it significantly above the 75th percentile of the comparator group, resulting in 100% of this tranche vesting. The FFO performance hurdle measures the actual Company Freehold FFO performance for each of the three years in the performance period against its annual FFO targets, as disclosed in its FFO guidance to the ASX for each relevant financial year. Over the performance period including FY20, FY21 and FY22 the Company delivered FFO of 8.7c, 13.1c (post-tax) and 31.0c (pre-tax) per share, in aggregate 52.8c per share, against forecast FFO of 38.97c per share for the same period (with the FFO forecasts being 7.67c, 12.8c (post-tax) and 18.5c (pre-tax) respectively). This actual aggregate FFO result delivered is 135% above the target FFO pool for the period and will result in 100% of this tranche vesting. Each participant has until one month after the FY24 awards are announced to exercise their rights. FY23 LTIP awards The Board has determined that the structure of the FY23 awards will be similar to that outlined in Section 5 relating to the FY22 awards. The only proposed significant change is the change in the comparator group for the relative TSR tranche from the S&P/ASX 300 A-REITS to the S&P/ASX 200 A-REITS. This reflects HMC Capital’s increase in size and complexity and its inclusion in the S&P/ASX 200 A-REITS index. New minimum shareholding requirements The Board agreed at its June 2022 meeting to introduce a new minimum shareholding policy which will apply to all Non- executive Directors (replacing the existing requirements), all Executive KMP and selected other senior executive. This new policy will be implemented in FY23 and details reported in the FY23 Remuneration Report. 37 HMC Capital | Annual Report 2022 Directorsr Report 8. Employment agreements Remuneration and other terms of employment for Executive KMP are formalised in employment agreements which outline their duties and remuneration. All agreements are open ended (i.e., ongoing until notice is provided by either party). Key terms of the agreements are set out below. Table 4: Executive KMP key employment terms Executive KMP Managing Director and Chief Executive Officer Other Executive KMP Notice Period — Company Notice Period — Executive KMP 6 months 6 months 6 months 6 months The Managing Director and Chief Executive Officer employment agreement contains post-employment restraints including non-compete clauses and restrictions against soliciting and enticing customers. The restrictions operate for up to 12 months post-employment and the enforceability of these restraints is subject to all usual legal restrictions. The Group may summarily terminate the employment agreement in certain circumstances, including acts of serious misconduct, gross negligence, a serious breach of the employment agreement or bankruptcy. Other than prescribed notice periods, there are no special termination benefits payable under the employment agreements. All payments on termination will be subject to the termination benefits cap under the Corporations Act 2001. 9. Details of remuneration for the financial year Amounts of remuneration Details of the remuneration expense of KMP of the Group for the current and previous financial year are set out in the following tables. 38 Remuneration for Executive KMP for FY22 and FY21 Table 5: Executive KMP total remuneration (statutory disclosures) Short-term benefits Post- employment Base Salary* Cash Bonus Annual leave Super- annuation Long- term benefits Long service leave Share-based payments Share benefits Rights benefits Total Current Executive KMP David Di Pilla, Managing Director and Chief Executive Officer FY22 FY21 682,139 487,316 — — 90,999 25,433 19,794 28,056 Sid Sharma, Chief Operating Officer FY22 FY21 526,432 250,000 29,288 24,333 461,800 193,800 19,735 23,845 Will McMicking, Chief Financial Officer FY22 FY21 Former Executive KMP 426,432 205,000 3,220 24,162 373,925 120,000 11,261 22,793 Andrew Selim, General Counsel and Company Secretary FY21^ 371,698 118,041 11,556 21,786 Andrew Boustred, Development Director FY21^ 273,491 88,530 4,207 21,061 Total Remuneration FY22 FY21 1,635,003 455,000 123,507 73,929 1,968,230 520,371 66,553 117,541 — — — — — — — — — — — — — — — — 860,808 1,659,379 429,276 964,442 441,433 1,271,486 260,110 959,290 182,302 841,117 64,823 592,802 — 100,727 623,808 — 83,514 470,803 — 1,484,543 3,771,982 — 938,450 3,611,145 Explanatory notes to the Remuneration for Executive KMP for FY22 and FY21 table are below. * For David Di Pilla Base salary also includes the FBT car parking expense of $2,853. ^ The FY21 remuneration shown represents remuneration until the date the executives ceased to be a KMP, being 18 June 2021. 39 HMC Capital | Annual Report 2022 Directorsr Report Remuneration for Non-Executive Directors for FY22 and FY21 Table 6: Non-Executive Director total remuneration (statutory disclosures) Short-term benefits Post- employment Long-term benefits Share-based payments Total Cash Fees^ Super- annuation Long service leave Share benefits Rights benefits Chris Saxon, Chair FY22 FY21 Zac Fried FY22 FY21 Brendon Gale FY22 FY21 Greg Hayes FY22 FY21 Jane McAloon FY22 FY21 Kelly O’Dwyer^^ FY22 FY21 Total Remuneration FY22 FY21 102,100 22,804 86,016 16,579 40,840 41,324 57,187 50,457 9,122 8,714 12,772 9,585 44,924 10,034 50,457 9,585 73,763 78,170 49,012 31,180 1,188 1,880 10,946 5,939 367,826 337,604 66,866 52,282 — — — — — — — — — — — — — — — — — — — — — — — — — — — — 125,000 249,905 105,040 207,635 50,000 99,962 62,432 112,470 70,000 139,958 60,658 120,700 55,000 109,958 62,876 122,918 75,000 149,951 61,546 141,596 60,000 119,958 122,839 159,958 435,000 869,692 475,391 865,277 Explanatory notes to the Remuneration for Non-Executive KMP for FY22 and FY21 table are below. ^ All Non-Executive Directors participate in the Non-Executive Director Equity Plan and receive a portion of their fees in Fee Sacrifice Rights, which are expensed and shown under the Rights Benefits column. Fee Sacrifice Rights awarded in FY21 vested into shares during the current 2022 financial year. The FY22 Rights benefits includes the value each Director sacrificed during FY22 to acquire Rights under the NEDEP. ^^ Ms O’Dwyer’s FY21 Rights benefits includes a one-off grant of 23,735 share rights to Ms O’Dwyer, as per her Consultancy Agreement prior to election to the Board. The number of Rights she was issued was based on her grant value divided by $3.16, being the VWAP of a Share over the 5 trading days following announcement of the Company’s FY20 full-year results. The Rights were granted under the NEDEP and were not subject to any performance conditions and were subject to Ms O’Dwyer continuing to hold office as a director. 40 Non-Executive Director’s salaries are 100% fixed. The fixed and variable remuneration proportions for Executive KMPs for FY22 is as follows: Table 7: Executive KMP mix of fixed and variable remuneration (based on statutory remuneration table) Executive KMP David Di Pilla Sid Sharma Will McMicking Fixed Remuneration % Variable remuneration % (included STIP and LTIP payments 48% 46% 54% 52% 54% 46% 10. Share-based compensation Share rights The terms and conditions of each award of rights over ordinary Shares affecting remuneration of directors and other KMP in this financial year are set out below. Rights granted have a $nil exercise price and carry no dividend or voting rights. Table 8: FY22 KMP rights awards Award details and recipient Grant Date Fair value at grant date Number of Rights awarded Estimated Vesting date FY22 LTIP (Executive KMP) 14/3/2022 $5.13# 27/08/2024 — David Di Pilla — Sid Sharma — Will McMicking 223,189 43,840 35,870 FY22 NEDEP Fee Sacrifice rights 14/3/2022 $6.58 26/08/2022 — Chris Saxon — Zac Fried — Brendon Gale — Greg Hayes — Jane McAloon — Kelly O’Dwyer 19,936 7,974 11,164 8,772 11,962 9,569 Recognition Rights (Executive KMP, excluding MD&CEO) 14/3/2022 $6.58 30/6/2022 — Sid Sharma — Will McMicking 7,184 7,184 Maximum value to be recognised in future years* $1,004,848 $197,378 $161,495 — — — — — — — — * The entire value of the FY22 NEDEP KMP rights awards and Recognition Rights were expensed in FY22. # This is the weighted average fair value. The fair value of the relative TSR hurdled performance rights was calculated at $4.03 and the fair value of FFO hurdled performance rights was calculated at $6.22. 41 HMC Capital | Annual Report 2022 Directorsr Report Share rights holding The number of share rights (including rights granted and vested as part of the compensation during the financial year) over ordinary shares in HMC Capital held during the financial year by each Non-Executive Director and Executive KMP of the Group, including their personally related parties, are set out below: Table 9: FY22 Rights holdings by KMP Non-Executive Directors Chris Saxon Zac Fried Brendon Gale Greg Hayes Jane McAloon Kelly O’Dwyer Executive KMP David Di Pilla Sid Sharma Will McMicking Rights held at 30 June 2021 Granted in FY22 Vested and exercised in FY22 Lapsed or expired in FY22 Rights held at 30 June 2022 36,409 19,936 (32,262) 23,618 21,546 24,137 22,583 39,066 7,974 11,164 8,772 11,962 9,569 688,760 223,189 363,209 51,024 119,946 43,054 (18,436) (18,436) (18,436) (18,436) (39,066) — — — — — — — — — — — — 24,083 13,156 14,274 14,473 16,109 9,569 911,949 414,233 163,000 Additional information The factors that are considered to affect total shareholder return (‘TSR’) are summarised below: Table 10: Factors impacting Group performance Share price at reporting date ($) Dividends (cents per security) FFO post-tax (cents per security) TSR of HMC Capital (%)** TSR of S&P/ASX 300 A-REIT Index (%)** 30 June 2022 30 June 2021 30 June 2020 IPO listing price 11 October 2019 $4.51* $5.44* $3.00 $3.35 12.0 30.3 (14.3%) (10.8%) 12.0 13.1 113.2% 30.6% 12.0 6.0 (9.4%) (21.8%) n/a n/a n/a n/a * Excludes the 0.5 HDN in-specie units received for every 1 HMC security (HDN IPO price of $1.33 = $0.67 value per HMC security). ** TSR for year to 30 June 2020 is from 11 October 2019 (ASX listing date). 42 11. Additional disclosures relating to KMP KMP Shareholdings The number of shares in HMC Capital held during the financial year by each Non-Executive Director and Executive KMP, including their personally related parties, are set out below: Table 11: Shareholdings of key management personnel Non-Executive Directors Chris Saxon Zac Fried Brendon Gale Greg Hayes Jane McAloon Kelly O’Dwyer Executive KMP David Di Pilla Sid Sharma Will McMicking Non-Executive Directors Chris Saxon Zac Fried Brendon Gale Greg Hayes Jane McAloon Executive KMP David Di Pilla Sid Sharma Will McMicking Balance held at 30 June 2021 Acquired Vested Balance held at 30 June 2022 Sold 175,776 18,825 32,262 24,536,064 1,572,217 231,871 — 10,190,683 768,969 165,175 17,277 18,436 18,436 18,436 18,436 — — 39,066 37,310,930 2,742,442 — — 2,606,437 196,344 — — — — — — — — — — — — 226,863 26,126,717 250,307 10,978,088 200,888 39,066 40,053,372 — 2,802,781 Balance held at 30 June 2020 Acquired Vested Balance held at 30 June 2021 Sold 165,175 10,601 20,432,049 4,104,015 221,270 10,601 9,086,183 1,104,500 165,175 — 33,127,978 4,182,952 — — 2,321,060 314,691 — — — — — — — — — — — — — — — 175,776 24,536,064 231,871 10,190,683 165,175 37,310,930 — (29,314) 2,606,437 Other transactions There are a number of related party transactions between KMP and the Group as disclosed in the notes to the Financial Statements. The terms and conditions of these transactions are considered to be no more favourable than those which it is reasonable to expect would have been adopted if dealing with an unrelated individual at arm’s length in the same circumstances. This concludes the remuneration report, which has been audited in accordance with section 308(3c) of the Corporations Act 2001. 43 HMC Capital | Annual Report 2022 Directorsr Report Non-audit services Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 32 to the financial statements. The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are of the opinion that the services as disclosed in note 32 to the financial statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons: l all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and l none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards. Officers of the Company who are former partners of PricewaterhouseCoopers There are no officers of the Company who are former partners of PricewaterhouseCoopers. Rounding of amounts The Company is of a kind referred to in ASIC Legislative Instrument 2016/191 relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Instrument to the nearest hundred thousand dollars, unless otherwise stated. Related party confirmation The directors confirm that since listing the Company has complied with, and continues to comply with, its Related Party Transaction Policy which is publicly available. Auditor’s independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors’ report. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors Chris Saxon Chair 23 August 2022 David Di Pilla Director 44 Auditor’s Independence Declaration Auditor’s Independence Declaration As lead auditor for the audit of Home Consortium Limited for the year ended 30 June 2022, I declare that to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Home Consortium Limited and the entities it controlled during the period. Scott Hadfield Partner PricewaterhouseCoopers Sydney 23 August 2022 PricewaterhouseCoopers, ABN 52 780 433 757 One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. 