ABACUS GROUP - Annual Report 2008

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annual fi nancial report 2008

Abacus Property Group

At 30 June 2008, the Abacus Property Group (APG) comprised the Abacus Trust (AT), the Abacus Income Trust (AIT), Abacus Group Holdings Limited (AHL) and Abacus Group Projects Limited (AGPL). A summary of the corporate structure is illustrated below.

AGHL has been identifi ed as the parent entity for the purpose of producing a consolidated fi nancial report for the APG. That is, The concise fi nancial report of AGHL services as a summary of the fi nancial performance and position of APG as a whole. It consolidates the fi nancial reports of AGHL, AT, AIT and AGPL and their controlled entities.

To comply with Australian reporting requirements, the concise fi nancial reports of AT, AIT and AGPL are also provided.

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Abacus Group Holdings Limited
Abacus Trust
Abacus Income Trust
Abacus Group Projects Limited
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Glossary

Abacus Abacus Funds Management Limited, the responsible entity of the trusts AGHL Abacus Group Holdings Limited AGPL Abacus Group Projects Limited AIT Abacus Income Trust APG Abacus Property Group AT Abacus Trust

01 Abacus Property Group 39 Abacus Trust 63 Abacus Income Trust 87 Abacus Group Projects Limited 109 Corporate Governance 111 ASX additional information

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abacus property group

Share Registry

Computershare Investor Services Pty Ltd Level 3, 60 Carrington Street SYDNEY NSW 2000 Tel: (02) 1800 635 323 Toll free Fax: (02) 8234 5050

The concise fi nancial report is an extract from the full fi nancial report for the year ended 30 June 2008. The fi nancial statements and specifi c disclosures included in the concise fi nancial report have been derived from the full fi nancial report. It is recommended that this Concise Annual Financial Report should be read in conjunction with the Concise Annual Financial Reports of Abacus Trust, Abacus Income Trust and Abacus Group Projects Limited for the year ended 30 June 2008. It is also recommended that the report be considered together with any public announcements made by the Abacus Property Group in accordance with its continuous disclosure obligations arising under the Corporations Act 2001.

annual fi nancial report / continued

directors’ report

30 JUNE 2008

The Directors present their report together with the consolidated fi nancial report of Abacus Group Holdings Limited and the auditor’s report thereon.

Abacus Group Holdings Limited (AGHL) has been identifi ed as the parent entity of the group referred to as the Abacus Property Group (APG or the Group). The consolidated fi nancial reports of Abacus Property Group for the year ended 30 June 2008 comprises the consolidated fi nancial reports of Abacus Group Holdings Limited and its controlled entities, Abacus Trust and its controlled entities, Abacus Group Projects Limited and its controlled entity and Abacus Income Trust and its controlled entities.

DIRECTORS

The Directors of Abacus Group Holdings Limited in offi ce during the fi nancial year and until the date of this report are as follows. Directors were in offi ce for this entire period unless otherwise stated.

CORPORATE STRUCTURE

The Group is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects Limited (AGPL) and Abacus Income Trust (AIT). Shares in AGHL and AGPL and units in AT and AIT and have been stapled together so that none can be dealt with without the others. An APG security consists of one share in AGHL, one unit in AT, one share in AGPL and one unit in AIT. A transfer, issue or reorganisation of a share or unit in any of the component parts is accompanied by a transfer, issue or reorganisation of a share or unit in each of the other component parts.

AGHL and AGPL are companies that are incorporated and domiciled in Australia. AT and AIT are Australian registered managed investment schemes. Abacus Funds Management Limited (AFML), the Responsible Entity of AT and AIT, is incorporated and domiciled in Australia and is a wholly-owned subsidiary of AGHL.

OPERATING PROFIT

John Thame	Chairman(Non-executive)
Frank Wolf	ManagingDirector
William Bartlett	Non-executive Director
David Bastian	Non-executive Director
Dennis Bluth Malcolm Irving Len Lloyd	Non-executive Director Non-executive Director Executive Director

The Group earned a net profi t attributable to members of $71.5 million for the year ended 30 June 2008 (June 2007: $118.8 million).

The Group earned a net ‘normalised’ profi t attributable to members (excluding net property, investments, derivative and employee entitlement fair value revaluations) of $92 million (June 2007: $79.8 million).

PRINCIPAL ACTIVITIES

The Group operates predominantly in Australia and its principal activities during the course sof the year ended 30 June 2008 included:

investment in commercial, retail and industrial properties;
property funds management;
property fi nance; and
participation in property joint ventures and developments.

2 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

DISTRIBUTIONS

Group distributions in respect of the year ended 30 June 2008 were $85 million (June 2007: $68.8 million), which is equivalent to 13.5 cents per stapled security (June 2007: 12.5 cents) paid and payable as follows:

	CENTS	$’000
Interim distributionpaid 8 November 2007	3.25	20,225
Interim distributionpaid 7 February2008	3.25	20,466
Interim distributionpaid 8 May2008	3.50	22,109
Final distributionpaid 7 August 2008	3.50	22,183
Total	13.50	84,983

REVIEW OF OPERATIONS

APG’s normalised earnings grew by 15.3%, refl ecting the Group’s robust growth in core business income and activity. Normalised earnings per stapled security of 14.7 cents exceeded distributions per stapled security of 13.5 cents (inclusive of the 8% year on year growth in distributions). Revenue and net profi t decreased due principally to the impact of $15.6 million in net property devaluations in the year ended 30 June 2008 compared to $33.3 million in net property revaluations for the year ended 30 June 2007.

	30 JUNE 2008	30 JUNE 2007	%
	$’000	$’000	CHANGE
Total income*	138,423	181,804	(23.9)
Pre-taxprof t	69,392	124,923	(44.5)
Netprof t after tax	72,426	120,402	(39.8)
Netprof t attributable to securityholders	71,460	118,811	(39.9)
Earningsper security (cents)	11.42	21.48	(46.8)
‘Normalised earnings’per security (cents)**	14.70	14.43	2
Distributions per security (cents)	13.50	12.50	8

[*] Total revenue plus realised gains on sale of investments plus unrealised revaluation gains/(losses) on properties/investments

[**] Normalised earnings is net profi t adjusted for AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other fi nancial instruments and share based payments)

Net property devaluations did not have a material impact on APG’s fi nancial condition which remains robust.

			%
	30 JUNE 2008	30 JUNE 2007	CHANGE
Normalised earnings($’000)	92,002	79,809	15.3
Total assets($million)	1,647	1,269	29.8
Gearing (%)	37.5	30.0	25.0
Net assets($million)	925	803.2	15.2
Net tangible assets($million)	883.9	762.2	16.0
NTAper security ($)	1.37	1.32	3.8
Retained earnings($million)	134.8	148.4	(9.2)
Securities on issue(million)	645.6	578.6	11.6
Weighted average securities on issue (million)	625.9	553.2	13.1

annual fi nancial report / continued

directors’ report

30 JUNE 2008

REVIEW OF OPERATIONS/CONTINUED

Business activities which contributed to the Group’s operating performance and fi nancial condition for the fi nancial year were:

Property

Total investment property assets at 30 June 2008 were $1,090 million (30 June 2007: $834 million). During the year the Group acquired 28 properties for approximately $327 million across a diverse range of sectors including commercial, retail, industrial and self storage.

Gains from the sale of four properties and strata suites increased Property’s contribution to the full year operating profi t by $9.4 million (2007: $13.3 million).

Rental income increased from $58 million in 2007 to $68 million due to a net increase in the property portfolio and net rental increases.

Funds Management

Gross assets under management (including APG assets) grew to $2.4 billion at 30 June 2008 (June 2007: $2.0 billion).

In July 2007 the $190 million Abacus Diversifi ed Income Fund II was launched to retail investors. The fund is an open-ended property fund investing in a diversifi ed portfolio of investment properties and other property-based assets and since the fund’s establishment it has acquired an additional fi ve properties for $48.9 million and sold one property with gross assets now approximating $219.1 million.

Two new Special Opportunity Funds were launched during the year including the Abacus Jigsaw Trust that invests in the Jigsaw child care centres and the Abacus Fern Bay Fund that invests in a retiree home park north of Newcastle in NSW.

Property Finance

Total property fi nance assets including accrued interest (and net of provisions) at 30 June 2008 were $144.7 million (30 June 2007: $120.5 million).

Revenue earned from interest and fees (net of provisions) totalled $13.2 million for the year (30 June 2007: $14.2 million).

Joint ventures and Developments

Investments managed within the Joint Ventures and Developments division comprise direct and indirect property investments and at 30 June 2008 totalled $77.3 million (30 June 2007: $70.2 million).

The joint venture investments are with experienced property investors and developers in New South Wales, Queensland and Victoria. These joint ventures enable the Group to participate in a range of property-related opportunities with industry leaders who have local knowledge and specialist property expertise.

During the year, the Group established Abacus Sanctuary Residences Pty Limited, a joint venture with Sanctuary Residences (Australia) Pty Limited, a specialist retirement living operator. This joint venture will own and develop specialist retirement living projects.

The Colemans Road project was settled in June 2008 and contributed $3.75 million in profi t to the Group.

Revenue in the form of equity accounted income, distributions and net fair value revaluations of listed securities and options contributed $3.8 million to the operating profi t (30 June 2007: $4 million).

REVIEW OF FINANCIAL CONDITION

During the year the following unlisted special opportunity funds were realised: Abacus Portfolio Services, Abacus Mariners Cove Equity Trust and Abacus Crows Nest Property Trust. The combined performance fees paid to Abacus upon realisation of these funds totalled $6.4 million and investors received an average return of 16.9%.

The Abacus Hospitality Fund released a new offer document in April increasing the unit price from $1.00 to $1.03 and increasing the annual distribution from 8.0 to 8.25 cents. The number of assets owned by the fund has increased from four to eight, with gross assets now totalling $340.4 million. The fund is now one of the top 10 hotel investors in Australia.

Funds management remained a material contributor to APG’s results with fees and other income totalling $43.8 million (30 June 2007: $38.2 million)

During the year ended 30 June 2008, the contributed equity of the Group increased by $123.1 million to $771.5 million compared to $648.4 million at 30 June 2007. Total equity increased by $121.8 million to $925 million at 30 June 2008 compared to $803.2 million at 30 June 2007 due principally to a $100 million capital raising on 25 July 2007.

Net tangible assets per security increased 3.7% to $1.37 at 30 June 2008 compared to $1.32 at 30 June 2007.

At 30 June 2008, existing bank loan facilities totalled approximately $755 million, of which $579 million was drawn. The weighted average maturity of its secured, non-recourse bank debt is 2.7 years. The Group manages interest rate exposure on debt facilities through the use of interest rate swap contracts. At 30 June 2008, 75.4% (2007: 71%) of total debt facilities were covered by interest rate swap

4 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

arrangements at an average interest rate (including bank margin) of 7.4% (2007: 7.03%) and an average term to maturity of 5.07 years (2007: 5.02 years).

The Group’s net debt gearing ratio (calculated as total interest bearing liabilities less cash assets divided by total assets less cash assets) was 37.5% at 30 June 2008 compared to 30.0% at 30 June 2007.

For the purposes of this report, the term ‘executive’ encompasses the Managing Director, senior executives, general managers and secretary of the parent and the Group.

DETAILS OF KEY MANAGEMENT PERSONNEL (INCLUDING THE FIVE HIGHEST PAID EXECUTIVES OF THE COMPANY AND THE GROUP).

i. Directors

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

The following signifi cant changes in the state of affairs of the Group occurred during the fi nancial year:

Retained earnings (including the impact of revaluations of investment properties and derivative fi nancial instruments) decreased $13.6 million to $134.8 million at 30 June 2008 compared to $148.4 million at 30 June 2007; and
Total equity increased by 15.2% from $803.2 million to $925 million at 30 June 2008 refl ecting the additional capital raised and net movements in retained earnings, increased distributions and net negative property revaluations during the year.

SIGNIFICANT EVENTS AFTER BALANCE DATE

Other than as disclosed already in this report, there has been no matter or circumstance that has arisen since the end of the fi nancial year that has signifi cantly affected, or may affect, the Group’s operations in future fi nancial periods, the results of those operations or the Group’s state of affairs in future fi nancial periods.

J. Thame Chairman (Non-executive) F. Wolf Managing Director W. Bartlett Director (Non-executive) D. Bastian Director (Non-executive) D. Bluth Director (Non-executive) M. Irving Director (Non-executive) L. Lloyd Executive Director ii. Executives R. de Aboitiz Chief Financial Offi cer T. Hardwick Director Funds Management J. L’Estrange General Manager Property Finance P. Strain Director Property E. Varejes Chief Operating Offi cer and Company Secretary

REMUNERATION AND NOMINATION COMMITTEE

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

In the opinion of the Directors, disclosure of any further information on future developments and results than is already disclosed in this report or the fi nancial statements would be unreasonably prejudicial to the interests of the Group.

REMUNERATION REPORT (AUDITED)

This Remuneration Report outlines the director and executive remuneration arrangements of the company and the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report Key Management Personnel (KMP) of the Group are defi ned as those persons having authority and responsibility for planning, directing and controlling the major activities of the parent company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the fi ve executives in the parent and the Group receiving the highest remuneration.

The Remuneration and Nomination Committee of the Board of Directors is responsible for determining and reviewing remuneration arrangements for the Board and executives.

The Remuneration and Nomination Committee assesses the appropriateness of the nature and amount of remuneration of executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefi t from the retention of a high quality, high performing Board and executive team.

annual fi nancial report / continued

directors’ report

30 JUNE 2008

REMUNERATION POLICY

The performance of the group depends upon the quality of its directors and executives. To prosper, the Group must attract, motivate and retain highly skilled directors and executives.

The Group’s policy is commensurate with our competitors and is critical to achieving the Group’s overall objective of producing superior performance and growth. The Group’s policy is designed to reward individual performance and closely align the interests of the Board and executives to those of shareholders through the use of short-term and long-term incentives. To this end, the Group embodies the following principles in its remuneration framework:

provide competitive rewards to attract high calibre executives;
link executive rewards to the Group’s performance and the creations of securityholder value;
have a reasonable portion of executive remuneration at risk; and
establish performance hurdles for variable executive remuneration.

Fees payable to non-executive directors are as follows:

Board/Committee	ROLE	FEE
Board	Chairman	$152,500
Board	Member	$57,500
Audit Committee	Chairman	$10,000
Audit Committee	Member	$5,000
Credit Committee Due Diligence Remuneration	Member Member Member	$4,800 $10,000 $5,000
Abacus Storage Funds Management
Limited Board	Member	$7,500

The payment of additional fees for serving on a committee recognises the additional time commitment required by directors who serve on one or more sub-committees.

The non-executive directors do not receive retirement benefi ts. Nor do they participate in any incentive programs. The remuneration of non-executive directors for the years ended 30 June 2008 and 30 June 2007 is detailed in Table 1 of this report.

REMUNERATION STRUCTURE

In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate and distinct.

NON-EXECUTIVE DIRECTOR REMUNERATION

Objective

The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract and retain directors of the highest calibre, while incurring a cost that is acceptable to securityholders.

Structure

The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. The latest determination was at the Annual General Meeting held on 14 November 2007 when securityholders approved an aggregate remuneration limit of $600,000 per year.

The aggregate remuneration limit and the fee structure is reviewed annually. The Board considers advice from an external consultant as well as the fees paid to non-executive directors of comparable groups when undertaking the annual review process.

EXECUTIVE REMUNERATION

Objective

The Group aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Group so as to:

reward executives for Group, business unit and individual performance against targets set by reference to appropriate benchmarks;
align the interests of executives with those of securityholders; and
ensure total remuneration is competitive by market standards.

Structure

In determining the level and make-up of executive remuneration, the Remuneration Committee engages external consultants as needed to provide independent advice.

The Remuneration Committee has negotiated a detailed contract of employment with the Managing Director. Details of this contract are provided below.

6 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

Remuneration consists of the following key elements:

fi xed remuneration (base salary, superannuation and non-monetary benefi ts).

The Board considers that performance linked objectives that have an operational and fi nancial impact focus are best suited to the outcomes desired by securityholders. Non-fi nancial measures are also taken into account.

variable remuneration
short term incentive (STI); and
long term incentive (LTI).

The proportion of fi xed remuneration and variable remuneration (potential short term and long term incentives) for each executive is set out in table 1.

FIXED REMUNERATION

Objective

Fixed remuneration is reviewed annually by the Remuneration Committee. The process consists of a review of Group, business unit and individual performance, relevant comparative remuneration in the market and internally and, where appropriate, external advice on policies and practices. The Committee has access to external advice independent of management.

Structure

Executives are given the opportunity to receive their fi xed (primary) remuneration in a variety of forms including cash and fringe benefi ts such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group.

The fi xed remuneration component of executives is detailed in Table 1.

The aggregate of annual STI payments available for executives across the Group is subject to the approval of the Remuneration Committee. Payments made are delivered as a cash bonus in the following reporting period.

VARIABLE REMUNERATION – LONG TERM INCENTIVE (LTI)

Objective

The objective of the LTI plans is to reward executives in a manner that aligns remuneration with the creation of securityholder wealth. As such, LTI grants are only made to executives who are able to infl uence the generation of securityholder wealth and thus have an impact on the Group’s performance against the relevant long term performance hurdle.

The LTI plans in operation are described below:

(a) Executive Performance Award Plan (EPAP)

LTI grants to executives are delivered in the form of security options under the EPAP. Security options are granted to executives employed on the fi rst day of the relevant fi nancial year. The security options will vest over a period of 3 years subject to meeting performance hurdles, with no opportunity to retest. Executives are able to exercise the security options for up to 7 years after vesting before the options lapse.

Performance hurdle

VARIABLE REMUNERATION – SHORT TERM INCENTIVE (STI)

Objective

The objective of the STI program is to link the achievement of the Group’s operational targets with the remuneration received by the executives charged with meeting those targets.

Structure

Actual STI payments granted to the Managing Director depend on the extent to which the specifi c target for group fi nancial performance set at the beginning of the fi nancial year is met.

At the discretion of the Board, executives and senior managers may receive STI payments based on reference to a variety of measures, both fi nancial and non-fi nancial. These measures primarily include Group profi tability targets, returns to security holders and certain key performance indicators such as assets under management.

The Group uses a relative Total Securityholder Return (TSR) as the performance hurdle for the LTI plan. Relative TSR was selected as the LTI performance hurdle as it ensures an alignment between comparative securityholder return and reward for executives.

In assessing whether the performance hurdles for each grant have been met, the Group compares its TSR growth from the commencement of each grant and that of the pre-selected peer group.

The peer group chosen for comparison is the S&P ASX 200 A-REIT. This peer group refl ects the Group’s competitors for capital transactions and talent.

The Group’s performance against the hurdle is determined according to the Group’s ranking against the peer group TSR growth over the performance period.

annual fi nancial report / continued

directors’ report

30 JUNE 2008

The security options will vest in accordance with the table below:

TSR target	PERCENTAGE OF SECURITY OPTIONS THAT VEST
Below the 50thpercentile	Nil
50thpercentile 50th to 75th percentile	50% Progressive scale of an additional 2% for each percentile increase
75th percentile	100%

Where a participant ceases employment prior to the vesting of their security options, the security options are forfeited unless cessation of employment is due to redundancy by the Group, total and permanent disablement or death. In the event of a change of control the performance period end date will be brought forward to the date of the change of control and awards will vest immediately subject to performance over this shortened period. The Group prohibits executives from entering into arrangements to protect the value of unvested LTI awards. This includes entering into contracts to hedge their exposure to options or shares granted as part of their remuneration package. Adherence to this policy is monitored on an annual basis.

Tables 2 and 3 provides details of LTI options granted and the value of options granted during the year. No LTI options were exercised or lapsed during the year.

(b) Executive Security Loan Plan (ESLP)

Executives were offered limited recourse loans to acquire Group securities on market. The executive entered into a salary sacrifi ce arrangement under which base remuneration approximately equal to a notional interest amount on the loan is foregone by the executive. The interest rate for a fi nancial year is equivalent to the Group distribution rate for that year.

The loans are repayable on the earlier of the executive ceasing to be employed by the Group, the sale of the Group securities purchased under the Plan or the repayment date (30 June 2010). If the loans are not repaid or interest if payable is not paid the Group securities may be sold and the funds received applied to repay the loan and interest on the loan.

The securities acquired under the ESLP were purchased on market and are fully vested.

No loans were provided under the ESLP during the year (2007: $20,000,000 to twelve executives).

In addition, in the year ended 30 June 2006 a limited recourse loan of $2,496,822 was provided (as a pre-conditional key term of employment) to one executive to acquire Group securities on market. The Executive entered into a salary sacrifi ce arrangement under which remuneration approximately equal to a notional interest amount on the loan is foregone by the executive. The interest rate for the fi nancial year is 7.5%.

This loan is repayable on the same basis as applies under the ESLP.

The loans are accounted for in accordance with AASB 2 Share Based Payments, as follows:

The loans are not recorded on the balance sheet, as they are regarded as options.
The value of a loan is determined by an option valuation model calculation (Binominal Tree American put option model) and this amount is treated as an employee expense with a corresponding increase in reserves.
A repayment of the loan is treated as an increase to Contributed Equity.

LINK BETWEEN REMUNERATION POLICY AND THE GROUP’S PERFORMANCE

The graph below shows the performance of the Group (as measured by the Group’s TSR) and the comparison of the Group’s TSR to the median of the TSR for the peer group as detailed above.

APG and S&P/ASX 200 A-REIT Accumulation Index Total Return

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180%
160%
140%
120%
100% S&P ASX200
80% APG
60%
40%
20%
0%
30/06/200230/12/200230/06/200330/12/200330/06/200430/12/200430/06/200530/12/200530/06/200630/12/200630/06/200730/12/200730/06/2008
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8 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

In addition to TSR, the Group’s performance is refl ected in the following table:

	30 JUNE 2004	30 JUNE 2005	30 JUNE 2006	30 JUNE 2007	30 JUNE 2008
Closingshareprice	$1.17	$1.36	$1.57	$1.98	$1.15
Distributionspaid andproposed(cents)	11.23	11.40	11.80	12.50	13.50
Normalised earningsper security (cents)	12.84	12.42	12.92	14.43	14.70
Net tangible assets per security	$1.00	$1.09	$1.22	$1.32	$1.37

EMPLOYMENT CONTRACTS

Managing Director

The Managing Director, Dr Wolf, is employed under a rolling contract. The current employment contract commenced on 10 October 2002. Under the terms of the present contract:

Dr Wolf receives a base salary which is reviewed annually. He is entitled to participate in the LTI plans that are made available and to receive short-term incentive payments.
Dr Wolf may resign from his position and thus terminate this contract by giving 6 months written notice. On termination any unvested options will be forfeited and the loan under the Security Loan Plan will be repayable.
The Group may terminate this employment agreement by providing 12 months written notice or providing payment in lieu of the notice period (based on the fi xed component of Dr Wolf’s remuneration). On termination on notice by the Group, any LTI options that have vested or that will vest during the notice period will be released. LTI options that have not yet vested will be forfeited.

