==> picture [72 x 72] intentionally omitted <==

annual 2012 financial report

==> picture [594 x 602] intentionally omitted <==

----- Start of picture text -----

350 george st, sydney
----- End of picture text -----

AbAcus ProPerty grouP

At 30 June 2012, Abacus Property Group comprised Abacus Trust, Abacus Income Trust, Abacus Storage Property Trust, Abacus Group Holdings Limited, Abacus Group Projects Limited and Abacus Storage Operations Limited. The Group structure is illustrated below.

AGHL has been identified as the parent entity for the purpose of producing a consolidated financial report for the Group. The consolidated financial reports of the Group for the year ended 30 June 2012 comprise the consolidated financial reports of AGHL and its controlled entities, AT and its controlled entities, AGPL and its controlled entities, AIT and its controlled entities, ASOL and its controlled entities, ASPT and its controlled entity, Abacus Diversified Income Fund II and its controlled entities, Abacus Hospitality Fund and its controlled entities, Abacus Storage Fund and its controlled entities (until the date of merger) and Abacus Miller Street Holding Trust and its controlled entity.

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 ASOL Abacus Storage Operations Limited ASPT Abacus Storage Property Trust AT Abacus Trust Group Abacus Property Group

==> picture [499 x 245] intentionally omitted <==

----- Start of picture text -----

AbAcus ProPerty grouP consolIdAted grouP
lIsted entItIes:
AGHL AT
AGPL AIT ABACUS
ASOL ASPT HOSPITALITY
FUNDS
INVESTMENT
PROPERTY
PORTFOLIO
PROPERTY FUNDS
ADIF II
COMMERCIAL VENTURES MANAGEMENT
STORAGE
RETAIL
INDUSTRIAL
OTHER
ABACUS MILLER
STREET FUND

----- End of picture text -----*

*Abacus Property Group has significant influence over these managed funds and the adoption of AASB 10 results in the consolidation of these funds.

==> picture [317 x 556] intentionally omitted <==

----- Start of picture text -----

CONTENTS
02 Who is Abacus
06 Financial highlights
08 Chairman & Managing Director’s report
12 Recent acquisitions & approvals
14 Board members
16 Senior executive team
18 Directors report
39 Auditor’s independence declaration
42 Consolidated income statement
43 Consolidated statement of other
comprehensive income
44 Consolidated statement of financial position
46 Consolidated statement of changes in equity
47 Consolidated statement of cash flow
48 Notes to the financial statements
129 Directors’ declaration
130 Independent audit report
132 Corporate governance report
135 ASX additional information
----- End of picture text -----

14 Martin place, sydney

==> picture [63 x 63] intentionally omitted <==

WHO IS ABACUS

Abacus Property Group is a diversified property group that specialises in private equity style real estate investments. We seek to invest our capital in core plus property opportunities to drive long term total returns through the property cycle. We look for Australian assets in gateway cities that we actively manage through the asset cycle to increase prospective total returns. Where appropriate, we realise mature assets and redeploy capital into the next generation of higher growth opportunities.

Abacus has a core plus, asset-centric business model where it is not the quantity of assets that is important, but rather the nature of each asset we control and the opportunities they present. Abacus’ disciplined property selection process maintains a firm focus on fundamental real estate value. Our experience has shown that strict adherence to our fundamental investment criteria enables Abacus to acquire assets well and provide opportunities for outperformance while minimising downside risk to equity.

==> picture [596 x 248] intentionally omitted <==

----- Start of picture text -----

BirKenHead pOint, sydney
----- End of picture text -----

1996

Abacus was formed in 1996 as a boutique property syndicator, providing property based investment opportunities for retail clients of financial planners.

2001

In 2001, Abacus merged a number of property syndicates to form the diversified Abacus Property Group.

2002

In late 2002, Abacus listed the Group on the ASX. Since listing, Abacus has continued to expand its business to become one of Australia’s larger listed real estate investment trusts.

2012

In 2012, Abacus merged with its largest unlisted managed fund, Abacus Storage Fund. The merger added $330 million of quality storage assets to the Group’s portfolio. Currently Abacus has total assets of $1.9 billion and a market capitalisation of approx $870 million and is included in the S&P/ASX 200 Index.

==> picture [115 x 9] intentionally omitted <==

----- Start of picture text -----

prOperty acquisitiOn
----- End of picture text -----

Our pHilOsOpHy

Our investment objective is to provide our investors with reliable and increasing returns. We look for property assets that are capable of providing growth in:

Properties that have realistic prospects for increased capital growth through active managment

rental income; and
asset value

as a result of our diligent active management.

Abacus is first and foremost a property investor seeking to extract value through active management.

The diagram on this page depicts the investment process that Abacus undertakes.

asset ManageMent

Significant asset management experience is applied to drive returns

Abacus has three integrated property businesses built on our core expertise in accessing properties and projects and actively managing them to realise their full value.

Our flat corporate structure and business model supports strong synergies across our businesses and contributes to the overall success of the businesses and the Group.

In total, Abacus has $2.2 billion of assets under management.

==> picture [128 x 9] intentionally omitted <==

----- Start of picture text -----

INVESTMENT realisatiOn
----- End of picture text -----

Where appropriate asset is returned to market

BirKenHead pOint, sydney

==> picture [63 x 63] intentionally omitted <==

==> picture [596 x 249] intentionally omitted <==

----- Start of picture text -----

180 queen street, BrisBane
----- End of picture text -----

direct prOperty investMents

Abacus Property Group holds a diversified investment portfolio of primarily commercial, storage, industrial and retail properties. Rental income from these properties is the largest contributor to the earnings of the Group. Abacus’ disciplined property selection process maintains a firm focus on fundamental real estate value. The Groups’s property portfolio is primarily situated in eastern seaboard locations ideally positioned to benefit as markets recover from the lows of the global financial crisis.

prOperty ventures

Abacus participates in a range of projects by combining our capital and property expertise with the regional or sector-specific expertise of our business partners. Abacus provides a range of property financing solutions where strict lending criteria are met, including mezzanine finance, structured equity participation and pre-sales agreements.

Funds ManageMent

Abacus has in the past offered a wide range of high quality investment solutions designed to meet the needs of different styles of investors. Following a change in investor sentiment towards unlisted retail property funds as a consequence of the global financial crisis, Abacus initiated a strategic review of this business. The review was completed during FY12. The Group has now redirected its focus towards wholesale third party capital.

==> picture [483 x 249] intentionally omitted <==

----- Start of picture text -----

Abacus has had a clear strategy
in recent years on upgrading and
improving the quality of its directly
owned investment portfolio. Over FY10
to FY12 these transactions have added
to the quality of the portfolio and the
Group’s recurring cashflows.
----- End of picture text -----

==> picture [43 x 109] intentionally omitted <==

----- Start of picture text -----

FY10
----- End of picture text -----

==> picture [43 x 108] intentionally omitted <==

----- Start of picture text -----

FY11
----- End of picture text -----

==> picture [43 x 109] intentionally omitted <==

----- Start of picture text -----

FY12
----- End of picture text -----

Implemented business strategy with divestment program of smaller mature non-core assets with lower growth prospects to secure higher quality recurring cashflows During FY10 Abacus sold $64 million of assets at approximately 4% above book value

Implemented third party capital strategy to accelerate portfolio improvement

Acquired with joint venturers and on our own balance sheet over $420 million of assets at average yields of over 8.25%

Sold over $121 million of assets at 16% above book value and at yields of approx 8.0% to assist with liquidity requirements

Successfully merged the $330 million Abacus Storage Fund into the Group

Acquired a further $167 million of assets averaging 8.6% yield through our third party capital strategy

Sold $150 million of development and non-core assets at approximately 7% above book value and at yields averaging 6%

180 queen street, BrisBane

FINANCIAL HIGHLIGHTS

7% increase tO underlying prOFit OF $76.8 MilliOn

15% increase tO tOtal assets OF $1.9 BilliOn

sales and realisatiOns tOtalled Over $200 MilliOn OF casH

16.5c annual distriButiOn delivering an average yield during Fy12 OF 8.4%

==> picture [43 x 109] intentionally omitted <==

----- Start of picture text -----

investMent prOperty
----- End of picture text -----

==> picture [43 x 109] intentionally omitted <==

----- Start of picture text -----

prOperty ventures
----- End of picture text -----

==> picture [43 x 108] intentionally omitted <==

----- Start of picture text -----

Funds ManageMent
----- End of picture text -----

Investment properties increased to $1.3 billion following storage merger, a 24% increase

$80 million contribution to Group EBITDA

$150 million of asset sales at 7% above book

Property fundamentals improved reflecting quality of portfolio

$25 million contribution to Group EBITDA, a 21% increase on FY11 Net cash inflows during the period

Post reporting date sale of Lewisham residential development for $48.5 million Positive sales results from Rosebery and Bay Street residential developments in NSW and VIC

$18 million contribution to Group EBITDA

AUM remain stable at $493 million post ASF merger

Successful progress on delivering short to medium term strategies following strategic review

Post balance date sale of Jigsaw Fund assets and Hospitality’s Diplomat Hotel

14 Martin place, sydney

FranK wOlF (leFt) JOHn tHaMe (rigHt)

CHAIRMAN & MANAGING DIRECTOR’S REPORT

We are very pleased to present to you our 2012 Annual Report. Once again, Abacus has experienced another active year of business and had, we believe, a very successful twelve months to 30 June 2012.

There have been multiple highlights during the year yielding a better quality, cleaner and transparent business with better growth opportunities than any time over the last 5 years and equipping the Group to deliver strong financial results, securing the Group’s returns to securityholders.

In the year under review we:

delivered a strong financial year 2012 (FY12) underlying profit of $77 million supported by cash from operations of $80 million.
improved both the quality of the portfolio and its recurring earnings.
made our balance sheet stronger and more flexible and substantially reduced our cost of funding.
grew the business and positioned it for further asset and earnings growth.

Abacus has a clear focus on growing its ownership of directly owned assets that should provide a strong platform to pursue growth opportunities, while also increasing and strengthening the Group’s recurring earnings.

A highlight of the FY12 year was the successful merger of Abacus Storage Fund into the Group in March 2012. The merger ensured ownership of a high quality and strategically important $330 million portfolio of self storage assets that should bolster the Group’s future recurring earnings.

Abacus again made a number of important acquisitions during the year, further expanding our third party capital joint ventures. These acquisitions demonstrate our continued focus on improving the quality of Group assets and their high quality recurring cashflows. Abacus’ third party capital joint ventures now own $273 million of properties, including $100 million of assets acquired since financial year end. These joint ventures enable Abacus to leverage our growth and earnings.

The improvement in the investment property portfolio quality was assisted by the sale of over $100 million of lower yielding and capital intensive development assets and a further $50 million of lower growth non-core assets. Their aggregate sale value exceeded the aggregate book value of the assets sold.

Abacus has also had successful realisations in our property ventures business, both during and after the year, at above book value. These realisations also contributed to the Group’s available liquidity and demonstrated the robustness of the Group’s NTA. These transactions again illustrate the core plus potential of the balance sheet.

Fy12 Financial results

FY12 was the first full year results that account for the effect of the adoption of AASB10 by the Group that required the consolidation of some of Abacus’ unlisted managed funds. This accounting adjustment had no effect on the Group’s underlying earnings, cashflows, banking arrangements or operations, nor any effect on the underlying position of investors in any of the relevant funds.

We encourage you to look at our FY12 results presentation on our website which will give you a snapshot of the Group as at 30 June 2012 if AASB10 had not applied. This will give you a clearer picture of the Group’s financials without accounting for the fund consolidations.

Following the success of FY11, we were pleased to report a 7% increase in underlying profit to $76.8 million from $72.2 million in FY11. We are particularly pleased that cashflow from operations was $79.6 million, illustrating a strong correlation between the Group’s cashflows and its underlying profit. The Group’s cashflow from operations far exceeded the total distributions of $67.8 million for the year. These results equate to an underlying earnings per security of 19.2 cents and distributions to securityholders of 16.5 cents per security, both easily covered by cashflow per security of 19.9 cents for the year.

Abacus successfully grew its total assets by almost 15% to $1.9 billion, with net assets of $1.2 billion, largely due to the inclusion of the $330 million storage portfolio and a further $100 million of core plus acquisitions. The Group’s net tangible asset (NTA) per security reduced slightly to $2.34 from its post AASB10 consolidation NTA of $2.43 at 31 December 2011 substantially due to non-cash swap mark to market movements.

We continued to exercise prudent capital management with a strengthening of our balance sheet with low gearing levels at 28.6% following the merger with the Storage Fund. The Group was able to refinance almost $700 million of banking facilities across the Group early in the year delivering cheaper funding, longer maturities and better covenants. Following the merger of the storage fund in March 2012 we have continued to execute capital management initiatives that allow us to target a FY13 funding cost of less than 6.75%, down from 8.3% in FY10.

The Group has increased levels of liquidity and available banking facilities to access the good buying opportunities that we expect to see in the market while following our disciplined investment approach. Abacus will look to scale its activities and balance sheet even further through its active third party capital joint ventures and through the realisation of its property venture, funds management and mature low growth assets.

OperatiOnal review

investment property portfolio

Abacus has had a clear strategy through recent years to upgrade and improve the quality of its directly owned investment property portfolio. We continue to achieve this through the appropriate sale of mature assets and re-investment into larger core plus assets with greater potential. Since 2009 the Group has realised over $335 million in sales of smaller mature, lower growth assets averaging prices 10% above book value. In particular, FY12 delivered earnings positive metrics for the Group with the $167 million of assets acquired averaging yields of 8.6%, outstripping the 6% yield on the $150 million of sold assets.

==> picture [106 x 225] intentionally omitted <==

sectOr diversity

[COMMERCIAL (32%)]

[RETAIL (26%)]

[INDUSTRIAL AND OTHER (14%)]

[STORAGE (28%)]

geOgrapHic diversity

[NSW (43%)]
[QLD (18%)]
[VIC (17%)]
[ACT (11%)]
[SA (6%)]
[NZ (5%)]

484 st Kilda rOad, MelBOurne

==> picture [63 x 63] intentionally omitted <==

The investment property portfolio grew from $964 million in assets to a total of $1,267 million by 30 June 2012. Excluding the storage portfolio, the principal portfolio’s operational metrics improved, with an increase in occupancy, by net lettable area, to 94.3% from 92.1% at December 2011. The portfolio’s weighted average lease expiry also increased to 4.2 years and like for like rental growth increased to 3.7% from 3.2% over the same six month period to 30 June 2012.

While the storage portfolio has only been included in the Group for a short time since March 2012, it continues to perform well. The Group’s focus is on driving earnings and low risk/high growth opportunities within the portfolio and from opportune acquisitions.

The Group’s third party joint ventures now total $273 million. These third party ventures are an important way for Abacus to leverage our existing capital and drive our long term total returns.

property ventures

The property ventures business delivered a strong result following the realisation of a number of projects during FY12. Projects generally focus on select residential and commercial development opportunities in core markets with experienced local joint venture partners. We have continued to de-risk the division through strong cash inflows and pre-sales:

Realisation of Lewisham residential joint venture for $48.5 million reducing the capital exposure over the remaining two projects in the RCL portfolio at Riverlands and Camellia
Current residential construction projects Powerhouse in Rosebery (Sydney, NSW) and 380 Degrees in Bay Street (Brighton, VIC) have successful pre-sales programs

Our two main residential development projects, the Powerhouse and 380 Degrees, are making excellent progress. Both projects have been significantly de-risked following strong pre-sales results. The Powerhouse joint venture has now sold 131 of its 135 units. The first construction phase is close to completion with phase two anticipated in March 2013. The project should be completed in FY13.

380 Degrees project is located in the exclusive Melbourne bay side suburb of Brighton. The project consists of 93 apartments over a 4,500m² full line Coles supermarket and 338 car park spaces. 63 units have been pre-sold to date. Construction began in March 2012 with funding through progress payments by Coles following the retails stratum sale for $36 million.

Towards the end of the year Abacus’ Lewisham residential development site held via joint venture was sold for $48.5 million, which was significantly above its book value. This is another illustration of the value-add potential inherent in the core plus asset class Abacus predominantly invests in.

Total invested capital of $255 million reflects only 14% of the balance sheet assets but provides huge potential for outperformance as projects and investments complete, as illustrated by the realisation of the Lewisham project.

Funds management

It was a successful year for the funds management division as the strategic review of the business was completed and implemented, with immediate results. The merger with Abacus Storage Fund substantially reduced assets under management to $493 million and was a significant first step in the implementation of the strategic review of this business. Strategies for the other funds have been finalised and unitholder approvals obtained.

The remaining fund strategies will look to realise equity for investors over time as each strategy is implemented. Abacus Hospitality and Abacus Miller Street Funds will implement a prudent and managed sell down of assets over the medium term when appropriate, to ensure returns are maximised. ADIF II and the Wodonga Fund will require a longer period of time to realise as a result of their structures and markets they operate in.

All fund capital positions are stable with no financing obligations due in FY13 and allow freedom for the steady realisation of the strategies for the funds.

reMuneratiOn

The Nomination and Remuneration Committee and the Board take great care in fulfilling their responsibilities with respect to remuneration. The conservative remuneration policy adopted in 2008 when the global financial crisis began has been continued. Following a thorough review in 2012, and despite the Group’s positive performance, salaries for staff for the 2013 financial year have generally been limited to a 3% increase (except where there were changes in position or increased responsibilities). All long term incentive awards were cancelled as they proved to be costly without realising corresponding benefits. The entire approach to variable incentives has been changed to align remuneration more closely with the interests of all stakeholders.

OutlOOK

Abacus has delivered a strong full year underlying result with contributions across all core business divisions. Transactions continue to deliver core plus returns and further illustrate the value add potential of the balance sheet. The business is stronger and more resilient, and market conditions favour Abacus’ core plus investment approach. We are well positioned to access opportunities and to grow the business.

We believe that we have built a stronger business with a better quality portfolio of assets to secure and drive recurring cashflows and which has a solid and sound footing thanks to the capital management initiatives that strengthened our balance sheet.