45 HMC Capital | Annual Report 2022 Financial Report 30 June 2022 Contents Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report to the Security Holders of Home Consortium Limited Security Holder Information Corporate Directory 47 49 50 51 52 104 105 110 113 46 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2022 Revenue Revenue from continuing operations Other income Share of profits of associates and joint ventures accounted for using the equity method Gain recognised on investments in associates Other income Interest revenue Change in assets/liabilities at fair value through profit or loss Expenses Impairment expenses Property expenses Corporate expenses Loss on demerger Acquisition and transaction costs Finance costs Profit/(loss) before income tax expense from continuing operations Income tax expense Profit/(loss) after income tax expense from continuing operations Profit after income tax expense from discontinued operations Profit/(loss) after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Profit/(loss) for the year is attributable to: Non-controlling interest Owners of Home Consortium Limited Total comprehensive income for the year is attributable to: Continuing operations Discontinued operations Non-controlling interest Continuing operations Discontinued operations Owners of Home Consortium Limited Consolidated 30 June 2022 $’000 30 June 2021 $’000 Note 6 16 16 7 16 8 8 9 10 78,592 69,397 71,148 16,900 100 255 8,940 — 405 90 28,755 (21,954) (21,339) (14,354) (21,572) — (11,376) (5,773) 121,336 (14,074) 107,262 — — (23,994) (10,983) (15,446) (1,945) (10,910) (6,400) (89,387) (95,787) 9,883 107,262 (85,904) — — 107,262 (85,904) 30,013 77,249 4,087 (89,991) 107,262 (85,904) 30,013 — 30,013 4,087 — 4,087 77,249 (99,874) — 77,249 9,883 (89,991) 107,262 (85,904) Non-controlling interest (‘NCI’) represents the results of HCDL for the period that it was stapled to HCL. The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 47 HMC Capital | Annual Report 2022 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2022 Earnings per security for profit/(loss) from continuing operations Basic earnings per security Diluted earnings per security Earnings per security for profit from discontinued operations Basic earnings per security Diluted earnings per security Earnings per security for profit/(loss) Basic earnings per security Diluted earnings per security Consolidated 30 June 2022 Cents 30 June 2021 Cents 26.34 26.16 (36.55) (36.55) — — 3.62 3.62 26.34 26.16 (32.93) (32.93) 40 40 40 40 40 40 Earnings per security above is attributable to equity holders of the Company. The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 48 Consolidated Statement of Financial Position as at 30 June 2022 ASSETS Current assets Cash and cash equivalents Trade and other receivables Other assets Derivative financial instruments Assets classified as held for sale Total current assets Non-current assets Investment property — freehold Investments accounted for using the equity method Property, plant and equipment Intangible assets Right-of-use assets Convertible notes Other assets Deferred tax assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Employee benefit obligations Lease liabilities Income tax Total current liabilities Non-current liabilities Lease liabilities Borrowings Derivative financial instruments Provisions Deferred tax liability Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Equity attributable to the owners of Home Consortium Limited Non-controlling interest Total equity Consolidated 30 June 2022 $’000 30 June 2021 $’000 Note 11 12 13 25 14 15 16 17 18 19 20 13 9 21 22 23 9 23 24 25 9 26 27 57,555 16,174 18,533 14,425 106,687 — 106,687 — 608,712 3,140 186,774 4,806 2,282 549 — 806,263 912,950 22,777 4,797 717 1,984 30,275 3,628 — — 485 32,560 36,673 66,948 846,002 11,694 6,125 13,563 — 31,382 478,592 509,974 188,100 263,878 — — 277 548 — 19,635 472,438 982,412 13,354 1,137 205 1,707 16,403 72 253,111 1,847 — — 255,030 271,433 710,979 5,036,746 (1,227,485) (2,963,259) 846,002 — 846,002 3,710,382 4,013 (3,007,503) 706,892 4,087 710,979 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 49 HMC Capital | Annual Report 2022 Consolidated Statement of Changes in Equity for the year ended 30 June 2022 Consolidated Contributed equity $’000 Profits reserve $’000 Share- based payments reserve $’000 Accumu- lated losses $’000 Non- controlling interest* $’000 Total equity $’000 Balance at 1 July 2020 3,607,986 38,584 472 (2,917,512) — 729,530 Profit/(loss) after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 26) Capital distribution (note 26) Dividends paid (note 28) Share-based payments Balance at 30 June 2021 — — — 291,996 (189,600) — — 3,710,382 — — — — — (36,699) — 1,885 — — — — — — 1,656 (89,991) 4,087 (85,904) — — — (89,991) 4,087 (85,904) — — — — — — — — 291,996 (189,600) (36,699) 1,656 2,128 (3,007,503) 4,087 710,979 Consolidated Contributed equity $’000 Profits reserve $’000 Share-based payments reserve $’000 NCI reserve $’000 Accumulated losses $’000 Non- controlling interest* $’000 Total equity $’000 Balance at 1 July 2021 3,710,382 1,885 2,128 — (3,007,503) 4,087 710,979 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: — — — Contributions of equity, net of transaction costs (note 26) 1,326,364 Share-based payments Transfer from NCI on de-stapling (note 27) Destapling transaction costs Other Dividends paid (note 27) Dividends paid (note 28) — — — — — — Balance at 30 June 2022 5,036,746 — — — — — — — — (1,885) — — — — — — — — 77,249 30,013 107,262 — — — 77,249 30,013 107,262 (478) (1,265,167) 3,404 — — — — — — 34,100 (1,472) — — — — — — — (58) — (32,947) 5,054 (1,232,539) (2,963,259) — — (34,100) — — — — — 60,719 3,404 — (1,472) (58) (1,885) (32,947) 846,002 *Non-controlling interest represents the contributed retained earnings of HCDL. The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 50 Consolidated Statement of Cash Flows for the year ended 30 June 2022 Cash flows from operating activities Receipts from vendors and tenants (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Other income — lease mitigation account Interest paid Income taxes paid Net cash from operating activities Cash flows from investing activities Payment for purchase of subsidiary, net of cash acquired Payments for investments Payment for investment property — freehold Payment for investment property — leasehold Payment for derivative financial assets Payments for convertible notes Payment for equity accounted investments Payment for plant and equipment Proceeds from disposal of investment property Proceeds from deposits Distributions received Proceeds from demerger Note 42 37 Cash balance held by subsidiary on disposal of discontinued operations 10 Net cash from/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares Share issue transaction costs Proceeds from borrowings Repayment of borrowings Repayment of lease liabilities and surrenders Dividends paid Borrowing costs paid Net cash (used in)/from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 28 11 Consolidated 30 June 2022 $’000 30 June 2021 $’000 52,422 (45,151) — (3,959) (1,707) 69,618 (46,199) 11,000 (11,761) — 1,605 22,658 (78,504) (117,972) — — (9,916) (317,224) — (5,800) (10,986) (1,734) (176,616) (3,344) 718,570 — 16,928 — — — (548) (87,437) — 69,000 1,383 3,119 204,954 (18,538) 336,426 (151,091) — 275,637 (1,538) (5,241) 429,750 153,500 (684,500) (264,750) (352) (34,832) (698) (11,895) (36,699) — (292,170) 110,552 45,861 11,694 57,555 (17,881) 29,575 11,694 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 51 HMC Capital | Annual Report 2022 Notes to the Consolidated Financial Statements Note 1. General information The financial statements cover HMC Capital as a group consisting of Home Consortium Limited (ACN 138 990 593) (the ‘Company’, ‘parent entity’ or ‘HCL’) and the entities it controlled at the end of, or during, the financial year. The financial statements are presented in Australian dollars, which is the Group’s functional and presentation currency. The comparative period results are for the stapled group comprising of HCL and Home Consortium Developments Pty Limited (‘HCDL’) (ACN 635 859 700) (formerly Home Consortium Developments Limited). As detailed in note 2 below, the shares of HCL and HCDL were destapled on 24 December 2021. As a result, the current period results are for the stapled group until 24 December 2021 and for the destapled group from 25 December 2021 to 30 June 2022. HCL is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Level 7 Gateway 1 Macquarie Place Sydney NSW 2000 A description of the nature of the Group’s operations and its principal activities are included in the directors’ report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 23 August 2022. The directors have the power to amend and reissue the financial statements. Note 2. Destapling of Home Consortium Developments Limited The shares of HCL were stapled to the shares in HCDL to form stapled securities such that shares in HCL and HCDL had to be purchased or sold together. The stapled securities, known as HMC, were admitted to the official list of the Australian Securities Exchange (‘ASX’) on 11 October 2019. During the periods HCL and HCDL were stapled, the financial statements presented both the financial statements and accompanying notes of HCL and its controlled entities and HCDL jointly as permitted by ASIC Corporations (Stapled Group Reports) Instrument 2015/838. HCL was the deemed parent of the stapled group in accordance with AASB 3 ‘Business Combinations’. The contributed equity and retained earnings of HCDL were shown as a non-controlling interest in the financial statements even though the equity holders of HCDL (the acquiree) are also equity holders in HCL (the acquirer) by virtue of the stapling arrangement. On 10 December 2021, the securityholders of HCL and HCDL approved the destapling of securities. Eligible securityholders then received approximately 1.65 HCL shares for each HMC stapled share they held on 17 December 2021. HCL acquired, in consideration for the issue of HCL shares, all of the HCDL shares. HCL shares were then consolidated on the basis that approximately every 2.65 HCL shares were converted into 1 HCL share so that eligible securityholders now hold one HCL share for each HCL stapled share they held. HCDL was delisted from the ASX on 29 December 2021. These consolidated financial statements are presented as a continuation of the existing group with HCL as the accounting parent entity. The acquisition constitutes a transaction amongst owners, where previously they held their interest through HCL and HCDL (the non-controlling interest), and after the transaction they hold all of their interest directly through HCL. The impact of this transaction has been recognised in equity whereby the difference between the fair value of shares issued and the non-controlling interest of HCDL is recognised in the non-controlling interest (‘NCI’) reserve (refer note 27). HCDL was converted from being an unlisted public company to a proprietary company on 25 June 2022. 52 Note 3. Significant accounting policies The principal accounting policies adopted in the preparation of the consolidated 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 of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Basis of preparation These general purpose financial statements have 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’). Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of certain financial assets and liabilities, including derivative financial instruments, and revaluation of investment properties at fair value through profit or loss. 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 Group’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 4. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 36. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of HCL as at 30 June 2022 and the results of all subsidiaries for the year then ended. Subsidiaries are all those entities over which the Group has control. The group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. 53 HMC Capital | Annual Report 2022 Operating segments Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’), which is the Board of Directors. The CODM is responsible for the allocation of resources to operating segments and assessing their performance. Revenue recognition The group recognises revenue as follows: Property rental income Property rental income is recognised on a straight-line basis over the lease term for leases with fixed rate or guaranteed minimum rent review clauses. Other property income Other property income represents direct and indirect outgoings. The group recognises direct and indirect outgoings based on actual costs incurred in accordance with the terms of the related leases on an accrual basis and billed monthly in arrears. Actual costs reflect the service provided. The amount of recoveries revenue is determined by the actual cost incurred and the terms in the lease. The outgoings recovered are recognised over the period the services are provided. Other property income includes recoveries from tenants recognised in accordance with AASB 15 ‘Revenue from contracts with customers’. Management fee income Management fees comprise investment management and property management fees for properties managed on behalf of third parties. Investment management fees are recognised over time based on a percentage of Gross Asset Value (GAV) of the investment being managed. Acquisition fees and disposal fees are recognised at a point in time as a percentage of purchase or disposal values on completion of the service. Property management fees are recognised over time based on the percentage of gross income. New tenant and lease renewal fees are recognised at a point in time as a percentage of annual rental on the successful execution of tenancy agreements. Development management fees are recognised over time based on a percentage of the development costs. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Distribution income Revenue is recognised when the Group’s right to receive the payment is established, which is generally when the directors of the investee approve the dividends. Government grants Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Income tax The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. 