Other Executives

There are no formal service agreements with other executives. On termination on notice by the Group, any LTI options that have vested or that will vest during the notice period will be released. LTI options that have not yet vested will be forfeited and any loan under the ESLP will be repayable. The Group may terminate an executive’s service at any time without notice if serious misconduct has occurred. Where termination with cause occurs the executive is only entitled to remuneration up to the date of termination. On termination with cause any unvested options will immediately be forfeited.

annual fi nancial report / continued

directors’ report

30 JUNE 2008

TABLE 1: REMUNERATION OF KEY MANAGEMENT PERSONNEL

TABLE 1: REMUNERATION OF KEY MANAGEMENT PERSONNEL
2008 SHORT-TERM	POST EMPLOYMENT	SECURITY- BASED PAYMENT TOTAL % PERFORMANCE RELATED
SALARY & FEES CASH BONUS NON- MONETARY BENEFITS	SUPER- ANNUATION ACCRUED LEAVE ENTITLEMENT	OPTIONS
Non-executive directors
J Thame – Chairman 146,871 – –	13,129 –	– 160,000 –
W Bartlett 46,069 – –	21,431 –	– 67,500 –
D Bastian – – –	84,800 –	– 84,800 –
D Bluth – – –	79,800 –	– 79,800 –
M Irving 80,000 – –	– –	– 80,000 –
Sub-total non-executive directors 272,940 – –	199,160 –	– 472,100 –
Executive directors
F Wolf – ManagingDirector 1,100,000 650,000 –	100,000 –	311,859 2,161,859 44%
L Lloyd – Managing Director, PropertyServices 220,000 150,000 –	100,000 –	98,558 568,558 44%
Other keymanagementpersonnel
R de Aboitiz – Chief Financial Off cer 436,871 150,000 –	13,129 –	48,558 648,558 31%
T Hardwick – Director Funds Management 436,871 150,000 –	13,129 –	98,558 698,558 36%
J L’Estrange – General Manager PropertyFinance 386,871 150,000 –	13,129 –	98,558 648,558 38%
P Strain – Director Property* 252,189 150,000	47,811 –	81,891 531,891 44%
E Varejes – Chief OperatingOff cer 382,500 150,000 –	67,500 –	98,558 698,558 36%
Sub-total executive KMP 3,215,302 1,550,000 –	354,698 –	836,540 5,956,540
Total 3,488,242 1,550,000 –	553,858 –	836,540 6,428,640

P. Strain did not meet the defi nition of a key management person under AASB 124 for the 2007 fi nancial year but is a key management person for 2008.

10 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

TABLE 1: REMUNERATION OF KEY MANAGEMENT PERSONNEL (CONT.)

2007 SHORT-TERM	POST EMPLOYMENT	SECURITY- BASED PAYMENT TOTAL % PERFORMANCE RELATED
SALARY & FEES CASH BONUS NON- MONETARY BENEFITS	SUPER- ANNUATION ACCRUED LEAVE ENTITLEMENT	OPTIONS
Non-executive directors
J Thame – Chairman 73,702 – –	86,298 –	– 160,000 –
W Bartlett 1 25,274 – –	– –	– 25,274 –
D Bastian 2 18,300 – –	35,000 –	– 53,300 –
D Bluth 54,479 – –	33,134 –	– 87,613 –
P Green 3 14,788 – –	1,462 –	– 16,250 –
M Irving 80,000 – –	– –	– 80,000 –
Sub-total non-executive directors 266,543 – –	155,894 –	– 422,437 –
Executive directors
F Wolf – ManagingDirector 894,887 650,000 –	105,113 –	812,304 2,462,304 59%
D Bastian 4 60,000 – –	90,000 295,026	– 445,026 –
L Lloyd – Managing Director, PropertyServices 132,549 125,000 –	127,451 –	230,628 615,628 58%
Other keymanagementpersonnel
R de Aboitiz – Chief Financial Off cer 5 305,382 100,000 –	10,003 –	150,524 565,909 44%
S O’Donoghue – Chief Financial Off cer 6 63,461 – –	15,289 –	– 78,750 –
T Hardwick – Director Funds Management 387,313 150,000 –	12,687 –	50,000 600,000 33%
J L’Estrange – Gen. Man. PropertyFinance 319,314 150,000 –	30,686 –	351,047 851,047 59%
E Varejes – Chief OperatingOff cer 327,500 150,000 –	72,500 –	351,047 901,047 56%
Sub-total executive KMP 2,490,406 1,325,000 –	463,729 295,026	1,945,550 6,519,711
Total KMP compensation 2,756,949 1,325,000 –	619,623 295,026	1,945,550 6,942,148
Othergroupexecutives
P Strain 217,314 150,000 –	12,686 –	183,857 563,857 59%

[1] Appointed on 14/02/07

[2] Appointed as non-executive director on 14/11/06

[3] Resigned on 1/09/06

[4] Resigned as Managing Director on 30/09/06

[5] Appointed on 18/09/06

[6] Resigned on 18/09/06

annual fi nancial report / continued

directors’ report

30 JUNE 2008

TABLE 2: COMPENSATION OPTIONS: GRANTED AND VESTED DURING THE YEAR

Executive Performance Award Plan

The following options were issued under the Executive Performance Award Plan:

GRANTED	TERMS & CONDITIONS FOR EACH GRANT
30 JUNE 2008 NO. GRANT DATE	FAIR VALUE PER OPTION AT GRANT DATE ($) (NOTE 24) EXERCISE PRICE PER OPTION ($) (NOTE 24) EXPIRY DATE FIRST EXERCISE DATE LAST EXERCISE DATE
Executive directors
F Wolf 2,403,846 31/08/07	0.202 2.01 30/08/17 30/09/10 30/08/17
L Lloyd 721,154 31/08/07	0.202 2.01 30/08/17 30/09/10 30/08/17
Other keymanagementpersonnel
R de Aboitiz 721,154 31/08/07	0.202 2.01 30/08/17 30/09/10 30/08/17
T Hardwick 721,154 31/08/07	0.202 2.01 30/08/17 30/09/10 30/08/17
J L’Estrange 721,154 31/08/07	0.202 2.01 30/08/17 30/09/10 30/08/17
P Strain 721,154 31/08/07	0.202 2.01 30/08/17 30/09/10 30/08/17
E Varejes 721,154 31/08/07	0.202 2.01 30/08/17 30/09/10 30/08/17

GRANTED	TERMS & CONDITIONS FOR EACH GRANT
30 JUNE 2007 NO. GRANT DATE	FAIR VALUE PER OPTION AT GRANT DATE ($) (NOTE 24) EXERCISE PRICE PER OPTION ($) (NOTE 24) EXPIRY DATE FIRST EXERCISE DATE LAST EXERCISE DATE
Executive directors
F Wolf 1,343,284 12/04/07	0.335 1.485 11/04/17 30/09/09 11/04/17
L Lloyd 447,761 12/04/07	0.335 1.485 11/04/17 30/09/09 11/04/17
Other keymanagementpersonnel
T Hardwick 447,761 12/04/07	0.335 1.485 11/04/17 30/09/09 11/04/17
J L’Estrange 447,761 12/04/07	0.335 1.485 11/04/17 30/09/09 11/04/17
E Varejes 447,761 12/04/07	0.335 1.485 11/04/17 30/09/09 11/04/17
Othergroupexecutives
P Strain 298,507 12/04/07	0.335 1.485 11/04/17 30/09/09 11/04/17

12 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

Executive Security Loan Plan

No options were issued under the Executive Security Loan Plan during the year.

The following options were issued under the Executive Security Loan Plan in the year ended 30 June 2007:

GRANTED	TERMS & CONDITIONS FOR EACH GRANT		VESTED
30 JUNE 2007 NO. GRANT DATE	FAIR VALUE PER OPTION AT GRANT DATE ($) (NOTE 24) EXERCISE PRICE PER OPTION ($) (NOTE 24) EXPIRY DATE FIRST EXERCISE DATE	LAST EXERCISE DATE	NO. %
Executive directors
F Wolf 2,881,728 31/01/07	0.23 1.91 30/06/10 31/01/07	30/06/10	2,881,728 100%
L Lloyd 785,925 31/01/07	0.23 1.91 30/06/10 31/01/07	30/06/10	785,925 100%
Other key managementpersonnel
R de Aboitiz 654,938 31/01/07	0.23 1.91 30/06/10 31/01/07	30/06/10	654,938 100%
J L’Estrange 1,309,875 31/01/07	0.23 1.91 30/06/10 31/01/07	30/06/10	1,309,875 100%
E Varejes 1,309,875 31/01/07	0.23 1.91 30/06/10 31/01/07	30/06/10	1,309,875 100%
Othergroupexecutives
P Strain 654,938 31/01/07	0.23 1.91 30/06/10 31/01/07	30/06/10	654,938 100%

TABLE 3: OPTIONS GRANTED AS PART OF REMUNERATION

				REMUNERATION
	TOTAL VALUE OF	VALUE OF OPTIONS	VALUE OF OPTIONS	CONSISTING OF
	OPTIONS GRANTED	EXERCISED DURING	LAPSED DURING	OPTIONS FOR
	DURING THE YEAR	THE YEAR	THE YEAR	THE YEAR %
F Wolf	485,577	–	–	14
L Lloyd	145,673	–	–	17
R de Aboitiz	145,673	–	–	7
T Hardwick	145,673	–	–	14
J L’Estrange	145,673	–	–	15
P Strain	145,673	–	–	15
E Varejes	145,673	–	–	14

There were no alterations to the terms and conditions of options granted as remuneration since their grant date. There were no forfeitures during the period.

No options have been exercised.

annual fi nancial report / continued

directors’ report

30 JUNE 2008

INFORMATION ON DIRECTORS AND OFFICERS

The Directors and Company Secretary of AGHL, AFML (the Responsible Entity of AT and AIT) and AGPL, in offi ce during the fi nancial year and until the date of this report are as set out below, with qualifi cations, experience and special responsibilities.

John Thame AIBF, FCPA Mr Thame has over 30 years’ experience in the retail fi nancial services industry Chairman (non-executive) in senior management positions. His 26-year career with Advance Bank included Member of Remuneration and 10 years as Managing Director until the Bank’s merger with St George Bank Nomination Committee Limited in 1997. Mr Thame was Chairman (2004 to 2008) and a director (1997 Member of Audit Committee to 2008) of St George Bank Limited and St George Life Limited. He is also a director of Reckon Limited and The Village Building Co Limited (Group).

Frank Wolf PhD BA Hons Dr Wolf has over 20 years’ experience in the property and fi nancial Managing Director services industries, including involvement in retail, commercial, industrial Member of Credit Committee and hospitality-related assets in Australia, New Zealand and the United States. Dr Wolf has been instrumental in over $2 billion worth of property related transactions, corporate acquisitions and divestments and has fi nanced specialist property-based assets in retirement and hospitality sectors. Dr Wolf is the Chairman of FSP Group Pty Limited and a Director of Kingston Capital Limited (fi nancial planning groups). He is also a director of HGL Limited, a diversifi ed publicly listed investment company.

David Bastian CPA Mr Bastian has almost 40 years’ experience in the fi nancial services industry, in Non-executive Director particular in the packaging of commercial, retail and residential property projects Member of Credit Committee and was the Managing Director of the Group until September 2006. He was Member of Due Diligence Committee Managing Director of the Canberra Building Society for 20 years and an Executive Member of Remuneration and Director of Godfrey Pembroke Financial Services Pty Limited for 7 years. Nomination Committee

Malcolm Irving AM,FCPA, SF Fin, BCom, Hon DLitt	Mr Irving has over 40 years’ experience in company management, including
Non-executive Director	12 years as Managing Director of CIBC Australia Limited. He was a director
Chairman of Audit Committee	of Keycorp Limited (2001 to 2007). He is also a director of O’Connell Street
Member of Remuneration and	Associates Pty Ltd and Thales Australia Limited.
Nomination Committee
Dennis Bluth LLM, LLB, BA, FAPI	Mr Bluth holds Bachelor of Arts, Bachelor of Law and Masters of Law degrees
Non-executive Director	and has practised as a solicitor for over 25 years, principally in the area of
Chairman of Credit Committee	property law. Mr Bluth is a partner of HWL Ebsworth, Lawyers and is a member
Chairman of Due Diligence Committee	of a number of Law Society and Law Council Committees. He is also a member
	of the Australian Valuation and Professional Standards Board.
William J Bartlett FCA, CPA, FCMA, CA(SA)	Mr Bartlett has strong accounting, f nancial and corporate credentials. During
Non-executive Director	his 23 year career with Ernst & Young, he held the roles of Chairman of
Chairman of Remuneration and	Worldwide Insurance Practice, National Director of Australian Financial Services
Nomination Committee	Practice and Chairman of the Client Service Board. Mr Bartlett is a director of
Member of Audit Committee	Suncorp-Metway Limited, GWA Limited, Reinsurance Group of America Inc and
	RGA Reinsurance Company of Australia Limited. Mr Bartlett was a director of
	Retail Cube Limited (2004 to 2006) and Arana Therapeutics Limited (2004 to
	2007). He is also a director of the Bradman Foundation and Museum.

14 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

INFORMATION ON DIRECTORS AND OFFICERS/CONTINUED

Len Lloyd FAPI, WDA Mr Lloyd is a licensed Real Estate Agent and a registered Real Estate Valuer. Executive Director He has 40 years experience in the development, management and funding of commercial, retail and residential property. Mr Lloyd joined the Abacus Group in October 2000 and now holds the position of Managing Director of Abacus Property Services Pty Limited responsible for property administration and development opportunities in the Abacus portfolio. In previous positions Mr Lloyd held responsibility for the property portfolios of the Advance Bank and St George Bank and provided valuation and lending advice while with the Commonwealth Development Bank for 21 years.

Ellis Varejes BCom, LLB	Mr Varejes has been the Company Secretary since September 2006. He has over
Company Secretary and	25 years’ experience as a corporate lawyer in private practice.
Chief Operating Off cer

The Directors and Offi cers were in offi ce from the beginning of the fi nancial year until the date of this report unless otherwise stated.

As at the date of this report, the relevant interests of the directors and specifi ed executives in the stapled securities of Abacus Property Group were as follows:

of Abacus PropertyGroupwere as follows:
	APG	NUMBER OF
	SECURITIES	OPTIONS OVER
Directors	HELD	APG SECURITIES
J Thame	55,378	–
F Wolf	9,718,341*	3,747,130
W Bartlett	8,000	–
D Bluth	20,000	–
D Bastian	4,503,497	–
M Irving	35,387	–
L Lloyd	795,925*	1,168,915

The holdings of F Wolf and L Lloyd include securities acquired under the Executive Share Loan Plan that are treated as options.

DIRECTORS’ MEETINGS

The number of meetings of directors (including meetings of committees of directors) of Abacus Group Holdings Limited and Abacus Funds Management Limited, the manager of the Abacus Property Group, held during the year and the number of meetings attended by each director were as follows:

of meetings attended by each director were as follows:
BOARD AUDIT COMMITTEE DUE DIL COM	IGENCE MITTEE NOMINATION & REMUNERATION COMMITTEE CREDIT COMMITTEE
HELD ATTENDED HELD ATTENDED HELD	ATTENDED HELD ATTENDED HELD ATTENDED
J Thame 12 11 4 4	2 1
F Wolf 12 11	17 17
W Bartlett 12 12 4 3	2 2
D Bastian 12 12 7	7 2 2 17 17
D Bluth 12 12 7	7 17 17
M Irving 12 11 4 3	2 2
L Lloyd 12 11

annual fi nancial report / continued

directors’ report

30 JUNE 2008

INDEMNIFICATION AND INSURANCE OF DIRECTORS

AND OFFICERS

The Group has paid an insurance premium in respect of a contract insuring all directors, full time executive offi cers and secretary. The terms of this policy prohibit disclosure of the nature of the risks insured or the premium paid.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group’s environmental responsibilities, such as waste removal and water treatment, have been managed in compliance with all applicable regulations and licence requirements and in accordance with industry standards. No breaches of requirements or any environmental issues have been discovered and brought to the board’s attention. There has been no known signifi cant breaches of any environmental requirements applicable to the Group.

NON-AUDIT SERVICES

The following non-audit services were provided by the Group’s auditor, Ernst & Young. The Directors are satisfi ed that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:

	Tax related services	–
	Other assurance and compliance services	$80,600
		$80,600

ROUNDING

STAPLED SECURITY OPTIONS

As at the date of this report, there were 12,701,136 unissued stapled securities under options issued under the Executive Performance Award Plan and 10,479,003 options arising from the purchase of stapled securities under the Executive Security Loan Plan. Refer to the remuneration report for further details of the options outstanding.

AUDITORS INDEPENDENCE DECLARATION

We have obtained an independence declaration from our auditor, Ernst & Young, and such declaration is shown on page 17.

The amounts contained in this report and in the annual fi nancial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the group under ASIC Class Order 98/100. The group is an entity to which the Class Order applies.

Signed in accordance with a resolution of the directors.

==> picture [122 x 59] intentionally omitted <==

==> picture [118 x 61] intentionally omitted <==

JOHN THAME Chairman

FRANK WOLF Managing Director

Sydney, 27 August 2008

16 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

■ Ernst & Young Centre ■ Tel 61 2 9248 5555 680 George Street Fax 61 2 9248 5959 Sydney NSW 2000 DX Sydney Stock Australia Exchange 10172 GPO Box 2646 Sydney NSW 2001

auditor’s independence declaration

TO THE DIRECTORS OF ABACUS GROUP HOLDINGS LIMITED

==> picture [494 x 579] intentionally omitted <==

annual fi nancial report / continued

consolidated income and distribution statements

YEAR ENDED 30 JUNE 2008

			CONSOLIDATED
		2008	2007
	NOTES	$’000	$’000
Revenue
Rental income		68,030	57,734
Storage-related income		6,934	–
Hotel-related income		1,472	9,272
Finance income	4a	16,442	15,372
Funds management income	4b	43,859	38,230
Share of prof t from equity accounted investments		12,948	1,444
Income from distributions		1,261	1,170
Other income		1,000	840
Net realised gains on investments	4c	9,118	23,107
Net unrealisedgains/(losses)on investments	4d	(22,641)	34,635
Total Revenue and Other Income		138,423	181,804
Employee benef ts expense	5a	(15,223)	(11,606)
Depreciation and amortisation expense	5b	(2,104)	(5,010)
Finance costs	5c	(38,420)	(21,909)
Other expenses	5d	(13,284)	(18,356)
Prof t before tax		69,392	124,923
Income tax benef t/(expense)		3,034	(4,521)
Prof t after tax		72,426	120,402
Prof t attributable to:
Equity holders of the parent entity		(8,750)	629
Equity holders of other stapled entities (minority interest)
Abacus Trust		55,490	89,122
Abacus Group Projects Limited		1,935	(415)
Abacus Income Trust		22,785	29,475
Stapled security holders		71,460	118,811
Netprof t attributable to external minorityinterests		966	1,591
Netprof t		72,426	120,402
Basic earnings per stapled security (cents)	7	11.42	21.48
Diluted earnings per stapled security (cents)	7	11.23	21.33
Basic earnings per stapled security ex fair value adjustments*	7	14.70	14.43
Diluted earningsper stapled securityex fair value adjustments*	7	14.45	14.33
STATEMENT OF DISTRIBUTION
Net prof t/(loss) attributable to securityholders		71,460	118,811
Net transfer of undistributed income from/(to)securityholders’ funds		13,523	(49,957)
Distributionspaid andpayable	6	84,983	68,854
Distribution per stapled security (cents per security)	6	13.50	12.50
Weighted average number of securities(‘000)	7	625,857	553,184

Based on net profi t excluding AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other fi nancial instruments and share based payments)

18 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

consolidated balance sheet

YEAR ENDED 30 JUNE 2008

			CONSOLIDATED
		2008	2007
	NOTES	$’000	$’000
Current assets
Cash and cash equivalents		46,777	19,068
Trade and other receivables		26,154	65,322
Inventories		9,848	13,359
Investment properties	8a	3,849	12,524
Property loans and other f nancial assets		157,278	256,236
Other		1,905	1,806
Total current assets		245,811	368,315
Non-current assets
Property, plant and equipment		31,839	30,553
Investment properties	8b	928,591	660,536
Property loans and other f nancial assets		292,746	70,945
Equity accounted investments		104,093	89,299
Deferred tax assets		1,177	4,268
Intangible assets and goodwill		41,139	40,977
Other		1,797	4,510
Total non-current assets		1,401,382	901,088
Total assets		1,647,193	1,269,403
Current liabilities
Trade and other payables		67,973	53,948
Interest-bearing loans and borrowings		63,704	171,183
Income tax payable		–	7,139
Other		2,102	417
Total current liabilities		133,779	232,687
Non-current liabilities
Interest-bearing loans and borrowings		580,874	222,491
Deferred tax liabilities		2,614	2,278
Other		4,927	8,742
Total non-current liabilities		588,415	233,511
Total liabilities		722,194	466,198
Net assets		924,999	803,205
Total equity		924,999	803,205

annual fi nancial report / continued

consolidated balance sheet

YEAR ENDED 30 JUNE 2008

			CONSOLIDATED
		2008	2007
	NOTES	$’000	$’000
Total equity attributable to members of AGHL:
Contributed equity		31,761	24,684
Reserves		830	2,703
Retained earnings		3,671	10,532
		36,262	37,919
Internal minorityinterest:
Total equity attributable to unitholders of AT:
Contributed equity		595,512	504,561
Retained earnings		86,326	98,260
		681,838	602,821
Total equity attributable to members of AGPL:
Contributed equity		7,259	6,240
Reserves		(483)	–
Retained earnings		619	(1,043)
		7,395	5,197
Total equity attributable to unitholders of AIT:
Contributed equity		136,970	112,956
Retained earnings		44,226	40,615
		181,196	153,571
Total equity attributable to external minority interest:
Contributed equity		2,544	1,321
Retained earnings		15,764	2,376
		18,308	3,697
Total equity		924,999	803,205
Equity
Contributed equity	9	771,502	648,440
Reserves		347	2,703
Retained earnings/(accumulated losses)		134,842	148,365
Total securityholders’ interest in equity		906,691	799,508
Total external minorityinterest		18,308	3,697
Total equity		924,999	803,205