Abacus’ position of strength offers significant capacity to reinvest into our growth strategies to acquire well, improve our assets and cashflows and generate sustainable distributions and higher total returns to our securityholders over the long term. The sustainability of Abacus’ strong level of distributions, underpinned by operating cashflows, is of paramount importance to the Group.

Finally, we and the other members of our Board would like to thank you, our investors and our other stakeholders for your continued support, especially over the years during and since the global financial crises. It is hard to believe that the effects are still being felt across the globe and in Australia. We are pleased with what we have been able to achieve in light of that and we are confident that we are positioning Abacus well in order to deliver strong long term total returns to investors in the future. This would not be possible without the dedication and hard work of everyone at Abacus. Therefore, on behalf of the Board, we would like to thank our executive team and all our staff.

==> picture [112 x 42] intentionally omitted <==

Frank Wolf Managing Director

John Thame Chairman

==> picture [506 x 42] intentionally omitted <==

350 geOrge st, sydney

RECENT ACQUISITIONS & APPROVALS

==> picture [199 x 264] intentionally omitted <==

==> picture [200 x 264] intentionally omitted <==

wHarF 10, nsw 180 queen st, qld 309 geOrge st, nsw This building is a unique waterfront The building is a heritage commercial This property comprises a 15 storey building located on Sydney’s Pyrmont building located in the heart of retail and commercial building with peninsula. This location benefits from Brisbane’s prime CBD shopping net lettable area of 9,317sqm. It is significant infrastructure and is a short strip, Queen Street Mall. The Mall located in the prime core precinct of walk across the pedestrian bridge to is renowned as Queensland’s prime the Sydney CBD and is in the heart the Sydney CBD. The building has total retail destination and is Australia’s of one of Sydney’s busiest retail strips NLA of 4,332sqm with 42 car spaces. highest grossing retail area. The Mall adjacent to Wynyard railway station Wharf 10 is one of the few offerings of serves as Brisbane’s primary retail with a 30m wide frontage to George wharf-style office accommodation in trade area and it attracts 26m visitors Street. Abacus has recently completed Sydney. It is currently 100% occupied annually. The building has total NLA of a major upgrade of the building. The with a WALE of over 6 years. 3,565sqm, comprised of ground floor building is located in a part of the and basement retail and 6 levels of CBD that is anticipated to undergo commercial office space. It is almost significant regeneration in the short to fully occupied with a WALE of 5.2 medium term. years.

==> picture [63 x 63] intentionally omitted <==

==> picture [200 x 264] intentionally omitted <==

----- Start of picture text -----

ARTIST IMPRESSION
----- End of picture text -----

==> picture [199 x 264] intentionally omitted <==

484 st Kilda rd, vic 35 BOundary st, qld BirKenHead Marina, nsw The building is an A grade commercial This building was built in 2008 and is Birkenhead Point Marina recently office building providing 20,366sqm located in South Brisbane near the received approval for the refurbishment of high quality accommodation, CBD. South Brisbane is fast becoming and extension of the current 187 berth comprising ground level retail, 15 an established commercial office facility. Once completed the marina upper levels of office space and two precinct. The building has total NLA of will have refurbished and upgraded levels of basement car parking. The 8,120sqm, comprising a ground floor berths and increased capacity to building is one of the best commercial café and 8 levels of office space with 201 berths. As well, there will be buildings in St Kilda Road. The car parking for 62 cars. The property more capacity for larger vesels. The property is located on a prominent is currently fully occupied and has a approval also provides for a new corner site providing excellent natural WALE of 3 years. refuelling dock, manager’s office and light to all floors and has unobstructed convenience store to service the needs views across Albert Park Lake to Port of inner harbour boat users. These Phillip Bay. This property is now fully works should enable Birkenhead Point leased with a WALE of 2.4 years. Marina to reach the coveted 5 Gold Anchor marina status over the next 24 months

BOARD MEMBERS

MalcOlM irving Myra salKinder

JOHn tHaMe

Mr Irving is a Non-Executive Director Mrs Salkinder is a Non-Executive Mr Thame is the Chairman and has and has over 40 years’ experience in Director and is a senior executive over 30 years’ experience in the company management, including 12 of the Kirsh Group. She has been retail financial services industry in years as Managing Director of CIBC integrally involved over many years senior management positions. His Australia Limited. He is also a director with the continued expansion of the 26-year career with Advance Bank of O’Connell Street Associates Pty Ltd Kirsh Group’s property and other included 10 years as Managing and Macquarie University Hospital. investments, both in South Africa Director until the Bank’s merger with and internationally. Mrs Salkinder St George Bank Limited in 1997. Mr is a director of various companies Thame was Chairman (2004 to 2008) associated with the Kirsh Group and a director (1997 to 2008) of St worldwide. George Bank Limited and St George Life Limited. He is also a director of Reckon Limited and The Village Building Co Limited.

==> picture [582 x 527] intentionally omitted <==

FranK wOlF williaM J Bartlett david Bastian Dr Wolf is the Managing Director Mr Bartlett is a Non-Executive Mr Bastian is a Non-Executive and has over 20 years’ experience in Director. As a partner at Ernst & Director and has almost 40 years’ the property and financial services Young for 23 years, he held the experience in the financial services industries, including involvement roles of Chairman of Worldwide industry. He was the Managing in retail, commercial, industrial and Insurance Practice, National Director Director of the Group until September hospitality-related assets in Australia, of Australian Financial Services 2006, Managing Director of the New Zealand and the United States. Practice and Chairman of the Client Canberra Building Society for 20 years Dr Wolf has been instrumental in over Service Board. Mr Bartlett is a and an Executive Director of Godfrey $3 billion worth of property related director of Suncorp Group Limited, Pembroke Financial Services Pty transactions, corporate acquisitions GWA Limited, Reinsurance Group of Limited for 7 years. and divestments and has financed America Inc and RGA Reinsurance specialist property-based assets in Company of Australia Limited. He the retirement and hospitality sectors. is Chairman of the Cerebral Palsy He is also a director of HGL Limited, Foundation of Australia. a diversified public listed investment company.

==> picture [582 x 305] intentionally omitted <==

----- Start of picture text -----

1 2 3 4
SENIOR
EXECUTIVE TEAM
----- End of picture text -----

==> picture [511 x 284] intentionally omitted <==

----- Start of picture text -----

5 6 7 8
9 10 11
----- End of picture text -----

==> picture [63 x 63] intentionally omitted <==

==> picture [57 x 163] intentionally omitted <==

1 - rOB BaulderstOne

general Manager Finance

Rob is responsible for the Group’s financial reporting.

2 - rOd de aBOitiz

chief Financial Officer

Rod is responsible for the Group’s and its managed funds’ financial management, financial reporting and treasury functions.

3 - caMerOn laird

Joint director property ventures

Cameron is responsible for the Group’s joint venture developments and fostering new property ventures. In addition he is responsible for the asset management and development activities across the Group’s retail portfolio.

4 - gavin lecHeM

director specialised capital

Gavin is responsible for matching the capital requirements of the Group’s current and future opportunities with those of the investment community.

5 - JOHn l’estrange

Joint director property ventures

John is responsible for building the Group’s property ventures business by overseeing current projects and fostering new opportunities.

6 - len llOyd

7 - pHil petersOn

associate director – investments

Phil is the fund manager of the Abacus Storage Fund and is responsible for investment and development activities in addition to the general day to day management of the fund.

8 - peter strain

director property

Peter is responsible for the asset management activities of the Group.

9 - neil suMMerField

Head of investor relations

Neil is responsible for investor relations, communications and marketing activities to the Group’s listed and wholesale stakeholders.

10 - alan tHaKe

associate director – investments

Alan is the fund manager for the Groups other unlisted funds including the Abacus Hospitality Fund and ADIF II. He is responsible for investment, development and capital management activities in addition to the general day to day management of the funds.

11 - ellis vareJes

chief Operating Officer and company secretary

Ellis is responsible for the Group’s transactional and business functions.

Managing director abacus property services

Len overviews management and administration activities of the Group’s property portfolio. Len is also involved in acquisitions, sales and development activities of the portfolio.

directors report

30 June 2012

The Directors present their report for the year ended 30 June 2012.

PRINCIPAL ACTIVITIES

Abacus Property Group operates predominantly in Australia and its principal activities during the course of the year ended 30 June 2012 included:

investment in commercial, retail and industrial
properties;
investment in self-storage facilities;
participation in property ventures and developments; and
property funds management.

ABP GROUP STRUCTURE (Listed entities)

On 24 February 2012 securityholders in both ABP Group (listed group) and Abacus Storage Fund (“ASF”), an unlisted fund managed by Abacus Storage Funds Management Limited as responsible entity agreed to merge the two groups effective 6 March 2012. The merger resulted in the shares in Abacus Storage Operations Limited (“ASOL”) and the units in Abacus Storage Property Trust (“ASPT”) being stapled to the shares in Abacus Group Holdings Limited (“AGHL”) and Abacus Group Projects Limited (“AGPL”) and to the units in Abacus Trust (“AT”) and Abacus Income Trust (“AIT”). The resulting stapled security is listed on the Australian Securities Exchange (ASX: ABP).

The ABP Group is now comprised of AGHL, AT, AGPL, AIT, ASOL and ASPT. Shares in AGHL, AGPL and ASOL and units in AT, AIT and ASPT have been stapled together. An ABP security comprises one share in AGHL, one unit in AT, one share in AGPL, one unit in AIT one share in ASOL and one unit in ASPT. A transfer, issue or reorganisation of a share or unit in any of the component parts requires while they continue to be stapled, a corresponding transfer, issue or reorganisation of a share or unit in each of the other component parts.

AGHL, AGPL and ASOL are companies incorporated and domiciled in Australia. AT, AIT and ASPT are Australian registered managed investment schemes. Abacus Funds Management Limited (“AFML”) is the Responsible Entity of AT and AIT and Abacus Storage Funds Management Limited (“ASFML”) is the Responsible Entity of ASPT. Both AFML and ASFML are incorporated and domiciled in Australia and are wholly-owned subsidiaries of AGHL.

ABACUS PROPERTY GROUP CONSOLIDATION

During the year the Directors adopted AASB10 – Consolidated Statements, AASB11 – Joint Arrangements and AASB12 – Disclosure of Interests in Other Entities. The application of AASB10 has led to the consolidation of Abacus Diversified Income Fund II, Abacus Hospitality Fund, Abacus Storage Fund and Abacus Miller Street Holding Trust by the ABP Group. This is due to the combination of ABP’s role as responsible entity, variable returns arising from its collective equity and loan investments in these funds and certain guarantees. The standards are applied retrospectively as at 1 July 2010 and the comparative balances have been adjusted accordingly. The total impact of consolidating the funds was a net reduction of $93.5 million to the 1 July 2010 retained earnings (see note 2 of the financial statements).

AGHL has been identified as the parent entity of the group referred to as the Abacus Property Group (“APG” or the “Group”). The consolidated financial reports of the Group for the year ended 30 June 2012 comprise the consolidated financial reports of AGHL and its controlled entities, AT and its controlled entities, AGPL and its controlled entities, AIT and its controlled entities, ASOL and its controlled entities, ASPT and its controlled entity, Abacus Diversified Income Fund II and its controlled entities, Abacus Hospitality Fund and its controlled entities, Abacus Storage Fund and its controlled entities (until the date of merger) and Abacus Miller Street Holding Trust and its controlled entity.

==> picture [63 x 63] intentionally omitted <==

abacus property group

REVIEW AND RESULTS OF OPERATIONS

The Group earned a net profit attributable to members of $8.47 million for the year ended 30 June 2012 (2011: $28.59 million). This profit has been calculated in accordance with Australian Accounting Standards and includes certain significant items that need adjustment to enable securityholders to obtain an understanding of the ABP Group’s underlying profit of $76.8 million (2011: $72.2 million).

The Underlying Profit reflects the statutory profit as adjusted in order to present a figure which reflects the Directors’ assessment of the result for the ongoing business activities of the ABP Group, in accordance with the AICD / Finsia principles for reporting Underlying Profit. The following table is unaudited:

principles for reporting Underlying Proft. The following table is unaudited:
	2012	2011
	$’000	$’000
Consolidated statutory net proft after tax attributable to members of the Group	8,470	28,587
less: consolidated profts/(losses) relating to Abacus Hospitality Fund, Abacus Storage Fund, Abacus Diversifed Income Fund II and Abacus Miller Street Holding Trust (includes a net loss in	(16,033)	11,237
fair value of derivatives of $19.1 million)
Net proft attributable to ABP securityholders	24,503	17,350
Certain signifcant items:
Net change in fair value of investment properties held at balance date	4,958	6,158
Net loss in fair value of investments and fnancial instruments held at balance date	1,908	16,285
Net loss in fair value of derivatives	35,205	8,458
Net change in fair value of property, plant and equipment, inventory and investment properties included in equity accounted investments	4,707	7,900
Costs relating to the merger and restructuring of managed funds	5,564	16,000
Underlyingproft attributable to ABP securityholders	76,845	72,151
Basic earnings per security (cents)	2.11	7.68
Basic underlying earnings per security (cents)	19.17	19.38
Distribution per security (cents - including proposed distribution)	16.50	16.50
Weighted average securities on issue (million)	400.9	372.3

The reduction in the net profit after tax attributable to members of the ABP Group was principally caused by the falling $A interest rates during the year which at reporting date yielded a fair value loss of $35.2 million on the interest rate swaps ABP uses to fix the cost of its borrowings, managed interest cover covenants and align these borrowings with the net revenue earned by the property portfolio. The fair value loss that the Group incurred, including the managed funds consolidated following the adoption of AASB10, on interest rate swaps used to fix the cost of borrowings was $54.3 million (ABP Group $35.2 million and managed funds $19.1 million).

directors report

30 June 2012

REVIEW AND RESULTS OF OPERATIONS (CONTINUED)

The ABP Group’s gearing, which includes debt funding the ASF self storage portfolio, increased during the year to 28.6% (2011: 25.8%) which reflects the inclusion of the ASF borrowings.

The impact of both year-end fair value adjustments and the Group’s performance on its financial condition were as follows:

	2012	2011
Total Assets ($ million)	2,106.8	2,120.5
Gearing (%)^	28.6	25.8
Net Assets*($ million)	1,056.9	993.7
Net Tangible Assets* ($ million)	1,016.1	951.4
NTA per security ($)	2.34	2.51
Securities on issue (million)	434.9	378.5

*excluding external non-controlling interests of $51.0 million (2011 $146.7 million) ^ABP Group

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

Property

As at 30 June 2012, the Group had an interest in the following properties:

	$’000	NO. OF PROPERTIES
ABP Group (listed entities)
including 44 self storage	1,118,708	88
properties*
Abacus Hospitality Fund^	156,221	5
Abacus Diversifed Income Fund II^	178,265	24
Abacus Miller Street Holding Trust^	62,800	1

The ABP Group investment property portfolio was revalued during the year ended 30 June 2012, which resulted in a net full year devaluation charge of $4.9 million (2011: $6.2 million).

During the year the Group acquired an interest in the following properties:

309 George Street, Sydney $19m (25% indirect ownership) 484 St Kilda Road, Melbourne $18m (25% indirect ownership)

Six properties including Epping Office Park in suburban Sydney were sold by the Group during the year for $97.1 million which realised a gross profit of $10.2 million.

The increase in rental income reflects a full year of income for the properties acquired during the course of the previous year.

Storage

As noted above the Group has 44 self storage properties located on the east coast of Australia and New Zealand. The properties are managed by Storage King.

Revenue earned from storage activities since the merger on 6 March 2012 with the ABP Group was $16.9 million and its contribution to profit before fair value adjustments and finance costs for the same period was $9.6 million.

Trading was consistent during the year with growth in storage rental income driven principally by increased average rental yield across the portfolio. New areas have been added to the portfolio comprising additional units acquired at Lane Cove and construction of a new building at Kambah, ACT

*Owned by ABP securityholders ^Consolidated per AASB10

==> picture [63 x 63] intentionally omitted <==

abacus property group

REVIEW AND RESULTS OF OPERATIONS (CONTINUED)

Property Ventures

Total property venture assets at 30 June 2012 were $255.1 million (2011: $270.0 million).

Revenue earned from lending and development activities totalled $26.7 million for the year (2011: $15.1 million) and its contribution before fair value adjustments was $21.2 million (2011: $11.0 million)

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

Funds Management

The strategic review of the unlisted retail funds announced in August 2011 has been completed and the outcomes were as follows:

Abacus Storage Fund – the fund merged with the ABP Group;
Abacus Hospitality Fund – securityholders in general meeting in June 2012 approved the continuation of the managed asset sale strategy;
Abacus Diversified Income Fund II – continue to actively manage the Fund’s property portfolio;
Abacus Miller Street Fund – unitholders were advised in May 2012 that a sale of the Fund’s property in North Sydney would be in their best interests; and
Abacus Wodonga Land Fund – the fund’s bank debt was refinanced for another three years and it was decided to restructure the fees and interest payable by the Fund to improve its capital stability.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

As previously noted the ABP Group and ASF merged on 6 March 2012.

In February 2012 securityholders approved the reallocation of $110 million of capital between the different entities within the ABP Group ($66 million of capital from AT and $44 million of capital from AIT was reallocated to AGHL - $100 million and AGPL - $10 million). The reallocation of capital had no impact on the reported profit of the ABP Group and was undertaken to provide further capital to the companies to support their activities and to reduce their borrowings to more appropriate levels.

The contributed equity of the Group increased $92.2 million to $1,232.0 million compared to $1,139.8 million at 30 June 2011 due to the merger of the ABP Group and ASF and securityholder participation in the distribution reinvestment plan.

Total equity decreased by 2.8% to $1,107.9 million at 30 June 2012 compared to $1,140.4 million at 30 June 2011 principally as a result of adverse interest rate swap mark to market movements.

In December 2011, the ABP Group re-financed its $400 million syndicated bank debt facility that was due to expire in August 2013 with a new tranched $200 million three year and $200 million four year facility with new maturity dates of December 2014 and December 2015, respectively. This materially extended the term of this core banking facility from the previous 2012/2013 refinancing requirements.