54 Notes to the Consolidated Financial Statements30 June 2022 Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: l when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or l when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. HCL (the ‘head entity’) and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime (‘HCL Tax consolidation group’). The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the ‘separate taxpayer within group’ approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group. In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity. Discontinued operations A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of profit or loss and other comprehensive income. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the Group’s normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. 55 HMC Capital | Annual Report 2022 Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, 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 changes in value. Trade and other 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. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Debts that are known to be uncollectable are written off when identified. Derivative financial instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. Movements in fair value are recognised directly in profit or loss. Non-current assets or disposal groups classified as held for sale Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying amount and fair value less costs of disposal. For non-current assets or assets of disposal groups to be classified as held for sale, they must be available for immediate sale in their present condition and their sale must be highly probable. An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of disposal groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less costs of disposal of a non-current assets and assets of disposal groups, but not in excess of any cumulative impairment loss previously recognised. Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognised. Non-current assets classified as held for sale and the assets of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current assets. The liabilities of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current liabilities. Investment in associates Associates are entities over which the Group has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The group discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate’s carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss. 56 Notes to the Consolidated Financial Statements30 June 2022 Investment in joint ventures A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the consent of the parties sharing control. The group’s investments in its joint ventures are accounted for using the equity method. Under the equity method, the investment in the joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the joint venture since the acquisition date. Goodwill relating to the joint venture is included in the carrying amount of the investment and is not tested for impairment separately. The statement of profit or loss reflects the Group’s share of the results of operations of the joint venture. Any change in other comprehensive income (‘OCI’) of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint venture. The financial statements of the joint venture are prepared using the same accounting policies and for the same reporting period as the Group. Convertible notes Convertible notes are accounted for on an amortised cost basis. Investment properties Investment properties are initially recognised at cost, including transaction costs, and are subsequently remeasured annually at fair value. Movements in fair value are recognised directly to profit or loss. Investment properties are derecognised when disposed of or when there is no future economic benefit expected. Gains or losses resulting from the disposal of freehold property is measured as the difference between the latest carrying value of the asset at the date of disposal and is recognised when control over the property has been transferred. Plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and equipment over their expected useful lives as follows: Fixtures, fittings and equipment 3 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Leasing costs and tenant incentives Leasing costs Leasing costs are costs that are directly associated with negotiating and arranging an operating lease (including commissions, fees and costs of preparing and processing documentation for new leases). These costs are capitalised and amortised on a straight-line basis over the term of the lease. Tenant incentives Incentives such as cash, rent-free periods, lessee or lessor owned fit-outs may be provided to lessees to enter into a lease. These incentives are capitalised and are amortised on a straight-line basis over the term of the lease as a reduction of rental income. The carrying amount of the tenant incentives is reflected in the fair value of investment properties. 57 HMC Capital | Annual Report 2022 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, 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 Group 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. The group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. Intangible assets Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. Goodwill Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed. Management rights Management rights acquired in a business combination are not amortised, on the basis of indefinite life, which is reassessed every year. Instead, they are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired, and are carried at cost less accumulated impairment losses. Trade and other payables Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. Borrowings Borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the 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 Group’s incremental borrowing rate. Lease payments comprise of 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 price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The 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; 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. 58 Notes to the Consolidated Financial Statements30 June 2022 Finance costs Finance costs are expensed in the period in which they are incurred. Provisions Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost. 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 the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. Share-based payments Equity-settled share-based compensation benefits are provided to directors and employees. Equity-settled transactions are awards of shares, rights over shares or options over shares, that are provided to directors and employees in exchange for the rendering of services. The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. 59 HMC Capital | Annual Report 2022 Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques used to measure fair value are those that are appropriate in the circumstances and which maximise the use of relevant 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 at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of 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, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. Contributed capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Dividends Dividends are recognised when declared during the financial year and no longer at the discretion of the Company. 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 is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifiable net assets. All acquisition costs are expensed as incurred to profit or loss. On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions in existence at the acquisition-date. Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s previously held equity interest in the acquirer. 60 Notes to the Consolidated Financial Statements30 June 2022 Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also 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 either 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. Earnings per security Basic earnings per security Basic earnings per security is calculated by dividing the profit attributable to the owners of HCL, excluding any costs of servicing equity other than ordinary securities, by the weighted average number of ordinary securities outstanding during the financial year, adjusted for bonus elements in ordinary securities issued during the financial year. Diluted earnings per security Diluted earnings per security adjusts the figures used in the determination of basic earnings per security to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary securities and the weighted average number of additional ordinary securities that would have been outstanding assuming conversion of all dilutive potential ordinary securities. Goods and Services Tax (‘GST’) and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the 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 tax authority 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 tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. Comparatives Comparatives in the financial statements have been realigned to the current year presentation. There was no effect on the results of operations for the year. Rounding of amounts The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2022. The group’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below. Classification of liabilities as current or non-current (AASB 2020-1, AASB 2020-6) A narrow-scope amendment to AASB 101 ‘Presentation of Financial Statements’ was issued by the AASB (based on the IASB amendment) to clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. The amendment may affect the classification of some liabilities that can be converted to equity and for liabilities where the intentions of management were used to determine the classification. The effective date was originally for annual reporting periods commencing from 1 January 2022 but it has been deferred to 1 January 2023. The group has not yet assessed the impact but does not expect that it will be significant. 61 HMC Capital | Annual Report 2022 Note 4. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. 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, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related 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. Fair value measurement hierarchy The group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective. The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs. Goodwill and other indefinite life intangible assets The group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 3. The recoverable amounts of cash-generating units have been determined based on fair value less cost to sell 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. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences and taxable losses only if the Group considers it is probable that future taxable amounts will be available to utilise those temporary differences and taxable losses. The group assesses the recoverability of deferred tax assets at each reporting date. In making this assessment, the Group considers, in particular, the future business plans, reasons for past losses, whether the unused tax losses resulted from identifiable causes which are unlikely to recur and if any tax planning opportunities exist in the period in which the taxable losses can be utilised. The recognised net deferred tax liability of $32.6 million (2021: asset of $19.6 million) comprises $5.7 million (2021: $10.9 million) of carry forward tax losses and $6.5 million (2021: $9.0 million) of deductible temporary differences. The group has made a judgement that they will be able to generate sufficient taxable profits over the foreseeable future, based upon its future business plans. Valuation of derivative financial instruments The fair value of derivative financial instruments is estimated using valuation techniques which includes assumptions of future events and significant estimates. The fair value of derivatives at the reporting date may differ if there is volatility in market rates and or prices. Note 5. Operating segments Identification of reportable operating segments The group is organised into three operating segments: Investments (renamed from Freehold properties), Funds management and Corporate (renamed from Other). During the previous financial year, the Group disposed of the former Masters Hardware leasehold properties via the sale of Home Consortium Leasehold Pty Ltd and its subsidiaries to Home Investment Consortium Trust (‘HICT’). Refer note 10 ‘Discontinued operations’ for further information. As a result, the comparatives include Leasehold properties as a separate segment consisting of the discontinued operations. The operating segments are based on the internal reports that are reviewed by the Chief Operating Decision Makers (‘CODM’) in assessing performance and in determining the allocation of resources. 