20 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

consolidated statement of changes in equity

YEAR ENDED 30 JUNE 2008

Consolidated ISSUED CAPITAL $’000 ASSET REVALUATION RESERVE $’000 FOREIGN CURRENCY TRANSLATION $’000 EMPLOYEE EQUITY BENEFITS $’000 RETAINED EARNINGS $’000	MINORITY INTEREST $’000 TOTAL EQUITY $’000
At 1 July 2007 648,440 – (165) 2,868 148,365 Foreign currency translation – – (3,394) Total income and expense for the year recognised directly in equity – – (3,394) – – Net income for theyear – – – – 71,460	3,697 803,205 (3,394) – (3,394) 966 72,426
Total income for theyear – – (3,394) – 71,460	966 69,032
Equity raisings 107,422 – – – – Issue Costs (1,976) – – – – Distribution reinvestment plan 17,616 – – – – Disposal of the Matson Resort – – – – – Acquired retained earnings on acquisition of U-Stow-It Holdings Limited – – – – – Distribution to securityholders – – – – (84,983) Share basedpayments – – – 1,038 –	– 107,422 – (1,976) – 17,616 (702) (702) 14,599 14,599 (252) (85,235) – 1,038
At 30 June 2008 771,502 – (3,559) 3,906 134,842	18,308 924,999
At 1 July 2006 572,503 1,907 (229) – 96,626 Sale of property, plant and equipment – (1,907) – – 1,907 Tax on options taken directly to equity – – – – (821) Share of associate’s retained earnings – – – – 337 Foreign currency translation – – 64 – – Adjustment resulting from changes in associated entities – – – – 359	2,304 673,111 – – (198) (1,019) – 337 – 64 – 359
Total income and expense for the year recognised directlyin equity – (1,907) 64 – 1,782	(198) (259)
Net income for theyear – – – – 118,811	1,591 120,402
Total income for theyear – (1,907) 64 – 120,593	1,393 120,143
Equity raisings 99,934 – – – – Issue costs (1,500) Treasury shares (22,497) – – – – Distribution to securityholders – – – – (68,854) Share basedpayments – – – 2,868 –	– 99,934 (1,500) – (22,497) – (68,854) – 2,868
At 30 June 2007 648,440 – (165) 2,868 148,365	3,697 803,205

annual fi nancial report / continued

YEAR ENDED 30 JUNE 2008

		CONSOLIDATED
	2008	2007
	$’000	$’000
Cash f ows from operating activities
Income receipts	169,152	101,918
Interest received	1,957	16,627
Distributions received	1,281	1,139
Income tax (paid)/received	(6,795)	806
Borrowing costs paid	(38,939)	(28,306)
Operating payments	(49,947)	(16,914)
Net cash f ows from operatingactivities	76,709	75,270
Cash f ows from investing activities
Payments for investments and funds advanced	(336,703)	(333,953)
Proceeds from sale and settlement of investments and funds repaid	204,446	298,279
Advances to related entities	(66,664)	(141,458)
Disposal of property, plant and equipment	16,549
Purchase of a controlled entity	(22,861)	–
Purchase of plant and equipment	(21,653)	(2,302)
Disposal of property, plant and equipment	4,397	23,056
Purchase of investment properties	(255,955)	(68,924)
Disposal of investment properties	57,090	134,664
Payment for other investments	(100)	(8,849)
Net cash f ows from/(used in)investingactivities	(421,454)	(99,487)
Cash f ows from f nancing activities
Proceeds from issue of stapled securities	110,711	64,197
Payment of f nance costs	(4,230)	(49)
Repayment of borrowings	(230,458)	(190,801)
Proceeds from borrowings	555,962	215,906
Distributionspaid	(59,045)	(66,075)
Net cash f ows from/(used in)f nancingactivities	372,940	23,178
Net increase/(decrease) in cash and cash equivalents	28,195	(1,039)
Net foreign exchange differences	(485)	–
Cash and cash equivalents at beginningofyear	19,067	20,107
Cash and cash equivalents at end of year	46,777	19,068

22 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

30 JUNE 2008

1. CORPORATE INFORMATION

Abacus Property Group (APG or the Group) is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects Limited (AGPL) and Abacus Income Trust (AIT). Shares in AGHL and AGPL and units in AT and AIT and have been stapled together so that neither can be dealt with without the other. The securities trade as one security on the Australian Stock Exchange (the ASX) under the code ABP.

The fi nancial report of the Group for the year ended 30 June 2008 was authorised for issue in accordance with a resolution of the directors on 27 August 2008.

The nature of the operations and principal activities of the Group are described in the Directors’ Report.

The concise fi nancial report has also been prepared on an historical cost basis, except for investment properties and derivative fi nancial instruments which have been measured at fair value, interests in joint ventures which are accounted for using the equity method, and certain investments measured at net market value. The carrying values of recognised assets and liabilities that are covered by interest rate swap arrangements, are adjusted to record changes in the fair values attributable to the risks that are being covered by derivative fi nancial instruments.

The concise fi nancial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated under the option available to the Group under ASIC Class Order 98/100. The Group is an entity to which the class order applies.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PREPARATION

The concise fi nancial report has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards.

The concise fi nancial report has been derived from the Annual Financial Report but does not include all notes of the type normally included within the annual fi nancial report and therefore cannot be expected to provide as full an understanding of the fi nancial performance, fi nancial position and fi nancing and investing activities of the Group as the full fi nancial report.

The concise fi nancial report should be read in conjunction with the Annual Financial Report of Abacus Trust, Abacus Group projects Limited and Abacus Income Trust. It is also recommended that the annual fi nancial report be considered together with any public announcements made by the Abacus Property Group during the year ended 30 June 2008 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001 .

(B) STATEMENT OF COMPLIANCE

The concise fi nancial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS), as issued by the IASB.

(C) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS

Except for the amendments arising from AASB 2007-7: Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments , which the Group has early adopted, Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2008. These are outlined in the table below.

annual fi nancial report / continued

REFERENCE	SUMMARY	APPLICATION DATE OF STANDARD*	IMPACT ON GROUP FINANCIAL REPORT	APPLICATION DATE FOR GROUP*
AASB 8 and AASB 2007-3	New standard replacing AASB114 Segment Reporting, which adopts a management reporting approach to segment reporting.	1 January 2009	AASB 8 is a disclosure standard so will have no direct impact on the amounts included in the Group’s f nancial statements although, it may directly impact the level at which goodwill is tested for impairment. In addition, the amendments may have an impact on the Group’s segment disclosures.	1 July 2008
AASB 101 and AASB 2007-8	Introduces a statement of comprehensive income. Other revisions include impacts on the presentation of items in the statement of changes in equity, new presentation requirements for restatements or reclassif cations of items in the f nancial statements, changes in the presentation requirements for dividends and changes to the titles of the f nancial statements.	1 January 2009	These amendments are only expected to affect the presentation of the Group’s f nancial report and will not have a direct impact on the measurement and recognition of amounts disclosed in the f nancial report. The Group has not determined at this stage whether to present a single statement of comprehensive income or two separate statements.	1 July 2009
AASB 2008-1	The amendments clarify the def nition of ‘vesting conditions’, introducing the term ‘non- vesting conditions’ for conditions other than vesting conditions as specif cally def ned and prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisf ed.	1 January 2009	The Group has share-based payment arrangements that may be affected by these amendments. However, the Group has not yet determined the extent of the impact, if any.	1 July 2009
AASB 2008-2	The amendments provide a limited exception to the def nition of a liability so as to allow an entity that issues puttable f nancial instruments with certain specif ed features, to classify those instruments as equity rather than f nancial liabilities.	1 January 2009	These amendments are not expected to have any impact on the Group’s f nancial report as the Group does not have on issue or expect to issue any puttable f nancial instruments as def ned by the amendments.	1 July 2009
AASB 3 (revised)	The revised standard introduces a number of changes to the accounting for business combinations, the most signif cant of which allows entities a choice for each business combination entered into – to measure a non-controlling interest (formerly a minority interest) in the acquiree either at its fair value or at its proportionate interest in the acquiree’s net assets. This choice will effectively result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively.	1 July 2009	The Group may enter into some business combinations during the next f nancial year and may therefore consider early adopting the revised standard. The Group has not yet assessed the impact of early adoption, including which accounting policy to adopt.	1 July 2009

24 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

REFERENCE	SUMMARY	APPLICATION DATE OF STANDARD*	IMPACT ON GROUP FINANCIAL REPORT	APPLICATION DATE FOR GROUP*
AASB 8-3	Amending standard issued as a consequence of revisions to AASB 3 and AASB 127.	1 July 2009	Refer to AASB 3 (revised) and AASB 127 (revised) above.	1 July 2009
Amendments to International Financial Reporting Standards	The main amendments of relevance to Australian entities are those made to IAS 27 deleting the ‘cost method’ and requiring all dividends from subsidiary, jointly controlled entity or associate to be recognised in prof t or loss in an entity’s separate f nancial statements (i.e. parent company account). The distinction between pre- and post- acquisition prof ts is no longer required. However, the payment of such dividends requires the entity to consider whether there is an indicator of impairment. AASB 127 has also been amended to effectively allow the cost of an investment in a subsidiary, in limited reorganisations, to be based on the previous carrying amount of the subsidiary (i.e. share of equity) rather than its fair value.	1 January 2009	Recognising all dividends received from subsidiaries, jointly controlled entities and associates as income will likely give rise to greater income being recognised by the parent entity after adoption of these amendments. In addition, if the Group enters into any group reorganisation establishing new parent entities, an assessment will need to be made to determine if the reorganisation meets the conditions imposed to be effectively accounted for on a carry- over basis’ rather than at fair value.	1 July 2009
Amendments to International Financial Reporting Standards	The improvements project is an annual project that provides a mechanism for making non-urgent, but necessary amendments to IFRSs. The IASB has separated the amendments into two parts: Part 1 deals with changes the IASG identif ed resulting in accounting changes; Part II deals with either terminology or editorial amendments that the IASB believes will have minimal impact.	1 January 2009 except for amendments to IFRS 5, which are effective from 1 July 2009.	The Group has not yet determined the extent of the impact of the amendments, if any.	1 July 2009

designates the beginning of the applicable annual reporting period

AASB 2007-2, AASB 2007-9, AASB 1004, AASB 1049, AASB 1050, AASB 1051, AASB 1052, IFRIC 15, AASB 2007-5, AASB 2007-6, AASB 123 and AASB Interpretation 4, 12, 13, 14, 129 and 1038 will have no application to the Group.

annual fi nancial report / continued

30 JUNE 2008

(D) BASIS OF CONSOLIDATION

The consolidated fi nancial statements comprise the fi nancial statements of AGHL and its subsidiaries, AT and its subsidiaries, AGPL and its subsidiaries, and AIT and its subsidiaries collectively referred to as the Group.

The concise fi nancial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies with adjustments made to bring into line any dissimilar accounting policies that may exist.

All intercompany balances and transactions, including unrealised profi ts from intra-group transactions, have been eliminated in full and subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Where there is a loss of control of a subsidiary, the consolidated fi nancial statements include the results for the part of the reporting period during which the Group has control.

3. SEGMENT INFORMATION

The Group predominantly operates in Australia. The Group’s segment reporting format is business segments as its risks and rates of return can be readily identifi ed with the type of business and services provided.

Segment revenue, segment expense and segment result do not include transactions between business segments.

The Group’s primary business segments are Property, Funds Management, Property Finance and Joint Ventures and Developments. The Property division comprises the investment in and ownership of commercial, retail and industrial properties. The Funds Management division develops, originates and manages off balance sheet funds in addition to discharging the Group’s responsible entity obligations. Property Finance provides mortgage lending and related property fi nancing solutions. Joint Ventures and Developments is responsible for the Group’s investments in joint venture activities and in securities of other listed and unlisted property trusts.

The acquisition of subsidiaries is accounted for using the purchase method of accounting. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition.

Minority interests represent those equity interests in Abacus Hobart Growth Trust, The Wollongong Property Trust, Abacus Independent Retail Property Trust and U-Stow-It Holdings Limited that are not held by the Group and are presented separately in the income statement and within equity in the consolidated balance sheet.

26 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

		FUNDS	PROPERTY	JOINT VENTURES &
	PROPERTY	MANAGEMENT	FINANCE	DEVELOPMENTS	TOTAL
Business segments	$’000	$’000	$’000	$’000	$’000
Year ended 30 June 2008
Revenue
Revenue from external customers	81,916	43,859	13,169	11,045	149,989
Realised gains on investments	9,428	–	–	(310)	9,118
Unrealisedgains/(losses)on investments	(15,656)	–	–	(6,985)	(22,641)
	75,688	43,859	13,169	3,750	136,466
Unallocated revenue					1,957
Total consolidated revenue					138,423
Result
Segment result	53,964	38,204	11,553	2,134	105,855
Unallocated revenue					1,957
Prof t/(loss) before tax and f nance costs (EBIT)					107,812
Finance costs					(38,420)
Prof t/(loss) before income tax and minority interest					69,392
Income tax benef t					3,034
Netprof t for theyear					72,426
Assets
Segment assets	1,089,727	243,908	144,657	77,281	1,555,573
Unallocated assets(a)					91,620
Total assets					1,647,193
Liabilities
Segment liabilities	44,024	7,890	430	10,937	63,281
Unallocated liabilities(b)					658,913
Total liabilities					722,194
Other segment information:
Depreciation and amortisation	2,083	21	–	–	2,104
Increase in fair value of investments	(15,656)	–	–	(6,985)	(22,641)
Cash f ow information
Total – operating	24,084	19,595	18,166	14,864	76,709
Total – investing	(284,276)	(467)	(84,600)	(52,111)	(421,454)
Total – f nancing	189,076	–	131,115	52,749	372,940

[(a)] Unallocated assets include goodwill, cash and other assets.

[(b)] Unallocated liabilities include interest-bearing liabilities, tax liabilities and other liabilities.

annual fi nancial report / continued

30 JUNE 2008

		FUNDS	PROPERTY	JOINT VENTURES &
	PROPERTY	MANAGEMENT	FINANCE	DEVELOPMENTS	TOTAL
Business segments	$’000	$’000	$’000	$’000	$’000
Year ended 30 June 2007
Revenue
Revenue from external customers	67,006	38,230	14,226	2,614	122,076
Realised gains on investments	23,107	–	–	–	23,107
Unrealisedgains on investments	33,270	–	–	1,365	34,635
	123,383	38,230	14,226	3,979	179,818
Unallocated revenue					1,986
Total consolidated revenue					181,804
Result
Segment result	100,918	29,605	12,285	2,038	144,846
Unallocated revenue					1,986
Prof t/(loss) before tax and f nance costs (EBIT)					146,832
Finance costs					(21,909)
Prof t/(loss) before income tax and minority interest					124,923
Income tax expense					(4,521)
Netprof t for theyear					120,402
Assets
Segment assets	834,474	133,149	120,491	70,165	1,158,279
Unallocated assets					111,124
Total assets					1,269,403
Liabilities
Segment liabilities	33,881	5,962	672	41	40,556
Unallocated liabilities					425,642
Total liabilities					466,198
Other segment information:
Depreciation and amortisation	4,549	461	–	–	5,010
Increase in fair value of investments	33,270	–	–	1,365	34,635
Cash f ow information
Net cash f ow from operating activities	29,244	9,779	29,730	6,517	75,270
Net cash f ow from investing activities	88,654	(98,633)	(61,605)	(27,904)	(99,488)
Net cash f ow from f nancing activities	(5,475)	–	24,154	4,500	23,179

28 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

4. REVENUE

4. REVENUE
		CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Finance income
Interest and fee income on secured loans	19,485	13,386
Provision for doubtful debts	(5,000)	–
Bank interest	1,957	1,986
Total f nance income	16,442	15,372
(b) Funds Management Income
Asset management fees	7,541	3,253
Property management fees	847	438
Consulting and other income	12,180	5,548
Interest on loans to funds management entities	13,924	7,803
Sale of units in AHF*	–	8,672
Sale of the Rendezvous Hotel	–	12,516
Sale of units in Matson Hotel*	9,367	–
Total funds management income	43,859	38,230
(c) Net realised gains on disposal of:
Investment properties	9,428	13,284
Units in Abacus Miller Street Trust*	–	9,823
Listed securities	(310)	–
Total net realisedgains on investments	9,118	23,107
(d) Unrealised gains/(losses) on investments
Change in fair value of investment properties	(15,656)	33,270
Change in fair value ofpropertysecurities	(6,985)	1,365
Total unrealised gains on investments	(22,641)	34,635

Sale was to new fund managed by AFML

annual fi nancial report / continued

30 JUNE 2008

5. EXPENSES

5. EXPENSES
		CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Employee benef ts expense
Wages and salaries	12,726	8,465
Share based payments	1,038	2,868
Other	1,459	273
Total employee benef ts expense	15,223	11,606
(b) Depreciation and amortisation expense
Depreciation of property, plant and equipment – hotels	362	3,268
Depreciation of property, plant and equipment – other	309	429
Amortisation of intangible assets	56	119
Amortisation – other	1,377	1,194
Total depreciation and amortisation expense	2,104	5,010
(c) Finance costs
Interest on loans	40,086	23,839
Holding costs – AHF and Rendezvous Hotel	–	4,671
Amortisation of f nance costs	1,471	634
Total f nance costs (on historical basis)	41,557	29,144
Unrealisedgains on interest rate swaps	(3,137)	(7,235)
Total f nance costs	38,420	21,909
(d) Other expenses
Property outgoings	12,350	8,752
Custody fees	218	170
Registry maintenance costs	323	405
Rental expenses	735	420
Other administrative expenses	(342)	8,609
Total other expenses	13,284	18,356

30 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

6. DISTRIBUTIONS PAID AND PROPOSED

6. DISTRIBUTIONS PAID AND PROPOSED
		CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Distributions paid during the year
Final distribution for f nancial year 30 June:
3.00 cents per unit (2006: 3.00 cents)	18,419	15,491
Interim distributions paid during the year:
September: 3.25 cents per unit (2007: 3.00 cents)	20,225	15,926
December: 3.25 cents per unit (2007: 3.00 cents)	20,466	16,013
March: 3.5 centsper unit(2007: 3.25 cents)	22,109	18,496
	81,219	65,926
(b) Distributions proposed and recognised as a liability
Final distribution payable for the June quarter:
3.5 centsper unit(2007: 3.25 cents)	22,183	18,419
The distributions were paid from the Abacus Trust and
Abacus Income Trust (which do not pay tax provided
they distribute all their taxable income) hence, there
were no franking credits attached.
(c) Franking credit balance
The amount of franking credits available for the
subsequent f nancial year are:
– franking account balance as at the end of the f nancial year at 30% (2007: 30%)	11,244	6,329
– franking credits that will arise from the receipt of dividends recognised as receivables
at the reporting date	8	15
– franking credits that will arise from the payment of income tax payable as at the end
of the f nancialyear	–	4,900
	11,252	11,244

annual fi nancial report / continued

30 JUNE 2008

7. EARNINGS PER STAPLED SECURITY

Attributable to Stapled Security holders of the Group

The following refl ects the income used in the basic and diluted earnings per stapled security computations.

		CONSOLIDATED
	2008	2007
	$’000	$’000
Earnings used in calculating earnings per security:
Net prof t attributable to security holders	71,460	118,811
Netprof t attributable to stapled securityholders excludingfair value adjustments(1)	92,002	79,810
	2008	2007
	’000	’000
Weighted average number of stapled securities:
Weighted average number of stapled securities for basic earnings per share	625,857	553,184
Effect of dilution:
Stapled securityoptions	10,479	3,703
Weighted average number of stapled securities adjusted for the effect of dilution	636,336	556,887

Options granted to employees (including key management personnel) are considered to be potential stapled securities and have been included in the determination of diluted earnings per stapled security to the extent they are dilutive. These options have not been included in the determination of basic earnings per stapled security.

[(1)] Fair value adjustments include property revaluations, revaluations of derivatives and other fi nancial instruments and share based payments.

32 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

8. INVESTMENT PROPERTIES

Investment properties are carried at the Directors’ determination of fair value and are based on independent valuations. The determination of fair value includes reference to the original acquisition cost together with capital expenditure since acquisition and either the latest full independent valuation or latest independent update. Total acquisition costs include incidental costs of acquisition such as property taxes on acquisition, legal and professional fees and other acquisition related costs.

Independent valuations of each investment property is conducted annually either in December or June of each year. This schedule was adopted in the current fi nancial year. Independent valuations are prepared using both the capitalisation of net income method and the discounting of future cashfl ows to their present value method. Capital expenditure since valuation may include purchases of sundry properties (and associated expenses of stamp duty, legal fees etc) and other capital refurbishment and repair expenditure.