The ABP Group also increased its working capital bank debt facility limit with ANZ Bank from $80 million to $100 million. The maturity date of the ABP Group $70 million bilateral facility with ANZ Bank was extended from December 2012 to September 2014.

In April 2012 the ABP Group refinanced its $190 million club bank debt facility (maturing August 2013) over its storage assets with a new tranched $95 million three year and $95 million four year facility maturity dates of April 2015 and April 2016, respectively.

ADIFII renewed its existing $54 million ANZ facility, which had an August 2012 maturity, to September 2014 and Abacus Miller Street Fund extended the term of its ANZ facility to September 2013.

30 June 2012

directors report

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS (CONTINUED)

At 30 June 2012, existing bank loan facilities of the ABP Group totalled $789.9 million, of which $567.5 million was drawn. Approximately 97% (2011: 58%[] ) of bank debt drawn was subject to fixed rate hedges with a weighted average term to maturity of 3 years (2011: 4 years[] ). At 30 June 2012, 25% of the 97% fixed rate hedge cover related to legacy ASF hedges. Hedge cover as a percentage of available facilities at 30 June 2012 is 69.7% (2011: 41.1%[**] ).

ABP’s weighted average interest rate as at 30 June 2012 was 7.27% (2011: 7.81%[] ). Line fees on undrawn facilities contributed to 0.39% of the weighted average interest rate at 30 June 2012 (2011: 0.87%[] ). ABP’s weighted average interest rate excluding the undrawn facilities line fees as at 30 June 2012 was 6.87% (2011: 6.94%[**] ).

**Excludes ASF which merged with ABP Group on 6 March 2012.

DISTRIBUTIONS

ABP Group distributions in respect of the year ended 30 June 2012 were $67.8 million (2011: $61.8 million), which is equivalent to 16.5 cents per stapled security (2011: 16.5 cents). This distribution includes 8.25 cents ($35.9 million) that was paid on 15 August 2012. Further details on the distributions, including distributions by the funds consolidated following the adoption of AASB10 are set out in note 9 of the financial statements.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Group will continue to pursue strategies that seek to improve total security holder returns during the coming year. 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 financial statements would be unreasonably prejudicial to the interests of the Group.

DIRECTORS AND SECRETARY

The Directors of AGHL, AFML, ASOL and AGPL in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

John Thame Frank Wolf	Chairman (Non-executive) Managing Director
	Non-executive Director
William Bartlett	(appointed to ASOL on 24
	February 2012)
David Bastian	Non-executive Director
Malcolm Irving	Non-executive Director
Myra Salkinder	Non-executive Director

SIGNIFICANT EVENTS AFTER BALANCE 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 financial year that has or may affect the Group’s operations in future financial years, the results of those operations or the Group’s state of affairs in future financial years.

==> picture [63 x 63] intentionally omitted <==

abacus property group

RECTORS AND SECRETARY (CONTINUED)

The qualifications, experience and special responsibilities of the Directors and Company Secretary are as follows:

John Thame AIBF, FCPA - Chairman (non-executive)

Mr Thame has over 30 years’ experience in the retail financial services industry in senior management positions. His 26-year career with Advance Bank included 10 years as Managing Director until the Bank’s merger with St George Bank Limited in 1997. Mr Thame was Chairman (2004 to 2008) and a director (1997 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).

Mr Thame is Chairman of the Due Diligence Committee and a member of the Audit & Risk and Remuneration & Nomination Committees.

Frank Wolf OAM, PhD, BA (Hons) - Managing Director

Dr Wolf has over 20 years’ experience in the property and financial services industries, including involvement in retail, commercial, industrial 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 financed specialist property-based assets in retirement and hospitality sectors. He is also a director of HGL Limited, a diversified publicly listed investment company.

David Bastian CPA

Mr Bastian is a Non-Executive Director and has almost 40 years’ experience in the financial services industry. He was the Managing Director of the Group until September 2006, Managing Director of the Canberra Building Society for 20 years and an Executive Director of Godfrey Pembroke Financial Services Pty Limited for 7 years.

Mr Bastian is a member of the Due Diligence and Remuneration & Nomination Committees.

Malcolm Irving AM, FCPA, SF Fin, BCom, Hon DLitt

Mr Irving is a Non-Executive Director and has over 40 years’ experience in company management, including 12 years as Managing Director of CIBC Australia Limited. He is also a director of O’Connell Street Associates Pty Ltd and Macquarie University Hospital.

Mr Irving is Chairman of the Audit & Risk and Compliance Committees and a member of the Due Diligence and Remuneration & Nomination Committees.

William J Bartlett FCA, CPA, FCMA, CA(SA)

Mr Bartlett is a Non-Executive Director. As a partner at Ernst & Young for 23 years, he held the roles of Chairman of Worldwide Insurance Practice, National Director of Australian Financial Services Practice and Chairman of the Client Service Board. Mr Bartlett is a director of Suncorp Group Limited, GWA Limited, Reinsurance Group of America Inc and RGA Reinsurance Company of Australia Limited. He is Chairman of the Cerebral Palsy Foundation of Australia.

Mr Bartlett is Chairman of the Remuneration & Nomination Committee and a member of the Due Diligence and Audit & Risk Committees.

30 June 2012

directors report

DIRECTORS AND SECRETARY (CONTINUED)

Myra Salkinder MBA, BA

Mrs Salkinder is a Non-Executive Director and is a senior executive of the Kirsh Group. She has been integrally involved over many years with the continued expansion of the Kirsh Group’s property and other investments, both in South Africa and internationally. Mrs Salkinder is a director of various companies associated with the Kirsh Group worldwide.

Mrs Salkinder is a member of the Due Diligence and Audit & Risk Committees.

Ellis Varejes BCom, LLB - Company Secretary and Chief Operating Officer

Mr Varejes has been the Company Secretary since September 2006. He has over 25 years’ experience as a corporate lawyer in private practice.

As at the date of this report, the relevant interests of the directors in the stapled securities of ABP were as follows:

Directors	ABP securities held
J Thame	55,364
F Wolf	2,837,464
W Bartlett	22,806
D Bastian	545,000
M Irving	29,063

Directors’ Meetings

The number of meetings of directors (including meetings of committees of directors) of AGHL, AFML (the Responsible Entity of AT and AIT), AGPL, ASFML (the Responsible Entity of ASPT) and ASOL, held during the year and the number of meetings attended by each director were as follows:

		BOARD	AUDIT & RISK COMMITTEE	AUDIT & RISK COMMITTEE	NOMINATION & REMUNERATION COMMITTEE
	HELD	ATTENDED	HELD	ATTENDED	HELD ATTENDED
J Thame	18	18	4	4	5 5
F Wolf	18	18
W Bartlett	18	14	4	4	5 5
D Bastian	18	17			5 5
M Irving	18	18	4	4	5 5
M Salkinder	18	14	4	4

Indemnification and Insurance of Directors and Officers

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

==> picture [63 x 63] intentionally omitted <==

abacus property group

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group is subject to significant environmental regulation in respect of its property activities. Adequate systems are in place for the management of the Group’s environmental responsibilities and compliance with the various licence requirements and regulations. No material breaches of requirements or any environmental issues have been identified during the year. The Group is a core plus investor, not a builder of new buildings. The Group endeavours to choose sustainable options whenever that is a cost-effective outcome.

AUDITORS INDEPENDENCE DECLARATION

We have obtained an independence declaration from our auditor, Ernst & Young, and such declaration is shown on page 39.

NON-AUDIT SERVICES

The following non-audit services were provided by the Group’s auditor, Ernst & Young. The Directors are satisfied 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:

Transactional advisory and other services $262,300

ROUNDING

The amounts contained in this report and in the half-year financial 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.

REMUNERATION REPORT (AUDITED)

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

For the purposes of this report, the term executive encompasses the Managing Director and other senior executives of the Group.

Details of key management personnel (including the highest paid executives of the Group).

(i) Non-executive Directors

J. Thame	Chairman
W. Bartlett	Director
D. Bastian	Director
M. Irving	Director
M Salkinder	Director

(ii) Executive Directors

F. Wolf	Managing Director
(iii) Executives
R. de Aboitiz	Chief Financial Offcer
C. Laird	Director Property Ventures
J. L’Estrange	Director Property Ventures
L. Lloyd	Managing Director – Property Services
P. Strain	Director Property
E. Varejes	Chief Operating Offcer

30 June 2012

directors report

REMUNERATION REPORT (AUDITED) (CONTINUED)

Remuneration at a glance

Base salaries

Base salaries paid to executives did not increase in the year ended 30 June 2012.

Short Term Incentives

Bonuses totalling $1,700,000 are payable to the executives of the Group for the year ended 30 June 2012 as compared with $1,235,500 paid in the previous year. The details of these bonuses are set out in table 1. Bonuses are generally payable only if the underlying net profit target is met. The Group target was exceeded in the current year. The amount of each bonus was determined by reference to the performance of the executive against key performance indicators (KPIs) and other aspects of the executive’s performance considered relevant in the context of the assessment.

Long Term Incentives

Global events impacting on Australia have had the effect that all long term incentives issued under the Group’s Security Appreciation Rights Plan would not deliver value but would nevertheless have a cost to the Group. Accordingly, all rights issued under the plan were cancelled pending the finalisation of changes to the plan that will be introduced in the year ending 30 June 2013. These proposed changes are being discussed with the Group’s independent remuneration consultant and proxy advisers.

Board oversight of remuneration

Remuneration & Nomination Committee

The Remuneration & Nomination Committee of the Board of Directors is responsible for making recommendations to the Board on the remuneration arrangements for the nonexecutive directors and executives.

The Committee must comprise at least three directors with a majority of independent members. The members of the Committee during the year were:

W. Bartlett Chairman (independent non-executive) D. Bastian (independent non-executive) M. Irving (independent non-executive) J. Thame Ex-officio member (independent non-executive)

Under its charter the Committee must meet at least two times during a year. The Committee met during the year and the attendance records are set out in the Directors’ Report. The Committee’s charter can be downloaded from the Corporate Governance section of the Group’s website www.abacusproperty.com.au.

The Committee assesses the appropriateness of the nature and amount of remuneration of non-executive directors and executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a quality performing Board and executive team.

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, which supports the achievement of the Group’s overall objective of producing superior performance and growth, is market competitive and designed to reward individual performance and closely align the interests of the executives to those of securityholders through the use of short-term and longterm incentives. To this end, the Group embodies the following principles in its remuneration framework:

provide competitive rewards assessed against market rates to attract and retain high calibre executives;
link executive rewards to the Group’s performance;
have a reasonable portion of executive remuneration at risk; and
establish appropriate performance hurdles for the variable components of executive remuneration.

The executives’ remuneration consists of the following key elements:

Fixed remuneration
Variable remuneration
Short term incentive
Long term incentive

==> picture [63 x 63] intentionally omitted <==

abacus property group

REMUNERATION REPORT (AUDITED) (CONTINUED)

Remuneration policy (continued)

The fixed remuneration component includes base salary, statutory superannuation and non monetary benefits (car parking and the applicable fringe benefits tax). The variable remuneration component includes short term and long term incentives.

The Group aims to ensure that the split of fixed and variable remuneration for executives is appropriate for the type of business that the Group operates, namely a cyclical, mature business which seeks to provide stable income earnings with a high level of distribution to securityholders. This has generally resulted in a higher proportion of fixed remuneration for executives compared to other A-REITs and a lower proportion of variable remuneration. Fixed remuneration for the senior executives did not increase in the year ended 30 June 2012.

Security Trading policy

The Group has a security trading policy in place for directors and employees. The policy can be downloaded from the Corporate Governance section of the Group’s website. Trading in the Group’s securities is only permitted within the six week periods commencing on the second trading day after the half-year and full-year results are announced and after the Annual General Meeting. The Chairman may approve trading windows at other times of the year. Trading is not permitted at any time if directors and employees are in receipt of inside information.

Remuneration structure

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

Non-executive director remuneration

Objective

The Board seeks to set aggregate remuneration at a level that enables the Group to attract, motivate and retain directors of the highest calibre, while incurring a cost that is market competitive.

Structure

The Group’s constituent documents and the ASX Listing Rules specify that the aggregate remuneration of nonexecutive directors must be determined from time to time by securityholders. The last determination was at the annual general meeting held on 12 November 2010 when securityholders approved an aggregate remuneration limit of $800,000 per year. This amount represents a limit on non-executive directors’ total fees, and does not represent the actual fees paid to non-executive directors which are set out in Table 1. The Board continued on its process to review Board’s composition and in October 2011 announced that Mr David Bastian would retire as a director in November 2012. This will reduce the number of directors to five, the majority of which will be independent. The Board believes that it will then have a sufficient complement of experienced directors to manage the Group from that time.

The aggregate remuneration limit and the fee structure are reviewed annually and fees were increased effective from October 2011. The previous increase was in May 2009. The increase in fees took into account advice from the Board’s independent consultants at the time, Deloitte Touche Tohmatsu, and a comparison of the fees paid to non-executive directors of other comparable A-REITs. Guerdon Associates now act as the Group’s independent consultants.

30 June 2012

directors report

REMUNERATION REPORT (AUDITED) (CONTINUED)

Structure (continued)

Fees payable, inclusive of superannuation, to non-executive directors are as follows:

BOARD/COMMITTEE	ROLE	FEE
Board	Chairman	$191,000
Board	Member	$71,000
Audit & Risk Committee	Chairman	$20,000
Audit & Risk Committee	Member	$10,000
Compliance Committee	Chairman	$10,000
Due Diligence Committee	Chairman	$15,000
Due Diligence Committee	Member	$5,000
Remuneration & Nomination Committee	Chairman	$12,000
Remuneration & Nomination Committee	Member	$8,000
Abacus Storage Funds Management Limited Board	Member	$9,000

The payment of additional fees for serving on a Board committee or on the Board of Abacus Storage Funds Management Limited recognises the additional time commitment required by directors who serve in those capacities.

The non-executive directors do not receive retirement benefits. Nor do they participate in any incentive programs. The remuneration of non-executive directors for the years ended 30 June 2012 and 2011 is detailed in Table 1 of this report.

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 remuneration is competitive by market standards.

The Group’s key gateway financial measure for variable remuneration is underlying profit, which the Board believes is the appropriate way to ensure that

variable remuneration is aligned with the interests of securityholders. The Group does not issue market guidance, but the gateway has been determined by the Board as appropriately challenging.

Structure

In determining the level and make-up of executive remuneration, the Remuneration & Nomination Committee used independent benchmarking information for the property industry generally and A-REITs in particular.

The Managing Director has a contract of employment. Details of this contract are provided below.

Executive remuneration consists of the following key elements:

fixed remuneration (base salary, superannuation and non-monetary benefits).
variable remuneration
short term incentives (STIs); and
long term incentives (LTIs).

The proportion of fixed remuneration and variable remuneration (STIs and LTIs) for each executive is generally in the following ratio:

Fixed – 60% STIs – 20% LTIs – 20%

==> picture [63 x 63] intentionally omitted <==

abacus property group

REMUNERATION REPORT (AUDITED) (CONTINUED)

Structure (continued)

The Group has a 70:30 investment strategy principally ensuring that 70% of its balance sheet exposure is to directly held core plus property, providing a sustainable recurring income stream. The Group’s investment philosophy is to provide investors with stable returns from sound rental income and improvement of asset values resulting from diligent asset management of core plus assets. The LTI award strategy is consequently designed to drive sustainable underlying profit and cash receipts that cover the distribution level implicit in the ABP security price. It follows that the STIs should generally be shadowed with an equal LTI grant.

For the year ended 30 June 2012 the Board determined that within the context of providing market competitive levels of remuneration:

(a) executives have an appropriate portion of their total remuneration at risk by linking it to the performance of the business and their own contributions to that performance; and
(b) executive remuneration be delivered with the proportion of fixed to potential maximum variable pay being, with exceptions for outstanding personal achievement, in the ratio of approximately 60:40.

The Board considers that this approach should discourage excessive risk taking.

These arrangements apply to those executives who are invited to participate in the Group’s incentive plan. Participation is limited to those executives whose roles have the potential to affect the long-term value of the Group. Market practice dictates that a significant portion of the remuneration of these executives should be linked to long-term incentives.

Both STIs and LTIs are offered to executives. STIs comprise cash bonuses. LTIs have been synthetic equity (comparable to cash-settled options) that generally have a vesting period of approximately three years. Following completion of the review of variable remuneration, the current LTI plan will be modified so as to deliver a greater level of alignment with securityholders and perceived value to executives.

The table below sets out the structure of the Group’s executive remuneration arrangements:

REMUNERATION COMPONENT	METHOD	PURPOSE	LINK TO PERFORMANCE
Fixed remuneration	Paid in cash comprises base salary, superannuation contributions and other benefts.	Set with reference to role, market, experience and skill-set.	No direct link to performance. Periodic increases are linked to market movements, changes in roles and responsibilities, and toperformance.
STI component	Paid in cash as a bonus in September.	Rewards executives for their contribution to achievement of Group and business outcomes, as well as individual key performance indicators (KPIs).	Underlying proft is a key fnancial metric for availability of a bonus. Individual performance is then tested against KPIs, key effectiveness indicators and other internal fnancial and performance measures.
LTI component (Issues of rights in the years ended 30 June 2011 and 2012 were cancelled in June 2012)	Awards have been made in the form of security appreciation rights.	Intended to reward executives for their contribution to the creation of securityholder value over the longer term.	Directly linked to the increase in the Group’s security price over the 3 year vesting period.

30 June 2012

directors report

REMUNERATION REPORT (AUDITED) (CONTINUED)

Fixed Remuneration

Objective

Fixed remuneration is reviewed annually by the Remuneration & Nomination Committee. The process consists of a review of Group, business unit and individual performance. The remuneration for each executive is then assessed also by reference to market rates based on reliable benchmarking information and, where appropriate, external advice from the Group’s remuneration consultant.

Base Salary

Base salary is set by reference to the executive’s position, performance and experience. In order to attract, motivate and retain executives of the highest quality the Group aims to set competitive rates of base salary. Base salary levels are benchmarked periodically and are reviewed on an annual basis having regard to performance, external market forces and promotion. There were no increases in base pay for executives for the year ended 30 June 2012.