62 Notes to the Consolidated Financial Statements30 June 2022 The CODM monitor the performance of the business on the basis of Funds from Operations (‘FFO’) for each segment. FFO represents the Group’s underlying and recurring earnings from its operations, and is determined by adjusting the statutory net profit after tax for items which are non-cash, unrealised or capital in nature. The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to the CODM is on a monthly basis. The group only operates in Australia. Operating segment information Investments $’000 Funds management $’000 Corporate $’000 Total $’000 Acquisition and transaction costs (1,711) (9,665) Consolidated — 30 June 2022 Revenue Property rental income Other property income Management fee income Total revenue FFO (before income tax) Depreciation expenses Net fair value movements Impairment expenses Amortisation of borrowing costs Straight-lining of rental income Share of associate profit (adjusted) Gain on investment in associates Profit/(loss) before income tax expense Income tax expense Profit after income tax expense Assets Segment assets Total assets Total assets includes: Investments in associates Liabilities Segment liabilities Total liabilities 13,303 1,201 — 14,504 58,299 — 725 — — 64,088 64,088 53,734 — — (21,339) (1,788) (563) 48,316 16,900 98,839 — — — — — — — — — 13,303 1,201 64,088 78,592 (21,052) 90,981 (520) — — — — — — — (520) 725 (11,376) (21,339) (1,788) (563) 48,316 16,900 44,069 (21,572) 121,336 (14,074) 107,262 680,130 223,996 8,824 912,950 912,950 608,712 — — 608,712 5,688 46,553 14,707 66,948 66,948 63 HMC Capital | Annual Report 2022 Investments $’000 Leasehold properties* $’000 Funds management $’000 Corporate $’000 Total $’000 Profit from discontinued operations — 9,883 Share of associate profit (adjusted) Net fair value movements Acquisition and transaction costs Amortisation of borrowing costs Straight-lining of rental income Other adjustments 2,846 (21,954) (1,716) (2,976) (3,503) (914) — — — — — — Profit/(loss) before income tax expense (3,608) 9,883 8,191 (10,983) 47,053 11,489 — 58,542 40,055 (15,446) 3,985 215 — 4,200 — — — — 10,855 10,855 8,420 — — — — (229) — — — — — — — (10,983) — — — — — — — — 51,038 11,704 10,855 73,597 37,492 (15,446) 9,883 2,846 (21,954) (1,945) (2,976) (3,503) (914) 3,483 (89,387) (85,904) Consolidated — 30 June 2021 Revenue Property rental income Other property income Management fee income Total revenue FFO (before income tax) Loss on demerger Income tax expense Loss after income tax expense Assets Segment assets Total assets Total assets includes: Investments in associates Liabilities Segment liabilities Total liabilities 946,855 — 13,526 22,031 982,412 263,878 264,017 — — — 4 982,412 — 263,878 7,412 271,433 271,433 * Revenue from leasehold properties is included in profit from discontinued operations in the consolidated statement of profit or loss and other comprehensive income. 64 Notes to the Consolidated Financial Statements30 June 2022 Note 6. Revenue From continuing operations Property rental income Other property income Management fee income Revenue from continuing operations Consolidated 30 June 2022 $’000 30 June 2021 $’000 13,303 47,053 1,201 11,489 64,088 10,855 78,592 69,397 Disaggregation of revenue The revenue from property rental income is recognised on a straight-line basis over the lease term. Other property income and management fee income is recognised over time as services are rendered. All revenue is generated within Australia. Revenue from operating segments is set out in note 5. Note 7. Change in assets/liabilities at fair value through profit or loss Net fair value gain/(loss) on investment properties — freehold Net fair value (loss)/gain on remeasurement of derivatives Realised gain on disposal of investment property Consolidated 30 June 2022 $’000 30 June 2021 $’000 5,003 (23,058) (4,278) 28,030 1,104 — 28,755 (21,954) 65 HMC Capital | Annual Report 2022 Note 8. Expenses Profit/(loss) before income tax from continuing operations includes the following specific expenses: Finance costs Interest and finance charges on borrowings Interest and finance charges on lease liabilities Amortisation of borrowing costs* Interest expense — other Finance costs expensed Superannuation expense Consolidated 30 June 2022 $’000 30 June 2021 $’000 3,962 7,440 23 1,788 — 19 2,976 475 5,773 10,910 Defined contribution superannuation expense 1,100 519 Employee benefits expense excluding superannuation Employee benefits expense excluding superannuation 17,995 7,657 Acquisition and transaction costs Transaction and group reorganisation costs 11,376 1,945 * Amortisation of borrowing costs includes $1.3 million (2021: $1.3 million) written off upon refinancing and limit reduction of debt facility (refer note 24). Government grants During the financial year, the Group repaid the Australian government JobKeeper support payments amounting to $0.3 million (2021: receipts of $0.2 million). These had been recognised as government grants in the financial statements and initially recorded as a deduction in corporate expenses and subsequently reversed. 66 Notes to the Consolidated Financial Statements30 June 2022 Note 9. Income tax Income tax expense Current tax Deferred tax movements Aggregate income tax expense Deferred tax included in income tax expense comprises: Decrease in deferred tax assets Numerical reconciliation of income tax expense and tax at the statutory rate Consolidated 30 June 2022 $’000 30 June 2021 $’000 1,969 1,707 12,105 87,680 14,074 89,387 12,105 87,680 Profit/(loss) before income tax expense from continuing operations 121,336 (6,400) Profit before income tax expense from discontinued operations Tax at the statutory tax rate of 30% Permanent differences and others Utilisation of tax losses Derecognition of deferred tax assets Income tax expense — 121,336 36,401 (27,544) 5,217 — 9,883 3,483 1,045 1,743 9,426 77,173 14,074 89,387 67 HMC Capital | Annual Report 2022 Deferred tax (liability)/asset Deferred tax (liability)/asset comprises temporary differences attributable to: Amounts recognised in profit or loss: Tax losses Investment property Lease liabilities Management rights Right-of-use assets Others Amounts recognised in equity: Transaction costs on share issue Deferred tax asset/(liability) Movements: Opening balance Charged to profit or loss Credited to equity Additions through business combinations (note 37) Derecognised upon sale of leasehold portfolio Closing balance Consolidated 30 June 2022 $’000 30 June 2021 $’000 5,732 10,949 — (223) 1,449 (41,231) (1,466) (2,073) (37,589) 83 — (83) 3,425 14,151 5,029 (32,560) 5,484 19,635 19,635 141,157 (12,105) (87,680) — (40,090) 1,561 — — (35,403) (32,560) 19,635 68 Notes to the Consolidated Financial Statements30 June 2022 Provision for income tax Provision for income tax Tax losses not recognised Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit at statutory tax rates Consolidated 30 June 2022 $’000 30 June 2021 $’000 1,984 1,707 Consolidated 30 June 2022 $’000 30 June 2021 $’000 2,511,680 2,530,852 753,504 759,256 Included within the amount debited to profit or loss for the year ended 30 June 2021 is reversal of tax losses of $139.2 million that no longer qualify for recognition. Tax losses carried forward at 30 June 2022 represent losses incurred by the Group since the IPO date and are subject to the Continuity of Ownership Test. The group has not brought to account $2,511.7 million (2021: $2,530.9 million) of tax losses, which includes the benefit arising from tax losses incurred prior to HCL’s IPO. The benefits of unused tax losses will only be brought to account (with the recognition of a deferred tax asset) when there is convincing evidence that it is probable that they will be realised. Given the change in ownership on IPO and subsequent changes to the underlying business, the likelihood of this is considered to be remote. This benefit of tax losses will only be obtained if: l the Group derives future assessable income of a nature and an amount sufficient to enable the benefit from the deductions for the losses to be realised; l the Group continues to comply with the conditions for deductibility imposed by tax legislation, in particular the Group continues to meet the Business Continuity Test or Similar Business Test; and l no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the losses. 69 HMC Capital | Annual Report 2022 Note 10. Discontinued operations On 20 November 2020, the Group disposed of the former Masters Hardware leasehold properties (Leasehold segment) via the sale of Home Consortium Leasehold Pty Ltd and its subsidiaries to foundation shareholder Home Investment Consortium Company Pty Limited as trustee for the Home Investment Consortium Trust (‘HICT’). The leasehold interest had a net asset position of $35.5 million and was sold for a nominal $1 consideration. The impact of the discontinued operations on the comparative period statement of profit or loss is provided below. Financial performance information Consolidated 30 June 2022 $’000 30 June 2021 $’000 — — — — — — — — — — 4,200 47,283 (6,107) 45,376 — 45,376 (35,493) — (35,493) 9,883 Consolidated 30 June 2022 $’000 30 June 2021 $’000 — — — 4,042 (12,817) (8,775) Total revenue Total other income Total expenses Profit before income tax expense Income tax expense Profit after income tax expense Loss on disposal of subsidiary Income tax expense Loss on disposal after income tax expense Profit after income tax expense from discontinued operations Cash flow information Net cash from operating activities Net cash used in investing activities Net decrease in cash and cash equivalents from discontinued operations 70 Notes to the Consolidated Financial Statements30 June 2022 Carrying amounts of assets and liabilities disposed Cash and cash equivalents Trade and other receivables Investment properties — leasehold Deferred tax assets Total assets Trade and other payables Provisions Lease liabilities Total liabilities Net assets Details of the disposal Total sale consideration* Carrying amount of net assets disposed Loss on disposal before income tax Loss on disposal after income tax * Nominal sale consideration of $1 was settled on disposal of leasehold operations. Note 11. Cash and cash equivalents Current assets Cash at bank Consolidated 30 June 2022 $’000 30 June 2021 $’000 — — — — — — — — — — 18,538 34,123 79,446 35,403 167,510 8,017 2,000 122,000 132,017 35,493 Consolidated 30 June 2022 $’000 — — — — 30 June 2021 $’000 — (35,493) (35,493) (35,493) Consolidated 30 June 2022 $’000 30 June 2021 $’000 57,555 11,694 71 HMC Capital | Annual Report 2022 Consolidated 30 June 2022 $’000 30 June 2021 $’000 16,431 (263) 16,168 6 16,174 6,287 (792) 5,495 630 6,125 Consolidated 30 June 2022 $’000 30 June 2021 $’000 473 1,938 16,122 — 3,776 432 8,477 878 18,533 13,563 549 — 19,082 13,563 Note 12. Trade and other receivables Current assets Trade receivables Allowance for expected credit losses Accrued income Note 13. Other assets Current assets Prepayments Other deposits Other receivables Other current assets Non-current assets Capitalised borrowing costs 72 Notes to the Consolidated Financial Statements30 June 2022 Note 14. Assets classified as held for sale Investment property Consolidated 30 June 2022 $’000 30 June 2021 $’000 — 478,592 During the previous financial year, the Group entered into conditional agreements to sell a 100% interest in a portfolio of seven large format retail assets (‘LFR Portfolio’) to HDN for a total purchase price of $266.4 million less estimated costs of the bonus unit issue of $8.9 million. HDN unitholder approval was obtained at an extraordinary general meeting on 16 June 2021 and settlement occurred on 1 July 2021. Ten other properties with a value of $221.1 million were seeded into HCW which is a separate listed entity established during the current financial year (refer note 16). Note 15. Investment property — freehold Consolidated 30 June 2022 $’000 30 June 2021 $’000 Non-current assets Investment property — freehold — at fair value — 188,100 Reconciliation Reconciliation of the fair values at the beginning and end of the current and previous financial year are set out below: Opening balance Acquisitions and additions Disposals Transfer to HDN upon demerger Transfer to assets held for sale (note 14) Capitalised expenditure Straight-lining and amortisation Net gain/(loss) from fair value adjustments Closing balance 188,100 1,013,750 — 284,548 (217,838) (69,000) — — (584,200) (478,592) 11,492 48,155 (563) (3,503) 18,809 (23,058) — 188,100 Refer to note 30 for further information on fair value measurement. During the financial year, the Group sold five investment properties to HDN for a total consideration of $114.9 million. 73 HMC Capital | Annual Report 2022 Lessor commitments Minimum lease commitments receivable but not recognised in the financial statements: Within one year One to two years Two to three years Three to four years Four to five years More than five years Consolidated 30 June 2022 $’000 30 June 2021 $’000 — — — — — — — 11,706 11,518 11,048 9,791 7,980 45,619 97,662 Note 16. Investments accounted for using the equity method Establishment of HealthCo Healthcare and Wellness REIT (HCW) During the financial year, the Group established HCW, a Trust registered with the Australian Securities and Investment Commission (‘ASIC’) and listed on the Australian Securities Exchange (‘ASX’). HCW was a subsidiary of HCL as at 30 June 2021. In September 2021, HCW issued new equity units for $650 million with HCL subscribing for $130 million (20%). HCW repaid the net inter-company loans from HCL (reflecting costs spent in relation to the properties in the portfolio which were owned and seeded by HCL). HCL derecognised assets classified as held for sale of $221.1 million as at 30 June 2021, recognised a $2.2 million rental guarantee payable, and recognised investment property gains of $13.7 million as part of this transaction. The fair value of the investment in HCW as at the date when control was lost, being $146.9 million, was calculated using the volume-weighted average price (‘VWAP’) of HCW shares as traded on the ASX over the first five trading days after listing. This resulted in a gain of $16.9 million upon the recognition of the investment in associate. The investment in HCW is accounted for as an investment in associate using the equity method of accounting. Camden joint ventures During the financial year, the Group entered into a joint venture arrangement with HCW and a third party to acquire and develop three separate parcels of land which are owned by the following special purpose vehicles — The George Trust, General Medical Precinct Trust and Life Sciences Medical Precinct Trust. The George Trust and General Medical Precinct Trust were initially capitalised at 25%, 25% and 50% by HMC, HCW and the third party, respectively. Life Sciences Medical Precinct Trust was initially capitalised at 30%, 30% and 40% by HMC, HCW and the third party, respectively. Future capital expenditure is to be funded by HMC and HCW in equal contributions. 