				CONSOLIDATED	CONSOLIDATED
		COSTS INCL ALL	INDEPENDENT
	ACQUISITION	ADDITIONS	VALUATION	2008	2007
Property	DATE	$’000	DATE	$’000	$’000
(a) Current asset
109 Pitt Street,Sydney,NSW(i)	22-Jun-99	3,849	30-Jun-06	3,849	12,524
(b) Non-current assets
66 Christina Road, Villawood, NSW(iv)	28-May-02	8,213	30-Jun-08	13,241	12,426
CSIRO, Limestone Ave., Campbell, ACT(vi)	21-Jun-02	12,686	30-Jun-08	20,000	20,000
4 Ray Road, Epping, NSW(v)	30-Apr-97	27,043	30-Jun-08	52,100	54,500
Ashf eld Mall, Ashf eld, NSW(iv)	15-Sep-97	86,806	30-Jun-08	112,000	116,842
10-12 Pike Street, Rydalmere, NSW(vi)	1-Oct-98	14,262	30-Jun-08	22,200	22,400
Liverpool Plaza, Liverpool, NSW(iv)	16-Aug-04	32,860	31-Dec-07	42,278	37,020
Macquarie Street, Liverpool, NSW(iv)	21-Sep-05	5,451	31-Dec-07	5,500	5,503
Moore Street, Liverpool, NSW(iv)	14-Oct-05	2,265	31-Dec-07	2,300	2,297
Aspley Village Shopping Centre(iii)	15-Feb-06	16,374	1-Feb-06	–	18,607
Westpac House, Adelaide SA(iv)	5-Oct-04	54,327	30-Jun-08	69,700	68,850
Homemaker City, Moorabbin, NSW(iv)	11-Aug-06	38,690	30-Jun-08	32,050	38,690
95 and 117 Mina Parade, Alderley, QLD	14-Sep-07	20,971	16-Jul-07	22,133	–
Cnr Main Street and Bellevue Drive and
169 Varsity Parade, Varsity Lakes, QLD(vii)	17-Sep-07	24,042	30-Jun-08	22,760	–
16-18 and 17-21 Anzac Street, and 206-220 Hume
Highway, Greenacre, NSW	30-Nov-07	14,037	19-Sep-07	17,063	–
1769 Hume Highway, Campbellf eld(vii)	12-Nov-07	18,538	30-Jun-08	17,665	–
12-14 Butler Road, Hurstville, NSW(v)	31-May-07	18,714	30-Jun-08	17,395	18,714
27 Grant Street, Port Macquarie, NSW(vii)	26-Jun-07	16,021	30-Jun-08	14,796	16,021
8 Sylvania Way, Lisarow, NSW(vi)	23-Jul-07	10,510	30-Jun-08	9,505	–
198-206 St Johns Road, Glebe, NSW	4-Oct-07	6,501	5-Sep-07	6,671	–
144-168 National Boulevarde, Campbellf eld	9-Nov-07	21,668	28-Sep-07	21,268	–
Lot 121, Orielton Road, Smeaton Grange	22-Nov-07	10,198	12-Oct-07	10,010	–
23 Norton Street, Leichhardt, NSW	22-Oct-07	9,062	30-Sep-07	8,894	–
Townsville Storage facilities	13-Sep-07	23,823	13-Sep-07	23,840	–
Rocklea Storage facilities	27-Mar-08	6,125	7-Jan-08	6,125	–

annual fi nancial report / continued

30 JUNE 2008

				CONSOLIDATED	CONSOLIDATED
		COSTS INCL ALL	INDEPENDENT
	ACQUISITION	ADDITIONS	VALUATION	2008	2007
Property	DATE	$’000	DATE	$’000	$’000
Salisbury Storage facilities	27-Mar-08	3,589	7-Jan-08	3,599	–
Hamilton Storage facilities	10-Sep-07	6,878	10-Sep-07	6,150	–
U-Stow-It Storage facilities	23-Nov-07	52,400	30-Jun-08	54,845	–
Allara	31-Jan-08	56,157	27-Nov-07	56,157
8 Station Street, Wollongong, NSW(vii)	30-Jun-03	7,866	30-Jun-08	12,000	12,000
1-5 Lake Dingley, Melbourne	28-May-03	11,956	30-Jun-06	–	13,300
367 Peel Street, Tamworth, NSW(iv)	22-Feb-04	11,961	31-Dec-07	11,000	12,700
500 Princes Highway,Noble Park,VIC(ii)	27-Nov-03	19,222	30-Jun-07	–	21,000
31-33 Windorah Avenue, Stafford, QLD(v)	3-Nov-03	5,109	30-Jun-08	6,500	6,500
Lennons Plaza, 66 Queen St., QLD(v)	19-Dec-03	32,272	31-Dec-07	43,596	39,000
26 Savage Street and 681 Curtin Avenue, Pinkenba, QLD(v)	23-Jan-04	5,040	30-Jun-08	13,300	12,000
671 Gympie Rd, Chermside, QLD(vii)	17-Dec-04	4,722	30-Jun-08	6,050	5,877
9-14 Yates Street, Mawson Lakes, SA(v)	7-Jun-05	6,857	31-Dec-07	5,750	5,700
36-52 National Blvd, Campbellf eld, VIC(v)	18-Jul-05	8,832	30-Jun-08	10,200	10,300
Gympie Market Place, Gympie(vii)	7-Jun-04	7,340	30-Jun-08	9,000	9,000
29-47 and 18-20 Becker St, Cobar NSW(iv)	5-Aug-04	1,174	30-Jun-07	2,000	1,950
50 Mostyn Street, Castlemaine, VIC(vii)	11-May-05	8,092	30-Jun-08	10,800	10,200
29 Queen Street, North Bundaberg, QLD(v)	18-Jul-05	15,536	30-Jun-08	15,000	15,537
93 Victoria Street, Eaglehawk, VIC(vii)	29-Sep-05	6,150	30-Jun-08	7,200	6,900
12 Docker Street, Wangaratta, QLD(vii)	31-Oct-05	2,965	30-Jun-08	3,200	3,100
Kingscote Kangaroo Island, SA(iv)	21-Dec-05	4,337	30-Jun-08	4,360	4,500
96-98 Victoria Street, St.George, QLD(ii)	18-Aug-05	3,029	30-Jun-08	3,460	3,200
293-295 Grt Eastern Highway, Midland WA(iv)	21-Jun-06	7,228	30-Jun-08	10,850	10,250
Mt View Plaza, Kirwan, QLD(i)	31-Aug-06	7,743	31-Dec-07	8,508	7,743
Mid City Plaza, Maryborough, VIC	29-Jun-07	4,802	30-Jun-08	4,400	4,802
41-49 George St., Gordonvale, QLD	4-Mar-08	2,894	4-Mar-08	2,984	–
244-256 Liverpool Road, Ashf eld, NSW(iv)	26-Mar-98	8,195	31-Dec-07	7,294	6,900
Woodlands Drive, Braeside, VIC	20-Dec-06	1,007	5-Dec-06	1,013	1,007
4-8 Jacobs Street, Bankstown(vi)	2-Dec-02	5,161	31-Dec-07	5,851	5,200
20-28 Sir William Pickering Dv, Christchurch, NZ	20-Jul-07	16,647	8-Jun-07	14,474	–
106 Nelson BayRoad,Fern Bay,NSW(viii)	6-Feb-08	19,556	21-Nov-07	19,556	–
Non-current – Investmentproperties				928,591	660,536
Total investment properties				932,440	673,060

[(i)] As valued by Knight Frank Pty Limited

[(ii)] As valued by Colliers International Consultancy and Valuation Pty Ltd

[(iii)] As valued by Urbis Property Consultants

[(iv)] As valued by CB Richard Ellis Pty Ltd

[(v)] As valued by FPD Savills (NSW) Pty Limited

[(vi)] As valued by DTZ Australia

[(vii)] As valued by Landmark White

[(viii)] As valued by Robertson & Robertson

34 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

Notes:

(a) The value of properties not externally valued at 30 June 2008 may include capital expenditures after the last valuation date.
(b) The property at 109 Pitt Street is currently under refurbishment and has been subdivided into strata units. The retail component and the leasehold interest in the car park were sold in prior fi nancial years while the sale of the commercial units continues at 30 June 2008.
(c) The Abacus Income Trust owns 98.4% of the units in the Wollongong Property Trust which owns 8 Station Street, Wollongong.
(d) Property is owned by Abacus Independent Retail Proeprty Trust (AIRPT). Abacus Retail Property Trust, a wholly owned trust of Abacus Income Trust, owns 75% of the units in AIRPT.
(e) The Group acquired 58.07% interest in U-Stow-It Holdings Pty Limited in November 2007.
(f) The investment properties are used as security for secured bank debt.

RECONCILIATIONS

Reconciliation of the carrying amounts of investment properties at the beginning and end of the current and previous fi nancial year:

		CONSOLIDATED
	2008	2007
	$’000	$’000
Investment properties
Carrying amount at beginning of the f nancial year	673,060	600,567
Additions and capital expenditure	293,582	105,890
Acquisition through business combinations	54,846	–
Net revaluation increments	(15,806)	33,270
Disposals/transfer	(73,242)	(66,667)
Carrying amount at end of the f nancial year	932,440	673,060

annual fi nancial report / continued

30 JUNE 2008

9. CONTRIBUTED EQUITY

		CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Issued stapled securities
Stapled securities	793,999	670,937
– securities f nanced byAPG under the ESLP	(22,497)	(22,497)
Total contributed equity	771,502	648,440
(b) Movement in stapled securities on issue
		CONSOLIDATED
	STAPLED SECURITIES
	NUMBER	VALUE
	’000	$’000
At 1 July 2007	578,633	648,440
– security purchase plan	3,991	7,422
– institutional equity raising	52,632	100,000
– distribution reinvestment plan	10,348	17,616
– less transaction costs	–	(1,976)
At 30 June 2008	645,604	771,502

10. EVENTS AFTER THE BALANCE SHEET DATE

Other than as disclosed in this report and to the knowledge of directors, there has been no other matter or circumstance that has arisen since the end of the fi nancial year that has or may affect the Group’s operations in future fi nancial years, the results of those operations or the Group’s state of affairs in future fi nancial years.

36 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

directors’ declaration

In accordance with a resolution of the Directors, we state that:

(1) in the opinion of the Directors:
(a) the fi nancial statements, notes and the additional disclosures included in the directors’ report designated as audited, of the company and of the consolidated entity are in accordance with the Corporations Act 2001 , including:
- (i) giving a true and fair view of the company’s and consolidated entity’s fi nancial position as at 30 June 2008 and of their performance for the year ended on that date; and
- (ii) complying with Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
(2) This declaration has been made after receiving the declarations required to be made to the directors in accordance with sections 295A of the Corporations Act 2001 for the fi nancial year ending 30 June 2008.

On behalf of the Board

==> picture [121 x 60] intentionally omitted <==

JOHN THAME Chairman

==> picture [118 x 61] intentionally omitted <==

FRANK WOLF Managing Director

Sydney, 27 August 2008

■ Ernst & Young Centre ■ Tel 61 2 9248 5555 680 George Street Fax 61 2 9248 5959 Sydney NSW 2000 DX Sydney Stock Australia Exchange 10172 GPO Box 2646 Sydney NSW 2001

independent auditor’s report

TO MEMBERS OF ABACUS GROUP HOLDINGS LIMITED

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Liability limited by a scheme approved under Professional Standards Legislation.

38 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus trust

Share Registry

Computershare Investor Services Pty Ltd Level 3, 60 Carrington Street SYDNEY NSW 2000 Tel: (02) 1800 635 323 Toll free Fax: (02) 8234 5050

The concise fi nancial report is an extract from the full fi nancial report for the year ended 30 June 2008. The fi nancial statements and specifi c disclosures included in the concise fi nancial report have been derived from the full fi nancial report. It is recommended that this Concise Annual Financial Report should be read in conjunction with the Concise Annual Financial Reports of Abacus Property Group, Abacus Income Trust and Abacus Group Projects Limited for the year ended 30 June 2008. It is also recommended that the report be considered together with any public announcements made by the Abacus Property Group in accordance with its continuous disclosure obligations arising under the Corporations Act 2001.

annual fi nancial report / continued

directors’ report

30 JUNE 2008

The Directors of Abacus Funds Management Limited (AFML), the responsible entity of the Abacus Trust (AT or the Trust), present their report together with the consolidated fi nancial report of Abacus Trust and the auditor’s report thereon.

DIRECTORS

The Directors of AFML in offi ce during the fi nancial year and until the date of this report are as follows. Directors were in offi ce for this entire period unless otherwise stated.

John Thame Frank Wolf	Chairman(Non-executive) ManagingDirector
William Bartlett	Non-executive Director
David Bastian Dennis Bluth	Non-executive Director Non-executive Director
Malcolm Irving	Non-executive Director
Len Lloyd	Executive Director

As at the date of this report, the relevant interests of the directors and specifi ed executives in the stapled securities of Abacus Property Group were as follows:

	APG SECURITIES	NUMBER OF OPTIONS OVER APG
Directors	HELD	SECURITIES
J Thame	55,378	–
F Wolf	9,718,341*	3,747,130
W Bartlett D Bluth	8,000 20,000	– –
D Bastian	4,503,497	–
M Irving L Lloyd	35,387 795,925*	– 1,168,915

PRINCIPAL ACTIVITIES

The Trust operates predominantly in Australia and its principal activities during the course of the year ended 30 June 2008 included:

investment in commercial, retail and industrial properties;
property fi nance; and
participation in property joint ventures

TRUST STRUCTURE

The Abacus Property Group is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects Limited (AGPL) and Abacus Income Trust (AIT). Shares in AGHL and AGPL and units in AT and AIT have been stapled together so that none can be dealt with without the others. An APG security consists of one share in AGHL, one unit in AT, one share in AGPL and one unit in AIT. A transfer, issue or reorganisation of a share or unit in any of the component parts is accompanied by a transfer, issue or reorganisation of a share or unit in each of the other component parts.

AT is an Australian registered managed investment scheme. Abacus Funds Management Limited, the Responsible Entity of AT, is incorporated and domiciled in Australia and is a wholly-owned subsidiary of AGHL.

OPERATING PROFIT

The Trust earned a net profi t attributable to members of $54.34 million for the year ended 30 June 2008 (June 2007: $89.12 million).

The Trust earned a net ‘normalised’ profi t attributable to members (excluding net property, investments, derivative and employee entitlement fair value revaluations) of $72.19 million (June 2007: $64.39 million).

The holdings of F Wolf and L Lloyd include securities acquired under the Executive Share Loan Plan that are treated as options.

40 ABACUS ANNUAL FINANCIAL REPORT 2008

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DISTRIBUTIONS

Trust distributions in respect of the year ended 30 June 2008 were $67.42 million (June 2007: $58.56 million), which is equivalent to 10.54 cents per stapled security (June 2007: 10.61 cents) paid and payable as follows:

	CENTS	$’000
Interim distributionpaid 8th November 2007	3.25	20,622
Interim distributionpaid 7th February2008	3.25	20,862
Interim distributionpaid 7th May2008	3.50	22,521
Final distributionpaid 7th August 2008	0.54	3,420
Total	10.54	67,425

REVIEW OF OPERATIONS

Net devaluations in investment properties of $20.59 million reduced AT’s revenues and net profi t for the year ended 30 June 2008. Normalised earnings per security were essentially unchanged as was distributions per security. As per prior years normalised earnings per security exceeded distributions per security:

	30 JUNE 2008	30 JUNE 2007	%
	$’000	$’000	CHANGE
Total income	100,258	116,377	(13.9%)
Netprof t attributable to unit holders	55,490	89,123	(37.7%)
Earningsper security (cents)	8.87	16.11	(44.9%)
‘Normalised earnings’per security (cents)**	11.69	11.64	(0.4%)
Distributions per security (cents)	10.54	10.61	(0.7%)

** Normalised earnings is net profi t adjusted for AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other fi nancial instruments and share based payments)

AT’s balance sheet grew due to a capital raising and asset acquisitions and its fi nancial condition remained robust during the year:

			%
	30 JUNE 2008	30 JUNE 2007	CHANGE
Total assets($million)	1,219	966	26.2%
Gearing (%)	30	28	3.6%
Net assets($million)	682	620	10.0%
Net tangible assets($million)	682	620	10.0%
NTAper security ($)	1.06	1.07	(1.9%)
Retained earnings($million)	86	98	(12.2%)
Units on issue(million)	646	579	11.6%
Weighted average units on issue (million)	636	557	14.2%

annual fi nancial report / continued

directors’ report

30 JUNE 2008

Business activities which contributed to the Trust’s operating performance and fi nancial condition for the fi nancial year were:

UNITS ON ISSUE

At 30 June 2008, 645,604,240 units in AT were on issue (2007: 578,633,460). Units on issue increased net 66,970,780 during the year ended 30 June 2008.

Property

Total investment property assets at 30 June 2008 were $542 million (30 June 2007: $432million). During the year the Trust acquired 9 properties with an aggregate purchase price of more than $137 million, including 169 Varsity Parade, Varsity Lakes QLD, 95 and 117 Mina Parade, Alderly QLD, 16-18, 20-21 Anzac St and 206-220 Hume Highway, Greenacre NSW, 1769 Hume Highway, Campbellfi eld VIC, 8 Sylvania Way, Lisarow NSW, 198-206 St Johns Rd Glebe NSW, 23 Norton St, Leichhardt NSW, 144-168 National Boulevard, Campbellfi eld NSW and Lot 121 Orielton Rd, Smeaton Grange.

Revaluation of the property portfolio during the fi nancial year reduced the Trust’s assets by $21 million (2007: $20 million revaluation gain).

Rental income increased from $35 million in 2007 to $41 million for the year.

Property Finance

Total assets including accrued interest (net of provisions) at 30 June 2008 were $526 million (30 June 2007: $410.5 million).

Revenue earned from interest and fees (net of provisions) totalled $70.7 million for the year (30 June 2007: $48.7 million).

During the year ended 30 June 2008, the contributed equity of the Trust increased $75 million to $596 million compared to $521 million at 30 June 2007.

Total equity increased by $62 million to $682 million at 30 June 2008 compared to $620 million at 30 June 2007. Net tangible assets per security decreased 1.9% to $1.05 at 30 June 2008 compared to $1.07 at 30 June 2007.

At 30 June 2008, existing bank loan facilities totalled approximately $444 million, of which $339 million was drawn. The weighted average maturity of its secured, non-recourse bank debt is 2.4 years (2007: 3.5years). The Trust manages interest rate exposure on debt facilities through the use of interest rate swap contracts. At 30 June 2008, 88% (2007: 71%) of total debt facilities were covered by interest rate swap arrangements at an average interest rate (including bank margin) of 7.44% (2007: 6.29%) and an average term to maturity of 2.33 years (2007: 3.5 years).

FEES PAID TO THE RESPONSIBLE ENTITY AND ASSOCIATES AT paid a management fee of $8.3 million and property acquisition fee of $2.6 million out of scheme property to the responsible entity for the year ended 30 June 2008 (2007: management fee of $2 million and nil property acquisition fee). In addition, AT paid property management fees to an associate of the responsible entity, Abacus Property Services Pty Limited of $0.7 million for the year ended 30 June 2008 (2007: $0.5 million).

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

The following signifi cant changes in the state of affairs of the Trust occurred during the fi nancial year:

Retained earnings (including the impact of revaluations of investment properties and derivative fi nancial instruments) decreased by $14 million to $84 million at 30 June 2008 compared to $98 million at 30 June 2007; and
Total equity increased by 10% from $620 million to $682 million at 30 June 2008 refl ecting the additional capital raised, net of movements in retained earnings and revaluations during the year.

SIGNIFICANT EVENTS AFTER BALANCE DATE

Other than as disclosed already in this report, there has been no matter or circumstance that has arisen since the end of the fi nancial year that has signifi cantly affected, or may affect, the Trust’s operations in future fi nancial periods, the results of those operations or the Trust’s state of affairs in future fi nancial periods.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Trust’s net debt gearing ratio (calculated as total interest bearing liabilities less cash assets divided by total assets) was 30% at 30 June 2008 compared to 28% at 30 June 2007.

42 ABACUS ANNUAL FINANCIAL REPORT 2008

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ENVIRONMENTAL REGULATION AND PERFORMANCE

The Trust’s environmental responsibilities, such as waste removal and water treatment, have been managed in compliance with all applicable regulations and licence requirements and in accordance with industry standards. No breaches of requirements or any environmental issues have been discovered and brought to the board’s attention. There has been no known signifi cant breaches of any environmental requirements applicable to the Trust.

AUDITORS INDEPENDENCE DECLARATION

We have obtained an independence declaration from our auditor, Ernst & Young, and such declaration is shown on page 44.

NON-AUDIT SERVICES

There were no non-audit services provided by the Trust’s auditor, Ernst & Young.

ROUNDING

The amounts contained in this report and in the annual fi nancial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Trust under ASIC Class Order 98/100. The Trust is an entity to which the Class Order applies.

Signed in accordance with a resolution of the directors.

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JOHN THAME Chairman

FRANK WOLF Managing Director

Sydney, 27 August 2008

■ Ernst & Young Centre ■ Tel 61 2 9248 5555 680 George Street Fax 61 2 9248 5959 Sydney NSW 2000 DX Sydney Stock Australia Exchange 10172 GPO Box 2646 Sydney NSW 2001

auditor’s independence declaration

TO THE DIRECTORS OF ABACUS FUNDS MANAGEMENT LIMITED AS THE RESPONSIBLE ENTITY FOR ABACUS TRUST

==> picture [507 x 428] intentionally omitted <==

Liability limited by a scheme approved under Professional Standards Legislation.

44 ABACUS ANNUAL FINANCIAL REPORT 2008

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consolidated income and distribution statements

YEAR ENDED 30 JUNE 2008

			CONSOLIDATED
		2008	2007
	NOTES	$’000	$’000
Revenue
Rental income		40,695	35,366
Finance income	4(a)	71,742	49,570
Share of prof t from equity accounted investments		7,415	1,462
Other income		1,000	–
Net realised gains on investments	4(b)	–	9,823
Net unrealisedgains/(losses)on investments	4(c)	(20,594)	20,156
Total Revenue and Other Income		100,258	116,377
Depreciation and amortisation expense	5(a)	(998)	(1,067)
Finance costs	5(b)	(23,248)	(10,432)
Other expenses	5(c)	(20,522)	(15,755)
Netprof t attributable to unitholders of Abacus Trust		55,490	89,123
Basic earnings per stapled security (cents)		8.87	16.11
Diluted earnings per stapled security (cents)		8.72	16.00
Basic earnings per stapled security ex fair value adjustments*		11.69	11.64
Diluted earnings per stapled security ex fair value adjustments*		11.50	11.56

Based on net profi t excluding AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other fi nancial instruments and share based payments)

STATEMENT OF DISTRIBUTION

Net prof t attributable to unitholders		55,490	89,123
Net transfer of undistributed income from/(to)unitholders’ funds		11,935	(30,565)
Distributionspaid andpayable	6	67,425	58,558
Distribution per unit (cents per unit)	6	10.54	10.61
Weighted average number of units (‘000)	7	636,336	556,887

annual fi nancial report / continued

consolidated balance sheet

AS AT 30 JUNE 2008

			CONSOLIDATED
		2008	2007
	NOTES	$’000	$’000
Current assets
Cash and cash equivalents		30,914	884
Trade and other receivables		2,998	50,169
Inventories		2,728	2,728
Property loans and other f nancial assets		434,141	392,382
Other		637	734
Total current assets		471,418	446,897
Non-current assets
Investment properties	8	542,093	431,870
Equity accounted investments		92,947	59,201
Property loans and other f nancial assets		111,434	23,245
Other		1,530	4,174
Total non-current assets		748,004	518,490
Total assets		1,219,422	965,387
Current liabilities
Trade and other payables		134,210	76,996
Interest-bearingloans and borrowings		7,000	169,372
Total current liabilities		141,210	246,368
Non-current liabilities
Interest-bearing loans and borrowings		379,669	99,493
Other		16,705	–
Total non-current liabilities		396,374	99,493
Total liabilities		537,584	345,861
Net assets		681,838	619,526
Equity
Contributed equity	9(a)	595,512	521,265
Retained earnings		86,326	98,261
Total equity		681,838	619,526

46 ABACUS ANNUAL FINANCIAL REPORT 2008

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consolidated statement of changes in equity

YEAR ENDED 30 JUNE 2008

	ISSUED	RETAINED	TOTAL
	CAPITAL	EARNINGS	EQUITY
	$’000	$’000	$’000
At 1 July 2007	521,265	98,261	619,526
Net income for theyear	–	55,490	55,490
Total income for the year	–	55,490	55,490
Equity raisings	92,952	–	92,952
Issue costs	(2,000)	–	(2,000)
Treasury units	(16,705)	–	(16,705)
Distribution to unitholders	–	(67,425)	(67,425)
At 30 June 2008	595,512	86,326	681,838
At 1 July 2006	446,550	67,357	513,907
Recognition of 30% swaprevaluation in AMSHT	–	339	339
Total income and expense for the year recognised directly in equity	–	339	339
Net income for theyear	–	89,123	89,123
Total income for the year	–	89,462	89,462
Equity raisings	76,215	–	76,215
Issue costs	(1,500)	–	(1,500)
Distribution to unitholders	–	(58,558)	(58,558)
At 30 June 2007	521,265	98,261	619,526

annual fi nancial report / continued

YEAR ENDED 30 JUNE 2008

			CONSOLIDATED
		2008	2007
	NOTES	$’000	$’000
Cash f ows from operating activities
Income receipts		79,406	24,079
Interest received		1,047	11,728
Borrowing costs paid		(25,176)	(13,860)
Operating payments		(24,814)	(3,230)
Net cash f ows from operatingactivities	10	30,463	18,717
Cash f ows from investing activities
Payments for investments and funds advanced		(134,496)	(246,648)
Proceeds from sale and settlement of
investments and funds repaid		126,178	241,554
Purchase of investmentproperties		(127,913)	(50,492)
Net cash f ows from/(used in)investingactivities		(136,231)	(55,586)
Cash f ows from f nancing activities
Proceeds from issue of units		79,978	43,071
Payment of f nance costs		(4,199)	(2,373)
Repayment of borrowings		(226,818)	(84,000)
Proceeds from borrowings		345,844	135,285
Distributionspaid		(59,007)	(66,073)
Net cash f ows from/(used in)f nancingactivities		135,798	25,910
Net increase/(decrease) in cash and cash equivalents		30,030	(10,959)
Cash and cash equivalents at beginningofyear		884	11,843
Cash and cash equivalents at end of year	10	30,914	884

48 ABACUS ANNUAL FINANCIAL REPORT 2008

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30 JUNE 2008

1. TRUST INFORMATION

The concise fi nancial report of the Trust for the year ended 30 June 2008 was authorised for issue in accordance with a resolution of the directors on 27 August 2008.