The fixed remuneration component of the Group’s Managing Director and the most highly remunerated executives is detailed in Table 1.

Managing Director’s remuneration

In determining the Managing Director’s remuneration the Board considered independent benchmarking information for the property industry as well as data from the general market (general listed industry companies of comparable size and, within that, A-REITs of comparable size) to determine an appropriate market-competitive level of pay, his personal performance and his value to the Group. The board also evaluated his performance against agreed strategic goals and other performance metrics. The Group considers that this approach works well in achieving its performance and remuneration objectives.

The Managing Director contributed significantly to the achievement of these key outcomes, and this is consequently reflected in his remuneration.

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

The STI plan is designed to link financial rewards with improving the underlying financial strength of the business.

STI pool – available for short-term incentive awards is linked directly to achievement of underlying net profit target for the assessment year.
KPIs – the performance measures that determine individual awards under the short-term incentive plan represent the contributions to be made by executives to the Group’s financial and operating performance.

Securityholders expect that the Board consider the financial performance of the business when forming decisions about whether to pay a bonus or not and, if so, the size of bonuses. The Board has established a process to manage the assessment and payment of STI entitlements through KPIs and key effectiveness indicators. The process is set out as follows on the following page:

The Group’s ability to operate successfully in a period of economic uncertainty, to attract third party capital from substantial overseas groups and to acquire new flagship assets is evidence of the success of the remuneration approach. The Abacus Property Group merged with Abacus Storage Fund and the strategic review of the managed funds was completed.

==> picture [63 x 63] intentionally omitted <==

abacus property group

REMUNERATION REPORT (AUDITED) (CONTINUED)

Variable Remuneration – Short Term Incentive (STI) (continued)

Structure (continued)

Beginning of the year / Set the Plan parameters

Underlying net profit[*] target for coming year
KPIs for each participant
Maximum STIs payable for each participant
Determine maximum STI pool size based on sum of individual theoretical maximums

Year-end / Measure Group financial performance

Is underlying net profit target met or exceeded?
If no, bonuses will generally not be available
If yes, gateway is passed

After year-end / Distribute bonus

Assess individual performance against KPIs
• STIs paid in cash

*The Board has compared the Group’s performance against several financial performance measures over annual periods to determine the strength of the relationship between the measures and security-holder value creation (measured by total security-holder return) and hence the most appropriate measure to determine entitlements to STIs. Based on this analysis the Board has adopted underlying net profit as the measure. Underlying net profit reflects the statutory profit as adjusted in order to present a figure that reflects the Directors’ assessment of the result for the ongoing business activities of the Group, in accordance with the AICD/Finsia principles for reporting underlying profit. The underlying profit is not audited.

For each relevant year the Board will specify an underlying profit target that operates as a gateway that must be passed if bonuses are to be generally payable. The Board retains a discretion, based on its view of the circumstances at the time, to adjust the pool size.

If the underlying net profit target has been missed by a small amount, the Board may reduce but not eliminate the pool if it determines the circumstances warrant such action. If performance has been exceptionally strong the Board may increase the total pool size to provide additional bonuses reflecting above target performance. Where the financial gateway has not been achieved and the Board determines that no bonus pool will generally be available, it retains the discretion to pay bonuses to selected individuals to reward them for their individual performance.

Key Performance Indicators

Where STIs are to be paid it is necessary to determine how STI entitlements will be quantified for participating executives.

STI payments made to each executive depend on the extent to which KPIs set at the beginning of the financial year are met. Account is also taken of qualitative indicators of effectiveness, performance and behaviour. They are the primary tools the Board uses as a means of determining performance against expectations in order to distribute STIs where the financial performance gateway specified by the Board has been achieved.

PERFORMANCE MEASURES	PROPORTION OF STI AWARD
	MEASURE APPLIES TO
Financial measure:	20-40% (dependant on
• Contribution to Group	role)
underlying proft
Non-fnancial measures:	60-80%
• Quality of analysis and
recommendations

reporting and financial requirements
Tax and compliance requirements
Transaction and project management
Key growth activities
Risk management
Asset value creation
Leadership, staff management, teambuilding and succession
Other performance measures focused on achieving business imperatives

If an executive is no longer employed at the time when the Group pays STIs for any relevant year then that executive will generally not be entitled to be paid their STI bonus if the relevant executive resigned for any reason or if their employment was terminated with cause.

directors report

30 June 2012

REMUNERATION REPORT (AUDITED) (CONTINUED)

Key Performance Indicators (continued)

These measures were chosen as they represent the key drivers for the short-term success of the business and provide a framework for long term securityholder value.

The Board is mindful of the competing needs for the Group to:

maintain a robust framework by which performance expectations are set and measured; and
retain its flexibility and entrepreneurialism as an organisation.

The Board has the discretion to consider each executive’s total contribution to the Group in addition to the specific KPIs selected for the relevant year.

The target levels of performance set by the Board are challenging, and payment of 100% of STI opportunity to an executive requires exceptional performance.

The payment of STIs to executives is subject to approval by the Remuneration and Nomination Committee. The Committee considers the performance of the executive against the KPIs and approves the amount, if any, of the STI to be paid.

For the 2012 financial year an STI cash bonus of $1,700,000 has been accrued and will be paid in September 2012.

For the 2011 financial year, 100% of the STI cash bonus of $1,235,500 accrued in that year vested and was paid to executives in the 2012 financial year. There were no forfeitures.

Variable Remuneration – Long Term Incentive (LTI)

Selected executives are invited by the Board to participate in the LTI plan which rewards improved Group performance and returns to securityholders. Awards under the plan are linked directly to the Group’s security price and executives will not benefit under the plan unless the security price improves over the relevant vesting period.

Objective

The objective of the LTI plan is to reward executives in a manner that aligns remuneration with the creation of securityholder wealth. LTI grants are made only to executives who are able to influence the generation of securityholder wealth and consequently have the potential to have an impact on the Group’s performance.

LTI Security Appreciation Rights Plan (SARs)

The Security Appreciation Rights (SARs) plan was designed to align the interests of executives with those of securityholders by providing for a significant portion of the remuneration of participating executives to be linked to the long-term price performance of the Group’s securities.

The SARs plan is an LTI plan under which:

Eligibility to participate is based on the performance assessment completed in determining STI awards.
Key executives may be allocated a number of SARs in any year as part of their annual remuneration package. The number of SARs allocated is determined by reference to:
the target LTI portion of each participant’s annual remuneration package; and
an adjustment factor (up or down) based on the annual STI performance assessment for the prior year and other relevant factors taken into account by the Board in its discretion.
Each SAR is equivalent to the positive change in market value of one Group security over the vesting period.
SARs vest at the end of a three-year period provided the executive remains employed by the Group (or otherwise at the Board’s discretion).
The Board will calculate the difference between the 5-day volume weighted average price (VWAP) of Abacus securities on the last day of the vesting period (generally 30 June in the vesting year) less the 5-day VWAP of Group securities as at the day before the commencement of the vesting period (generally 1 July of the grant year). If the difference is positive, then the difference will be multiplied by the number of SARs allocated to the relevant executive that have vested. An amount equal to the product will be paid to the relevant executive.
Payment entitlements will be subject to PAYG tax withholding and will be made as soon as practicable following the completion of the vesting period.

The Board retains the discretion to allocate SARs in excess of the target LTI amount in cases of exceptional performance.

==> picture [63 x 63] intentionally omitted <==

abacus property group

REMUNERATION REPORT (AUDITED) (CONTINUED) Security Appreciation Rights Plan

The plan was designed to expose executives to fluctuations in the security price throughout the vesting period and directly rewards them for the increase in the Group’s security price over that period. If the Group’s security price does not increase over the vesting period for an award of SARs, executives are not entitled to any payment under the plan for that award.

The Group’s security price was chosen as the key measure for the LTI on the basis that it:

reflects the market’s assessment of the success or failure of management over the long term; and
is a comprehensive single objective metric that reflects the market’s assessment of all aspects of the Group’s financial performance.

SARs payouts are cash bonuses, the size of which is determined by reference to the security price.

Each SAR payout is subject to:

income tax at the recipient’s marginal income tax rate in the year in which the bonus is paid; and
PAYG

in the same manner as other cash remuneration payments.

All of the SARs have been cancelled for the reasons previously stated in this report. The Board anticipates modifications to the LTI plan that should deliver perceived value to executives and hence be sufficiently incentivising so as to justify the cost of providing the LTI benefit. Executives will not be compensated for the cancellation of SARs issued to them in the financial years ended 30 June 2011 and 2012. The details of the SARs issued and cancelled during the year were as follows:

	OPENING BALANCE	NEW ISSUE DURING THE YEAR	CANCELLED	BALANCE AT 30 JUNE 2012	POTENTIAL VALUE OF CANCELLED SARS s
Director
Frank Wolf	730,769	2,857,143	(3,587,912)	-	$ 875,000
Executives
Ellis Varejes	269,231	1,071,429	(1,340,660)	-	$ 325,000
John L'Estrange	153,846	714,286	(868,132)	-	$ 200,000
Cameron Laird	153,846	714,286	(868,132)	-	$ 200,000
Rod de Aboitiz	153,846	535,714	(689,560)	-	$ 175,000
Len Lloyd	230,769	714,286	(945,055)	-	$ 250,000
Peter Strain	230,769	1,302,198	(1,302,198)	-	$ 300,000

30 June 2012

directors report

Accordingly, the size of the STI is directly related to Group performance and a range of key measures that impact on shareholder value.

REMUNERATION REPORT (AUDITED) (CONTINUED)

Link between remuneration policy and the Group’s performance

The value of SARs that will be issued following the modification of the LTI plan will be directly related to the Group’s security price.

The Group’s performance is regularly compared with its peers in the S&P/ASX 300 A-REIT. This peer group reflects the Group’s competitors for capital transactions and talent. As previously discussed, executives are eligible to receive an STI and participate in the LTI plan. Both STIs and LTIs are risk-related components of total remuneration as payment entitlements are dependent on performance. The Group’s objective is for remuneration policy to encourage business strategy and implementation that achieves growth in total securityholder returns and favourable peer comparison.

The Group’s performance in comparison with the S&P/ASX 300 A-REIT is set out in the following graph:

APG and S&P/ASX 300 A-REIT Accumulation Index Total Return

==> picture [424 x 226] intentionally omitted <==

----- Start of picture text -----

180%
160%
140%
120%
100%
80%
ABP
60%
S&P/ASX 300
40% Accumulation
20%
0%
-20%
-40%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-60%
-80% end of financial year
----- End of picture text -----

==> picture [49 x 796] intentionally omitted <==

==> picture [63 x 63] intentionally omitted <==

abacus property group

REMUNERATION REPORT (AUDITED) (CONTINUED)

Link between remuneration policy and the Group’s performance (continued)

The Group’s performance for the past five years is as follows:

	2008	2009	2010	2011*	2012
Underlying earnings per security (cents)	13.98	8.30	3.90	19.38	19.17
Distributions paid and proposed (cents)	13.50	7.75	3.15	16.50	16.50
Closing security price (30 June)	$1.15	$0.37	$0.41	$2.31	$2.04
Net tangible assets per security**	$1.37	$0.62	$0.58	$2.51	$2.34
Weighted average securities on issue	650.9m	867.5m	1,662.5m	372.3m	400.9m

The Group’s securities were consolidated on a 5:1 basis on 29 November 2010.

** Net tangible assets per security includes the impact of the fair value movements on the interest rate swaps. The fair value loss in 2012 was $35.2 million.

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 contract:

• Dr Wolf receives a base salary that is reviewed annually;

he is eligible to participate in the LTI plans that are made available and to receive STI payments;

Other Executives

The other executives are employed on an ongoing basis under letter agreements until (generally) one month’s notice is given by either party. 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. Deferred STI and LTI awards vest according to the plan rules.

Dr Wolf may resign from his position and thus terminate this contract by giving 6 months written notice; and
the Group may terminate this employment agreement by providing 12 months written notice or providing payment in lieu of notice (based on the fixed component of Dr Wolf’s remuneration).

2012 SHORT-TERM BENEFITS POST EMPLOYMENT LONG- TERM BENEFITS SECURITY- BASED PAYMENT TOTAL % PER- FORMANCE RELATED SALARY & FEES CASH BONUS NON- MONETARY BENEFITS TOTAL CASH PAYMENTS AND SHORT TERM BENEFITS SUPER- ANNUATION RETIREMENT BENEFITS LONG SERVICE LEAVE* APPRE- CIATION RIGHTS	Non-Executive Directors J Thame - Chairman 182,225 - - 182,225 15,775 - - - 198,000 - W Bartlett 90,138 - - 90,138 8,112 - - - 98,250 - D Bastian 42,250 - - 42,250 50,000 - - - 92,250 - M Irving 126,750 - - 126,750 - - - - 126,750 - M Salkinder 86,009 - - 86,009 7,741 - - - 93,750	Sub-total non-executive directors 527,372 - - 527,372 81,628 - - - 609,000 -		Executive Directors F Wolf - Managing Director 1,150,000 750,000 5,150 1,905,150 50,000 - 19,683 - 1,974,833 38%	Other key management personnel R de Aboitiz - Chief Financial Offcer 474,225 150,000 - 624,225 15,775 - 47,087 - 687,087 22% C Laird - Director Property Ventures 409,225 150,000 2,997 562,222 15,775 - - - 577,997 26% J L'Estrange - Director Property Ventures 411,225 200,000 5,150 616,375 33,775 - 6,475 - 656,625 30% L Lloyd - Managing Director, Property Services 350,000 125,000 - 475,000 50,000 - 6,335 - 531,335 24% P Strain - Director Property 375,000 150,000 5,150 530,150 50,000 - 6,714 - 586,864 26% E Varejes - Chief Operating Offcer 459,223 175,000 5,150 639,373 40,777 - 8,012 - 688,162 25%	Sub-total executive KMP 3,628,898 1,700,000 23,597 5,352,495 256,102 - 94,306 - 5,702,903	Total 4,156,270 1,700,000 23,597 5,879,867 337,730 - 94,306 - 6,311,903	Details of the security appreciation rights cancelled during the year are set out on page 33.

2011 SHORT-TERM BENEFITS POST EMPLOYMENT LONG- TERM BENEFITS SECURITY- BASED PAYMENT TOTAL % PER- FORMANCE RELATED SALARY & FEES CASH BONUS NON- MONETARY BENEFITS TOTAL CASH PAYMENTS AND SHORT TERM BENEFITS SUPER- ANNUATION RETIREMENT BENEFITS LONG SERVICE LEAVE* APPRE- CIATION RIGHTS	Non-Executive Directors J Thame - Chairman 176,801 - - 176,801 15,199 - - - 192,000 - W Bartlett 79,817 - - 79,817 7,183 - - - 87,000 - D Bastian 40,000 - - 40,000 50,000 - - - 90,000 - D Bluth (retired 12 November 2010) - - - - 30,800 - - - 30,800 - M Irving 108,000 - - 108,000 - - - - 108,000 - M Salkinder (appointed 12 April 2011) 18,207 - - 18,207 1,639 - - - 19,846	Sub-total non-executive directors 422,825 - - 422,825 104,821 - - - 527,646 -		Executive Directors F Wolf - Managing Director 1,150,000 500,000 5,135 1,655,135 50,000 - 19,634 20,339 1,745,108 30%	Other key management personnel R de Aboitiz - Chief Financial Offcer 474,801 100,000 - 574,801 15,199 - - 4,282 594,282 18% T Hardwick - Director Funds Management^ 7,266 - - 7,266 1,389 189,808 - - 198,463 - C Laird - Director Property Ventures 409,801 118,500 - 528,301 15,199 - - 4,282 547,782 22% J L'Estrange - Director Property Ventures 411,801 74,000 5,135 490,936 33,199 - 7,605 4,282 536,022 15% L Lloyd - Managing Director, Property Services# 350,000 147,000 - 497,000 50,000 - 12,447 6,423 565,870 27% P Strain - Director Property 375,000 147,500 5,135 527,635 50,000 - 10,113 6,423 594,171 26% E Varejes - Chief Operating Offcer 472,100 148,500 5,135 625,735 27,900 - 45,570 7,493 706,698 22%	Sub-total executive KMP 3,650,769 1,235,500 20,540 4,906,809 242,886 189,808 95,369 53,524 5,488,396	Total 4,073,594 1,235,500 20,540 5,329,634 347,707 189,808 95,369 53,524 6,016,042	#L Lloyd retired as a director of Abacus Group Holdings Limited, Abacus Group Projects Limited and Abacus Funds Management Limited on 12 November 2010 but continues to perform his executive duties. ^T Hardwick resigned in October 2010. *Accrued but not presently entitled

directors report

30 June 2012

Signed in accordance with a resolution of the directors. Abacus Group Holdings Limited (ABN 31 080 604 619)

==> picture [111 x 42] intentionally omitted <==

John Thame Chairman Sydney, 28 August 2012

Frank Wolf Managing Director

==> picture [63 x 62] intentionally omitted <==

abacus property group

==> picture [115 x 63] intentionally omitted <==

abacus property group FINANCIAL STATEMENTS

consolidated income statement

year ended 30 June 2012

		2012	2011
			RESTATED*
	NOTES	$’000	$’000
reVeNUe
Rental income		101,506	96,795
Storage income		47,093	41,872
Hotel income		52,011	52,411
Finance income	6(a)	28,997	22,569
Funds management income	6(b)	6,509	4,550
Sale of inventory		-	78,000
total revenue		236,116	296,197
Net change in fair value of investment properties derecognised		9,456	1,955
Net change in fair value of investments and fnancial instruments derecognised	6(c)	(132)	4,761
Share of proft / (loss) from equity accounted investments	17(b)	7,379	(6,021)
Other		686	2,679
total revenue and other income		253,505	299,571
Property expenses and outgoings		(18,123)	(14,967)
Storage expenses		(16,410)	(14,461)
Hotel expenses		(40,010)	(40,227)
Depreciation, amortisation and impairment expense	7(a)	(7,800)	(8,182)
Cost of inventory sales		-	(63,094)
Net change in fair value of derivatives		(54,315)	(1,825)
Net change in fair value of investment properties and property, plant & equipment held at balance date		(2,235)	8,096
Net change in fair value of investments held at balance date	7(b)	(1,244)	(15,679)
Finance costs	7(c)	(73,043)	(66,878)
Impairment charges - related parties	17(a)	(3,507)	-
Administrative and other expenses	7(d)	(26,318)	(27,686)
ProFit BeFore tAX		10,500	54,668
Income tax expense	8(a)	(2,474)	(3,467)
Net ProFit AFter tAX		8,026	51,201
ProFit AttriBUtABLe to
Equity holders of the parent entity (AGHL)		450	33,841
equity holders of other stapled entities
AT members		6,507	(8,804)
AGPL members		208	(5,997)
AIT members		1,964	9,547
ASPT members#		(11,071)	-
ASOL members#		10,412	-
Stapled security holders		8,470	28,587
Netproft / (loss) attributable to external non-controllinginterests		(444)	22,614
Net ProFit		8,026	51,201
Basic and diluted earnings per stapled security (cents)	10	2.11	7.68

*Certain numbers shown here do not correspond to the 2011 financial statements as they reflect required adjustments resulting from the adoption of AASB10 as set out in note 2.