74 Notes to the Consolidated Financial Statements30 June 2022 Details of investments in associates and joint ventures at the reporting date are provided below: Non-current assets Associate — HomeCo Daily Needs REIT Associate — HealthCo Healthcare and Wellness REIT Joint venture — The George Trust Joint venture — General Medical Precinct Trust Joint venture — Life Sciences Medical Precinct Trust Consolidated 30 June 2022 $’000 30 June 2021 $’000 443,194 263,878 136,924 17,150 2,511 8,933 — — — — 608,712 263,878 Interests in associates and joint ventures Interests in associates and joint ventures are accounted for using the equity method of accounting. Information relating to associates that are material to the Group are set out below: Name HomeCo Daily Needs REIT HealthCo Healthcare and Wellness REIT The George Trust General Medical Precinct Trust Life Sciences Medical Precinct Trust Principal place of business/ Country of incorporation Australia Australia Australia Australia Australia Ownership interest 30 June 2022 % 30 June 2021 % 14.1% 28.5% 20.9% 40.3% 25.0% 30.2% — — — — 75 HMC Capital | Annual Report 2022 Summarised financial information Summarised statement of financial position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets HDN 30 June 2022 $’000 30 June 2021 $’000 HCW 30 June 2022 $’000 Joint ventures 30 June 2022 $’000 52,622 268,785 55,995 1,042 4,803,567 1,121,640 637,602 87,002 4,856,189 1,390,425 693,597 88,044 117,067 31,515 1,601,375 425,778 1,718,442 457,293 17,213 22,294 39,507 3,137,747 933,132 654,090 5,876 — 5,876 82,168 Summarised statement of profit or loss and other comprehensive income Revenue and fair value changes 488,255 62,052 64,269 Expenses Profit before income tax Other comprehensive income Total comprehensive income Reconciliation of the Group's carrying amount (153,143) (30,720) (14,657) 335,112 31,332 49,612 — — — 335,112 31,332 49,612 Opening carrying amount 263,878 — Fair value of investments acquired during the year — 174,154 — — — — — — — — — Additional investments acquired during the year 146,243 87,481 136,094 28,594 Share of profit after income tax 60,911 8,940 10,237 Share of distributions paid/payable (19,922) (6,697) (4,968) HDN bonus unit reduction Impairment expenses Fair value gain on investments in HCW (7,916) — — — — — — (21,339) 16,900 — — — — — Closing carrying amount 443,194 263,878 136,924 28,594 76 Notes to the Consolidated Financial Statements30 June 2022 A $21.3 million impairment to the carrying value of the investment in HCW has been recognised for the year ended 30 June 2022. The investment has been reduced to its recoverable amount which has been based on the net tangible assets per unit of HCW as at 30 June 2022. Commitments Committed at the reporting date but not recognised as liabilities: Capital expenditure Property acquisitions Note 17. Property, plant and equipment Non-current assets Fixtures, fittings and equipment — at cost Less: Accumulated depreciation Consolidated 30 June 2022 $’000 30 June 2021 $’000 116,582 34,400 127,558 274,000 Consolidated 30 June 2022 $’000 30 June 2021 $’000 3,320 (180) 3,140 — — — Reconciliations Reconciliations of the written down values at the beginning and end of the current financial year are set out below: Consolidated Balance at 1 July 2021 Additions Depreciation expense Balance at 30 June 2022 Furniture, fittings and equipment $’000 — 3,320 (180) 3,140 77 HMC Capital | Annual Report 2022 Note 18. Intangible assets Non-current assets Goodwill Management rights Consolidated 30 June 2022 $’000 30 June 2021 $’000 49,337 137,437 186,774 — — — Reconciliations Reconciliations of the written down values at the beginning and end of the current financial year are set out below: Consolidated Balance at 1 July 2021 Additions through business combinations (note 37) Balance at 30 June 2022 Goodwill $’000 — 49,337 49,337 Management rights $’000 — Total $’000 — 137,437 186,774 137,437 186,774 Impairment testing Goodwill and management rights with an indefinite useful life are tested annually for impairment or when there are indicators of impairment. Goodwill and management rights are considered to be impaired if their recoverable amount is less than their carrying amount. As part of annual impairment testing goodwill, generated as a result of the recognition of deferred tax on management rights acquired in a business combination, is offset against a corresponding and equal deferred tax liability when calculating the carrying value of the cash generating unit. No impairment expense was recognised for the year ended 30 June 2022. The recoverable amount of goodwill and management rights was determined using the fair value less cost to sell approach and valued using discounted cash flow projections. Key assumptions adopted in the discounted cash flow valuation are as follows: Cash flows Discount rate (post-tax) Terminal growth rate 10 years 7.6% 3.0% Cash flow projections were based on financial budgets for the year ending 30 June 2023. Cash flows beyond the projected period are extrapolated using estimated growth rates. Terminal growth rates are estimated based on the expected long-term earnings growth and macro-economic factors. Discount rates applied to cash flow projections are calculated by reference to the Group’s weighted average cost of capital. Discount rates are adjusted for risks specific to the cash generating unit. 78 Notes to the Consolidated Financial Statements30 June 2022 Sensitivity analysis A 50 basis point increase/decrease in the discount rate would result in a $186.8 million decrease/$232.9 million increase in the recoverable value of the cash generating unit. A 50 basis point increase/decrease in the terminal growth rate would result in a $168.5 million increase/$135.4 million decrease in the recoverable value of the cash generating unit. Note 19. Right-of-use assets Non-current assets Right-of-use assets Less: Accumulated amortisation Consolidated 30 June 2022 $’000 30 June 2021 $’000 4,887 (81) 4,806 585 (308) 277 The group leases office premises under an agreement expiring in five years, with an option to extend. The lease has various escalation clauses. Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2020 Amortisation expense Balance at 30 June 2021 Additions Amortisation expense Balance at 30 June 2022 For other AASB 16 lease-related disclosures refer to the following: l note 8 for details of interest on lease liabilities and other lease expenses; l note 23 and note 42 for details of lease liabilities at the beginning and end of the reporting period; l note 29 for the maturity analysis of lease liabilities; and l consolidated statement of cash flows for repayment of lease liabilities. Office premises $’000 466 (189) 277 4,887 (358) 4,806 79 HMC Capital | Annual Report 2022 Note 20. Convertible notes Non-current assets Convertible notes Consolidated 30 June 2022 $’000 30 June 2021 $’000 2,282 548 Convertible notes represent an investment in a related party and derive interest at a variable rate plus a margin. The convertible notes have a 7-year term and may be converted between a date that is five years after the commencement date and the maturity date. Note 21. Trade and other payables Consolidated 30 June 2022 $’000 30 June 2021 $’000 3,198 265 15,783 3,531 4,267 1,132 7,636 319 22,777 13,354 Consolidated 30 June 2022 $’000 30 June 2021 $’000 1,038 3,759 4,797 410 727 1,137 Current liabilities Trade payables Rent received in advance Accrued expenses Other payables Refer to note 29 for further information on financial instruments. Note 22. Employee benefit obligations Current liabilities Annual leave Other employee benefits 80 Notes to the Consolidated Financial Statements30 June 2022 Note 23. Lease liabilities Current liabilities Lease liability Non-current liabilities Lease liability Refer to note 29 for maturity analysis of lease liabilities. Note 24. Borrowings Non-current liabilities Senior secured bank debt Capitalised borrowing costs Consolidated 30 June 2022 $’000 30 June 2021 $’000 717 205 3,628 4,345 72 277 Consolidated 30 June 2022 $’000 30 June 2021 $’000 — — — 254,750 (1,639) 253,111 Refer to note 29 for further information on financial instruments. Capitalised borrowing costs of $0.5 million as at 30 June 2022 have been disclosed as other non-current assets in note 13. On 29 July 2021, the Group completed an upsize and extension of its existing three-year senior secured syndicated debt facility to a $375.0 million senior secured syndicated debt facility expiring in November 2023. The facility limit was reduced to $275.0 million in December 2021. The bank loans are secured by assets held by the Group. The interest comprises a base rate plus a variable margin, determined by the prevailing loan to valuation ratio. 81 HMC Capital | Annual Report 2022 Financing arrangements Unrestricted access was available at the reporting date to the following lines of credit: Total facilities Senior secured bank debt Used at the reporting date Senior secured bank debt Unused at the reporting date Senior secured bank debt Consolidated 30 June 2022 $’000 30 June 2021 $’000 275,000 315,000 — 254,750 275,000 60,250 Compliance with loan covenants The group has complied with the financial covenants of its debt facilities during the financial year ended 30 June 2022 and 30 June 2021. Note 25. Derivative financial instruments Current assets Derivative asset — equity total return swap Non—current liabilities Derivative liability — interest rate swap Refer to note 29 for further information on financial instruments. Refer to note 30 for further information on fair value measurement. Consolidated 30 June 2022 $’000 30 June 2021 $’000 14,425 — — 14,425 (1,847) (1,847) 82 Notes to the Consolidated Financial Statements30 June 2022 Note 26. Contributed equity Consolidated 30 June 2022 Shares 30 June 2021 Shares 30 June 2022 $’000 30 June 2021 $’000 Ordinary shares — fully paid 299,617,806 290,121,283 5,036,746 3,710,382 Movements in ordinary share capital Details Balance Issue of shares (at $2.88 per ordinary share) Date 1 July 2020 7 July 2020 Shares $’000 197,912,426 3,607,986 48,611,111 140,000 Issue of shares (at $2.83 per ordinary share) 28 July 2020 3,758,565 10,637 Issue of shares (at $2.88 per ordinary share) 2 September 2020 6,944,444 20,000 Capital distribution on demerger of HomeCo Daily Needs REIT 26 November 2020 — (189,600) Issue of shares (at $3.80 per ordinary share) 10 December 2020 32,894,737 125,000 Share issue transaction costs, net of tax — (3,641) Balance 30 June 2021 290,121,283 3,710,382 Issue of shares on vesting of share rights 27 August 2021 145,072 478 Share issue upon acquisition of HCDL (refer note 2) 17 December 2021 478,994,382 1,265,167 Share consolidation (refer note 2) 17 December 2021 (478,994,382) — Issue of shares on acquisition of Aventus Holdings Limited (refer note 37) 4 March 2022 9,351,451 60,784 Share issue transaction costs, net of tax — (65) Balance 30 June 2022 299,617,806 5,036,746 Until 24 December 2021, the issued shares of the Group were made up of stapled securities comprising of one share of HCL and one share of HCDL. As noted in note 2, the stapled securities were destapled effective from 24 December 2021. Ordinary shares Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to securityholders should the company be wound up in proportions that consider both the number of shares held and the extent to which those shares are paid up. The fully paid ordinary shares have no par value and HCL does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. 83 HMC Capital | Annual Report 2022 Share buy-back There is no current on-market share buy-back. Capital risk management The group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for security holders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to security holders, return capital to security holders, issue new shares or sell assets to reduce debt. The group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year. The capital risk management policy remains unchanged from the prior year. Note 27. Reserves Profits reserve Share-based payments reserve Non-controlling interest (‘NCI’) reserve Consolidated 30 June 2022 $’000 — 5,054 (1,232,539) 30 June 2021 $’000 1,885 2,128 — (1,227,485) 4,013 Profits reserve In the prior year, the profits reserve was an amount arising from previous years profits and retained as a separate reserve to be used for distribution as dividends in future years. Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration. Non-controlling interest reserve The reserve is used to recognise the difference between the amount of the adjustment to non-controlling interests in HCDL and any consideration paid or received attributable to HCL on de-stapling from the Group. 