AT is a registered managed investment scheme and is a component entity of the Abacus Property Group (APG) – which now comprises Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Income Trust (AIT) and Abacus Group Projects Limited (AGPL). The securities of each respective component trade as one security on the Australian Stock Exchange (the ASX) under the code ABP.

Units in AT and AIT and shares in AGHL and AGPL have been stapled together so that neither can be dealt with without the other. An APG security consists of one unit in AT, one unit in AIT, one share in AGHL and one share in AGPL. A transfer, issue or reorganisation of a unit or share in each of the other component parts is accompanied by a transfer, issue or reorganisation of a unit or share in each of the other component parts.

The nature of the operations and principal activities of the Trust are described in the Directors’ Report.

The concise fi nancial report should be read in conjunction with the Annual Financial Report of Abacus Property Group, Abacus Group Projects Limited and Abacus Income Trust. It is also recommended that the annual fi nancial report be considered together with any public announcements made by the Abacus Property Group during the year ended 30 June 2008 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001 .

The concise fi nancial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated under the option available to the Group under ASIC Class Order 98/100. The Trust is an entity to which the class order applies.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PREPARATION

The concise fi nancial report has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards.

(B) STATEMENT OF COMPLIANCE

The concise fi nancial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS), as issued by the IASB.

(C) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS

Except for the amendments arising from AASB 2007-7: Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments , which the Trust has early adopted, Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Trust for the annual reporting period ended 30 June 2008. These are outlined in the table below.

annual fi nancial report / continued

REFERENCE	SUMMARY	APPLICATION DATE OF STANDARD*	IMPACT ON GROUP FINANCIAL REPORT	APPLICATION DATE FOR TRUST*
AASB 8 and AASB 2007-3	New standard replacing AASB114 Segment Reporting, which adopts a management reporting approach to segment reporting.	1 January 2009	AASB 8 is a disclosure standard so will have no direct impact on the amounts included in the Trust f nancial statements although, it may directly impact the level at which goodwill is tested for impairment. In addition, the amendments may have an impact on the Trust’s segment disclosures.	1 July 2008
AASB 101 and AASB 2007-8	Introduces a statement of comprehensive income. Other revisions include impacts on the presentation of items in the statement of changes in equity, new presentation requirements for restatements or reclassif cations of items in the f nancial statements, changes in the presentation requirements for dividends and changes to the titles of the f nancial statements.	1 January 2009	These amendments are only expected to affect the presentation of the Trust f nancial report and will not have a direct impact on the measurement and recognition of amounts disclosed in the f nancial report. The Trust has not determined at this stage whether to present a single statement of comprehensive income or two separate statements.	1 July 2009
AASB 2008-1	The amendments clarify the def nition of ‘vesting conditions’, introducing the term ‘non- vesting conditions’ for conditions other than vesting conditions as specif cally def ned and prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisf ed.	1 January 2009	The Trust has share-based payment arrangements that may be affected by these amendments. However, the Trust has not yet determined the extent of the impact, if any.	1 July 2009
AASB 2008-2	The amendments provide a limited exception to the def nition of a liability so as to allow an entity that issues puttable f nancial instruments with certain specif ed features, to classify those instruments as equity rather than f nancial liabilities.	1 January 2009	These amendments are not expected to have any impact on the Trust f nancial report as the Trust does not have on issue or expect to issue any puttable f nancial instruments as def ned by the amendments.	1 July 2009
AASB 3 (revised)	The revised standard introduces a number of changes to the accounting for business combinations, the most signif cant of which allows entities a choice for each business combination entered into – to measure a non- controlling interest (formerly a minority interest) in the acquiree either at its fair value or at its proportionate interest in the acquiree’s net assets. This choice will effectively result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively.	1 July 2009	The Trust may enter into some business combinations during the next f nancial year and may therefore consider early adopting the revised standard. The Trust has not yet assessed the impact of early adoption, including which accounting policy to adopt.	1 July 2009

50 ABACUS ANNUAL FINANCIAL REPORT 2008

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REFERENCE	SUMMARY	APPLICATION DATE OF STANDARD*	IMPACT ON GROUP FINANCIAL REPORT	APPLICATION DATE FOR TRUST*
AASB 8-3	Amending standard issued as a consequence of revisions to AASB 3 and AASB 127.	1 July 2009	Refer to AASB 3 (revised) and AASB 127 (revised) above.	1 July 2009
Amendments to International Financial Reporting Standards	The main amendments of relevance to Australian entities are those made to IAS 27 deleting the ‘cost method’ and requiring all dividends from subsidiary, jointly controlled entity or associate to be recognised in prof t or loss in an entity’s separate f nancial statements (i.e. parent company account). The distinction between pre- and post- acquisition prof ts is no longer required. However, the payment of such dividends requires the entity to consider whether there is an indicator of impairment. AASB 127 has also been amended to effectively allow the cost of an investment in a subsidiary, in limited reorganisations, to be based on the previous carrying amount of the subsidiary (i.e. share of equity) rather than its fair value.	1 January 2009	Recognising all dividends received from subsidiaries, jointly controlled entities and associates as income will likely give rise to greater income being recognised by the parent entity after adoption of these amendments. In addition, if the Trust enters into any group reorganisation establishing new parent entities, an assessment will need to be made to determine if the reorganisation meets the conditions imposed to be effectively accounted for on a carry-over basis’ rather than at fair value.	1 July 2009
Amendments to International Financial Reporting Standards	The improvements project is an annual project that provides a mechanism for making non-urgent, but necessary amendments to IFRSs. The IASB has separated the amendments into two parts: Part 1 deals with changes the IASG identif ed resulting in accounting changes; Part II deals with either terminology or editorial amendments that the IASB believes will have minimal impact.	1 January 2009 except for amendments to IFRS 5, which are effective from 1 July 2009.	The Trust has not yet determined the extent of the impact of the amendments, if any.	1 July 2009

designates the beginning of the applicable annual reporting period

annual fi nancial report / continued

30 JUNE 2008

(D) BASIS OF CONSOLIDATION

The consolidated fi nancial statements comprise the fi nancial statements of AT and its subsidiaries.

All intercompany balances and transactions, including unrealised profi ts from intra-group transactions, have been eliminated in full and subsidiaries are consolidated from the date on which control is transferred to the Trust and cease to be consolidated from the date on which control is transferred out of the Trust. Where there is a loss of control of a subsidiary, the consolidated fi nancial statements include the results for the part of the reporting period during which the Trust has control.

3. SEGMENT INFORMATION

The Trust predominantly operates in Australia. The Trust’s segment reporting format is business segments as its risks and rates of return can be readily identifi ed with the type of business and services provided.

Segment revenue, segment expense and segment result do not include transactions between business segments.

The Trust’s primary business segments are Property and Property Finance. The Property division comprises the investment in and ownership of commercial, retail and industrial properties. Property Finance provides mortgage lending and related property fi nancing solutions. Other activities include equity accounted investments.

52 ABACUS ANNUAL FINANCIAL REPORT 2008

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30 JUNE 2008

		PROPERTY
	PROPERTY	FINANCE	OTHER	TOTAL
Business segments	$’000	$’000	$’000	$’000
Year ended 30 June 2008
Revenue
Revenue from external customers	41,695	70,695	7,415	119,805
Unrealisedgains/(losses)on investments	(20,594)	–	–	(20,594)
	21,101	70,695	7,415	99,211
Unallocated revenue				1,047
Total consolidated revenue				100,258
Result
Segment result	10,235	60,578	6,878	77,691
Unallocated revenue				1,047
Prof t/(loss) before tax and
f nance costs (EBIT)				78,738
Finance costs				(23,248)
Prof t/(loss) before income tax				55,490
Income tax expense				–
Netprof t for theyear				55,490
Assets
Segment assets	547,662	529,092	103,444	1,180,198
Unallocated assets				39,224
Total assets				1,219,422
Liabilities
Segment liabilities	3,483	128,516	–	131,999
Unallocated liabilities				405,585
Total liabilities				537,584
Other segment information:
Depreciation and amortisation	998	–	–	998
Increase in fair value of investments	20,594	–	–	20,594
Cash f ow information
Net cash f ow from operating activities	25,632	(3,362)	8,193	30,463
Net cash f ow from investing activities	(129,400)	37,413	(44,244)	(136,231)
Net cash f ow from f nancing activities	49,612	81,919	4,267	135,798

[(a)] Unallocated assets include goodwill, cash and other assets.

[(b)] Unallocated liabilities include interest-bearing liabilities, tax liabilities and other liabilities.

annual fi nancial report / continued

30 JUNE 2008

		PROPERTY
	PROPERTY	FINANCE	OTHER	TOTAL
Business segments	$’000	$’000	$’000	$’000
Year ended 30 June 2007
Revenue
Revenue from external customers	35,366	48,712	1,462	85,540
Realised and unrealised gains on investments	29,979	–	–	29,979
Unallocated revenue				858
Total consolidated revenue				116,377
Result
Segment results	64,112	33,402	1,183	98,697
Interest Income				858
Prof t/(loss) before f nance costs				99,555
Finance costs				(10,432)
Netprof t for theyear				89,123
Assets
Segment assets	513,285	413,284	39,021	965,590
Total assets				965,590
Liabilities
Segment liabilities	78,927	299	–	79,226
Interest bearingliabilities				266,838
Total liabilities				346,064
Other segment information:
Capital expenditure	6,930	–	–	6,930
Depreciation and amortisation	1,067	–	–	1,067
Other non-cash expenses	1,067	–	–	1,067
Cashf ow
Net cash f ow from operating activities	6,385	10,870	1,462	18,717
Net cash f ow from investing activities	(4,680)	(42,054)	(8,852)	(55,586)
Net cash f ow from f nancing activities	–	25,910	–	25,910

54 ABACUS ANNUAL FINANCIAL REPORT 2008

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4. REVENUE
		CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Finance income
Interest and fee income on secured loans	70,695	48,712
Bank interest	1,047	858
Total f nance income	71,742	49,570
(b) Net realised gains on disposal of:
Sale of investment properties	–	10,093
Expenses on sale of investmentproperties	–	(270)
Total net realisedgains on investments	–	9,823
(c) Net Unrealised gains on investments
Change in fair value of investmentproperties	(20,594)	20,156
Total net unrealised gains/(loss) on investments	(20,594)	20,156
5. EXPENSES
(a) Depreciation and amortisation expense
Amortisation of leasingincentives	998	1,067
Total depreciation and amortisation expense	998	1,067
(b) Finance costs
Interest on loans	25,176	14,677
Amortisation of f nance costs	970	330
Total f nance costs (on historical basis)	26,146	15,007
Unrealisedgains on interest rate swaps	(2,898)	(4,575)
Total f nance costs	23,248	10,432
(c) Other expenses
Property outgoings	6,849	6,871
Bad and doubtful debts	5,000	3,000
Auditor’s remuneration	20	100
Custody fees	164	121
Registry maintenance costs	–	30
Other	8,489	5,633
Total other expenses	20,522	15,755

annual fi nancial report / continued

30 JUNE 2008

6. DISTRIBUTIONS PAID AND PROPOSED

6. DISTRIBUTIONS PAID AND PROPOSED
		CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Distributions paid during the year
Final distribution for f nancial year 30 June:
1.36 cents per unit (2006: 3.00 cents)	7,844	15,491
Interim distributions paid during the year:
September: 3.25 cents per unit (2007: 3.00 cents)	20,622	15,973
December: 3.25 cents per unit (2007: 3.00 cents)	20,862	16,059
March: 3.5 centsper unit(2007: 3.25 cents)	22,521	18,681
	71,849	66,204
(b) Distributions proposed and recognised as a liability
Final distribution payable for the June quarter:
0.54 cents per unit (2007: 1.36 cents)	3,420	7,844

The distributions were paid from the Abacus Trust and Abacus Income Trust (which do not pay tax provided they distribute all their taxable income) hence, there were no franking credits attached.

7. EARNINGS PER UNIT

Attributable to Unitholders of the Trust

The following refl ects the income used in the basic and diluted earnings per unit computation:

(a) Earnings used in calculating earnings per unit:

(a) Earnings used in calculating earnings per unit:
Net prof t attributable to unitholders	55,490	89,123
Net prof t attributable to unitholders fair value adjustments(1)	73,186	64,392
(1)Fair value adjustments include property revaluations, revaluations of derivatives
and other f nancial instruments and share based payments.
	2008	2007
	’000	’000
(b) Weighted average number of units:
Weighted average number of units for basic earnings per share	625,857	553,184
Effect of dilution:
Stapled securityoptions	10,479	3,703
Weighted average number of units adjusted for the effect of dilution	636,336	556,887

Options granted to employees (including key management personnel) are considered to be potential units and have been included in the determination of diluted earnings per stapled security to the extent they are dilutive. These options have not been included in the determination of basic earnings per stapled security.

56 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus trust

8. INVESTMENT PROPERTIES

Investment properties are carried at the Directors’ determination of fair value and are based on independent valuations where appropriate. The determination of fair value includes reference to the original acquisition cost together with capital expenditure since acquisition and either the latest full independent valuation or latest independent update. Total acquisition costs include incidental costs of acquisition such as property taxes on acquisition, legal and professional fees and other acquisition related costs.

				CONSOLIDATED	CONSOLIDATED
		COSTS
		INCL ALL	INDEPENDENT
	ACQUISITION	ADDITIONS	VALUATION	2008	2007
Property	DATE	$’000	DATE	$’000	$’000
66 Christina Road,Villawood,NSW(i)	28-May-02	8,213	31-Dec-07	13,242	12,426
Properties owned bytheparent entity,Abacus Trust				13,242	12,426
CSIRO, Limestone Ave., Campbell, ACT(vii)	21-Jun-02	12,686	30-Jun-08	20,000	20,000
4 Ray Road, Epping, NSW(ii)	30-Apr-97	27,043	30-Jun-08	52,100	54,500
Ashf eld Mall, Ashf eld, NSW(v)	15-Sep-97	86,806	30-Jun-08	112,000	116,842
10-12 Pike Street, Rydalmere, NSW(vii)	1-Oct-98	14,262	30-Jun-08	22,200	22,400
Liverpool Plaza, Liverpool, NSW(iv)	16-Aug-04	32,860	31-Dec-07	42,278	37,020
Macquarie Street, Liverpool, NSW(iii)	21-Sep-05	5,451	31-Dec-07	5,500	5,503
Moore Street, Liverpool, NSW(iii)	14-Oct-05	2,265	31-Dec-07	2,300	2,297
Aspley Village Shopping Centre(iii)	15-Feb-06	16,374	30-Jun-07	–	18,607
Westpac House, Adelaide SA(i)(50% interest)	5-Oct-04	54,328	30-Jun-08	69,700	68,850
970 Nepean Highway, Moorabbin, NSW(viii)	11-Aug-06	38,688	31-Dec-07	32,050	38,690
12-14 Butler Road, Hurstville(v)	31-May-07	18,714	30-Jun-08	17,750	18,714
27 Grant Street, Port Macquarie(viii)	26-Jun-07	16,021	30-Jun-08	15,100	16,021
8 Sylvania Way, Lisarow NSW(vii)	23-Jul-07	10,510	31-Dec-07	9,700	–
198-206 St Johns Rd, Glebe NSW	4-Oct-07	6,501	5-Sep-07	6,821	–
23 Norton St, Leichhardt NSW	22-Oct-07	9,062	30-Sep-07	9,063	–
144-168 National Boulevard, Campbellf eld NSW	9-Nov-07	21,668	30-Jun-08	21,668	–
Lot 121 Orielton Rd, Smeaton Grange	22-Nov-07	10,198	12-Oct-07	10,197	–
169 Varsity Parade, Varsity Lakes QLD(viii)	17-Sep-07	24,042	30-Jun-08	23,000	–
95 and 117 Mina Parade, Alderly QLD	14-Sep-07	20,971	9-Jul-07	22,342	–
16-18, 20-21 Anzac St and 206-220 Hume Highway, Greenacre NSW	30-Nov-07	14,037	19-Sep-07	17,232	–
1769 Hume Highway,Campbellf eld VIC(vii)	12-Nov-07	18,538	30-Jun-08	17,850	–
Properties owned byAbacus Trust and its controlled entities				542,093	431,870

annual fi nancial report / continued

30 JUNE 2008

Notes:

[(a)] The aggregated value at 30 June 2008 includes capital expenditures after the last valuation date.
[(i)] As valued by Knight Frank Pty Limited

[(ii)] As valued by Colliers International Consultancy and Valuation Pty Ltd

[(iii)] As valued by Urbis Property Consultants
[(iv)] As valued by CB Richard Ellis Pty Ltd
[(v)] As valued by FPD Savills (NSW) Pty Limited

[(vi)] As valued by Jeffrey Reid Flanagan

[(vii)] As valued by DTZ

[(viii)] As valued by Landmarkwhite

RECONCILIATIONS

Reconciliation of the carrying amounts of investment properties at the beginning and end of the current and previous fi nancial year:

	CONSOLIDATED	CONSOLIDATED
	2008	2007
	$’000	$’000
Investment properties
Carrying amount at beginning of the f nancial year	431,870	366,079
Additions and capital expenditure	130,817	85,635
Net revaluation increments/(decrements)	(20,594)	20,156
Disposals	–	(40,000)
Carrying amount at end of the f nancial year	542,093	431,870

58 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus trust

9. CONTRIBUTED EQUITY
	CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Issued Units
Issued Capital	611,936	535,690
Finance and issue costs	(16,424)	(14,425)
Total contributed equity	595,512	521,265
(b) Movement in units on issue
	CONSOLIDATED
	UNITS	HELD
	NUMBER	VALUE
	‘000	$’000
At 1 July 2007	578,633	521,265
– institutional equity raising	52,632	74,453
– distribution reinvestment plan	10,348	12,973
– security purchase plan	3,991	5,526
– less transaction costs	–	(2,000)
– securities f nanced byAPG under the ESLP	–	(16,705)
At 30 June 2008	645,604	595,512

10. EVENTS AFTER THE BALANCE SHEET DATE

Other than as disclosed in this report and to the knowledge of directors, there has been no other matter or circumstance that has arisen since the end of the fi nancial year that has or may affect the Trust’s operations in future fi nancial years, the results of those operations or the Trust’s state of affairs in future fi nancial years.

annual fi nancial report / continued

directors’ declaration

In accordance with a resolution of the Directors, we state that:

(1) In the opinion of the Directors:
(a) the concise fi nancial statements, notes and the additional disclosures included in the directors’ report designated as audited, of the company and of the consolidated entity are in accordance with the Corporations Act 2001 , including:
- (i) giving a true and fair view of the company’s and consolidated entity’s fi nancial position as at 30 June 2008 and of their performance for the year ended on that date; and
- (ii) complying with Accounting Standards and the Corporations Regulations 2001; and there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
(2) This declaration has been made after receiving the declarations required to be made to the directors in accordance with sections 295A of the Corporations Act 2001 for the fi nancial year ending 30 June 2008

On behalf of the Board

==> picture [122 x 60] intentionally omitted <==

==> picture [119 x 61] intentionally omitted <==

JOHN THAME Chairman

FRANK WOLF Managing Director

Sydney, 27 August 2008

60 ABACUS ANNUAL FINANCIAL REPORT 2008

■ Ernst & Young Centre ■ Tel 61 2 9248 5555 680 George Street Fax 61 2 9248 5959 Sydney NSW 2000 DX Sydney Stock Australia Exchange 10172 GPO Box 2646 Sydney NSW 2001

independent auditor’s report

TO MEMBERS OF ABACUS TRUST

==> picture [492 x 428] intentionally omitted <==

Liability limited by a scheme approved under Professional Standards Legislation.

annual fi nancial report / continued

independent auditor’s report

TO MEMBERS OF ABACUS TRUST

==> picture [498 x 160] intentionally omitted <==

62 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus income trust

directors’ report

30 JUNE 2008

The Directors of Abacus Funds Management Limited (AFML), the Responsible Entity of the Abacus Income Trust (AIT or the Trust) submit their report for the Trust for the year ended 30 June 2008 and the auditor’s report thereon.

DIRECTORS

The Directors of the Responsible Entity in offi ce during the fi nancial year and until the date of this report are as follows. Directors were in offi ce for this entire period unless otherwise stated.