Contribution since date of merger on 6 March 2012.

consolidated statement of other comprehensive income

year ended 30 June 2012

==> picture [115 x 63] intentionally omitted <==

	2012	2011
		RESTATED*
	$’000	$’000
Net ProFit AFter tAX	8,026	51,201
otHer coMPreHeNSiVe iNcoMe
Revaluation of assets, net of tax	3,957	(1,071)
Foreign exchange translation adjustments, net of tax	3,782	(289)
totAL coMPreHeNSiVe iNcoMe For tHe yeAr	15,765	49,841
total comprehensive income attributable to:
Members of the APG Group	9,808	29,160
External non-controllinginterests	5,957	20,681
totAL coMPreHeNSiVe iNcoMe For tHe yeAr	15,765	49,841
total comprehensive income / (loss) attributable to members of the Group analysed by
amounts attributable to:
AGHL members	1,788	34,409
AT members	6,507	(8,804)
AGPL members	208	(5,991)
AIT members	1,964	9,547
ASPT members	(11,071)	-
ASOL members	10,412	-
totAL coMPreHeNSiVe iNcoMe AFter tAX AttriBUtABLe to MeMBerS oF tHe GroUP	9,808	29,161

*Certain numbers shown here do not correspond to the 2011 financial statements as they reflect required adjustments resulting from the adoption of AASB10 as set out in note 2.

consolidated statement of financial position As at 30 June 2012

		30 JuN 2012	30 JuN 2011	1 JuL 2010
			RESTATED*	RESTATED*
	NOTES	$’000	$’000	$’000
cUrreNt ASSetS
Cash and cash equivalents	11	54,129	64,648	37,783
Trade and other receivables	12(a)	11,918	15,584	14,996
Property, plant and equipment		-	-	20,901
Investment properties held for sale	16	190,821	91,131	91,327
Inventory	15(a)	26,479	23,382	1,899
Property loans	13(a)	19,098	19,324	63,357
Other fnancial assets	13(b)	8,053	959	2,189
Other		3,004	4,114	3,543
totAL cUrreNt ASSetS		313,502	219,142	235,995
NoN-cUrreNt ASSetS
Investment properties	16	1,181,203	1,338,130	1,199,464
Inventory	15(b)	100,974	57,595	89,648
Property loans	13(c)	154,758	153,893	138,148
Other fnancial assets	13(d)	24,489	32,177	53,881
Property, plant and equipment	14	154,065	163,238	159,279
Equity accounted investments	17	121,833	99,195	102,028
Deferred tax assets	8(c)	16,320	15,978	16,897
Intangible assets and goodwill	18	33,461	35,173	35,173
Trade and other receivables	12(b)	6,212	6,000	-
totAL NoN-cUrreNt ASSetS		1,793,315	1,901,379	1,794,518

totAL ASSetS		2,106,817	2,120,521	2,030,513
cUrreNt LiABiLitieS
Trade and other payables	19(a)	30,426	30,509	32,424
Interest-bearing loans and borrowings	20(a)	29,950	47,366	230,790
Income tax payable		636	566	-
Other		4,516	3,567	3,186
totAL cUrreNt LiABiLitieS		65,528	82,008	266,400
NoN-cUrreNt LiABiLitieS
Trade and other payables	19(b)	12,725	13,575	4,065
Interest-bearing loans and borrowings	20(b)	772,260	791,868	540,987
Derivatives at fair value		79,752	28,644	44,855
Deferred tax liabilities	8(c)	10,183	8,800	7,203
Other fnancial liabilities	30	56,250	49,902	36,789
Other		2,227	5,314	1,866
totAL NoN-cUrreNt LiABiLitieS		933,397	898,103	635,765

totAL LiABiLitieS		998,925	980,111	902,165
Net ASSetS		1,107,892	1,140,410	1,128,348
totAL eQUity		1,107,892	1,140,410	1,128,348

*Certain numbers shown here do not correspond to the 2011 financial statements as they reflect required adjustments resulting from the adoption of AASB10 as set out in note 2.

consolidated statement of financial position (continued) As at 30 June 2012

==> picture [115 x 63] intentionally omitted <==

		30 JuN 2012	30 JuN 2011	1 JuL 2010
			RESTATED*	RESTATED*
	NOTES	$’000	$’000	$’000
equity attributable to members of AGHL
Contributed equity		157,386	50,270	48,440
Reserves		6,050	2,405	1,839
Accumulated losses		(47,337)	(46,275)	(80,362)
total equityattributable to members of AGHL		116,099	6,400	(30,083)
equity attributable to unitholders of At
Contributed equity		783,358	860,983	837,064
Accumulated losses		(137,593)	(104,494)	(58,057)
total equityattributable to unitholders of At		645,765	756,489	779,007
equity attributable to members of AGPL
Contributed equity		20,415	9,657	9,459
Reserves		(78)	(78)	(85)
Accumulated losses		(17,529)	(17,737)	(11,740)
total equityattributable to members of AGPL		2,808	(8,158)	(2,366)
equity attributable to unitholders of Ait
Contributed equity		170,620	218,914	212,031
Accumulated losses		(566)	20,095	33,349
total equityattributable to unitholders of Ait		170,054	239,009	245,380
equity attributable to unitholders of ASPt
Contributed equity		87,461	-	-
Reserves		(2,322)	-	-
Retained earnings		8,790	-	-
total equityattributable to unitholders of ASPt		93,929	-	-
equity attributable to members of ASoL
Contributed equity		12,754	-	-
Reserves		13	-	-
Retained earnings		15,501	-	-
total equityattributable to members of ASoL		28,268	-	-
equity attributable to external non-controlling interest:
Contributed equity		67,295	135,713	135,145
Reserves		5,424	(978)	955
Accumulated losses		(21,750)	11,935	310
total equityattributable to external non-controllinginterest		50,969	146,670	136,410
totAL eQUity		1,107,892	1,140,410	1,128,348
Contributed equity	23	1,231,994	1,139,824	1,106,994
Reserves		3,663	2,327	1,754
Accumulated losses		(178,734)	(148,411)	(116,810)
Total stapled security holders' interest in equity		1,056,923	993,740	991,938
Total external non-controllinginterest		50,969	146,670	136,410
totAL eQUity		1,107,892	1,140,410	1,128,348

*Certain numbers shown here do not correspond to the 2011 financial statements as they reflect required adjustments resulting from the adoption of AASB10 as set out in note 2.

consolidated statement of changes in equity

year ended 30 June 2012

	ATTRIBuTABLE TO THE STAPLED SECuRITY HOLDER	ExTERNAL
CONSOLIDATED ISSuED CAPITAL ASSET REVALuATION RESERVE FOREIGN CuRRENCY TRANSLATION EMPLOYEE EquITY BENEFITS RETAINED EARNINGS NON- CONTROLLING INTEREST TOTAL EquITY $’000 $’000 $’000 $’000 $’000 $’000 $’000
At 1 July 2011* 1,139,824 1,021 (4,142) 5,448 (148,411) 146,670 1,140,410 Other comprehensive income - (409) 1,745 - - 6,403 7,739 Net income for theyear - - - - 8,470 (444) 8,026
total comprehensive income for theyear - (409) 1,745 - 8,470 5,959 15,765
Equity raisings^ 56,528 - - - - - 56,528 Return of capital^ (61,873) - - - - - (61,873) Distribution reinvestment plan 36,189 - - - - - 36,189 Issue costs (2,168) - - - - - (2,168) Acq. of non-controlling interest - - - - - (1,754) (1,754) Merger of ASOL / ASPT 63,494 - - - 24,387 (87,881) - Distribution to security holders - - - - (63,180) (12,025) (75,205)
At 30 June 2012 1,231,994 612 (2,397) 5,448 (178,734) 50,969 1,107,892

^Capital was returned to securityholders that was applied to the issue of securities as part of the merger between the ABP Group and ASF (Note 27).

	ATTRIBuTABLE TO THE STAPLED SECuRITY HOLDER	ExTERNAL
CONSOLIDATED ISSuED CAPITAL ASSET REVALuATION RESERVE FOREIGN CuRRENCY TRANSLATION EMPLOYEE EquITY BENEFITS RETAINED EARNINGS NON- CONTROLLING INTEREST TOTAL EquITY $’000 $’000 $’000 $’000 $’000 $’000 $’000
At 1 July 2010 (pre AASB10) 1,110,517 342 (3,975) 5,448 (23,262) 13,799 1,102,869 Application of AASB 10 (3,523) 297 (358) - (93,547) 122,610 25,479
At 1 July 2010 (post AASB10) 1,106,994 639 (4,333) 5,448 (116,809) 136,409 1,128,348
Other comprehensive income - 382 191 - - (1,933) (1,360) Net income for theyear - - - - 28,587 22,614 51,201
total comprehensive income for theyear - 382 191 - 28,587 20,681 49,841
Equity raisings - - - - - - - Distribution reinvestment plan 32,779 - - - - - 32,779 Issue costs 51 - - - - - 51 Movement in equity interest - - - - (95) 95 - Distribution to security holders - - - - (60,094) (10,515) (70,609)
At 30 June 2011* 1,139,824 1,021 (4,142) 5,448 (148,411) 146,670 1,140,410

*Certain numbers shown here do not correspond to the 2011 financial statements as they reflect required adjustments resulting from the adoption of AASB10 as set out in note 2.

consolidated statement of cashflow

year ended 30 June 2012

==> picture [115 x 63] intentionally omitted <==

		2012	2011
			RESTATED*
	NOTES	$’000	$’000
cASH FLoWS FroM oPerAtiNG ActiVitieS
Income receipts		258,618	307,041
Interest received		3,657	2,589
Distributions received		1,015	1,328
Income tax paid		(1,353)	(229)
Finance costs paid		(60,735)	(62,522)
Operating payments		(114,952)	(102,048)
Net cASH FLoWS FroM oPerAtiNG ActiVitieS	11	86,250	146,159
cASH FLoWS FroM iNVeStiNG ActiVitieS
Payments for investments and funds advanced		(91,909)	(74,414)
Proceeds from sale and settlement of investments and funds repaid		27,208	50,066
Purchase of property, plant and equipment		(1,230)	(3,404)
Proceeds from sale of property, plant and equipment		15,512	13,251
Purchase of investment properties		(24,382)	(175,932)
Disposal of investment properties		96,079	38,003
Payment for other investments		(5,138)	(3,180)
Net cASH FLoWS FroM /(USeD iN)iNVeStiNG ActiVitieS		16,140	(155,610)
cASH FLoWS FroM FiNANciNG ActiVitieS
Proceeds from issue of stapled securities		62,901	13,209
Return of capital		(61,873)	-
Payment of issue / fnance costs		(6,223)	(8,139)
Repayment of borrowings		(242,345)	(342,650)
Proceeds from borrowings		174,954	415,965
Distributionspaid		(40,338)	(41,414)
Net cASH FLoWS FroM /(USeD iN)FiNANciNG ActiVitieS		(112,924)	36,971
Net iNcreASe / (DecreASe) iN cASH AND cASH eQUiVALeNtS		(10,534)	27,520
Net foreign exchange differences		15	(155)
Cash and cash equivalents at beginningofyear		64,648	37,283
cASH AND cASH eQUiVALeNtS At eND oF yeAr	11	54,129	64,648

*Certain numbers shown here do not correspond to the 2011 financial statements as they reflect required adjustments resulting from the adoption of AASB10 as set out in note 2.

30 June 2012

notes to the financial statements

1. corPorAte iNForMAtioN

Abacus Property Group (“APG” or the “Group”) is comprised of Abacus Group Holdings Limited (“AGHL”) (the nominated parent entity), Abacus Trust (“AT”), Abacus Group Projects Limited (“AGPL”), Abacus Income Trust (“AIT”), Abacus Storage Property Trust (“ASPT”) and Abacus Storage Operations Limited (“ASOL”). Shares in AGHL, AGPL and ASOL and units in AT, AIT and ASPT have been stapled together so that neither can be dealt with without the other. The securities trade as one security on the Australian Securities Exchange (the “ASx”) under the code ABP. The units in ASPT and the shares in ASOL were stapled to the Group in March 2012.

The financial report of the Group for the year ended 30 June 2012 was authorised for issue in accordance with a resolution of the directors on 28 August 2012.

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

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS

(a) Basis of Preparation

The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards. The financial report has also been prepared on a historical cost basis, except for investment properties and derivative financial instruments which have been measured at fair value, interests in joint ventures and associates which are accounted for using the equity method, and certain investments and financial assets measured at fair value.

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

(b) Statement of compliance

The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS), as issued by the AASB and IASB respectively.

(c) New accounting standards and interpretations

(i) changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial year except as follows:

The Group has adopted the following new and amended Australian Accounting Standards and AASB interpretations as of 1 July 2011. Adoption of these standards and interpretations did not have any effect on the financial position or performance of the Group.

amendment introduces an exemption from the general related party disclosure requirements for transactions with government as the reporting entity. The adoption of the amendment did not have any impact on the financial position or performance of the Group.

AASB 132 Financial Instruments: Presentation – The AASB issued an amendment that alters the definition of a financial liability in AASB132 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. The amendment has had no effect on the financial position or performance of the Group.
AASB Int 14 Prepayments of a Minimum Funding Requirement – The amendment has had no effect on the financial position or performance of the Group

improvements to AASBs

In May 2010, the AASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying working. These are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies, but no impact on the financial position or performance of the Group.

AASB7 Financial Instruments – Disclosures: The amendment was intended to simplify the disclosures provided by reducing the volume of disclosures around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in context. The Group reflects the revised disclosure requirements in Note 22.

Other amendments resulting from improvements to AASBs to the following standards did not have any impact on the accounting policies, financial position or performance of the Group:

AASB 3 Business Combinations
AASB 101 Presentation of Financial Statements
AASB 127 Separate Financial Statements
AASB 134 Interim Financial Statements

The following interpretation and amendments to interpretations did not have any impact on the accounting policies, financial position or performance of the Group:

AASB Int 13 Customer Loyalty Programmes
AASB Int 19 Extinguishing Financial Liabilities with Equity Instruments.
AASB 124 Related Party Transactions – The AASB issued an amendment to AASB 124 that clarifies the definitions of a related party. The new definitions emphasise a symmetrical view of related party relationships and clarifies the circumstances in which persons and key management personnel affect related party relationships of an entity. In addition, the

abacus property group

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(i) changes in accounting policy and disclosures (continued)

During the year the Group has also adopted the following standards, together with the consequential amendments as at 1 July 2011.

AASB 10 consolidated Financial Statements: establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and uIG-112 Consolidation – Special Purpose Entities.

The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less than a majority of voting rights may give control.

Consequential amendments were also made to other standards via AASB 2011-7 and amendments to AASB 127.

AASB 11 Joint Arrangements: replaces AASB 131 Interests in Joint Ventures and uIG-113 Jointly controlled Entities – Non-monetary Contributions by Ventures. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition it removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the parties a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. Joint ventures that give the parties a right to the net assets is accounted for using the equity method.

==> picture [115 x 63] intentionally omitted <==

The impact of the adoption of these standards are summarised below:

AASB10 consolidated Financial Statements: adoption has resulted in the consolidation of Abacus Hospitality Fund, Abacus Storage Fund, Abacus Diversified Income Fund II and Abacus Miller Street Holding Trust. This is due to the combination of APG’s role as responsible entity, variable returns arising from its collective equity and loan investments in these funds and certain guarantees. The total impact of consolidating the funds was a net reduction of $93.5 million to the Group’s 1 July 2010 retained earnings made up as follows:

Abacus Hospitality Fund (“AHF”): the consolidation of AHF results in the effective settlement of the Abacus working capital loan to AHF at its fair value at the deemed control date rather than its anticipated recoverable value based on a 2016 maturity date. This resulted in a $47.1 million reduction to the Group’s 1 July 2010 retained earnings.
Abacus Storage Fund (“ASF”): the consolidation of ASF resulted in a $1.7 million increase to the Group’s 1 July 2010 retained earnings.
Abacus Diversified income Fund ii (“ADiFii”): The consolidation of ADIFII results in the recognition of ADIFII’s issued units as a liability as a result of the capital guarantee and is measured at the current value of the capital and yield guarantee amounts rather than the estimated liability under the guarantees in 2013 and 2016. This resulted in a $48.4 million reduction to the Group’s 1 July 2010 retained earnings.
Abacus Miller Street Holding trust (“AMSHt”): the consolidation of AMSHT will result in a $0.3m increase to the Group’s 1 July 2010 retained earnings.

Consequential amendments were also made to other standards via AASB 2011-7 and amendments to AASB 128.

AASB 12 Disclosure of interests in other entities: includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. New disclosures have been introduced about the judgements made by management to determine whether control exists, and to require summarised information about certain joint arrangements, associates and structured entities and subsidiaries with non controlling interests.