84 Notes to the Consolidated Financial Statements30 June 2022 Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Profits reserve $’000 38,584 (36,699) — 1,885 (1,885) — — — — — — Consolidated Balance at 1 July 2020 Dividends paid (note 28) Share-based payments Balance at 30 June 2021 Dividends paid Share-based payments Transfer to contributed equity on vesting of rights (note 26) Transfer from contributed equity on destapling (note 26) Transfer from non-controlling interest Destapling transaction costs Balance at 30 June 2022 Note 28. Dividends Dividends Dividends paid during the financial year were as follows: Share- based payments reserve $’000 NCI reserve $’000 Total $’000 39,056 (36,699) 1,656 4,013 (1,885) 3,404 (478) — — — — — — — (1,265,167) (1,265,167) 34,100 34,100 (1,472) (1,472) 5,054 (1,232,539) (1,227,485) 472 — 1,656 2,128 — 3,404 (478) — — — Final dividend to shareholders registered on 3 September 2021 of 6.0 cents (2020: 7.5 cents) per ordinary security Interim dividend for the year ended 30 June 2022 of 6.0 cents (2021: 6.0 cents) per ordinary security Consolidated 30 June 2022 $’000 30 June 2021 $’000 17,416 17,416 19,292 17,407 34,832 36,699 85 HMC Capital | Annual Report 2022 On 23 August 2022, the directors determined to pay a fully franked dividend of 6.0 cents per ordinary share. The dividends will be paid on 7 October 2022 to eligible shareholders on the register on 2 September 2022. Franking credits Consolidated 30 June 2022 $’000 30 June 2021 $’000 Franking credits available for subsequent financial years based on a tax rate of 30% 12,889 21,355 The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for: l franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date l franking debits that will arise from the payment of dividends recognised as a liability at the reporting date l franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date Note 29. Financial instruments Financial risk management objectives The group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity 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 derivative financial instruments such as interest rate swap contracts to hedge certain risk exposures. The group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate risk and ageing analysis for credit risk. Risk management is carried out by senior finance executives (‘finance’) under policies approved by the Board of Directors (‘the Board’). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group’s operating units. Finance reports to the Board on a monthly basis. Market risk Foreign currency risk The group is not exposed to any significant foreign currency risk. Price risk The group’s main exposure to price risk arises from the total return equity swap (equity swap) disclosed in note 25 to the financial statements. The fair value of the equity swap is dependent upon the price of Sigma Healthcare Limited (ASX: SIG) a company listed on the Australian Securities Exchange. A 10% increase/decrease in the share price of SIG would result in a $8.3 million increase/decrease in the fair value of the equity swap assuming all other variables are held constant. This would also result in a $5.8 million increase/decrease in net profit after tax and equity. 86 Notes to the Consolidated Financial Statements30 June 2022 Interest rate risk The group’s main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the Group to interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value risk. The policy is to maintain approximately 50% of borrowings at fixed rates using interest rate swaps to achieve this when necessary. As at the reporting date, the Group had the following variable rate borrowings and interest rate swap contracts outstanding: Consolidated Bank loans Interest rate swaps (notional principal amount) Net exposure to cash flow interest rate risk 30 June 2022 30 June 2021 Weighted average interest rate % Weighted average interest rate % Balance $’000 Balance $’000 0.66% — — — — 1.87% 254,750 0.89% (175,000) 79,750 An analysis by remaining contractual maturities is shown in ‘liquidity and interest rate risk management’ below. An official increase/decrease in interest rates of 50 (2021: 50) basis points would have an adverse/favourable effect on profit before tax of $Nil (2021: $0.4 million) per annum. The percentage change is based on the expected volatility of interest rates using market data and analysts forecasts. Interest rate swap In the prior year, the Group had an interest rate swap contract with a notional principal amount of $175.0 million. The maturity date of the interest rate swap contract was October 2022. The interest rate swap hedges the Group’s risk against an increase in variable interest rates. However, hedge accounting is not applied. During the financial year, the Group novated its interest rate swap contract to HDN for consideration of $0.2 million. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The group has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The group does not hold any collateral. The group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all tenants of the Group based on recent experience, historical collection rates and forward-looking information that is available. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this 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 Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable. The group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. Refer to note 24 for details of unused borrowing facilities at the reporting date. 87 HMC Capital | Annual Report 2022 Remaining contractual maturities The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. 1 year or less $’000 Between 1 and 2 years $’000 Between 2 and 5 years $’000 Over 5 years $’000 Remaining contractual maturities $’000 Consolidated — 30 June 2022 Non-derivatives Non-interest bearing Trade payables Other payables Interest-bearing — variable Bank loans Interest-bearing — fixed rate Lease liability Total non-derivatives Consolidated — 30 June 2021 Non-derivatives Non-interest bearing Trade payables Other payables Interest-bearing — variable Bank loans Interest-bearing — fixed rate Lease liability Total non-derivatives Derivatives Interest rate swaps net settled Total derivatives 3,198 3,531 — — 1,815 761 — — — 869 9,413 922 1,683 3,026 3,026 — — — — — 3,198 3,531 2,576 4,817 14,122 1 year or less $’000 Between 1 and 2 years $’000 Between 2 and 5 years $’000 Over 5 years $’000 Remaining contractual maturities $’000 4,267 319 — — 4,741 256,157 215 72 9,542 256,229 1,553 1,553 461 461 — — — — — — — — — — — — — — 4,267 319 260,898 287 265,771 2,014 2,014 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. 88 Notes to the Consolidated Financial Statements30 June 2022 Note 30. Fair value measurement Fair value hierarchy The following tables detail the Group’s assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability Consolidated — 30 June 2022 Assets Derivative financial instruments Total assets Consolidated — 30 June 2021 Assets Investment property — freehold Investment property — held for sale Total assets Liabilities Derivative financial instruments Total liabilities Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 — — 14,425 14,425 — — Level 1 $’000 Level 2 $’000 Level 3 $’000 14,425 14,425 Total $’000 — — — — — — — — 1,847 1,847 188,100 188,100 478,592 478,592 666,692 666,692 — — 1,847 1,847 Assets held for sale are measured at fair value on a non-recurring basis. There were no transfers between levels during the financial year. The carrying amounts of trade and other receivables and trade and other payables approximate their fair values due to their short-term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities. 89 HMC Capital | Annual Report 2022 Valuation techniques for fair value measurements categorised within level 2 and level 3 The basis of the valuation of investment properties is fair value. Independent valuations are obtained on a rotational basis to ensure each property is valued at least once every 24 months by an independent external valuer. Valuations are based on current prices in an active market for similar properties of the same location and condition, subject to similar leases and take into consideration occupancy rates and returns on investment. For properties not independently valued during the reporting period, a directors’ valuation is carried out to determine the appropriate carrying value of the property as at the date of the report. Where directors’ valuations are performed, the valuation methods include using the discounted cash flow method and the capitalisation method. Derivative financial instruments have been valued using observable market inputs. This valuation technique maximises the use of observable market data where it is available and relies as little as possible on entity specific estimates. Level 3 assets and liabilities The level 3 assets and liabilities unobservable inputs and sensitivity are as follows: Description Investment property — freehold and held for sale Unobservable inputs (i) Capitalisation rate (ii) Discount rate (iii) Terminal yield (iv) Rental growth Range (weighted average) 30 June 2022 Nil Nil Nil Nil Range (weighted average) 30 June 2021 4.8% to 8.0% (6.5%) 5.5% to 9.0% (7.1%) 5.3% to 8.3% (6.6%) 2.0% to 3.5% (2.7%) A higher capitalisation rate, discount rate or terminal yield will lead to a lower fair value. A higher growth rate will lead to a higher fair value. The capitalisation rate is the most significant input into the valuation of investment property and therefore most sensitive to changes in valuation. A 25 (2021: 25) basis point change in capitalisation rate would increase/decrease fair value by $ Nil (2021: $26.9 million). Note 31. Key management personnel disclosures Compensation The aggregate compensation made to directors and other members of key management personnel of the Group is set out below: Consolidated 30 June 2022 $ 30 June 2021 $ 2,581,336 2,892,758 140,795 169,823 1,919,543 1,413,841 4,641,674 4,476,422 Short-term employee benefits Post-employment benefits Share-based payments 90 Notes to the Consolidated Financial Statements30 June 2022 Note 32. Remuneration of auditors During the financial year the following fees were paid or payable for services provided by PricewaterhouseCoopers, the auditor of the Company, and unrelated firms: Audit services — PricewaterhouseCoopers Audit or review of the financial statements Other services — PricewaterhouseCoopers Other assurance services Review of destapling shareholder booklet Total remuneration to PricewaterhouseCoopers Other auditors Audit or review of the financial statements Other services Other assurance services Total remuneration to other auditors Note 33. Contingent liabilities The group had no contingent liabilities as at 30 June 2022 and 30 June 2021. Consolidated 30 June 2022 $ 30 June 2021 $ 392,416 408,733 8,731 8,160 76,500 — 85,231 8,160 477,647 416,893 18,000 13,000 31,000 — — — 91 HMC Capital | Annual Report 2022 Note 34. Commitments Capital commitments Committed at the reporting date but not recognised as liabilities: Capital expenditure Property acquisitions Note 35. Related party transactions Parent entity Home Consortium Limited is the parent entity of the Group. Subsidiaries Interests in subsidiaries are set out in note 38. Associates Interests in associates are set out in note 16. Consolidated 30 June 2022 $’000 30 June 2021 $’000 26,950 17,556 — 125,045 26,950 142,601 Key management personnel Disclosures relating to key management personnel are set out in note 31 and the remuneration report included in the directors’ report. Related party transactions with HealthCo Healthcare and Wellness REIT (‘HCW’) HCW Funds Management Limited (Responsible Entity) was appointed as the responsible entity of HCW during the financial year. The Responsible Entity has appointed HMC Property Management Pty Limited (the ‘Property Manager’) and HMC Investment Management Pty Ltd (the ‘Investment Manager’) to provide certain asset management, investment management and development management services to HCW in accordance with an Investment Management and Property and Development Management Agreement (‘Management Agreements’). The Responsible Entity, Property Manager and Investment Manager are wholly owned subsidiaries of the Group. Refer note 16 for details of the establishment of HCW. 92 Notes to the Consolidated Financial Statements30 June 2022 Related party transactions with HomeCo Daily Needs REIT (‘HDN’) HMC Funds Management Limited was appointed as the responsible entity of HDN in the previous financial year. The Responsible Entity has appointed HMC Property Management Limited (the ‘Property Manager’) and HMC Investment Management Pty Ltd (the ‘Investment Manager’) to provide certain asset management, investment management and development management services to HDN in accordance with an Investment Management and Property and Development Management Agreement (‘Management Agreements’). The Responsible Entity, Property Manager and Investment Manager are wholly owned subsidiaries of the Group. Material related party transactions entered during the financial year are disclosed below: Consolidated 30 June 2022 $ 30 June 2021 $ Sale of goods and services: Property rental and other property income derived from director and shareholder related entities 839,970 6,700,113 Investment management and property management fees derived from HDN and HCW 62,607,034 10,118,036 Responsible Entity expenses reimbursed from HDN and HCW Management fees derived from director and KMP related entity Payment for goods and services: 1,981,868 288,946 918,750 1,248,790 Payment for office space, associated costs and reimbursement of expenses to a director related entity — 43,749 Payment for settlement adjustments relating to tenant rent and property expenses 2,192,165 1,962,001 Other transactions: (i) Rental guarantee expenses payable to HDN and HCW 2,689,997 475,000 (ii) Receipts from HDN and HCW (reimbursement of property deposits, capital expenditure and IPO transaction costs) (iii) Sub underwriter fee (iv) Sale of 50% interest in Proxima (Southport) QLD to HCW (v) Novation of interest rate swap to HDN 15,392,422 26,140,642 — 405,000 5,000,000 198,791 — — Settlement of assets classified as held for sale Refer to note 14 for assets classified as held for sale for properties that were later settled during the financial year to HCW and HDN. Settlement of investment properties Refer to note 15 for investment properties that were disposed during the financial year to HDN. 93 HMC Capital | Annual Report 2022 Receivable from and payable to related parties The following balances are outstanding at the reporting date in relation to transactions with related parties: Current receivables: Trade receivables from the director and shareholder related entities Receivables from HDN and HCW Receivables from director and KMP related entity Current payables: Payables to HDN and HCW Loans to/from related parties The following balances are outstanding at the reporting date in relation to loans with related parties: Consolidated 30 June 2022 $ 30 June 2021 $ 56,474 496,117 22,300,644 6,251,806 55,000 1,593,661 — — Consolidated 30 June 2022 $ 30 June 2021 $ Non-current receivables: Convertible notes in a director and KMP related entity 2,281,500 548,000 All related party receivables are considered to be recoverable. Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. 94 Notes to the Consolidated Financial Statements30 June 2022 Note 36. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Profit/(loss) after income tax Total comprehensive income/(loss) Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Contributed equity Profits reserve Share-based payments reserve Accumulated losses Total equity Parent 30 June 2022 $’000 30 June 2021 $’000 49,061 (89,220) 49,061 (89,220) Parent 30 June 2022 $’000 30 June 2021 $’000 11,141 12,011 2,079,380 977,526 9,536 9,536 4,455 259,691 5,036,746 3,710,382 24,821 4,837 1,885 2,128 (2,996,560) (2,996,560) 2,069,844 717,835 Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021. Capital commitments — Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 June 2021. Significant accounting policies The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 3, except for the following: l Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. l Investments in associates are accounted for at cost, less any impairment, in the parent entity. l Dividends received from subsidiaries and distributions received from associates are recognised as other income by the parent entity. 95 HMC Capital | Annual Report 2022 Note 37. Business combinations Aventus Holdings Limited (‘AHL’) On 4 March 2022, the Group acquired 100% of the ordinary shares of AHL for the total consideration of $143.7 million. AHL was listed on the Australian Securities Exchange and its activities included management of large format retail property assets. The acquired business contributed revenues of $5.0 million to the Group for the period from 4 March 2022 to 30 June 2022. If the acquisition occurred on 1 July 2021, the full-year contributions would have been revenues of $17.4 million. The assets and liabilities recognised as a result of the acquisition are as follows: Cash and cash equivalents Trade and other receivables Management rights Trade and other payables Provision for income tax Deferred tax liabilities Employee benefits Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Cash consideration paid Home Consortium Limited shares issued Acquisition costs expensed to profit or loss Cash used to acquire business, net of cash acquired: Cash consideration Less: cash and cash equivalents acquired Net cash used Fair value $’000 4,440 2,395 137,437 (8,896) (16) (40,090) (879) 94,391 49,337 143,728 82,944 60,784 143,728 3,519 82,944 (4,440) 78,504 The goodwill of $49.3 million comprises of $8.1 million relating to the profitability of the acquired business and the synergistic opportunities that will arise from the acquisition plus $41.2 million relating to deferred tax liabilities recognised for management rights. The values identified in relation to the acquisition of AHL are provisional as at 30 June 2022. 96 Notes to the Consolidated Financial Statements30 June 2022 Note 38. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following principal subsidiaries in accordance with the accounting policies described in note 3: Name Subsidiaries of Home Consortium Limited: Home Consortium Property Pty Ltd Home Consortium Property Trust Aventus Holdings Limited HMC Capital Partners Trust A HMC Capital Partners Trust B HMC Capital Partners Trust C Subsidiaries of Home Consortium Developments Pty Limited (HCDL)* HomeCo Childcare Pty Ltd** HMC Funds Management Limited** HMC Investment Management Pty Ltd** HMC Property Management Pty Ltd** HCW Funds Management Limited** HMC Capital Funds Management Pty Ltd** Home Consortium Developments Property Trust Principal place of business/ Country of incorporation Ownership interest 30 June 2022 % 30 June 2021 % Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% — — — — 100% 100% 100% 100% — — — 100% * As detailed in note 2, HCDL was de-stapled from the HMC group during the year. HCL obtained 100% control of HCDL and its subsidiaries from 24 December 2021. ** Entity is a 100% owned subsidiary of HCDL. Note 39. Deed of cross guarantee HCL and its wholly owned subsidiaries are parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements and Directors’ report under ASIC Legislative Instrument 2016/785. HCL and its wholly owned subsidiaries represent a ‘Closed Group’ for the purposes of the Instrument, and as there were no other parties to the deed of cross guarantee that are controlled by HCL, they also represented the ‘Extended Closed Group’. The statement of profit or loss and other comprehensive income for the year ended 30 June 2022 and statement of financial position as at 30 June 2022 are the same as the Group and therefore have not been separately disclosed. 97 HMC Capital | Annual Report 2022 Note 40. Earnings per security Earnings per security for profit/(loss) from continuing operations Profit/(loss) after income tax Non-controlling interest Profit/(loss) after income tax Consolidated 30 June 2022 $’000 30 June 2021 $’000 107,262 (95,787) (30,013) (4,087) 77,249 (99,874) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 293,292,529 273,245,680 Adjustments for calculation of diluted earnings per share: Rights over ordinary shares 2,017,991 — Weighted average number of ordinary shares used in calculating diluted earnings per share 295,310,520 273,245,680 Cents 26.34 Cents (36.55) 26.16 (36.55) Consolidated 30 June 2022 $’000 30 June 2021 $’000 — — — 9,883 — 9,883 Cents Cents — — 3.62 3.62 Basic earnings per security Diluted earnings per security Earnings per security for profit from discontinued operations Profit after income tax Non-controlling interest Profit after income tax Basic earnings per security Diluted earnings per security 98 Notes to the Consolidated Financial Statements30 June 2022 Earnings per security for profit/(loss) Profit/(loss) after income tax Non-controlling interest Profit/(loss) after income tax Basic earnings per security Diluted earnings per security Consolidated 30 June 2022 $’000 30 June 2021 $’000 107,262 (85,904) (30,013) (4,087) 77,249 (89,991) Cents 26.34 Cents (32.93) 26.16 (32.93) Nil (2021: 1,869,816) share rights over ordinary shares have been excluded from the calculation of diluted earnings per security as they are anti-dilutive. Note 41. Share-based payments The share-based payment expense for the year was $3.4 million (2021: $1.7 million). Share rights The following share rights are issued to employees and key management personnel of the Group. Share rights issued in the 2022 financial year During the financial year, the Group made a number of equity awards. These included the FY22 LTIP (which has predetermined relative total shareholder return and aggregated FFO performance hurdles and also service conditions), NEDEP fee sacrifice rights (which upon vesting are only subject to disposal restrictions), recognition rights awards (service conditions only) and a number of sign-on awards to newly appointed executives in compensation for equity awards forgone from prior employers (service conditions only). 99 HMC Capital | Annual Report 2022 Set out below are summaries of share rights granted under the plans: 30 June 2022 Plan details Grant date Estimated vesting date Balance at the start of the year Granted Exercised — — — — — — — — — (145,072) FY20 LTIP 14/10/2019 27/08/2022 436,485 IPO employee grant 14/10/2019 14/10/2022 344,319 FY20 COVID-19 grant 25/08/2020 30/09/2022 262,567 FY21 LTIP (MD & CEO) 25/11/2020 27/08/2023 376,083 25/11/2020 27/08/2021 145,072 FY21 NEDEP fee sacrifice rights FY21 LTIP (Executive KMP, excluding MD & CEO) 18/01/2021 27/08/2023 305,290 33,054 FY22 LTIP 14/03/2022 28/08/2024 FY22 NEDEP fee sacrifice rights 14/03/2022 25/08/2022 Recognition rights 14/03/2022 30/06/2022 Sign-on award 14/03/2022 01/04/2024 Sign-on award 14/03/2022 25/08/2022 Sign-on award 14/03/2022 27/08/2023 Sign-on award 14/03/2022 31/01/2024 Sign-on award 19/05/2022 26/04/2023 Sign-on award 19/05/2022 26/04/2024 Sign-on award 19/05/2022 26/04/2025 — — — — — — — — — — 508,115 69,377 107,041 37,500 25,235 14,399 9,885 20,172 20,172 20,172 Expired/ forfeited/ other Balance at the end of the year — 436,485 (8,695) 335,624 — — — — 262,567 376,083 — 338,344 (19,130) 488,985 — 69,377 (2,874) 104,167 — — — — — — — 37,500 25,235 14,399 9,885 20,172 20,172 20,172 — — — — — — — — — — — 1,869,816 865,122 (145,072) (30,699) 2,559,167 30 June 2021 Plan details Grant date Estimated vesting date Balance at the start of the year Granted Exercised FY20 LTIP 14/10/2019 27/08/2022 374,627 IPO employee grant 14/10/2019 14/10/2022 300,000 FY20 COVID-19 grant 25/08/2020 30/09/2022 FY21 LTIP (MD & CEO) 25/11/2020 27/08/2023 FY21 NEDEP fee sacrifice rights FY21 LTIP (Executive KMP, excluding MD & CEO) 25/11/2020 27/08/2021 18/01/2021 27/08/2023 — — — — — — 262,567 376,083 145,072 305,290 674,627 1,089,012 — — — — — — — Expired/ forfeited/ other* Balance at the end of the year 61,858 436,485 44,319 344,319 — — — — 262,567 376,083 145,072 305,290 106,177 1,869,816 * Includes 110,655 top-up awards that were made for existing awards during FY21, as these awards have been added to their original awards. 100 Notes to the Consolidated Financial Statements30 June 2022 There are 104,167 share rights that are vested and exercisable as at 30 June 2022 (2021: Nil). The weighted average remaining contractual life of share rights outstanding at the end of the financial year was 0.9 years (2021: 1.5 years). For the share rights granted during the current financial year, the valuation model inputs used to determine the fair value at the grant date, are as follows: Plan details Grant date Vesting date Share price at grant date $ Expected volatility % Dividend yield % Risk-free interest rate % Fair value at grant date $ FY21 LTI awards — Relative TSR FY21 LTI awards — Freehold FFO FY22 LTI awards — Relative TSR FY22 LTI awards — Freehold FFO FY22 NEDEP fee sacrifice rights 14/03/2022 26/08/2023 6.58 40.0% 2.3% 1.0% 14/03/2022 26/08/2023 6.58 40.0% 2.3% 1.0% 6.22 6.37 14/03/2022 26/08/2024 6.58 38.0% 2.3% 1.5% 4.03 14/03/2022 26/08/2024 6.58 38.0% 2.3% 1.5% 14/03/2022 26/08/2022 Recognition rights 14/03/2022 30/06/2022 Sign-on award 14/03/2022 01/04/2024 Sign-on award 14/03/2022 26/08/2022 Sign-on award 14/03/2022 26/08/2023 Sign-on award 14/03/2022 31/01/2024 Sign-on award 19/05/2022 26/04/2023 Sign-on award 19/05/2022 26/04/2024 Sign-on award 19/05/2022 26/04/2025 6.58 6.58 6.58 6.58 6.58 6.58 5.74 5.74 5.74 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 38.0% 38.0% 38.0% — — 2.3% — 2.3% 2.3% 2.3% 2.3% 2.3% 0.8% 0.2% 1.3% 0.3% 0.9% 1.2% 1.2% 2.5% 2.8% 6.22 6.58 6.58 6.28 6.58 6.37 6.31 5.62 5.49 5.36 101 HMC Capital | Annual Report 2022 Note 42. Cash flow information Reconciliation of profit/(loss) after income tax to net cash from operating activities Profit/(loss) after income tax expense for the year Adjustments for: Depreciation expenses Impairment expenses Share-based payments expenses Share of profit from associates and joint ventures Net gain on disposal of investment property Net fair value adjustment to investment property — freehold Net fair value adjustment on remeasurement of derivative financial assets Gain recognised on investments in associates Straight-lining of rental income Amortisation of capitalised borrowing costs Management fees not received in cash Change in operating assets and liabilities, net of effects from purchase of controlled entities: Increase in trade and other receivables Decrease in deferred tax assets (Increase)/decrease in other operating assets Increase/(decrease) in trade and other payables Decrease in derivative liabilities Increase/(decrease) in other operating liabilities Net cash from operating activities Consolidated 30 June 2022 $’000 30 June 2021 $’000 107,262 (85,904) 520 21,339 3,404 — — 1,656 (71,148) (8,940) (28,030) — (5,003) 23,058 6,324 (16,900) 563 1,788 — — (3,503) 2,976 (22,300) — (7,653) (5,151) 12,105 123,083 (3,212) 1,496 1,351 (22,834) (1,847) (1,279) 3,042 (2,000) 1,605 22,658 102 Notes to the Consolidated Financial Statements30 June 2022 Non-cash investing and financing activities Additions to the right-of-use assets Shares issued in relation to business combinations (note 37) Shares issued on acquisition of property Capital distribution on demerger of HDN Units acquired in HDN Changes in liabilities arising from financing activities Consolidated Balance at 1 July 2020 Net cash used in financing activities Transfer to investment property — leasehold Disposal of leasehold property Balance at 30 June 2021 Net cash used in financing activities Acquisition of leases Balance at 30 June 2022 Consolidated 30 June 2022 $’000 4,887 60,784 30 June 2021 $’000 — — — — 20,000 (189,600) 140,272 — 205,943 (169,600) Senior secured bank debt $’000 Lease liabilities $’000 Total $’000 366,000 143,077 509,077 (111,250) (11,895) (123,145) — — (8,905) (8,905) (122,000) (122,000) 254,750 277 255,027 (254,750) (334) (255,084) — — 4,402 4,345 4,402 4,345 Note 43. Events after the reporting period HMC Capital Partners Fund I On 4 July 2022, HMC Capital’s wholly owned subsidiary HMC Investment Management Pty Limited (Manager) launched HMC Capital Partners Fund I (the Fund), an Australian domiciled unlisted wholesale fund providing exposure to a high-conviction investment strategies. The Fund will target public and private companies in Australia and New Zealand with real assets. HMC Capital has committed to investing $150.0 million of equity into the Fund subject to the qualifications set out in the Fund information memorandum dated July 2022. As part of an early commitment incentive program, initial investors into the Fund will receive rebated management fees and be eligible to subscribe for options in HMC Capital, subject to receiving (and making a valid application order) a prospectus in respect of such options and compliance with relevant law. The options are proposed to be issued following approval at HMC Capital’s next AGM which is expected to be held in November 2022. Following HMC Capital lodging an initial substantial holder notice in Sigma Healthcare Limited (ASX: SIG) in June 2022, HMC Capital increased its combined relevant and economic interest to 13.9%. The investment is being acquired as a seed asset for the Fund. No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years. 