John Thame	Chairman(Non-executive)
Frank Wolf	ManagingDirector
William Bartlett	Non-executive Director
David Bastian	Non-executive Director
Dennis Bluth	Non-executive Director
Malcolm Irving	Non-executive Director
Len Lloyd	Executive Director

As at the date of this report, the relevant interests of the directors and specifi ed executives in the stapled securities of Abacus Property Group were as follows:

	APG	NUMBER OF OPTIONS
Directors	SECURITIES HELD	OVER APG SECURITIES
J Thame	55,378	–
F Wolf W Bartlett	9,718,341* 8,000	3,747,130 –
D Bluth	20,000	–
D Bastian	4,503,497	–
M Irving	35,387	–
L Lloyd	795,925*	1,168,915

TRUST STRUCTURE

The Abacus Property Group (APG) is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects Limited (AGPL) and Abacus Income Trust (AIT). Shares in AGHL and AGPL and units in AT and AIT have been stapled together so that none can be dealt with without the others. An APG security consists of one share in AGHL, one unit in AT, one share in AGPL and one unit in AIT. A transfer, issue or reorganisation of a share or unit in any of the component parts is accompanied by a transfer, issue or reorganisation of a share or unit in each of the other component parts.

AIT is an Australian registered managed investment schemes. Abacus Funds Management Limited (AFML), the Responsible Entity of AT and AIT, is incorporated and domiciled in Australia and is a wholly owned subsidiary of AGHL.

OPERATING PROFIT

The Trust earned a net profi t attributable to members of $22.8 million for the year ended 30 June 2008 (June 2007: $29.5 million).

The Trust earned a net ‘normalised’ profi t attributable to members (excluding net property, investments, derivative and employee entitlement fair value revaluations) of $19.5 million (June 2007: $14.6 million).

DISTRIBUTIONS

AIT has a distribution of $19.2 million (3.50 cents per unit) declared and provided for in respect of the quarter ended 30 June 2008. AT funded all other distributions to APG security holders for the year ended 30 June 2008.

The holdings of F Wolf and L Lloyd include securities acquired under the Executive Share Loan Plan that are treated as options.

PRINCIPAL ACTIVITIES

The Trust operates predominantly in Australia and its principal activities during the course of the year ended 30 June 2008 included:

investment in commercial, retail and industrial properties; and
property fi nance.

64 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus income trust

REVIEW OF OPERATIONS

AIT’s revenues, net profi t and normalised earnings per unit contracted as a result of asset revaluation being $10 million less than the prior year. Distributions per unit grew strongly in the year ended 30 June 2008:

	30 JUNE 2008	30 JUNE 2007	%
	$’000	$’000	CHANGE
Total income*	39,580	43,928	-9.90%
Net prof t attributable to unitholders	22,786	29,475	-22.69%
Earnings per unit (cents)	3.64c	5.33c	-31.71%
‘Normalised earnings’ per unit (cents)**	3.11c	2.64c	17.80%
Distributions per unit (cents)	3.50c	1.89c	85.19%

Total revenue plus realised gains on sale of investments plus unrealised revaluation gains/(losses) on properties/investments

** Normalised earnings is net profi t adjusted for AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other fi nancial instruments)

Similarly the AIT’s fi nancial condition remained comparable to the prior year:

			%
	30 JUNE 2008	30 JUNE 2007	CHANGE
Total assets ($ million)	354	313	13.10%
Gearing (%)	40.66%	42.94%	-5.31%
Net assets ($ million)	183	160	14.38%
Net tangible assets ($ million)	183	160	14.38%
NTA per security ($)	0.29	0.28	3.57%
Retained earnings ($million)	44	41	7.32%
Units on issue (million)	645	579	11.40%
Weighted average units on issue (million)	626	553	13.20%

Business activities which contributed to the Trust’s operating performance and fi nancial condition for the fi nancial year were:

Property

Total investment property assets at 30 June 2008 were $190 million (30 June 2007 $216 million). During the year the Trust acquired a property in Gordonvale ($3 million) and undertook capital improvements in North Bundaberg project ($2 million).

Revaluation of the property portfolio during the fi nancial year contributed $3.5 million to the Trust’s assets (2007: $13.1 million)

Gains from sale of 3 properties (Matson, Dingley and Noble Park) increased operating profi t by $16.2 million (2007: $6.3 million).

Rental income decreased from $20 million (2007) to $17 million for the year due to a net reduction in the property portfolio.

annual fi nancial report / continued

directors’ report

30 JUNE 2008

REVIEW OF FINANCIAL CONDITION

During the year ended 30 June 2008, the contributed equity of the Trust increased $20 million to $137 million compared to $117 million at 30 June 2007 as a result of capital raising on 25 July 2007.

Net tangible assets per unit marginally increased 3.57% to $0.29 at 30 June 2008 compared to $0.28 at 30 June 2007.

At 30 June 2008, existing bank loan facilities totalled approximately $135 million, of which $108 million was drawn. The weighted average maturity of its secured, non-recourse bank debt is 2.62 (2007: 5.02). The Trust manages interest rate exposure on debt facilities through the use of interest rate swap contracts. At 30 June 2008, 66% (2007: 53%) of total debt facilities were covered by interest rate swap arrangements at an average interest rate (including bank margin) of 7.33% (2007: 6.38%) and an average term to maturity of 2.66 years (2007: 5.00).

The Trust’s net debt gearing ratio (calculated as total interest bearing liabilities less cash assets divided by the net of total asset and cash) was 40.66% at 30 June 2008 compared to 42.94% at 30 June 2007.

UNITS ON ISSUE

At 30 June 2008, 645,604,240 units in AIT were on issue (2007: 578,633,460).

FEES PAID TO THE RESPONSIBLE ENTITY AND ASSOCIATES

The AIT paid a management fee out of scheme property to the Responsible Entity of $3.4 million for the year ended 30 June 2008 (2007: $2.2 million). In addition, AIT paid property management fees to an associate of the Responsible Entity, Abacus Property Services Pty Limited of $0.3 million (2007: $0.4 million) for the year ended 30 June 2008.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

The following signifi cant changes in the state of affairs of the Trust occurred during the fi nancial year:

retained earnings (including the impact of revaluations of investment properties and derivative fi nancial instruments) increased $3 million to $44 million at 30 June 2008 compared to $41 million at 30 June 2007; and
total equity increased by 14.38% from $160 million to $183 million at 30 June 2008 refl ecting the additional capital raised, growth in retained earnings and net positive revaluations during the year.

SIGNIFICANT EVENTS AFTER BALANCE DATE

Other than as disclosed already in this report, there has been no matter or circumstance that has arisen since the end of the fi nancial year that has signifi cantly affected, or may affect, the Trust’s operations in future fi nancial periods, the results of those operations or the Trust’s state of affairs in future fi nancial periods.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Trust’s environmental responsibilities, such as waste removal and water treatment, have been managed in compliance with all applicable regulations and licence requirements and in accordance with industry standards. No breaches of requirements or any environmental issues have been discovered and brought to the board’s attention. There has been no known signifi cant breach of any environmental requirements applicable to the Trust.

66 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus income trust

AUDITORS INDEPENDENCE DECLARATION

We have obtained an independence declaration from our auditor, Ernst & Young, and such declaration is shown on page 68.

ROUNDING

Signed in accordance with a resolution of the directors.

==> picture [121 x 59] intentionally omitted <==

JOHN THAME Chairman Sydney, 27 August 2008

==> picture [118 x 60] intentionally omitted <==

FRANK WOLF Managing Director

annual fi nancial report / continued

auditor’s independence declaration

TO THE DIRECTORS OF ABACUS FUND MANAGEMENT LIMITED AS THE RESPONSIBLE ENTITY FOR ABACUS INCOME TRUST

==> picture [494 x 579] intentionally omitted <==

68 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus income trust

consolidated income and distribution statements

YEAR ENDED 30 JUNE 2008

			CONSOLIDATED
		2008	2007
	NOTES	$’000	$’000
Revenue
Rental income		17,150	20,387
Finance income	4a	2,726	4,173
Income from distributions		–	–
Net realised gains on investments	4b	6,995	2,985
Net realised gain on property, plant and equipment	4c	9,252	3,269
Net unrealisedgains on investments	4d	3,457	13,114
Total Revenue and Other Income		39,580	43,928
Depreciation and amortisation expense		(300)	(759)
Finance costs	4e	(9,613)	(7,630)
Other expenses	4f	(7,060)	(4,320)
Net prof t		22,607	31,219
Attributable to:
Minority interest		(179)	1,744
Unitholders ofparent entity		22,786	29,475
		22,607	31,219
Basic earnings per unit (cents)		3.64	5.33
Diluted earnings per unit (cents)		3.58	5.29
Basic earnings per unit ex fair value adjustments*		3.11	2.64
Diluted earnings per unit ex fair value adjustments*		3.06	2.63

Based on net profi t excluding AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other fi nancial instruments and share based payments)

STATEMENT OF DISTRIBUTION

Net prof t attributable to unitholders		22,786	29,475
Net transfer of undistributed income(to)/from unitholders’ funds		(3,604)	(18,511)
Distributionspaid andpayable	5	19,182	10,964
Distribution per unit (cents)		3.50	1.89
Weighted average number of units (‘000)	6	625,857	553,184

annual fi nancial report / continued

consolidated balance sheet

AS AT 30 JUNE 2008

			CONSOLIDATED
		2008	2007
	NOTES	$’000	$’000
Current assets
Cash and cash equivalents		3,453	4,208
Trade and other receivables		114,208	46,516
Property loans and other f nancial assets		43,280	27,273
Other		584	641
Total current assets		161,525	78,638
Non-current assets
Property, plant and equipment		–	15,991
Investment properties	7	190,158	215,558
Property loans and other f nancial assets		2,019	2,825
Other		252	307
Total non-current assets		192,429	234,681
Total assets		353,954	313,319
Current liabilities
Trade and other payables		24,715	16,302
Interest-bearingloans and borrowings		4,987	32,171
Total current liabilities		29,702	48,473
Non-current liabilities
Interest-bearingloans and borrowings		140,963	104,756
Total non-current liabilities		140,963	104,756
Total liabilities		170,665	153,229
Net assets		183,289	160,090
Equity
Contributed equity	8a	136,970	117,196
Retained earnings		44,219	40,615
Total unitholders’ interest in equity		181,189	157,811
Total external minorityinterest		2,100	2,279
Total equity		183,289	160,090

70 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus income trust

consolidated statement of changes in equity

YEAR ENDED 30 JUNE 2008

		ASSET
	ISSUED	REVALUATION	RETAINED	MINORITY	TOTAL
	CAPITAL	RESERVE	EARNINGS	INTEREST	EQUITY
	$’000	$’000	$’000	$’000	$’000
At 1 July 2007	117,196	–	40,615	2,279	160,090
Net income for theyear	–	–	22,786	(179)	22,607
Total income for the year	–	–	22,786	(179)	22,607
Equity raisings	23,904	–	–	–	23,904
Issue costs	110				110
Treasury units	(4,240)	–	–	–	(4,240)
Distribution to securityholders	–	–	(19,182)	–	(19,182)
At 30 June 2008	136,970	–	44,219	2,100	183,289
At 1 July 2006	99,672	1,907	20,196	535	122,310
Sale ofproperty, plant and equipment	–	(1,907)	1,907	–	–
Total income and expense for the year
recognised directly in equity	–	(1,907)	1,907	–	–
Net income for theyear	–	–	29,475	1,744	31,219
Total income for the year	–	(1,907)	31,382	1,744	31,219
Equity raisings	17,524	–	–	–	17,524
Distribution to securityholders	–	–	(10,963)	–	(10,963)
At 30 June 2007	117,196	–	40,615	2,279	160,090

annual fi nancial report / continued

YEAR ENDED 30 JUNE 2008

		CONSOLIDATED
	2008	2007
	$’000	$’000
Cash f ows from operating activities
Income receipts	17,918	18,027
Interest received	233	4,042
Borrowing costs paid	(6,916)	(8,321)
Operating payments	(10,509)	(2,405)
Net cash f ows from operatingactivities	726	11,343
Cash f ows from investing activities
Payments for investments and funds advanced	(13,807)	(7,134)
Proceeds from sale and settlement of investments and funds repaid	–	11,000
Advances to related entities	(62,366)	(43,329)
Disposal of property, plant and equipment	16,549	17,735
Purchase of investment properties	(5,512)	(19,113)
Disposal of investment properties	43,050	23,575
Payment for other investments	(4)	3
Net cash f ows from/(used in)investingactivities	(22,090)	(17,263)
Cash f ows from f nancing activities
Proceeds from issue of units	23,905	17,524
Payment of f nance costs	–	(432)
Repayment of borrowings	(1,742)	(35,245)
Proceeds from borrowings	9,410	26,935
Distributionspaid	(10,964)	(2)
Net cash f ows from/(used in)f nancingactivities	20,609	8,780
Net increase/(decrease) in cash and cash equivalents	(755)	2,860
Cash and cash equivalents at beginningofyear	4,208	1,348
Cash and cash equivalents at end of year	3,453	4,208

72 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus income trust

30 JUNE 2008

1. TRUST INFORMATION

AIT is a registered managed investment scheme and is a component entity of the Abacus Property Group (APG) – which comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects Limited (AGPL) and Abacus Income Trust (AIT). Shares in AGHL and AGPL and units in AT and AIT and have been stapled together so that neither can be dealt with without the other. The securities trade as one security on the Australian Stock Exchange (the ASX) under the code ABP.

The nature of the operations and principal activities of the Trust are described in the Directors’ Report.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The concise fi nancial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated under the option available to the Trust under ASIC Class Order 98/100. The Trust is an entity to which the class order applies.

(A) BASIS OF PREPARATION

The concise fi nancial report has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards.

The concise fi nancial report should be read in conjunction with the Annual Financial Report of Abacus Trust and Abacus Group Projects Limited. It is also recommended that the annual fi nancial report be considered together with any public announcements made by the Abacus Property Group during the year ended 30 June 2008 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001 .

(B) STATEMENT OF COMPLIANCE

The concise fi nancial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS), as issued by the IASB.

(C) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS

annual fi nancial report / continued

REFERENCE	SUMMARY	APPLICATION DATE OF STANDARD*	IMPACT ON TRUST FINANCIAL REPORT	APPLICATION DATE FOR TRUST*
AASB 8 and AASB 2007-3	New standard replacing AASB114 Segment Reporting, which adopts a management reporting approach to segment reporting.	1 January 2009	AASB 8 is a disclosure standard so will have no direct impact on the amounts included in the Trust’s f nancial statements although, it may directly impact the level at which goodwill is tested for impairment. In addition, the amendments may have an impact on the Trust’s segment disclosures.	1 July 2008
AASB 101 and AASB 2007-8	Introduces a statement of comprehensive income. Other revisions include impacts on the presentation of items in the statement of changes in equity, new presentation requirements for restatements or reclassif cations of items in the f nancial statements, changes in the presentation requirements for dividends and changes to the titles of the f nancial statements.	1 January 2009	These amendments are only expected to affect the presentation of the Trust’s f nancial report and will not have a direct impact on the measurement and recognition of amounts disclosed in the f nancial report. The Trust has not determined at this stage whether to present a single statement of comprehensive income or two separate statements.	1 July 2009
AASB 2008-1	The amendments clarify the def nition of ‘vesting conditions’, introducing the term ‘non- vesting conditions’ for conditions other than vesting conditions as specif cally def ned and prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisf ed.	1 January 2009	The Trust has share-based payment arrangements that may be affected by these amendments. However, the Trust has not yet determined the extent of the impact, if any.	1 July 2009
AASB 2008-2	The amendments provide a limited exception to the def nition of a liability so as to allow an entity that issues puttable f nancial instruments with certain specif ed features, to classify those instruments as equity rather than f nancial liabilities.	1 January 2009	These amendments are not expected to have any impact on the Trust’s f nancial report as the Trust does not have on issue or expect to issue any puttable f nancial instruments as def ned by the amendments.	1 July 2009
AASB 3 (revised)	The revised standard introduces a number of changes to the accounting for business combinations, the most signif cant of which allows entities a choice for each business combination entered into – to measure a non- controlling interest (formerly a minority interest) in the acquiree either at its fair value or at its proportionate interest in the acquiree’s net assets. This choice will effectively result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively.	1 July 2009	The Trust may enter into some business combinations during the next f nancial year and may therefore consider early adopting the revised standard. The Trust has not yet assessed the impact of early adoption, including which accounting policy to adopt.	1 July 2009

74 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus income trust

REFERENCE	SUMMARY	APPLICATION DATE OF STANDARD*	IMPACT ON TRUST FINANCIAL REPORT	APPLICATION DATE FOR TRUST*
AASB 8-3	Amending standard issued as a consequence of revisions to AASB 3 and AASB 127.	1 July 2009	Refer to AASB 3 (revised) and AASB 127 (revised) above.	1 July 2009
Amendments to International Financial Reporting Standards	The main amendments of relevance to Australian entities are those made to IAS 27 deleting the ‘cost method’ and requiring all dividends from subsidiary, jointly controlled entity or associate to be recognised in prof t or loss in an entity’s separate f nancial statements (i.e. parent company account). The distinction between pre- and post- acquisition prof ts is no longer required. However, the payment of such dividends requires the entity to consider whether there is an indicator of impairment. AASB 127 has also been amended to effectively allow the cost of an investment in a subsidiary, in limited reorganisations, to be based on the previous carrying amount of the subsidiary (i.e. share of equity) rather than its fair value.	1 January 2009	Recognising all dividends received from subsidiaries, jointly controlled entities and associates as income will likely give rise to greater income being recognised by the parent entity after adoption of these amendments. In addition, if the Trust enters into any trust reorganisation establishing new parent entities, an assessment will need to be made to determine if the reorganisation meets the conditions imposed to be effectively accounted for on a carry-over basis’ rather than at fair value.	1 July 2009
Amendments to International Financial Reporting Standards	The improvements project is an annual project that provides a mechanism for making non-urgent, but necessary amendments to IFRSs. The IASB has separated the amendments into two parts: Part 1 deals with changes the IASG identif ed resulting in accounting changes; Part II deals with either terminology or editorial amendments that the IASB believes will have minimal impact.	1 January 2009 except for amendments to IFRS 5, which are effective from 1 July 2009.	The Trust has not yet determined the extent of the impact of the amendments, if any.	1 July 2009

designates the beginning of the applicable annual reporting period

annual fi nancial report / continued

30 JUNE 2008

(D) BASIS OF CONSOLIDATION

The consolidated fi nancial statements comprise the fi nancial statements of AIT and its subsidiaries.

All intercompany balances and transactions, including unrealised profi ts from intra-trust transactions, have been eliminated in full and subsidiaries are consolidated from the date on which control is transferred to the Trust and cease to be consolidated from the date on which control is transferred out of the Trust. Where there is a loss of control of a subsidiary, the consolidated fi nancial statements include the results for the part of the reporting period during which the Trust has control.

3. SEGMENT INFORMATION

Segment revenue, segment expense and segment result do not include transactions between business segments.

Minority interests represent those equity interests in The Wollongong Property Trust and Abacus Independent Retail Property Trust that are not held by the Trust and are presented separately in the income statement and within equity in the consolidated balance sheet.

76 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus income trust

		PROPERTY
	PROPERTY	FINANCE	TOTAL
Business segments	$’000	$’000	$’000
Year ended 30 June 2008
Revenue
Revenue from external customers	17,150	2,726	19,876
Realised gains on investments	16,247	–	16,247
Unrealisedgains on investments	3,457	–	3,457
Total consolidated revenue	36,854	2,726	39,580
Result
Segment result	29,494	2,726	32,220
Finance costs			(9,613)
Netprof t for theyear			22,607
Assets
Segment assets	310,674	43,280	353,954
Liabilities
Segment liabilities	127,385	43,280	170,665
Other segment information:
Depreciation and amortisation	300	–	300
Increase in fair value of investments	3,457	–	3,457
Cash f ow information
Net cash f ow from operating activities	493	233	726
Net cash f ow from investing activities	(8,283)	(13,807)	(22,090)
Net cash f ow from f nancing activities	20,609	–	20,609

annual fi nancial report / continued

30 JUNE 2008

		PROPERTY
	PROPERTY	FINANCE	TOTAL
Business segments	$’000	$’000	$’000
Year ended 30 June 2007
Revenue
Revenue from external customers	20,387	4,173	24,560
Realised gains on investments	6,254	–	6,254
Unrealisedgains on investments	13,114	–	13,114
Total consolidated revenue	39,755	4,173	43,928
Result
Segment result	35,738	3,111	38,849
Finance costs			(7,630)
Netprof t for theyear			31,219
Assets
Segment assets	283,221	30,098	313,319
Liabilities
Segment liabilities	123,131	30,098	153,229
Other segment information:
Depreciation and amortisation	759	–	759
Increase in fair value of investments	13,114	–	13,114
Cash f ow information
Net cash f ow from operating activities	7,549	3,794	11,343
Net cash f ow from investing activities	(21,129)	3,866	(17,263)
Net cash f ow from f nancing activities	8,780	–	8,780

78 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus income trust

4. REVENUE AND EXPENSES
		CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Finance income
Interest and fee income on secured loans	2,493	3,905
Bank interest	233	268
Total f nance income	2,726	4,173
(b) Net realised gains on investments
Investment properties	43,050	23,600
Expenses on sale of investmentproperties	(36,055)	(20,615)
Total net realisedgains on investments	6,995	2,985
(c) Net realised gains on property, plant and equipment
Sale of property, plant and equipment	16,549	18,148
Expenses on sale ofproperty, plant and equipment	(7,297)	(14,879)
Total net realisedgains onproperty plant and equipment	9,252	3,269
(d) Net unrealised gains on investments
Change in fair value of investmentproperties	3,457	13,114
Total net unrealisedgains on investments	3,457	13,114
(e) Finance costs
Interest on loans	9,121	9,285
Amortisation of f nance costs	329	77
Total f nance costs (on historical basis)	9,450	9,362
Unrealised(gains)/losses on interest rate swaps	163	(1,732)
Total f nance costs	9,613	7,630
(f) Other expenses
Property outgoings	3,248	1,841
Audit fees	32	118
Custody fees	49	43
Management fees	3,396	2,204
Other administrative expenses	335	114
Total other expenses	7,060	4,320

annual fi nancial report / continued

30 JUNE 2008

5. DISTRIBUTIONS PAID AND PROPOSED

		CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Distributions paid during the year
Final distribution for f nancial year 30 June:
3.00 centsper unit(2006: nil)	–	10,963
	–	10,963
(b) Distributions proposed and recognised as a liability
Final distribution payable for the June quarter:
3.5 cents per unit (2007: 3.25 cents)	19,182	10,963

6. EARNINGS PER UNIT

The following refl ects the income used in the basic and diluted earnings per unit computations:

Earnings used in calculating earnings per unit:

Earnings used in calculating earnings per unit:
Net prof t attributable to unitholders	22,786	29,475
Netprof t attributable to unitholders excludingfair value adjustments(1)	19,492	14,628
	2008	2007
	’000	’000
Weighted average number of units:
Weighted average number of units for basic earnings per unit	625,857	553,184
Effect of dilution:
Options	10,479	3,703
Weighted average number of units adjusted for the effect of dilution	636,336	556,887

[(1)] Fair value adjustments include property revaluations, revaluations of derivatives and other fi nancial instruments and share based payments.