The Group has applied the above standards retrospectively as at 1 July 2010 and the comparative balances have been adjusted accordingly.

notes to the financial statements

30 June 2012

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(i) changes in accounting policy and disclosures (continued)

As a result of the accounting policy change, the following consolidation adjustments were made to the financial statements:

As of 1 July 2010 (statement of financial position)

Increase in cash and cash equivalents of $16.0 million Increase in trade and other receivables of $1.2 million Increase in inventory of $0.5 million Decrease in property loans of $210.7 million Increase in other assets of $1.6 million Increase in investment properties of $581.7 million Increase in other financial assets of $6.8 million Increase in property, plant and equipment of $150.0 million Decrease in equity accounted investment of $25.7 million Increase in deferred tax assets of $3.7 million Increase in trade and other payables of $19.4 million Increase in interest bearing loans and borrowings of $422.1 million Increase in derivatives at fair value of $14.5 million Increase in deferred tax liabilities of $6.9 million Increase in other financial liabilities of $36.8 million Reduction in issued capital (recognition of issue costs) of $3.5 million Increase in asset revaluation reserve of $0.3 million Decrease in foreign currency translation reserve of $0.4 million Increase in accumulated losses of $93.5 million Increase in non-controlling interests in equity of $122.6 million

As of and for the year ended 30 June 2011 (income statement, statement of other comprehensive income, statement of cash flow)

Increase in property / storage / hotel income of $116.8 million Decrease in finance income of $0.7 million Decrease in funds management income of $15.9 million Increase in net change in fair value of derivatives of $6.6 million Increase in net change in fair value of investment properties derecognised of $0.7 million Increase in net change in fair value of investments and financial instruments derecognised of $1.7 million Decrease in share of loss from equity accounted investments of $2.6 million Decrease in other revenue of $1.5 million Increase in property / storage / hotel expenses and outgoings of $56.1 million Increase in depreciation, amortisation and impairment expense of $5.1 million Increase in net change in fair value of investment properties held at balance date of $14.3 million Net change in fair value of investments held at balance date of $1.0 million Increase in finance costs of $33.0 million Increase in administrative and other expenses of $10.3 million Increase in income tax expense of $2.9 million Net increase in profit after tax of $33.4 million Net increase in comprehensive income of $30.8 million Net decrease in cash from operating activities of $23.7 million Net increase in cash used in investing activities of $12.5 million Net increase in cash from financing activities of $32.4 million

abacus property group

==> picture [115 x 63] intentionally omitted <==

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(c) New accounting standards and interpretations (continued)
(i) changes in accounting policy and disclosures (continued)

As of 30 June 2011 (statement of financial position)

Increase in cash and cash equivalents of $19.1 million Increase in trade and trade receivables of $2.8 million Increase in inventory of $0.5 million Decrease in property loans of $167.9 million Increase in other assets of $0.9 million Increase in investment properties of $585.0 million Decrease in other financial assets of $40.8 million Increase in property, plant and equipment of $143.9 million Decrease in equity accounted investments of $28.1 million Increase in deferred tax assets of $4.0 million Increase in trade and other payables of $17.1 million Increase in interest bearing loans and borrowings of $392.7 million Increase in income tax payable of $0.6 million Increase in other liabilities of $1.5 million Increase in derivatives at fair value of $1.3 million Increase in other financial liabilities of $49.9 million Reduction in issued capital (recognition of issue costs) of $3.4 million Increase in asset revaluation reserve of $0.1 million

Decrease in foreign currency translation reserve of $0.5 million Increase in accumulated losses $82.1 million

Increase in non-controlling interests in equity of $132.9 million

Additional qualitative and quantitative disclosures have been added with respect to subsidiaries with material noncontrolling interest. Refer to note 25.

AASB 11 Joint Arrangements: adoption has had no impact in the Group’s method of accounting for its joint arrangements. The adoption of AASB 12 has resulted in the Group disclosing the summarised financial information of material investments in joint arrangements. Prior to adoption of AASB12, the Group’s share of summarised financial information was disclosed.

AASB 12 Disclosure of interests in other entities: adoption has resulted in the Group disclosing the summarised financial information of material investments in joint arrangements. Prior to adoption of AASB12, the Group’s share of summarised financial information was disclosed.

(ii) Accounting Standards and interpretations issued but not yet effective.

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2012. These are outlined in the table over the page.

30 June 2012

notes to the financial statements

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

==> picture [486 x 41] intentionally omitted <==

----- Start of picture text -----

Application Application
date of Impact on Group financial date for
Reference Summary standard report Group
AASB These amendments address the determination of 1 January This revision will not have a 1 July 2012
----- End of picture text -----

Reference	Summary	Application date of standard*	Impact on Group fnancial report	Application date for Group*
AASB	These amendments address the determination of	1 January	This revision will not have a	1 July 2012
2010-8	deferred tax on investment property measured at fair value and introduce a rebuttable presumption that deferred tax on the basis that the carrying amount will be recoverable through sale. The amendments also incorporate SIC-21 Income Taxes – Recovery of Revalued Non-depreciable Assets into AASB 112.	2012	material impact on the Group’s fnancial statements and the way it currently discloses deferred tax assets and liabilities.
AASB 9	AASB 9 includes requirements for the classifcation and measurement of fnancial assets. It was further amended by AASB 2010-7 to refect amendments to the accounting for fnancial liabilities. These requirements improve and simplify the approach for classifcation and measurement of fnancial assets compared with the requirements of AASB 139. The main changes are described below: (a) Financial assets that are debt instruments will be classifed based on (1) the objective of the entity’s business model for managing the fnancial assets; (2) the characteristics of the contractual cash fows. (b) Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in proft or loss and there is no impairment or recycling on disposal of the instrument. (c) Financial assets can be designated and measured at fair value through proft or loss at initial recognition if doing so eliminates or signifcantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases. (d) Where the fair value option is used for fnancial liabilities the change in fair value is to be accounted for as follows: - The change attributable to changes in credit risk are presented in other comprehensive income (OCI) - The remaining change is presented in proft or loss. Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7 and 2010-10.	1 January 2015	The Group will review the classifcation of its existing fnancial assets and liabilities in line with the standard, such as secured and related party loans, options and derivatives. The tests above with respect to any potential reclassifcation of fnancial assets with variable cash fows will depend on the facts applicable at transition date and cannot be reasonably estimated at this time.	1 July 2015

abacus property group

==> picture [115 x 63] intentionally omitted <==

==> picture [487 x 33] intentionally omitted <==

----- Start of picture text -----

Application Application
date of Impact on Group financial date for
Reference Summary standard report Group
----- End of picture text -----

Reference	Summary	Application date of standard*	Impact on Group fnancial report	Application date for Group*

AASB 13	AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted. Application of this defnition may result in different fair values being determined for the relevant assets. AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined. Consequential amendments were also made to other standards via AASB 2011-8.	1 January 2013	The Group will review the assets and liabilities requiring measurement at fair value. There will be no material fnancial impact on the Group however the Group may be required to increase its level of disclosure.	1 July 2013
AASB 119	The main change introduced by this standard is to revise the accounting for defned beneft plans. The amendment removes the options for accounting for the liability and requires that the liabilities arising from such plans is recognised in full with actuarial gains and losses being recognised in other comprehensive income. It also revised the method of calculating the return on plan assets. The revised standard changes the defnition of short- term employee benefts. The distinction between short-term and other long-term employee benefts is now based on whether the benefts are expected to be settled wholly within 12 months after the reporting date. Consequential amendments were also made to other standards via AASB 2011-10.	1 January 2013	This revision will have no impact on how the Group measures its employee benefts.	1 July 2013
Annual Improve- ments Cycle 2009-2011	This standard sets out amendments to IFRSs and the related bases for conclusions and guidance made during the International Accounting Standards Boards Annual Improvements process. These amendments have not yet been adopted by the AASB. The following items are addressed by this standard: IFRS 1 First-time Adoption of International Reporting Standards • Repeated application of IFRS 1 • Borrowing costs IAS 1 Presentation of Financial Statements • Clarifcation of the requirements for comparative information IAS 16 Property, Plant and Equipment • Classifcation of servicing equipment IAS 32 Financial Instruments: Presentation • Tax effect of distribution to holders of equity instruments IAS 34 Interim Financial Reporting • Interim fnancial reporting and segment information for total assets and liabilities	1 January 2013	The Group will review any amendments to the Standards when adopted by the AASB.	1 July 2013

30 June 2012

notes to the financial statements

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

==> picture [486 x 42] intentionally omitted <==

----- Start of picture text -----

Application Application
date of Impact on Group financial date for
Reference Summary standard report Group
AASB 1053 This Standard establishes a differential financial 1 July 2013 The Group is required to 1 July 2013
----- End of picture text -----

Reference	Summary	Application date of standard*	Impact on Group fnancial report	Application date for Group*
AASB 1053	This Standard establishes a differential fnancial	1 July 2013	The Group is required to	1 July 2013
Application of Tiers of Australian Accounting Standards	reporting framework consisting of two Tiers of reporting requirements for preparing general purpose fnancial statements: (a) Tier 1: Australian Accounting Standards (b) Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1 and substantially reduced disclosures corresponding to those requirements. The following entities apply Tier 1 requirements in preparing general purpose fnancial statements: (a) For-proft entities in the private sector that have public accountability (as defned in this Standard) (b) The Australian Government and State, Territory and Local Governments The following entities apply either Tier 2 or Tier 1 requirements in preparing general purpose fnancial statements: (a) For-proft private sector entities that do not have public accountability (b) All not-for-proft private sector entities (c) Public sector entities other than the Australian Government and State, Territory and Local Governments		report under the Tier 1 requirement as a for-proft entity in the private sector that has public accountability. There will be no impact to the reporting requirements of the Group..

*designates the beginning of the applicable annual reporting period

AASB 2011-3, AASB 2011-4, AASB 2011-9 and Interpretation 20 will have no application to the Group.

abacus property group

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(d) Basis of consolidation

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

Subsidiaries are all those entities over which the Group has power over the investee such that the Group is able to direct the relevant activities, has exposure or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns.

The adoption of AASB 10 has led to the consolidation of Abacus Hospitality Fund, Abacus Storage Fund (until merger in March 2012), Abacus Diversified Income Fund II and Abacus Miller Street Holding Trust. This is due to the combination of the Group’s role as responsible entity and its exposure to available returns arising from its collective equity and loan investments in these funds and certain guarantees.

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

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

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

==> picture [115 x 63] intentionally omitted <==

(e) Foreign currency translation

Functional and presentation currency

Both the functional and presentation currency of the Group are in Australian dollars. Each entity in the Group determines its own functional currency and items are included in the financial statements of each entity are measured using that functional currency.

transactions and balances

Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.

All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences on foreign currency borrowings on translation of foreign operations that provide a hedge against a net investment in a foreign operation. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss. On disposal of a foreign operation, the cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

At reporting date the assets and liabilities of these entities are translated into the presentation currency of the Group at the rate of exchange prevailing at balance date and the financial performance is translated at the average exchange rate prevailing during the reporting period. The exchange differences arising on translation are taken directly to the foreign currency translation reserve in equity.

Non-controlling interests are allocated their share of net profit after tax in the consolidated income statement and are presented within equity in the consolidated statement of financial position, separately from the equity of the owners of the parent.

Non-controlling interests represent those equity interests in Abacus Hospitality Fund, Abacus Miller Street Holding Trust, Abacus Jigsaw Trust and Abacus Independent Retail Property Trust (and Abacus Storage Fund until the date of merger being 6 March 2012) that are not held by the Group and are presented separately in the income statement and within equity in the consolidated statement of financial postion.

30 June 2012

notes to the financial statements

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(f) revenue recognition

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

rental and Storage income

Rental income from investment properties is accounted for on a straight-line basis over the lease term. Contingent rental income is recognised as income in the periods in which it is earned. Lease incentives granted are recognised as an integral part of the total rental income.

Hotel income

Revenue from rooms is recognised and accrued on the provision of rooms or on the date of which rooms are to be provided in accordance with the terms and conditions of the bookings. Advance deposits from customers received are not recognised as revenue until such time when the rooms have been provided or when the customers forfeit the deposits due to failure of attendance.

Finance income

Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Income from the sale of joint venture profit share rights is recognised when the Group enters into arrangements with other parties which result in the Group receiving consideration for the sale of its right to receive a profit share from the joint venture

Dividends and distributions

Revenue is recognised when the Group’s right to receive the payment is established.

Net change in fair value of investments and financial instruments derecognised during the year

Net change in fair value of investments held at balance date

Changes in net market value of investments are recognised as revenue or expense in determining the net profit for the period.

Property development sales

Revenue from property development sales is recognised when the significant risks, rewards of ownership and effective control has been transferred to the purchaser which has been determined to occur upon settlement and after contractual duties are completed.

No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, the costs incurred or to be incurred cannot be measured reliably, there is a risk of return or there is continuing management involvement to the degree usually associated with ownership.

(g) expenses

Expenses including rates, taxes and other outgoings, are brought to account on an accrual basis and any related payables are carried at cost.

(h) cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash which are subject to an insignificant risk of changes in value.

For the purposes of the Statement of Cash Flow, cash and cash equivalents consist of cash and cash equivalents as defined above.

(i) trade and other receivables

Trade receivables, which generally have 30 day terms, are recognised at amortised cost, which in the case of the Group, is the original invoice amount less an allowance for any uncollectible amounts.

Collectibility of trade receivables is reviewed on an ongoing basis. An allowance for doubtful debts is raised when there is objective evidence that collection of the full amount is no longer probable. Bad debts are written off when identified.

Revenue from sale of investments is recognised on settlement when the significant risks and rewards of the ownership of the investments have been transferred to the buyer. Risks and rewards are generally considered to have passed to the buyer at the time of settlement of the sale. Financial instruments are derecognised when the right to receive or pay cash flows from the financial derivative has expired or when the entity transfers substantially all the risks and rewards of the financial derivative through termination. Gains or losses due to derecognition are recognised in the statement of comprehensive income.

abacus property group

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(j) Derivative financial instruments and hedging

The Group utilises derivative financial instruments, both foreign exchange and interest rate swaps to manage the risk associated with foreign currency and interest rate fluctuations. Such derivative financial instruments are recognised at fair value.

The Group has set defined policies and implemented hedging policies to manage interest and exchange rate risks. Derivative instruments are transacted in line with these policies to achieve the economic outcomes in line with the Group’s treasury and hedging policy. They are not transacted for speculative purposes.

The Group does not employ hedge accounting and as such derivatives are recorded at fair value with gains or losses arising from the movement in fair values recorded in the income statement.

(k) investments and other financial assets

All investments are initially recognised at cost, being the fair value of the consideration given.

Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held to maturity investments, or available-for-sale financial assets. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end. At 30 June 2012 the Group’s investments in listed and unlisted securities have been classified as financial assets at fair value through profit or loss and property loans are classified as loans and receivables.

recognition and derecognition

Purchases and sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place are recognised on the trade date i.e. the date that the Group commits to purchase the assets. Financial assets are derecognised when the right to receive cash flows from the financial assets have expired or been transferred.

After initial recognition, investments, which are classified as held for trading, are measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term with the intention of making a profit. Gains or losses on investments held for trading are recognised in the income statement.

==> picture [115 x 63] intentionally omitted <==

For investments that are actively traded in organised financial markets, fair value is determined by reference to the Australian Securities Exchange quoted market bid prices at the close of business on the balance sheet date.

For investments where there is no quoted market or unit price, fair value is determined by reference to the current market value of another instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of the investment.

Financial assets at fair value through profit or loss

A financial asset or financial liability at fair value is designated by the entity at fair value through the profit and loss upon initial recognition. APG uses this designation where doing so results in more relevant information.

(k) investments and other financial assets (continued)

This group of financial assets and liabilities are managed and their performance evaluated on a fair value basis, in accordance with APG’s documented risk management and investment strategy which outlines that these assets and liabilities are managed on a total rate of return basis, and information about the instruments is provided internally on that basis to the entity’s key management personnel and the Board.

APG enters into loans and receivables with associated options that provide for a variety of outcomes including repayment of principal and interest, satisfaction through obtaining interests in equity or property or combinations thereof. The fair value of the maximum exposure to credit risk in relation to these instruments was $27.9 million (2011: $27.4 million).

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Subsidiaries

Investment in subsidiaries are held at lower of cost or recoverable amount.

30 June 2012

notes to the financial statements

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(l) investment in associates

The Group’s investments in its associates are accounted for under the equity method of accounting in the consolidated financial statements. The associates are entities over which the Group has significant influence but not control and accordingly are neither subsidiaries nor joint ventures.

The investment in the associates is carried in the consolidated balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associates, less any impairment in value.

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivable and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The reporting dates of the associates and the Group are identical and the associates’ accounting policies conform to those used by the Group for like transactions and events in similar circumstances.

Investments in associates held by the parent are held at lower of cost and recoverable amount in the parent’s financial statements.

(m) interest in joint arrangements

The Group’s interest in joint venture entities is accounted for under the equity method of accounting in the consolidated financial statements. The investment in the joint venture entities is carried in the consolidated balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the joint ventures, less any impairment in value. The consolidated income statement reflects the Group’s share of the results of operations of the joint ventures.

(n) Property, plant and equipment

Land and buildings are measured at fair value, based on periodic valuations by external independent valuers, less accumulated depreciation on buildings and less any impairment losses recognised after the date of the revaluation.

Plant and equipment is stated at historical cost less accumulated depreciation and any impairment losses.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

Buildings – 40 years Buildings (Hotel) – 50 years

Plant and equipment – over 5 to 15 years Plant and equipment (Hotel) over 3 to 20 years

impairment

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount.

The recoverable amount of property (including land and buildings), plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the assets.

Impairment losses are recongised in the income statement.

Independent valuations are performed with sufficient regularity to ensure that the carrying amount does not differ materially from the asset’s fair value at the balance sheet date.

Investments in joint ventures are held at lower of cost or recoverable amount in the investing entities.

The Group’s interest in joint operations that give the parties a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations.

abacus property group

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(n) Property, plant and equipment (continued) revaluations of land and buildings

Any revaluation increment is credited to the asset revaluation reserve included in the equity section of the balance sheet except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss.