103 HMC Capital | Annual Report 2022 Directors’ Declaration In the directors’ opinion: l the attached financial statements and notes of Home Consortium Limited comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; l the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 3 to the financial statements; l the attached financial statements and notes give a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance for the financial year ended on that date; l 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 l at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 39 to the HMC financial statements. The directors have been given the declarations required by section 295A of the Corporations Act 2001, from the Chief Executive Officer and Chief Financial Officer for the year ended 30 June 2022. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors Chris Saxon Chair 23 August 2022 David Di Pilla Director 104 Independent Auditor’s Report to the security holders of Home Consortium Limited Independent Auditor’s Report Independent auditor’s report To the members of Home Consortium Limited Report on the audit of the financial report Our opinion In our opinion: The accompanying financial report of Home Consortium Limited (the Company) and its controlled entities (together the Group) is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group's financial position as at 30 June 2022 and of its financial performance for the year then ended (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. What we have audited The Group financial report comprises: ● ● ● ● ● ● the consolidated statement of financial position as at 30 June 2022 the consolidated statement of profit or loss and other comprehensive income for the year then ended the consolidated statement of changes in equity for the year then ended the consolidated statement of cash flows for the year then ended the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information the Directors’ declaration. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. PricewaterhouseCoopers, ABN 52 780 433 757 One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001 T: +61 2 8266 0000, F: +61 2 8266 9999 Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999 Liability limited by a scheme approved under Professional Standards Legislation. 105 HMC Capital | Annual Report 2022 Independent Auditorrs Report Our audit approach An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates. Materiality ● For the purpose of our audit we used overall Group materiality of $4.2 million, which represents approximately 0.5% of the Group’s net assets. ● We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole. ● We chose Group net assets because, in our view, it is a common benchmark for entities with a high level of growth. We utilised a 0.5% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds. Audit scope ● Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events. ● The Group engagement team directed the involvement of the component audit team who performed an audit of the financial information of Healthco Healthcare and Wellness REIT (“HCW”). The component engagement team of HomeCo Daily Needs REIT (‘HDN’) is the Group engagement team and as such, all other procedures outside those performed over HCW were performed by the Group team. ● For the work performed by the component audit team, we considered the level of involvement we needed to have in their audit work to be able to evaluate whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Group’s financial report as a whole. This included active dialogue during the audit with the component audit team and consideration of the results of their work. 106 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. The key audit matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context. Key audit matter How our audit addressed the key audit matter Investments accounted for using the equity method Refer to note 16 of the financial report The carrying value of the associates accounted for under the equity method at 30 June 2022 totalled $580.1 million and comprised $443.2 million for HomeCo Daily Needs REIT (‘HDN’) and $136.9 million for HealthCo Healthcare and Wellness REIT (‘HCW’). In accordance with Australian Accounting Standards, interests in associates need to be assessed for indicators of impairment at the reporting date. If indicators of impairment exist, the recoverable amount for each investment needs to be estimated. We have considered this a key audit matter due to the financial significance of the associates, the level of judgement required to determine the fair value of the investment properties they hold and the complexity and judgements required in determining their recoverable amount. The significant judgments included discounted cash flow analysis, the capitalisation method or the use of observable inputs that require significant adjustments based on unobservable inputs. ● Our audit procedures on associates accounted for using the equity method included, amongst others: ● Reperforming the equity method of accounting ● calculations by reference to underlying investee financial information. Evaluating the assessment made by the Group of whether there were any indicators of impairment. Where such indicators exist, evaluating, with the help of our valuation subject matter experts, the impairment assessment methodologies and the significant assumptions used. In addition, we tested the mathematical accuracy of the model on a sample basis. ● Considering the professional competence of the component auditors and performing procedures to obtain sufficient evidence that the component auditors’ work was adequate for our audit. This included understanding the audit procedures performed by the component auditors over investment properties, with a focus on evaluating their work over the methodology and key assumptions such as the capitalisation rate, discount rate, market rents, terminal yield and capital expenditure adopted by management. Assessing the reasonableness of the relevant disclosures in the financial reports in light of the requirements of Australian Accounting Standards. Business Combination Refer to note 37 of the financial report On 4 March 2022 the Group acquired 100% of the ordinary shares of Aventus Holdings Limited ('Aventus') whose activities included investment and management of large format retail property assets. This was a key audit matter due to the complexity of the valuation methods adopted in calculating the intangible assets acquired and the consequent accounting treatment. Our audit procedures on the business combination included, amongst others: ● Understanding and evaluating the Group’s accounting treatment and process to identify the intangible assets. ● With the assistance of our valuation subject matter experts, assessing the appropriateness of the methods used and assumptions made by the Group in determining the value of the acquired intangible assets. 107 HMC Capital | Annual Report 2022 Independent Auditorrs Report Key audit matter How our audit addressed the key audit matter ● ● Assessing the appropriateness of assumptions made by the Group in determining the value of the identified tangible assets and liabilities acquired. Agreeing the consideration paid to relevant supporting documents. ● Recalculating the goodwill balance. ● Recalculating the deferred tax impact of the ● accounting entries posted. Assessing the reasonableness of the relevant disclosures in the financial reports in light of the requirements of Australian Accounting Standards. Other information The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 June 2022, but does not include the financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other information we obtained included the Directors’ report, Security Holder information and Corporate directory. We expect the remaining other information to be made available to us after the date of this auditor's report. Our opinion on the financial report does not cover the other information and we do not and will not express an opinion or any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the other information not yet received, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the Directors and use our professional judgement to determine the appropriate action to take. Responsibilities of the Directors for the financial report The Directors are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determines is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. 108 Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report. Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 12 to 30 of the Directors' report for the year ended 30 June 2022. In our opinion, the remuneration report of Home Consortium Limited for the year ended 30 June 2022 complies with section 300A of the Corporations Act 2001. Responsibilities The Directors are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers Scott Hadfield Partner Sydney 23 August 2022 109 HMC Capital | Annual Report 2022 Security Holder Information The security holder information set out below was applicable as at 28 July 2022. Distribution of equitable securities Analysis of number of equitable security holders by size of holding: 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Holding less than a marketable parcel Ordinary securities Number of holders of securities % of total securities issued 900 1,126 710 745 60 0.11 1.13 1.78 5.85 91.13 3,541 100.00 — — 110 Equity security holders Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Home Investment Consortium Trust* HSBC Custody Nominees (Australia) Limited JP Morgan Nominees Australia Pty Limited Citicorp Nominees Pty Limited National Nominees Limited BNP Paribas Noms Pty Ltd GOAT Properties Pty Ltd Aurrum Holdings Pty Ltd Netwealth Investments Limited UBS Nominees Pty Ltd BBFIT Investments Pte Limited Bridgebox Pty Ltd CW Property Nominees Pty Ltd Citicorp Nominees Pty Limited HSBC Custody Nominees (Australia) Limited Longmorn Pty Ltd BNP Paribas Nominees Pty Ltd SG Foundation Investments Pty Ltd Doux Argent Pty Ltd RRI Investments Pty Ltd * Home Investment Consortium Trust holding includes all subsidiaries. Ordinary securities Number held 90,354,537 76,845,654 29,856,578 11,667,833 8,410,296 8,356,688 7,596,973 7,010,418 3,743,101 3,693,480 3,103,125 2,759,639 2,238,806 1,867,101 1,561,086 1,350,000 1,206,963 1,071,014 901,899 870,247 % of total securities issued 30.16 25.65 9.96 3.89 2.81 2.79 2.53 2.34 1.25 1.23 1.04 0.92 0.75 0.62 0.52 0.45 0.40 0.36 0.30 0.29 264,465,438 88.26 111 HMC Capital | Annual Report 2022 Security Holder Information Unquoted equity securities Share rights Substantial security holders Substantial holders in the Company are set out below: Home Investment Consortium Trust* * Home Investment Consortium Trust holding includes all subsidiaries. Voting rights The voting rights attached to ordinary shares are set out below: Number on issue Number of holders 2,559,167 44 Ordinary securities Number held % of total securities issued 90,354,537 30.16 Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. There are no other classes of equity securities. Restricted securities Class Expiry date Ordinary securities Upon retirement from the Board Number of securities 101,493 112 Corporate Directory Directors Chris Saxon David Di Pilla Zac Fried Greg Hayes Jane McAloon Brendon Gale Kelly O’Dwyer Company secretary Andrew Selim Registered office and Principal place of business Level 7 Gateway 1 Macquarie Place Sydney NSW 2000 Share register Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000 Telephone: 1300 554 474 Auditor PricewaterhouseCoopers Tower One, International Towers Sydney Level 17, 100 Barangaroo Avenue Barangaroo NSW 2000 Stock exchange listing Home Consortium Limited shares are listed on the Australian Securities Exchange (ASX code: HMC) Website https://www.hmccapital.com.au/ Corporate Governance Statement The directors and management are committed to conducting the business of Home Consortium Limited in an ethical manner and in accordance with the highest standards of corporate governance. Home Consortium Limited has adopted and has fully complied with the ASX Corporate Governance Principles and Recommendations (Fourth Edition) (‘Recommendations’). The group’s Corporate Governance Statement, which sets out the corporate governance practices that were in operation during the financial year and ASX Appendix 4G are approved and released to the ASX on the same day the Annual Report is released. The Corporate Governance Statement and Home Consortium Limited’s other corporate governance policies and charters can be found on its website at https://hmccapital.com.au/investor-centre. 113 HMC Capital | Annual Report 2022
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