80 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus income trust

7. INVESTMENT PROPERTIES

and repair expenditure.
				CONSOLIDATED
		COSTS INCL ALL	INDEPENDENT
	ACQUISITION	ADDITIONS	VALUATION	2008	2007
Property	DATE	$’000	DATE	$’000	$’000
8 Station Street, Wollongong, NSW(iv)	30-Jun-03	7,866	30-Jun-08	12,000	12,000
1-5 Lake Dingley, Melbourne,VIC	28-May-03	11,956	30-Jun-06	–	13,300
367 Peel Street, Tamworth, NSW(i)	22-Feb-04	11,961	30-Jun-08	11,000	12,700
500 Princes Highway,Noble Park,VIC	27-Nov-03	19,222	30-Jun-07	–	21,000
31-33 Windorah Avenue, Stafford, QLD(ii)	3-Nov-03	5,109	30-Jun-08	6,500	6,500
Lennons Plaza, 66 Queen St., QLD(ii)	19-Dec-03	32,272	31-Dec-07	43,596	39,000
26 Savage Street and 681 Curtin Avenue,
Pinkenba, QLD(ii)	23-Jan-04	5,040	30-Jun-08	13,300	12,000
671 Gympie Rd, Chermside, QLD(iv)	17-Dec-04	4,722	30-Jun-08	6,050	5,877
9-14 Yates Street, Mawson Lakes, SA(ii)	7-Jun-05	6,857	31-Dec-07	5,750	5,700
36-52 National Blvd, Campbellf eld, VIC(ii)	18-Jul-05	8,832	30-Jun-08	10,200	10,300
Gympie Market Place, Gympie, QLD(iv)	7-Jun-04	7,340	30-Jun-08	9,000	9,000
29-33 Marshall St, Cobar NSW(iv)	5-Aug-04	1,713	30-Jun-08	2,000	1,950
50 Mostyn Street, Castlemaine, VIC(iv)	11-May-05	8,092	30-Jun-08	10,800	10,200
29 Queen Street, North Bundaberg, QLD(ii)	18-Jul-05	15,536	30-Jun-08	15,000	15,536
93 Victoria Street, Eaglehawk, VIC(iv)	29-Sep-05	6,150	30-Jun-08	7,200	6,900
12 Docker Street, Wangaratta, QLD(vi)	31-Oct-05	2,965	30-Jun-08	3,200	3,100
Kingscote Kangaroo Island, SA(iv)	21-Dec-05	4,337	30-Jun-08	4,360	4,500
96-98 Victoria Street, St.George, QLD(ii)	18-Aug-05	3,030	30-Jun-08	3,460	3,200
293-295 Grt Eastern Highway, Midland WA(iii)	21-Jun-06	7,228	30-Jun-08	10,850	10,250
Mt View Plaza, Kirwan, QLD(v)	31-Aug-06	7,743	31-Dec-07	8,508	7,743
Mid City Plaza, Maryborough, VICº(iv)	29-Jun-07	4,802	30-Jun-08	4,400	4,802
41-49 George St,Gordonvale,QLD	4-Mar-08	2,984	4-Mar-08	2,984	–
Properties owned by AIT and its controlled entities				190,158	215,558

[(i)] As valued by CB Richard Ellis Pty Ltd

[(ii)] As valued by FPD Savills (NSW) Pty Limited

[(iii)] As valued by DTZ Australia

[(iv)] As valued by Landmarkwhite

[(v)] As valued by Knight Frank

annual fi nancial report / continued

30 JUNE 2008

Notes:

(a) The value of properties not externally valued at 30 June 2008 may include capital expenditures after the last valuation date.
(b) The Abacus Income Trust owns 98.4% of the units in the Wollongong Property Trust which owns 8 Station Street, Wollongong.
(c) Property is owned by Abacus Independent Retail Property Trust (AIRPT). Abacus Retail Property Trust, a wholly owned trust of Abacus Income Trust, owns 75% of the units in AIRPT.
(d) Properties undergoing major redevelopment were valued at cost including capitalised costs.
(e) Investment properties are used as security for secured bank debt.

RECONCILIATIONS

Reconciliation of the carrying amounts of investment properties at the beginning and end of the current and previous fi nancial year:

		CONSOLIDATED
	2008	2007
	$’000	$’000
Investment properties
Carrying amount at beginning of the f nancial year	215,558	204,132
Additions and capital expenditures	5,438	18,902
Net revaluation increments	3,457	13,114
Disposals/transfer	(34,295)	(20,590)
Carrying amount at end of the f nancial year	190,158	215,558

82 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus income trust

8. CONTRIBUTED EQUITY

8. CONTRIBUTED EQUITY
		CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Issued units
Issued units	146,421	122,517
Finance and issue costs	(5,211)	(5,321)
Units f nanced byAPG under the ESLP	(4,240)	–
Total contributed equity	136,970	117,196

(b) Movement in contributed equity for the year

(b) Movement in contributed equity for the year
		CONSOLIDATED
		UNITS ISSUED
	NUMBER	VALUE
	‘000	$‘000
At 1 July 2007	578,633	117,196
– security purchase plan	3,991	1,412
– institutional equity raising	52,632	19,025
– distribution reinvestment plan	10,348	3,467
– transaction costs recovery	–	110
At 30 June 2008	645,604	141,210
– Units f nanced byAPG under the ESLP	–	(4,240)
	645,604	136,970

9. EVENTS AFTER THE BALANCE SHEET DATE

Other than as disclosed in this report and to the knowledge of directors, there has been no other matter or circumstance that has arisen since the end of the fi nancial year that has or may affect the Trust’s operations in future fi nancial years, the results of those operations or the Trust’s state of affairs in future fi nancial years.

annual fi nancial report / continued

directors’ declaration

In accordance with a resolution of the Directors, we state that:

(1) In the opinion of the Directors:
(a) the concise fi nancial statements, notes and the additional disclosures included in the directors’ report designated as audited, of the company and of the consolidated entity are in accordance with the Corporations Act 2001 , including:
- (i) giving a true and fair view of the company’s and consolidated entity’s fi nancial position as at 30 June 2008 and of their performance for the year ended on that date; and
- (ii) complying with Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
(2) This declaration has been made after receiving the declarations required to be made to the directors in accordance with sections 295A of the Corporations Act 2001 for the fi nancial year ended 30 June 2008.

On behalf of the Board

==> picture [122 x 60] intentionally omitted <==

JOHN THAME Chairman

==> picture [119 x 61] intentionally omitted <==

FRANK WOLF Managing Director

Sydney, 27 August 2008

84 ABACUS ANNUAL FINANCIAL REPORT 2008

■ Ernst & Young Centre ■ Tel 61 2 9248 5555 680 George Street Fax 61 2 9248 5959 Sydney NSW 2000 DX Sydney Stock Australia Exchange 10172 GPO Box 2646 Sydney NSW 2001

independent auditor’s report

TO THE MEMBERS OF ABACUS INCOME TRUST

==> picture [495 x 428] intentionally omitted <==

Liability limited by a scheme approved under Professional Standards Legislation.

annual fi nancial report / continued

==> picture [78 x 369] intentionally omitted <==

independent auditor’s report

TO THE MEMBERS OF ABACUS INCOME TRUST

==> picture [495 x 428] intentionally omitted <==

86 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus group projects limited

directors’ declaration

30 JUNE 2008

The Directors present their report together with the consolidated fi nancial report of Abacus Group Projects Limited (AGPL or the Company) and the auditor’s report thereon.

DIRECTORS

The Directors of Abacus Group Projects Limited in offi ce during the fi nancial year and until the date of this report are as follows. Directors were in offi ce for this entire period unless otherwise stated.

PRINCIPAL ACTIVITIES

The Company operates predominantly in Australia and its principal activities during the course of the year ended 30 June 2008 included:

investment in commercial, retail and industrial properties;
hotel operations management;
self-storage management;
funds management; and
investment.

John Thame	Chairman(Non-executive)
Frank Wolf	ManagingDirector
William Bartlett	Non-executive Director
David Bastian	Non-executive Director
Dennis Bluth	Non-executive Director
Malcolm Irving	Non-executive Director
Len Lloyd	Executive Director

As at the date of this report, the relevant interests of the directors and specifi ed executives in the stapled securities of Abacus Property Group were as follows:

		NUMBER OF
		OPTIONS
	APG SECURITIES	OVER APG
Directors	HELD	SECURITIES
J Thame	55,378	–
F Wolf	9,718,341*	3,747,130
W Bartlett	8,000	–
D Bluth	20,000	–
D Bastian	4,503,497	–
M Irving	35,387	–
L Lloyd	795,925*	1,168,915

The holdings of F Wolf and L Lloyd include securities acquired under the Executive Share Loan Plan that are treated as options.

88 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus group projects limited

CORPORATE STRUCTURE

AGPL is a member of the Abacus Property Group (APG) which is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects Limited (AGPL) and Abacus Income Trust (AIT). Shares in AGHL and AGPL and units in AT and AIT have been stapled together so that none can be dealt with without the others. An APG security consists of one share in AGHL, one unit in AT, one share in AGPL and one unit in AIT. A transfer, issue or reorganisation of a share or unit in any of the component parts is accompanied by a transfer, issue or reorganisation of a share or unit in each of the other component parts.

AGPL is a company incorporated and domiciled in Australia.

OPERATING PROFIT

The Company earned a net profi t attributable to members of $1.1 million for the year ended 30 June 2008 (June 2007: $0.4 million loss).

DIVIDENDS

There were no dividends paid by Abacus Group Projects Limited during the year ended 30 June 2008 (June 2007: nil).

REVIEW OF OPERATIONS

AGPL revenues, net profi t grew strongly in the year ended 30 June 2008:

Similarly the AGPL’s fi nancial condition also strengthened during the year:

	30 JUNE	30 JUNE
	2008	2007
Total Assets($’000) Net Assets($’000) Net Tangible Assets($’000)	188,106 31,817 28,834	9,598 6,095 5,180
NTAper security ($)	4.6	0.9
Securities on issue(million) Weighted average securities on issue (million)	645.6 625.9	578.6 553.2

During the year, AGPL purchased a $6.1 million storage facility at 31 Ruakura Road, Hamilton, New Zealand and storage facilities at Townsville, Queensland for $33.6 million and acquired 58.07% of the shareholdings in U-Stow-It Holdings Limited which operates self-storage facilities in Canberra. In addition, AGPL purchased a $19.6 million home park village at 106 Nelson Bay Road, Fern Bay and a commercial building in 51 Allara Street in Canberra for $56.2 million. These acquisitions increased AGPL’s consolidated total assets to $188.6 million (June 30 2007 $9.6 million).

In December 2007, AGPL sold its interest in the hotel business which contributed a net gain of $0.12 million.

	30 JUNE	30 JUNE
	2008	2007
	$’000	$’000
Total revenue *	11,786	12,040
Pre-taxprof t	3,741	(45)
Netprof t	2,922	(543)
Earnings per security (cents)	0.13	(.08)

Total revenue plus realised gains on sale of investments plus unrealised revaluation gains on properties/investments

annual fi nancial report / continued

directors’ declaration

30 JUNE 2008

FEES PAID TO ABACUS FUNDS MANAGEMENT LIMITED AND ASSOCIATES

AGPL paid a management fee to Abacus Funds Management Limited (AFML) of $0.47 million (2007: $0.04 million) for the year ended 30 June 2008. In addition, AGPL paid property management fees to an associate company, Abacus Property Services Pty Limited of $0.125 million (2007: $0.06 million) for the year ended 30 June 2008.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Company’s environmental responsibilities, such as waste removal and water treatment, have been managed in compliance with all applicable regulations and licence requirements and in accordance with industry standards. No breaches of requirements or any environmental issues have been discovered and brought to the board’s attention. There has been no known signifi cant breaches of any environmental requirements applicable to the Company.

AUDITORS INDEPENDENCE DECLARATION

We have obtained an independence declaration from our auditor, Ernst & Young, and such declaration is shown on page 91.

ROUNDING

The amounts contained in this report and in the annual fi nancial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/100. The Company is an entity to which the Class Order applies.

Signed in accordance with a resolution of the directors.

==> picture [122 x 59] intentionally omitted <==

==> picture [118 x 61] intentionally omitted <==

JOHN THAME Chairman

FRANK WOLF Managing Director

Sydney, 27 August 2008

SIGNIFICANT EVENTS AFTER BALANCE DATE

Other than as disclosed already in this report, there has been no matter or circumstance that has arisen since the end of the fi nancial year that has signifi cantly affected, or may affect, the Company’s operations in future fi nancial periods, the results of those operations or the Company’s state of affairs in future fi nancial periods.

90 ABACUS ANNUAL FINANCIAL REPORT 2008

■ Ernst & Young Centre ■ Tel 61 2 9248 5555 680 George Street Fax 61 2 9248 5959 Sydney NSW 2000 DX Sydney Stock Australia Exchange 10172 GPO Box 2646 Sydney NSW 2001

auditor’s independence declaration

TO THE DIRECTORS OF ABACUS GROUP PROJECTS LIMITED

==> picture [495 x 428] intentionally omitted <==

Liability limited by a scheme approved under Professional Standards Legislation.

annual fi nancial report / continued

consolidated income and distribution statements

YEAR ENDED 30 JUNE 2008


		2008	2007
	NOTES	$’000	$’000
Continuing operations
Revenue
Rental income		3,280	–
Storage-related income		6,914	–
Funds management income		420	–
Finance income	4a	77	–
Income from distribution		–	–
Net realised gains on investment	4b	115	–
Net unrealisedgains on investment	4c	980	–
Total Revenue		11,786	–
Depreciation expense	4d	(30)	–
Finance costs	4e	(5,523)	–
Other expenses	4f	(2,492)	(45)
Prof t/(loss) from continuing operations before tax		3,741	(45)
Income tax benef t/(expense)		(1,149)	13
Prof t from/(loss)continuingoperations after tax		2,592	(32)
Discontinued operation
Prof t/(loss)from discontinued operation after income tax		330	(511)
Netprof t		2,922	(543)
Attributable to:
Minority interest		1,786	128
Member of theparent		1,136	(415)
Earnings per share for prof t/(loss) from continuing operations attributable
to the ordinary shareholders of the company:
Basic earnings per share (cents)		0.13	(0.08)
Diluted earnings per share (cents)		0.13	(0.07)
Basic earnings per share ex fair value adjustments*		(0.11)	(0.11)
Diluted earnings per share ex fair value adjustments*		(0.11)	(0.11)
Earnings per share for prof t/(loss) attributable to the ordinary
shareholders of the company:
Basic earnings per share (cents)		0.18	(0.08)
Diluted earnings per share (cents)		0.18	(0.07)
Basic earnings per share ex fair value adjustments*		(0.11)	(0.11)
Diluted earnings per share ex fair value adjustments*		(0.11)	(0.11)

Based on net profi t excluding AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other fi nancial instruments and share based payments)

92 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus group projects limited

consolidated balance sheet

AS AT 30 JUNE 2008

			CONSOLIDATED
		2008	2007
	NOTES	$’000	$’000
Current assets
Cash and cash equivalents		2,257	2,031
Trade and other receivables		464	4,585
Inventories		–	125
Other		355	64
Total current assets		3,076	6,805
Non-current assets
Property, plant and equipment		193	924
Investment properties	6	170,273	–
Investment in subsidiaries		–	–
Property loan and other f nancial assets		11,109	–
Deferred tax assets		472	954
Intangible assets andgoodwill		2,983	915
Total non-current assets		185,030	2,793
Total assets		188,106	9,598
Current liabilities
Trade and other payables		5,926	3,155
Interest-bearing loans and borrowings		41,812	–
Income tax payable		222	–
Other		–	139
Total current liabilities		47,960	3,294
Non-current liabilities
Interest-bearing loans and borrowings		101,410	–
Deferred tax liabilities		6,835	–
Other		84	209
Total non-current liabilities		108,329	209
Total liabilities		156,289	3,503
Net assets		31,817	6,095
Equity
Contributed equity	7	7,259	6,437
Reserves		(483)	–
Retained earnings/(accumulated losses)		93	(1,043)
Total security holders’ interest in equity		6,869	5,394
Total external minorityinterest		24,948	701
Total equity		31,817	6,095

annual fi nancial report / continued

consolidated statement of changes in equity

YEAR ENDED 30 JUNE 2008

		FOREIGN
	ISSUED	CURRENCY	RETAINED	MINORITY	TOTAL
	CAPITAL	TRANSLATION	EARNINGS	INTEREST	EQUITY
	$’000	$’000	$’000	$’000	$’000
At 1 July 2007	6,437	–	(1,043)	701	6,095
Net income for theyear	–	–	1,136	1,786	2,922
Total income for the year	–	–	1,136	1,786	2,922
Equity raisings	1,106	–	–	–	1,106
Issue costs	(87)	–	–	–	(87)
Treasury shares	(197)	–	–	–	(197)
Disposal of interest in Matson Resort	–	–	–	(701)	(701)
Foreign currency translation	–	(483)	–	–	(483)
Interest in Abacus Ventures Trust	–	–	–	8,827	8,827
Interest on acquisition of U-Stow-It Holdings Limited	–	–	–	14,335	14,335
At 30 June 2008	7,259	(483)	93	24,948	31,817
At 1 July 2006	5,557	–	(628)	829	5,758
Net income for theyear	–	–	(415)	(128)	(543)
Total income for the year	–	–	(415)	(128)	(543)
Equityraisings	880	–	–	–	880
At 30 June 2007	6,437	–	(1,043)	701	6,095

94 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus group projects limited

YEAR ENDED 30 JUNE 2008

		CONSOLIDATED
	2008	2007
	$’000	$’000
Cash f ows from operating activities
Income receipts	15,958	3,934
Interest received	80	15
Distributions received	–	3
Borrowing costs paid	(4,145)	–
Operating payments	(10,929)	(3,081)
Net cash f ows from/(used in)operatingactivities	964	871
Cash f ows from investing activities
Payments for investments and funds advanced	(10,478)	–
Advances from related entities	6,627	36
Purchase of a controlled entity	(22,861)	–
Purchase of plant and equipment	–	(119)
Disposal of property, plant and equipment	926	–
Purchase of investmentproperties	(107,228)	–
Net cash f ows from/(used in)investingactivities	(133,014)	(83)
Cash f ows from f nancing activities
Proceeds from issue of stapled securities	1,106	–
Proceeds from borrowings	131,653	–
Net cash f ows from/(used in)f nancingactivities	132,759	–
Net increase/(decrease) in cash and cash equivalents	709	788
Net foreign exchange differences	(483)	–
Cash and cash equivalents at beginningofyear	2,031	1,243
Cash and cash equivalents at end of year	2,257	2,031

annual fi nancial report / continued

30 JUNE 2008

1. CORPORATE INFORMATION

Abacus Group Projects Limited (AGPL or the Company) is a member of Abacus Property Group (APG ) which is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects Limited (AGPL) and Abacus Income Trust (AIT). Shares in AGHL and AGPL and units in AT and AIT and have been stapled together so that neither can be dealt with without the other. The securities trade as one security on the Australian Stock Exchange (the ASX) under the code ABP.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PREPARATION

The concise fi nancial report has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards.

The concise fi nancial report should be read in conjunction with the Annual Financial Report of Abacus Trust and Abacus Income Trust. It is also recommended that the annual fi nancial report be considered together with any public announcements made by the Abacus Property Group during the year ended 30 June 2008 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001 .

The concise fi nancial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated under the option available to the Company under ASIC Class Order 98/100. The Company is an entity to which the class order applies.

(B) STATEMENT OF COMPLIANCE

The concise fi nancial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS), as issued by the IASB.

(C) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS

Except for the amendments arising from AASB 2007-7: Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments , which the Company has early adopted, Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Company for the annual reporting period ended 30 June 2008. These are outlined in the table below.

96 ABACUS ANNUAL FINANCIAL REPORT 2008

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REFERENCE	SUMMARY	APPLICATION DATE OF STANDARD*	IMPACT ON COMPANY FINANCIAL REPORT	APPLICATION DATE OF COMPANY*
AASB 8 and AASB 2007-3	New standard replacing AASB114 Segment Reporting, which adopts a management reporting approach to segment reporting.	1 January 2009	AASB 8 is a disclosure standard so will have no direct impact on the amounts included in the Company’s f nancial statements although, it may directly impact the level at which goodwill is tested for impairment. In addition, the amendments may have an impact on the Company’s segment disclosures.	1 July 2008
AASB 101 and AASB 2007-8	Introduces a statement of comprehensive income. Other revisions include impacts on the presentation of items in the statement of changes in equity, new presentation requirements for restatements or reclassif cations of items in the f nancial statements, changes in the presentation requirements for dividends and changes to the titles of the f nancial statements.	1 January 2009	These amendments are only expected to affect the presentation of the Company’s f nancial report and will not have a direct impact on the measurement and recognition of amounts disclosed in the f nancial report. The Company has not determined at this stage whether to present a single statement of comprehensive income or two separate statements.	1 July 2009
AASB 2008-1	The amendments clarify the def nition of ‘vesting conditions’, introducing the term ‘non- vesting conditions’ for conditions other than vesting conditions as specif cally def ned and prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisf ed.	1 January 2009	The Company has share-based payment arrangements that may be affected by these amendments. However, the Company has not yet determined the extent of the impact, if any.	1 July 2009
AASB 2008-2	The amendments provide a limited exception to the def nition of a liability so as to allow an entity that issues puttable f nancial instruments with certain specif ed features, to classify those instruments as equity rather than f nancial liabilities.	1 January 2009	These amendments are not expected to have any impact on the Company’s f nancial report as the Company does not have on issue or expect to issue any puttable f nancial instruments as def ned by the amendments.	1 July 2009
AASB 3 (revised)	The revised standard introduces a number of changes to the accounting for business combinations, the most signif cant of which allows entities a choice for each business combination entered into – to measure a non- controlling interest (formerly a minority interest) in the acquiree either at its fair value or at its proportionate interest in the acquiree’s net assets. This choice will effectively result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively.	1 July 2009	The Company may enter into some business combinations during the next f nancial year and may therefore consider early adopting the revised standard. The Company has not yet assessed the impact of early adoption, including which accounting policy to adopt.	1 July 2009
AASB 8-3	Amending standard issued as a consequence of revisions to AASB 3 and AASB 127.	1 July 2009	Refer to AASB 3 (revised) and AASB 127 (revised) above.	1 July 2009

annual fi nancial report / continued

REFERENCE	SUMMARY	APPLICATION DATE OF STANDARD*	IMPACT ON COMPANY FINANCIAL REPORT	APPLICATION DATE OF COMPANY*
Amendments to International Financial Reporting Standards	The main amendments of relevance to Australian entities are those made to IAS 27 deleting the ‘cost method’ and requiring all dividends from subsidiary, jointly controlled entity or associate to be recognised in prof t or loss in an entity’s separate f nancial statements (i.e. parent company account). The distinction between pre- and post- acquisition prof ts is no longer required. However, the payment of such dividends requires the entity to consider whether there is an indicator of impairment. AASB 127 has also been amended to effectively allow the cost of an investment in a subsidiary, in limited reorganisations, to be based on the previous carrying amount of the subsidiary (i.e. share of equity) rather than its fair value.	1 January 2009	Recognising all dividends received from subsidiaries, jointly controlled entities and associates as income will likely give rise to greater income being recognised by the parent entity after adoption of these amendments. In addition, if the Company enters into any Company reorganisation establishing new parent entities, an assessment will need to be made to determine if the reorganisation meets the conditions imposed to be effectively accounted for on a carry- over basis’ rather than at fair value.	1 July 2009
Amendments to International Financial Reporting Standards	The improvements project is an annual project that provides a mechanism for making non-urgent, but necessary amendments to IFRSs. The IASB has separated the amendments into two parts: Part 1 deals with changes the IASG identif ed resulting in accounting changes; Part II deals with either terminology or editorial amendments that the IASB believes will have minimal impact.	1 January 2009 except for amendments to IFRS 5, which are effective from 1 July 2009.	The Company has not yet determined the extent of the impact of the amendments, if any.	1 July 2009

designates the beginning of the applicable annual reporting period

(D) BASIS OF CONSOLIDATION

The consolidated fi nancial statements comprise the fi nancial statements of AGPL and its subsidiaries.