Any revaluation decrease is recognised in profit or loss except to the extent that it offsets a previous revaluation increase for the same asset in which case the decrease is debited directly to the asset revaluation reserve to the extent of the credit balance existing in the revaluation reserve for that asset.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the income statement.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amounts of the assets and the net amounts are restated to the revalued amounts of the assets.

Disposal

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.

(o) investment properties

Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing parts of an existing investment property at the time that the cost is incurred if the recognition criteria are met, and excludes the costs of dayto-day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market and property specific conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are recognised in the income statement in the year in which they arise.

==> picture [115 x 63] intentionally omitted <==

Transfers are made to investment property when, and only when, there is a change in use, evidenced by commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of development with a view to sale.

For a transfer from investment property to inventories, the deemed cost of property for subsequent accounting is its fair value at the date of change in use. For a transfer from inventories to investment property, any difference between the fair value of the property at that date and its previous carrying amount is recognised in profit or loss. When the Group completes the construction or development of a “self-constructed investment property”, any difference between the fair value of the property at that date and its previous carrying amount is recognised in profit or loss.

Land and buildings are considered to have the function of an investment and are therefore regarded as a composite asset, the overall value of which is influenced by many factors, the most prominent being income yield, rather than diminution in value of the building content due to the passing of time. Accordingly, the buildings and all components thereof, including integral plant and equipment, are not depreciated.

Investment properties are independently valued on a staggered basis every two years unless the underlying financing requires a more frequent independent valuation cycle. In determining fair value, the capitalisation of net income method and the discounting of future cashflows to their present value have been used.

Lease incentives provided by the Group to lessees, and rental guarantees which may be received by the Group from third parties (arising from the acquisition of investment properties) are included in the measurement of fair value of investment property. Leasing costs are treated as separate assets and are amortised over the respective periods to which the lease incentives and rental guarantees apply, either using a straight-line basis, or a basis which is more representative of the pattern of benefits.

under AASB 140, investment properties, including any plant and equipment, are not subject to depreciation. However, depreciation allowances in respect of certain buildings, plant and equipment are currently available to investors for taxation purposes.

Investment properties are derecognised either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year of retirement or disposal.

Investment properties under construction are carried at fair value after allowing for the remaining expected costs of completion plus an appropriate risk adjusted development margin.

30 June 2012

notes to the financial statements

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(p) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Group as lessee

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. Lease incentives are recognised in the income statement as an integral part of the total lease expense.

Group as a lessor

Leases in which the Group retains substantially all the risks and benefits of ownership of the lease assets are classified as operating leases.

(q) Goodwill and intangibles Goodwill

Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses and is not amortised. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated:

Represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and
Is not larger than a segment based on either the Group’s primary or the Group’s secondary reporting format determined in accordance with AASB 8 Operating Segments.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cashgenerating units), to which the goodwill relates. When the recoverable amount of the cash-generating unit (group of cash-generating units) is less that the carrying amount, an impairment loss is recognised. When goodwill forms part of a cash-generating unit (group of cash-generating units) and an operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation.

Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Impairment losses recognised for goodwill are not subsequently reversed.

intangible assets

Intangible assets acquired separately or in a business combination are initially measured at cost. Following initial recognition, intangibles are carried at cost less accumulated amortisation and impairment losses.

Intangible assets created within the business are not capitalised and expenditure is charged against profits in the period in which the expenditure is incurred.

The useful lives of these intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible asset maybe impaired. The amortisation period and the amortisation method for an intangible asset with a finite life is reviewed at least each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefit embodied in the asset are accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in an accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in the income statement through the ‘depreciation and amortisation expense’ line item.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis.

(r) impairment of non-financial assets other than goodwill

Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed.

abacus property group

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(s) trade and other payables

Trade payables and other payables are carried at amortised cost. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

(t) Provisions and employee leave benefits

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs.

employee leave benefits

(i) Wages, salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

ii) Long service leave

The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(u) Distributions and dividends

Trusts generally distribute their distributable assessable income to their unitholders. Such distributions are determined by reference to the taxable income of the respective trusts. Distributable income may include capital gains arising from the disposal of investments and taxdeferred income.

==> picture [115 x 63] intentionally omitted <==

unrealised gains and losses on investments that are recognised as income are usually retained and are generally not assessable or distributable until realised. Capital losses are not distributed to security holders but are retained to be offset against any future realised capital gains.

A liability for dividend or distribution is recognised in the Balance Sheet if the dividend or distribution has been declared, determined or publicly recommended prior to balance date.

(v) interest-bearing loans and borrowings

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of transaction costs associated with the borrowing.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid in the establishment of loan facilities that are yield related are included as part of the carrying amount of loans and borrowings.

Borrowings are classified as non-current liabilities where the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Borrowing costs

Borrowing costs are recognised as an expense when incurred unless they relate to a qualifying asset or to upfront borrowing establishment and arrangement costs, which are deferred and amortised as an expense over the life of the facility. A qualifying asset is an asset that generally takes more than 12 months to get ready for its intended use or sale. In these circumstances, the financing costs are capitalised into the cost of the asset. Where funds are borrowed by the Group for the acquisition or construction of a qualifying asset, the amount of the borrowing costs capitalised are those incurred in relation to the borrowing.

(w) contributed equity

Issued and paid up capital is recognised at the fair value of the consideration received by the Group. Stapled securities are classified as equity. Incremental costs directly attributable to the issue of new securities are shown in equity as a deduction, net of tax, from the proceeds.

(x) transfers to / (from) total equity

In respect of the Group, revaluation increments or decrements arising from changes in the fair value of investment properties and derivative financial instruments, unrealised gains and losses in the net value of investments, accrued income not yet assessable and expenses provided for or accrued not yet deductible, net capital losses and tax free or tax deferred amounts maybe transferred to equity and may not be included in the determination of distributable income.

30 June 2012

notes to the financial statements

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(y) Non-current assets held for sale

Before classification as held for sale the measurement of the assets is updated. upon classification as held for sale, assets are recognised at the lower of carrying amount and fair value less costs to sell with the exception of investment properties which are valued in accordance with 2(q).

Gains and losses from revaluations on initial classification and subsequent re-measurement are recognised in the income statement.

(z) inventories

Property Development

Inventories are stated at the lower of cost and net realisable value. Net realisable value is determined on the basis of sales in the ordinary course of business. Expenses of marketing, selling and distribution to customers are estimated and deducted to establish net realisable value. Where the net realisable value of inventory is less than cost, an impairment expense is recognised in the consolidated income statement. Reversals of previously recognised impairment charges are recognised in the consolidated income statement such that the inventory is always carried at the lower of cost and net realisable value. Cost includes the purchase consideration, development costs and holding costs such as borrowing costs, rates and taxes.

Hotel

Inventories are valued at the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.

(za) taxation

The Group comprises taxable and non-taxable entities. A liability for current and deferred tax and tax expense is only recognised in respect of taxable entities that are subject to income tax and potential capital gains tax as detailed below.

trust income tax

under current Australian income tax legislation AT, AIT, ASPT, AHT, ADIFII and AMSHT are not liable to Australian income tax provided security holders are presently entitled to the taxable income of the trusts and the trusts generally distribute their taxable income.

company income tax

AGHL and its Australian resident wholly-owned subsidiaries, ASOL and its Australian resident whollyowned subsidiaries and AHL and its Australian resident wholly-owned subsidiaries have formed separate tax consolidation groups. AGHL, ASOL and AHL have entered into tax funding agreements with their Australian resident wholly-owned subsidiaries, so that each subsidiary agrees to pay or receive its share of the allocated tax at the current tax rate.

The head tax entity and the controlled entities in each tax consolidated group continue to account for their own current and deferred tax amounts.

In addition to its own current and deferred tax amounts, the head tax entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the group.

Any difference between the amounts assumed and amounts receivable of payable under the tax funding agreements are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax assets and unused tax losses can be utilised, except: when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

when the deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

abacus property group

2. SUMMAry oF SiGNiFicANt AccoUNtiNG PoLicieS (coNtiNUeD)

(za) taxation (contiuned)

when the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, and the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

New Zealand

The trusts that operate in New Zealand (“NZ”) are treated as a company for NZ income tax purposes and are taxed at the corporate tax rate of 28% (2011: 30%). NZ income tax paid in the Trusts can be claimed as foreign tax credits to offset against foreign income and distributable to security holders. NZ tax losses are carried forward provided the continuity test of ownership is satisfied. Interest expense from the Trusts are fully deductible subject to thin capitalisation considerations. Property revaluation gains or losses are to be excluded from taxable income, with no deferred tax implications as capital gains are not taxed in NZ.

Income derived by companies which are incorporated in Australia and registered in NZ as overseas companies is exempt from tax in Australia where the income has been taxed in NZ. This income is regarded as non-assessable non-exempt income. As such, income tax is calculated on the companies’ NZ taxable income and taxed at the NZ corporate rate of 28% (2011: 30%).

==> picture [115 x 63] intentionally omitted <==

Goods and services tax (GSt)

Revenues, expenses and assets are recognised net of the amount of GST except when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(zb) earnings per stapled security (ePSS)

Basic EPSS is calculated as net profit attributable to stapled security holders, adjusted to exclude costs of servicing equity (other than distributions) divided by the weighted average number of stapled securities on issue during the period under review.

Diluted EPSS is calculated as net profit attributable to stapled security holders, adjusted for:

costs of servicing equity (other than distributions);
the after tax effect of dividends and interest associated with dilutive potential stapled securities that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential stapled securities;

divided by the weighted average number of stapled securities and dilutive potential stapled securities, adjusted for any bonus element.

(zc) Security based payment plans

Executives of the Group may be granted share appreciation rights, which can only be settled in cash (cash-settled transactions). The cost of cash-settled transactions is initially measured at fair value at the grant date using a Monte Carlo Simulation based model, further details of which are given in Note 29. This fair value is expressed over the period until the vesting date with recognition of a corresponding liability. The liability is remeasured to fair value at each reporting date up to and including the settlement date.

30 June 2012

notes to the financial statements

3. FiNANciAL riSK MANAGeMeNt

The risks arising from the use of the Group’s financial instruments are credit risk, liquidity risk and market risk (interest rate risk, price risk and foreign currency risk).

The Group’s financial risk management focuses on mitigating the unpredictability of the financial markets and its impact on the financial performance of the Group. The Board reviews and agrees policies for managing each of these risks, which are summarised below.

Primary responsibility for identification and control of financial risks rests with the Treasury Management Committee under the authority of the Board. The Board reviews and agrees policies for managing each of the risks identified below, including the setting of limits for trading in derivatives, hedging cover of interest rate risks and cash flow forecast projections.

The main purpose of the financial instruments used by the Group is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. The Group also enters into derivative transactions principally interest rate swaps. The purpose is to manage the interest rate exposure arising from the Group’s operations and its sources of finance.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in notes 2 and 4 to the financial statements.

(a) credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers, investment in securities and options, secured property loans and interest bearing loans and derivatives with banks.

The Group manages its exposure to risk by:

derivative counterparties and cash transactions are limited to high credit quality financial institutions;
policy which limits the amount of credit exposure to any one financial institution;
providing loans as an investment into joint ventures, associates, related parties and third parties where it is satisfied with the underlying property exposure within that entity;
regularly monitoring loans and receivables balances on an ongoing basis;
regularly monitoring the performance of its associates, joint ventures, related parties and third parties on an ongoing basis; and
obtaining collateral as security (where required or appropriate).

The Group’s credit risk is predominately driven by its Property Ventures business which provides loans to third parties, those using the funds for property development and / or investment. The Group mitigates the exposure to this risk by evaluation of the application before acceptance. The analysis will specifically focus on:

the Loan Valuation Ratio (LVR) at drawdown;
mortgage ranking;
background of the developer (borrower) including previous developments;
background of the owner (borrower) including previous investment track record;
that the terms and conditions of higher ranking mortgages are acceptable to the Group;
appropriate property insurances are in place with a copy provided to the Group; and
market analysis of the completed development being used to service drawdown.

The Group also mitigates this risk by ensuring adequate security is obtained and timely monitoring of the financial instrument to identify any potential adverse changes in the credit quality.

(b) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate and diverse amount of committed credit facilities, the ability to close out market positions and the flexibility to raise funds through the issue of new stapled securities or the distribution reinvestment plan.

The Group’s policy is to maintain an available loan facility with banks sufficient to meet expected operational expenses and to finance investment acquisitions for a period of 90 days, including the servicing of financial obligations. Current loan facilities are assessed and extended for a maximum period based on the Group’s expectations of future interest and market conditions.

As at 30 June 2012, the Group had undrawn committed facilities of $253.1 million and cash of $54.1 million which are adequate to cover short term funding requirements.

Further information regarding the Group’s debt profile is disclosed in Note 20.

(c) refinancing risk

Refinancing risk is the risk that unfavorable interest rate and credit market conditions result in an unacceptable increase in the Group’s credit margins and interest cost. Refinancing risk arises when the Group is required to obtain debt to fund existing and new debt positions.

The Group is exposed to refinancing risks arising from the availability of finance as well as the interest rates and credit margins at which financing is available. The Group manages this risk by spreading maturities of borrowings and interest rate swaps, diversification of lenders and reviewing potential transactions to understand the impact on the Group’s credit worthiness.

abacus property group

3. FiNANciAL riSK MANAGeMeNt (coNtiUNeD)

(d) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Foreign currency risk

The Group is exposed to currency risk on its investment in foreign operations, equity investments, investment in associates and property loans denominated in a currency other than the functional currency of Group entities. The currencies in which these transactions are conducted are primarily denominated in NZD.

As a result the Group’s balance sheet can be affected by movements in the A$/NZ$ exchange rates.

interest rate risk

APG’s exposure to the risk of changes in market interest rates relates primarily to APG’s long-term bank debt obligations which are based on floating interest rates. APG’s policy is to maintain a mix of floating exposure and fixed interest rate hedging with fixed rate cover highest in years 1 to 5.

Similar policies are employed for the funds consolidated by the Group (AHF, ADIF II and AMSHT).

The Group hedges to minimise interest rate risk by entering variable to fixed interest rate swaps which also helps deliver interest covenant compliance and positive carry (net rental income in excess of interest expense) on the property portfolio. Interest rate swaps have the economic effect of converting borrowings from variable rates to fixed rates. under the interest rate swaps, the Group agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to the agreed notional principal amounts. At 30 June 2012, after taking into account the effect of interest rate swaps, approximately 93.4% of the Group’s drawn debt is subject to fixed rate hedges (2011: 67.8%). Hedge cover as a percentage of available facilities at 30 June 2012 is 69.9% (2011: 53.9%).

Fair value interest rate risk

As the Group holds interest rate swaps against its variable rate debt there is a risk that the economic value of a financial instrument will fluctuate because of changes in market interest rates. The level of swapped and fixed rate debt is disclosed in note 22.

==> picture [115 x 63] intentionally omitted <==

4. SiGNiFicANt AccoUNtiNG JUDGMeNtS, eStiMAteS AND ASSUMPtioNS

In applying the Group’s accounting policies management continually evaluates judgments, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact on the Group. All judgments, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management. Actual results may differ from the judgments, estimates and assumptions. Significant judgments, estimates and assumptions made by management in the preparation of these financial statements are outlined below:

(i) Significant accounting judgments

operating lease commitments – Group as lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined that it retains all the significant risks and rewards of ownership of these properties and has thus classified the leases as operating leases.

recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences and tax losses on revenue account as management considers that it is probable that future taxable profits will be available to utilise those temporary differences and tax losses.

classification of and valuation of investments

The Group has decided to classify investments in listed and unlisted securities as ‘held for trading’ investments and movements in fair value are recognised directly in profit or loss. The fair value of listed securities has been determined by reference to published price quotations in an active market. The fair value of unlisted securities has been determined by reference to the net assets of the entity and available redemption facilities.

impairment of property loans and financial assets

The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. If an impairment trigger exists the recoverable amount of the asset is determined. For property loans and interim funding to related funds this involves value in use calculations, which incorporate a number of key estimates and assumptions around cashflows and fair value of underlying investment properties held by the borrower and expected timing of cashflows from equity raisings of related funds.

(e) other market price risk

The Group is exposed to equity securities price risk. The key risk variable is the quoted price of securities which is influenced by a range of factors, most of which are outside the control of the Group. Management of the Group monitors the securities in its investment portfolio based on market indices and published prices. Investments within the portfolio are managed on an individual basis and all buy / sell decisions are approved by the Managing Director and the Chief Financial Officer.

30 June 2012

notes to the financial statements

4. SiGNiFicANt AccoUNtiNG JUDGMeNtS, eStiMAteS AND ASSUMPtioNS (coNtiUNeD)

(i) Significant accounting judgments (continued) Accounting policy – financial assets and liabilities at fair value through profit and loss

A financial asset or financial liability is designated by the entity as being at fair value through profit or loss upon initial recognition. APG uses this designation where doing so results in more relevant information, because it is a group of financial assets and liabilities which is managed and its performance is evaluated on a fair value basis, in accordance with APG’s documented risk management and investment strategy, and information about the instruments is provided internally on that basis to the entity’s key management personnel and the Board.

control and significant influence

In determining whether the Group has control over an entity, the Group assess its exposure or rights to variable returns from its involvement with the entity and whether it has the ability to affect those returns through its power over the investee. The Group may have significant influence over an entity when it has the power to participate in the financial and operating policies decisions of the entity but is not in control or joint control of those policies.

(ii) Significant accounting estimates and assumptions impairment of goodwill and intangibles with indefinite useful lives

The Group determines whether goodwill and intangibles with indefinite useful lives are impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating units to which the goodwill and intangibles with indefinite useful lives are allocated. For goodwill this involves value in use calculations which incorporate a number of key estimates and assumptions around cash flows and fair value of investment properties upon which these determine the revenue / cash flows. The assumptions used in the estimations of the recoverable amount and the carrying amount of goodwill and intangibles with indefinite useful lives are discussed in note 18.