All intercompany balances and transactions, including unrealised profi ts from intra-Company transactions, have been eliminated in full and subsidiaries are consolidated from the date on which control is transferred to the Company and cease to be consolidated from the date on which control is transferred out of the Company. Where there is a loss of control of a subsidiary, the consolidated fi nancial statements include the results for the part of the reporting period during which the Company has control.

Minority interests represent those equity interests in Abacus Ventures Trust, Abacus Villages Trust, Abacus Allara Trust and U-Stow-It Holdings Limited that are not held by the Company and are presented separately in the income statement and within equity in the consolidated balance sheet.

98 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus group projects limited

3. SEGMENT INFORMATION

The Company predominantly operates in Australia. The Company’s segment reporting format is business segments as its risks and rates of return can be readily identifi ed with the type of business and services provided.

Segment revenue, segment expense and segment result do not include transactions between business segments.

The Company’s primary business segments are Property, Funds management, Investment, Hotel and Self-storage management. The Property division comprises the investment in and ownership of commercial, retail and industrial properties.

CONTINUING OPERATIONS	DISCONTINUING OPERATION
Business segments PROPERTY $’000 FUNDS MANAGEMENT $’000 INVESTMENT INCOME $’000 STORAGE RELATED INCOME $’000 TOTAL $’000	HOTEL OPERATIONS $’000 TOTAL OPERATIONS $’000
Year ended 30 June 2008 Revenue Revenue from external customers 3,357 420 – 6,914 10,691 Unrealised gains (loss) on investments – – – 980 980 Realisedgains(loss)on investments – – 115 – 115	6089 16,780 – 115
Total consolidated revenue and other income 3,357 420 115 7,894 11,786	6,089 16,895
Result Segment result 2,705 420 115 6,024 9,264 Finance costs (5,523)	472 9,736 (5,523)
Prof t/(loss) before income tax and minorityinterest 3,741	4,213
Assets Segment assets 77,735 7,970 – 102,401 188,106	188,106
Total assets	188,106
Liabilities Segment liabilities 76,635 7,808 – 71,846 156,289	156,289
Total liabilities	156,289
Other segment information: Depreciation and amortisation 30 30 Increase in fair value of investments 980 980 Cash f ow information Net cash f ow from operating activities 405 420 (40) 179 964 Net cash f ow from investing activities (119,690) – 927 (14,251) (133,014) Net cash f ow from f nancing activities 82,463 – – 50,296 132,759

annual fi nancial report / continued

30 JUNE 2008

CONTINUING OPERATIONS	DISCONTINUING OPERATION
Business segments PROPERTY $’000 FUNDS MANAGEMENT $’000 INVESTMENT INCOME $’000 STORAGE RELATED INCOME $’000 TOTAL $’000	HOTEL OPERATIONS $’000 TOTAL OPERATIONS $’000
Year ended 30 June 2007 Revenue Revenue from external customers – – – –	12,040 12,040
Total consolidated revenue and other income – – –	12,040 12,040
Result Segment result – – – – –	(1,054) (1,054)
Prof t/(loss) before income tax and minorityinterest –	(1,054)
Assets Segment assets – – – – –	9,598 9,598
Total assets	9,598
Liabilities Segment liabilities – – – – –	3,503 3,503
Total liabilities	3,503
Other segment information: Depreciation and amortisation Cash f ow information Net cash f ow from operating activities Net cash f ow from investing activities	185 185 871 871 (83) (83)

100 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus group projects limited

4. REVENUE AND EXPENSES

4. REVENUE AND EXPENSES
		CONSOLIDATED
	2008		2007
	$’000		$’000
(a) Finance income
Bank interest	77		–
Total f nance income	77		–
(b) Net realised gains on disposal of:
Shares in Abacus Matson Holdings PtyLtd	115		–
Total net realisedgains on investments	115		–
(c) Unrealised gains on investments
Change in fair value of investmentproperties	980		–
Total unrealisedgains on investments	980		–
(d) Depreciation expense
Depreciation ofproperty, plant and equipment	30		–
Total depreciation expense	30		–
(e) Finance costs
Interest on loans	6,211		–
Amortisation of f nance costs	153		–
Total f nance costs (on historical basis)	6,364		–
Unrealisedgains on interest rate swaps	(841)		–
Total f nance costs	5,523		–
(f) Other expenses
Property outgoings	1,578		–
Other administrative expenses	914		45
Total other expenses	2,492		45

101

annual fi nancial report / continued

30 JUNE 2008

5. EARNINGS PER SHARE

The following refl ects the income used in the basic and diluted earnings per share computations:

		CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Earnings used in calculating earnings per shares:
Net prof t/(loss) from continuing operations attributed to ordinary shareholders
of the parent	806	(415)
Prof t attributable to discontinued operations	330	–
Netprof t/(loss)attributable to ordinaryshareholders of theparent	1,136	(415)
Net prof t/(loss) attributable to shareholders excluding fair value adjustments(1)	(678)	(415)
	2008	2007
	’000	’000
(b) Weighted average number of shares:
Weighted average number of shares for basic earnings per share	625,857	553,184
Effect of dilution:
Share options	10,479	3,703
Weighted average number of shares adjusted for the effect of dilution	636,336	556,887

Options granted to employees (including key management personnel) are considered to be potential shares and have been included in the determination of diluted earnings per share to the extent they are dilutive. These options have not been included in the determination of basic earnings per share.

[(1)] Fair value adjustments include property revaluations, revaluations of derivatives and other fi nancial instruments and share based payments.

102 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus group projects limited

6. INVESTMENT PROPERTIES

				CONSOLIDATED	CONSOLIDATED
		COSTS INCL ALL	INDEPENDENT
	ACQUISITION	ADDITIONS	VALUATION	2008	2007
Property	DATE	$’000	DATE	$’000	$’000
Townsville Storage facilities(i)	13-Sep-07	33,537	13-Sep-07	33,564	–
Hamilton Storage facilities(ii)	10-Sep-07	6,150	10-Sep-07	6,150	–
U-Stow-It Storage facilities(iii)	23-Nov-07	54,967	30-Jun-08	54,846	–
106 Nelson Bay Rd, Bayway Village(iv)	6-Feb-08	19,800	21-Nov-07	19,556	–
51 Allara St,Canberra(v)	31-Jan-08	56,158	27-Nov-07	56,157	–
				170,273	–

[(i)] As valued by Blackwell Consulting

[(ii)] As valued by DTZ Australia

[(iii)] As valued by CB Richard Ellis Pty Ltd

[(iv)] As valued by Robertson & Robertson

[(v)] As valued by Knight Frank

Notes:

(a) The Group acquired 58.07% interest in U-Stow-It Holdings Pty Limited in November 2007.

(b) The investment properties are used as security for secured bank debt.

103

annual fi nancial report / continued

30 JUNE 2008

RECONCILIATIONS

Reconciliation of the carrying amounts of investment properties at the beginning and end of the current and previous fi nancial year:


	2008	2007
	$’000	$’000
Investment properties
Carrying amount at beginning of the f nancial year	–	–
Additions and capital expenditures	115,427	–
Acquisition through business combinations	53,866	–
Net revaluation increments	980	–
Carrying amount at end of the f nancial year	170,273	–

104 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus group projects limited

7. CONTRIBUTED EQUITY

		CONSOLIDATED
	2008	2007
	$’000	$’000
(a) Issued Shares
Issued Shares	7,456	6,437
– securities f nanced byAPG under the ESLP	(197)	–
Total contributed equity	7,259	6,437

(b) Movement in stapled securities on issue

(b) Movement in stapled securities on issue
		CONSOLIDATED
	STAPLED SECURITIES
	NUMBER	VALUE
	‘000	$’000
At 1 July 2007	578,633	6,437
– security purchase plan	3,991	61
– institutional equity raising	52,632	825
– distribution reinvestment plan	10,348	220
– less transaction cost	–	(87)
At 30 June 2008	645,604	7,456
– securities f nanced byAPG under the ESLP	–	(197)
	645,604	7,259

8. EVENTS AFTER THE BALANCE SHEET DATE

Other than as disclosed in this report and to the knowledge of directors, there has been no other matter or circumstance that has arisen since the end of the fi nancial year that has or may affect the Company’s operations in future fi nancial years, the results of those operations or the Company’s state of affairs in future fi nancial years.

105

annual fi nancial report / continued

directors’ declaration

In accordance with a resolution of the Directors, we state that:

(1) in the opinion of the Directors:
(a) the concise fi nancial statements, notes and the additional disclosures included in the directors’ report designated as audited, of the company and of the consolidated entity are in accordance with the Corporations Act 2001 , including:
- (i) giving a true and fair view of the company’s and consolidated entity’s fi nancial position as at 30 June 2008 and of their performance for the year ended on that date; and
- (ii) complying with Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
(2) This declaration has been made after receiving the declarations required to be made to the directors in accordance with sections 295A of the Corporations Act 2001 for the fi nancial year ended 30 June 2008.

On behalf of the Board

==> picture [122 x 60] intentionally omitted <==

JOHN THAME Chairman

==> picture [119 x 61] intentionally omitted <==

FRANK WOLF Managing Director

Sydney, 27 August 2008

106 ABACUS ANNUAL FINANCIAL REPORT 2008

■ Ernst & Young Centre ■ Tel 61 2 9248 5555 680 George Street Fax 61 2 9248 5959 Sydney NSW 2000 DX Sydney Stock Australia Exchange 10172 GPO Box 2646 Sydney NSW 2001

independent auditor’s report

TO THE MEMBERS OF ABACUS GROUP PROJECTS LIMITED

[insert Auditor’s report]

Liability limited by a scheme approved under Professional Standards Legislation.

107

annual fi nancial report / continued

independent auditor’s report

TO THE MEMBERS OF ABACUS GROUP PROJECTS LIMITED

==> picture [498 x 428] intentionally omitted <==

108 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

corporate governance report

This report sets out the Group’s position relating to each of the ASX Corporate Governance Council Principles of Good Corporate Governance during the year. Additional information, including charters and policies, is available through a dedicated corporate governance information section on the Abacus website at www.abacusproperty.com.au under ‘About Abacus’.

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

The Board has adopted a charter that sets out the responsibilities reserved by the Board, those delegated to the Managing Director and those specifi c to the Chairman.

Nomination and Remuneration Committee

The Board has established a Nomination and Remuneration committee. The Committee’s charter sets its role, responsibilities and membership requirements. The members of the committee and their attendance at meetings are provided on page 21.

The Selection and Appointment of Non-Executive Directors policy sets out the procedures followed when considering the appointment of new directors.

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

Standards of ethical behaviour

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

Board size and composition

The board is comprised of two executive directors and fi ve non-executive directors. The majority of the Board (Messrs Thame, Bluth, Irving and Bartlett) are independent members. The board has determined that an independent director is one who is not:

a current executive or a substantial securityholder of the Group;
a director who has been employed in an executive capacity by the Group;
involved in material contractual relationships with the Group; or
a principal of a material adviser or material consultant to the Group.

Given the nature of the Group’s business and current stage of development, the Board considers its current composition provides the necessary skills and experience to ensure a proper understanding of, and competence to deal with, the current and emerging issues of the business to optimise the fi nancial performance of the Group and returns to securityholders. Details of the skills, experience and expertise of each director are set out on page 19.

Directors’ independent advice

Directors may seek independent professional advice on any matter connected with the performance of their duties. In such cases, the Group will reimburse the reasonable costs of such advice.

The Group’s Code of Conduct promotes ethical practices and responsible decision making by directors and employees. The Code deals with confi dentiality of information, protection of company assets, disclosure of potential confl icts of interest and compliance with laws and regulations.

Trading in Group securities

The Group policy restricts trading in Group securities by directors and employees. The policy sets out the periods in which trading in Group securities is permitted.

PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

Financial report accountability

The Managing Director and the Chief Financial offi cer provide a written assurance to the Board that the Group’s fi nancial reports present a true and fair view, in all material respects, of the Group’s fi nancial condition and operational results and are in accordance with relevant accounting standards.

Audit Committee

The Audit Committee comprises three independent nonexecutive directors and the chairman of the Committee is not the chairman of the Board. The members of the committee and their attendance at meetings are provided on page 21.

The Audit Committee has a formal charter which sets out its specifi c roles and responsibilities, and composition requirements.

The procedures for the selection and appointment of the external auditor are set out in the Audit Committee Charter.

109

annual fi nancial report / continued

corporate governance report

PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE

The Group has a policy and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements. The Managing Director is responsible for ensuring that the Group complies with its disclosure obligations.

PRINCIPLE 8: ENCOURAGE ENHANCED PERFORMANCE

The Nomination and Remuneration Committee is responsible for assessing the processes for evaluating the performance of the Board and key executives.

PRINCIPLE 9: REMUNERATE FAIRLY AND RESPONSIBLY

PRINCIPLE 6: RESPECT THE RIGHTS OF SECURITYHOLDERS

The Group aims to keep securityholders informed of signifi cant developments and activities of the Group. The Group’s website is updated regularly and includes annual and half-yearly reports, distribution history and all other announcements lodged with the ASX.

In addition, the Group publishes a newsletter from time to time which updates investors and their advisers on the current activities of the Group.

External auditor

The external auditor attends the annual general meetings of the Group and is available to answer securityholder questions.

PRINCIPLE 7: RECOGNISE AND MANAGE RISK

The Business Risk Management Policy dealing with oversight and management of material business risks is set out in the corporate governance information section on the Abacus website at www.abacusproperty.com.au.

The Group’s remuneration policies including security-based payment plans and the remuneration of key management personnel are discussed in the Remuneration Report.

The members of the committee and their attendance at meetings are provided on page 21.

Non-executive directors are paid fees for their service and do not participate in other benefi ts which may be offered other than those which are statutory requirements.

PRINCIPLE 10: RECOGNISE THE LEGITIMATE INTERESTS OF STAKEHOLDERS

The Code of Conduct discussed under Principle 3 guides compliance with legal and ethical responsibilities and also sets a standard for employees and directors dealing with the Group’s obligations to external stakeholders.

During the year in consultation with an external consultant the Group’s risk management framework was updated. Under the compliance plan the responsible managers report regularly on the risks they manage and any emerging risks. The Audit Committee has responsibility for reviewing the Group’s risk management framework.

The Managing Director and Chief Financial Offi cer confi rm in writing to the Board that the fi nancial statements present a true and fair view and that this statement is based on a sound system of risk management and internal compliance. The statement also confi rms that these controls implement the policies adopted by the Board and that the Group’s risk and internal compliance controls are operating effi ciently and effectively in all material respects.

110 ABACUS ANNUAL FINANCIAL REPORT 2008

abacus property group

asx additional information

Abacus Property Group is made up of the Abacus Trust, Abacus Income Trust, Abacus Group Holdings Limited and Abacus Group Projects Limited. The responsible entity of the Abacus Trust and Abacus Income Trust is Abacus Funds Management Limited. Unless specifi ed otherwise, the following information is current as at 20 August 2008.

Number of holders of ordinaryfully paid stapled securities	9,059
	one vote per stapled
Votingrights attached to ordinaryfully paid stapled securities	security
Number of holders holdingless than a marketableparcel of ordinaryfully paid stapled securities	144
Secretary, Abacus Funds Management Limited
Secretary, Abacus Group Holdings Limited	Ellis Varejes
Secretary,Abacus GroupProjects Limited
Registered off ce	Level 34, Australia Square
	264-278 George Street
	Sydney NSW 2000
	612 9253 8600
Abacus Funds Management Limited
Abacus Group Holdings Limited
Abacus GroupProjects Limited
Registry	Computershare Investor
	Services Pty Ltd
	GPO Box 7045
	Sydney NSW 1115
	1300 855 080
Other stock exchanges on which Abacus PropertyGroupsecurities arequoted	none
Number and class of restricted securities or securities subject to voluntaryescrow that are on issue	none
There is no current on-market buy-back

SUBSTANTIAL SECURITYHOLDER NOTIFICATIONS

SUBSTANTIAL SECURITYHOLDER NOTIFICATIONS
Securityholders	NUMBER OF SECURITIES
UBS Nominees PtyLimited	46,014,131
ING Australia Holdings Limited	35,696,384
Australia and New Zealand Banking Group Limited	47,346,039

SECURITIES REGISTER

SECURITIES REGISTER
Number of Securities	NUMBER OF SECURITYHOLDERS
1-1000	276
1,001-5000	1,003
5,001-10000	1,888
10,001-100000	5,652
100,001 – over	240

111

annual fi nancial report / continued

asx additional information

TOP 20 LARGEST SECURITYHOLDINGS

		NUMBER OF	% ISSUED
Securityholders		SECURITIES	SECURITIES
1	National Nominees Limited	72,762,246	11.23%
2	HSBC CustodyNominees(Australia)Limited	67,805,259	10.46%
3	J P Morgan Nominees Australia Limited	67,255,797	10.38%
4	Australian Executor Trustees Limited	22,783,538	3.52%
5	ANZ Nominees Limited	18,925,925	2.92%
6	ANZ Nominees Limited	18,351,968	2.83%
7	RBC Dexia Investor Services Australia Nominees PtyLtd	15,726,881	2.43%
8	RBC Dexia Investor Services Australia Nominees PtyLtd	14,650,822	2.26%
9	CiticorpNominees PtyLimited	13,926,343	2.15%
10	AMP Life Limited	13,689,857	2.11%
11	SuncorpCustodian Services PtyLimited	12,593,346	1.94%
12	Netwealth Investments Limited	11,686,484	1.80%
13	CiticorpNominees PtyLimited	10,900,839	1.68%
14	Tricom Nominees PtyLtd	10,479,000	1.62%
15	Cogent Nominees PtyLimited	9,940,264	1.53%
16	Avanteos Investments Limited	7,548,766	1.17%
17	Cogent Nominees PtyLimited	5,744,520	0.89%
18	Avanteos Investments Limited	5,345,446	0.83%
19	CiticorpNominees PtyLimited	4,759,784	0.73%
20	Bond Street Custodians Limited	4,543,868	0.70%

112 ABACUS ANNUAL FINANCIAL REPORT 2008

Abacus Property Group

Level 34 Australia Square 264-278 George Street Sydney NSW 2000 T 612 9253 8600 F 612 9253 8616 E [email protected] www.abacusproperty.com.au

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AI assistant

ABACUS GROUP — Annual Report 2008

64280_rns_2008-09-28_24be3ef7-0e81-4aa6-b677-e60fe60d9836.pdf

Abacus Property Group

Glossary

Contents

abacus property group

Directory

Contents

Share Registry

directors’ report

DIRECTORS

CORPORATE STRUCTURE

OPERATING PROFIT

PRINCIPAL ACTIVITIES

DISTRIBUTIONS

REVIEW OF OPERATIONS

directors’ report

REVIEW OF OPERATIONS/CONTINUED

Property

Funds Management

Property Finance

Joint ventures and Developments

REVIEW OF FINANCIAL CONDITION

DETAILS OF KEY MANAGEMENT PERSONNEL (INCLUDING THE FIVE HIGHEST PAID EXECUTIVES OF THE COMPANY AND THE GROUP).

i. Directors

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

SIGNIFICANT EVENTS AFTER BALANCE DATE

REMUNERATION AND NOMINATION COMMITTEE

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

REMUNERATION REPORT (AUDITED)

annual fi nancial report / continued

directors’ report

REMUNERATION POLICY

REMUNERATION STRUCTURE

NON-EXECUTIVE DIRECTOR REMUNERATION

Objective

Structure

EXECUTIVE REMUNERATION

Objective

Structure

FIXED REMUNERATION

Objective

Structure

VARIABLE REMUNERATION – LONG TERM INCENTIVE (LTI)

Objective

(a) Executive Performance Award Plan (EPAP)

Performance hurdle

VARIABLE REMUNERATION – SHORT TERM INCENTIVE (STI)

Objective

Structure

directors’ report

(b) Executive Security Loan Plan (ESLP)

LINK BETWEEN REMUNERATION POLICY AND THE GROUP’S PERFORMANCE

APG and S&P/ASX 200 A-REIT Accumulation Index Total Return

EMPLOYMENT CONTRACTS

Managing Director

Other Executives

directors’ report

TABLE 1: REMUNERATION OF KEY MANAGEMENT PERSONNEL

directors’ report

TABLE 2: COMPENSATION OPTIONS: GRANTED AND VESTED DURING THE YEAR

Executive Performance Award Plan

Executive Security Loan Plan

directors’ report

INFORMATION ON DIRECTORS AND OFFICERS

INFORMATION ON DIRECTORS AND OFFICERS/CONTINUED

DIRECTORS’ MEETINGS

directors’ report

INDEMNIFICATION AND INSURANCE OF DIRECTORS

AND OFFICERS

ENVIRONMENTAL REGULATION AND PERFORMANCE

NON-AUDIT SERVICES

ROUNDING

STAPLED SECURITY OPTIONS

AUDITORS INDEPENDENCE DECLARATION

auditor’s independence declaration

consolidated income and distribution statements

consolidated balance sheet

consolidated balance sheet

ABACUS GROUP Annual Report 2008