Valuation of investment properties and property, plant and equipment held at fair value

The Group makes judgements in respect of the fair value of investment properties (note 2(o)). The fair value of these properties are reviewed regularly by management with reference to external independent property valuations and market conditions existing at reporting date, using generally accepted market practices. The assumptions underlying estimated fair values are those relating to the receipt of contractual rents, expected future market rentals, maintenance requirements, capitalisation rates and discount rates that reflect current market conditions and current or recent property investment prices. If there is any material change in these assumptions or regional, national or international economic conditions, the fair value of investment properties may differ and may need to be reestimated.

Net realisable value of inventory

Inventories are carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses. The estimates take into consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the period. The key assumptions that require the use of management judgment are reviewed half-yearly. If the net realisable value is less than the carrying value of inventory, an impairment loss is recognised in the income statement.

Fair value of financial assets

APG enters into loans and receivables with associated options that provide for a variety of outcomes including repayment of principal and interest, satisfaction through obtaining interests in equity or property or combinations thereof. At the end of the year, the fair value of the maximum exposure to credit risk in relation to these instruments was $27.9 million (2011: $27.4 million).

Fair value of derivatives

The fair value of derivatives is determined using closing quoted market prices (where there is an active market) or a suitable pricing model based on discounted cash flow analysis using assumptions supported by observable market rates. Where the derivatives are not quoted in an active market their fair value has been determined using (where available) quoted market inputs and other data relevant to assessing the value of the financial instrument, including financial guarantees granted by the Group, estimates of the probability of exercise.

abacus property group

==> picture [115 x 63] intentionally omitted <==

5. SeGMeNt iNForMAtioN

The Group predominately operates in Australia. Following are the Group’s operating segments, which are regularly reviewed by the Chief Operating Decision Maker to make decisions about resources allocation and to assess performance:

(a) Property: the segment is responsible for the investment in and ownership of commercial, retail and industrial properties. This segment also includes the equity accounting of material co-investments in property entities not engaged in development and construction projects;
(b) Funds Management: the segment includes development, origination, co-investment and fund management revenues and expenses in addition to discharging the Group’s responsible entity obligations;
(c) Property Ventures: provides secured lending and related property financing solutions and is also responsible for the Group’s investment in joint venture and associates’ development and construction projects, which includes revenue from debt and equity investments in joint ventures and associates. This segment also is responsible for the Group’s investment in property securities; and
(d) Storage: the segment is responsible for the investment in and ownership of self-storage facilities. This segment commenced in March 2012 following the merger of the Abacus Storage Fund with the Abacus Property Group.

Segment result includes transactions between operating segments which are then eliminated.

AASB 10 - in application of the standard the Group has consolidated the Abacus Hospitality Fund, Abacus Storage Fund (until the merger in March 2012), Abacus Diversified Income Fund II and the Abacus Miller Street Trust. The performances of these entities which are operated as externally managed investment schemes are reviewed separately to that of the performance of the Group’s business segments.

	FuNDS TOTAL MANAGE- PROPERTY CORE uNALLOCATED/ PROPERTY MENT VENTuRES STORAGE* SEGMENTS AHF ASF ADIFII AMSHT ELIMINATIONS CONSOLIDATED YEAR ENDED 30 JuNE 2012 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000	revenue Rental income 76,485 - - - 76,485 1,337 - 18,111 5,573 - 101,506 Storage income 1,864 - - 17,013 18,877 - 28,216 - - - 47,093 Hotel income 2,625 - - - 2,625 49,386 - - - - 52,011 Finance income 1,316 - 26,635 - 27,951 - - - - (1,316) 26,635 Funds mangement income - 19,503 - - 19,503 - - - - (12,994) 6,509 Net change in fair value of investment properties derecognised 9,869 - - - 9,869 - - (413) - - 9,456 Net change in fair value of investments and fnancial instruments derecognised - 560 - (50) 510 - - - - (642) (132) Share of proft from equity accounted investments 4,806 2,069 82 - 6,957 - - - - 422 7,379 Other revenue 5 942 6 - 953 - 675 - - (942) 686 Other unallocated revenue 1,854 341 63 50 54 2,362	total consolidated revenue 96,970 23,074 26,723 16,963 165,584 51,064 28,954 17,748 5,627 (15,472) 253,505	Property expenses and outgoings (16,237) - - - (16,237) (342) 14 (1,485) (826) 753 (18,123) Storage expenses (753) - - (5,815) (6,568) - (9,842) - - - (16,410) Hotel expenses (3,018) - - - (3,018) (36,992) - - - - (40,010) Depreciation, amortisation and impairment expense (2,835) - - (116) (2,951) (4,134) (140) (388) (187) - (7,800) Administrative and other expenses (9,124) (4,915) (5,489) (1,467) (20,995) (1,723) (1,226) (360) (362) (1,652) (26,318)	Segment result 65,003 18,159 21,234 9,565 115,815 7,873 17,760 15,515 4,252 (16,371) 144,844	* commenced in March 2012 following the merger of Abacus Storage Fund with Abacus Property Group
NON CORE SEGMENTS
CORE SEGMENTS

	FuNDS TOTAL MANAGE- PROPERTY CORE uNALLOCATED/ PROPERTY MENT VENTuRES STORAGE SEGMENTS AHF ASF ADIFII AMSHT ELIMINATIONS CONSOLIDATED YEAR ENDED 30 JuNE 2012 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000	Impairment charge - related party (3,507) - - - - - (3,507) Net change in fair value of investments and fnancial instruments held at balance date (6,865) 4,317 1,603 9,750 423 (12,707) (3,479) Net change in fair value of derivatives (35,205) (10,684) (2,998) (4,555) (873) - (54,315) Finance costs (43,860) (11,308) (11,698) (12,653) (4,317) 10,793 (73,043)	Proft / (loss) before tax 26,378 (9,802) 4,667 8,057 (515) (18,285) 10,500	Income tax beneft / (expense) (1,185) 8 (890) (407) - - (2,474)	Net proft / (loss) for the period 25,193 (9,794) 3,777 7,650 (515) (18,285) 8,026	less non-controlling interest (690) 3,874 (3,098) - 358 - 444	Net proft / (loss) for the period attributable to members of the Group 24,503 (5,920) 679 7,650 (157) (18,285) 8,470
NON CORE SEGMENTS
CORE SEGMENTS

	FuNDS TOTAL MANAGE- PROPERTY CORE uNALLOCATED/ PROPERTY MENT VENTuRES SEGMENTS AHF ASF ADIFII AMSHT ELIMINATIONS CONSOLIDATED YEAR ENDED 30 JuNE 2011 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000	revenue Rental income 72,427 - - 72,427 1,284 (231) 17,440 5,875 - 96,795 Storage income 1,806 - - 1,806 - 40,066 - - - 41,872 Hotel income 5,831 - - 5,831 57,580 - - - (11,000) 52,411 Finance income 664 - 21,072 21,736 - - - - (1,313) 20,423 Funds mangement income 178 20,260 - 20,438 - - - - (15,888) 4,550 Sale of inventory 78,000 - - 78,000 - - - - - 78,000 Net change in fair value of investment properties derecognised 1,271 - - 1,271 71 613 - - - 1,955 Net change in fair value of investments and fnancial instruments derecognised 1,410 - 1,603 3,013 936 382 430 - - 4,761 Share of proft from equity accounted investments 5,496 (1,211) (7,698) (3,413) - - - - (2,608) (6,021) Other revenue 3,916 243 - 4,159 (15) - - - (1,465) 2,679 Other unallocated revenue 1,527 619 2,146	total consolidated revenue 170,999 19,292 14,977 206,795 59,856 40,830 17,870 5,875 (31,655) 299,571	Property expenses and outgoings (13,531) - - (13,531) (443) 965 (1,874) (814) 730 (14,967) Storage expenses (754) - - (754) - (13,707) - - - (14,461) Hotel expenses (5,034) - - (5,034) (35,193) - - - - (40,227) Depreciation, amortisation and impairment \ expense (3,129) - - (3,129) (4,483) (271) (131) (168) - (8,182) Cost of inventory sales (63,094) - - (63,094) - - - - - (63,094) Administrative and other expenses (9,257) (7,267) (3,976) (20,500) (1,733) (1,945) (741) (374) (528) (25,821) unallocated expenses (1,525) - (1,525)	Segment result 76,200 12,025 11,001 99,228 18,004 25,872 15,124 4,519 (31,453) 131,294
NON CORE SEGMENTS
CORE SEGMENTS

	FuNDS TOTAL MANAGE- PROPERTY CORE uNALLOCATED/ PROPERTY MENT VENTuRES SEGMENTS AHF ASF ADIFII AMSHT ELIMINATIONS CONSOLIDATED YEAR ENDED 30 JuNE 2011 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000	Impairment charge - related party (16,000) - - - - 16,000 - Net change in fair value of investments and fnancial instruments held at balance date (22,443) 335 16,477 (3,124) 973 199 (7,583) Net change in fair value of derivatives (8,458) 254 (1,341) 1,322 398 6,000 (1,825) Finance costs (33,912) (10,555) (17,309) (14,657) (4,302) 13,517 (67,218)	Proft / (loss) before tax 18,415 8,038 23,699 (1,335) 1,588 4,263 54,668	Income tax (expense) / beneft (571) 733 (3,327) (302) - - (3,467)	Net proft / (loss) for the period 17,844 8,771 20,372 (1,637) 1,588 4,263 51,201	less non-controlling interest (494) (6,577) (15,605) - (1,156) 1,218 (22,614)	Net proft / (loss) for the period attributable to members of the Group 17,350 2,194 4,767 (1,637) 432 5,481 28,587
NON CORE SEGMENTS
CORE SEGMENTS

NON CORE SEGMENTS	FuNDS TOTAL MANAGE- PROPERTY CORE uNALLO- PROPERTY MENT VENTuRES STORAGE SEGMENTS CATED AHF ADIFII AMSHT ELIMINATIONS CONSOLIDATED YEAR ENDED 30 JuNE 2012 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000	current assets Cash and cash equivalents - - - - - 43,115 9,990 226 798 - 54,129 Trade and other receivables - - - - - 7,959 3,237 1,058 (336) - 11,918 Investment properties held for sale 106,951 - - - 106,951 - 13,250 7,820 62,800 - 190,821 Inventory 26,045 - - - 26,045 - 434 - - - 26,479 Property loans - - 19,098 - 19,098 - - - - - 19,098 Other fnancial assets - - 169 - 169 - - 7,884 - - 8,053 Other - - - - - 2,267 415 219 103 - 3,004	total current assets 132,996 - 19,267 - 152,263 53,341 27,326 17,207 63,365 - 313,502	Non-current assets Investment properties 671,992 - - 338,7661,010,758 - - 170,445 - - 1,181,203 Inventory 25,310 - 75,664 - 100,974 - - - - - 100,974 Property, plant and equipment 4,889 - - 720 5,609 - 148,456 - - - 154,065 Property loans 19,035 148,669 121,298 - 289,002 - - - - (134,244) 154,758 Other fnancial assets - 48,000 24,671 - 72,671 - - - - (48,182) 24,489 Equity accounted investments 111,340 9,784 8,034 - 129,158 - - - - (7,325) 121,833 Deferred tax assets - - - - - 12,569 3,734 17 - - 16,320 Intangible assets and goodwill 1,000 - - - 1,000 32,461 - - - - 33,461 Trade and other receivables - - 6,212 - 6,212 - - - - - 6,212	total non-current assets 833,566 206,453 235,879 339,486 1,615,384 45,030 152,190 170,462 - (189,751) 1,793,315		total assets 966,562 206,453 255,146 339,486 1,767,647 98,371 179,516 187,669 63,365 (189,751) 2,106,817
CORE SEGMENTS

NON CORE SEGMENTS	FuNDS TOTAL MANAGE- PROPERTY CORE uNALLO- PROPERTY MENT VENTuRES STORAGE SEGMENTS CATED AHF ADIFII AMSHT ELIMINATIONS CONSOLIDATED YEAR ENDED 30 JuNE 2012 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000	current liabilities Trade and other payables 7,372 3,324 4,432 4,881 20,009 - 6,895 2,694 828 - 30,426 Interest-bearing loans and borrowings - - - - - 29,950 - - - - 29,950 Income tax payable - - - - - 604 - 32 - - 636 Other 1,353 398 530 530 2,811 - 566 1,139 - - 4,516	total current liabilities 8,725 3,722 4,962 5,411 22,820 30,554 7,461 3,865 828 - 65,528	Non-current liabilities Trade and other payables 2,600 - 10,125 - 12,725 - - - - - 12,725 Interest-bearing loans and borrowings - - - - - 560,330 166,969 170,190 53,016 (178,245) 772,260 Derivatives at fair value - - - - - 53,286 16,709 7,914 1,843 - 79,752 Deferred tax liabilities - - - - - 5,229 229 4,725 - - 10,183 Other fnancial liabilities - 10,000 - - 10,000 - - - - 46,250 56,250 Other 544 181 242 242 1,209 - 1,018 - - 2,227	total non-current liabilities 3,144 10,181 10,367 242 23,934 618,845 184,925 182,829 54,859 (131,995) 933,397		total liabilities 11,869 13,903 15,329 5,653 46,754 649,399 192,386 186,694 55,687 (131,995) 998,925		Net assets 954,693 192,550 239,817 333,833 1,720,893 (551,028) (12,870) 975 7,678 (57,756) 1,107,892
CORE SEGMENTS

	FuNDS TOTAL MANAGE- PROPERTY CORE uNALLO- PROPERTY MENT VENTuRES SEGMENTS CATED AHF ASF ADIFII AMSHT ELIMINATIONS CONSOLIDATED YEAR ENDED 30 JuNE 2011 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000	current assets Cash and cash equivalents - - - - 47,106 9,407 3,982 1,866 2,287 - 64,648 Trade and other receivables - - - - 11,157 2,099 2,175 272 122 (241) 15,584 Investment properties held for sale 91,131 - - 91,131 - - - - - - 91,131 Inventory 22,882 - - 22,882 - 500 - - - - 23,382 Property loans - - 19,324 19,324 - - - - - - 19,324 Other fnancial assets - - 959 959 - - - - - - 959 Other - - - - 3,260 279 233 248 94 - 4,114	total current assets 114,013 - 20,283 134,296 61,523 12,285 6,390 2,386 2,503 (241) 219,142	Non-current assets Investment properties 753,127 - - 753,127 - 12,500 331,133 178,570 62,800 - 1,338,130 Inventory 23,107 - 34,488 57,595 - - - - - - 57,595 Property, plant and equipment 19,341 - - 19,341 - 143,087 810 - - - 163,238 Property loans 20,757 149,466 151,614 321,837 - - - - - (167,944) 153,893 Other fnancial assets - 48,000 24,976 72,976 - - - 7,381 - (48,180) 32,177 Equity accounted investments 67,101 27,528 32,658 127,287 - - - - - (28,092) 99,195 Deferred tax assets - - - - 12,481 3,319 170 - 8 - 15,978 Intangible assets and goodwill 2,712 - - 2,712 32,461 - - - - - 35,173 Trade and other receivables - - 6,000 6,000 - - - - - - 6,000	total non-current assets 886,145 224,994 249,736 1,360,875 44,942 158,906 332,113 185,951 62,808 (244,216) 1,901,379		total assets 1,000,158 224,994 270,019 1,495,171 106,465 171,191 338,503 188,337 65,311 (244,457) 2,120,521
NON CORE SEGMENTS

CORE SEGMENTS

	FuNDS TOTAL MANAGE- PROPERTY CORE uNALLO- PROPERTY MENT VENTuRES SEGMENTS CATED AHF ASF ADIFII AMSHT ELIMINATIONS CONSOLIDATED YEAR ENDED 30 JuNE 2011 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000	current liabilities Trade and other payables 4,106 5,955 3,403 13,464 - 6,534 7,474 2,669 610 (242) 30,509 Interest-bearing loans and borrowings - - - - 13,450 - - - 33,916 - 47,366 Income tax payable - - - - - - 424 142 - - 566 Other 411 198 113 722 2,289 556 - - - - 3,567	total current liabilities 4,517 6,153 3,516 14,186 15,739 7,090 7,898 2,811 34,526 (242) 82,008	Non-current liabilities Trade and other payables 3,567 - 10,008 13,575 - - - - - - 13,575 Interest-bearing loans and borrowings - - - - 433,115 162,944 209,658 186,337 20,757 (220,943) 791,868 Derivatives at fair value - - - - 17,360 6,024 931 3,359 970 - 28,644 Deferred tax liabilities - - - - - 331 3,991 4,478 - - 8,800 Other fnancial liabilities - 10,000 - 10,000 - - - - - 39,902 49,902 Other 3,770 366 210 4,346 - 968 - - - - 5,314	total non-current liabilities 7,337 10,366 10,218 27,921 450,475 170,267 214,580 194,174 21,727 (181,041) 898,103		total liabilities 11,854 16,519 13,734 42,107 466,214 177,357 222,478 196,985 56,253 (181,283) 980,111		Net assets 988,304 208,475 256,285 1,453,064 (359,749) (6,166) 116,025 (8,648) 9,058 (63,174) 1,140,410
NON CORE SEGMENTS

CORE SEGMENTS

notes to the financial statements

30 June 2012

6. reVeNUe
	2012	2011
	$’000	$’000
(a) Finance income
Interest and fee income on secured loans	15,635	20,423
Sale of joint venture proft share rights	11,000	-
Bank interest	2,362	2,146
total fnance income	28,997	22,569
(b) Funds Management income
Asset / property management fees	3,002	1,619
Interest on loans to funds management entities	3,507	2,931
total funds management income	6,509	4,550
(c) Net change in fair value of investments and fnancial instruments
derecognised
Net change in fair value of fnancial instruments derecognised	(50)	3,770
Net change in fair value of other investments derecognised	(82)	991
total net change in fair value of investments and fnancial instruments derecognised	(132)	4,761

abacus property group

==> picture [115 x 63] intentionally omitted <==

7. eXPeNSeS
	2012	2011
	$’000	$’000
(a) Depreciation, amortisation and impairment expense
Depreciation of property, plant and equipment	4,701	5,351
Net loss on property, plant and equipment remeasured at fair value	688	1,028
Amortisation of software	27	23
Impairment of intangible assets	12	-
Amortisation - leasingcosts	2,372	1,780
total depreciation,amortisation and impairment expense	7,800	8,182
(b) Net change in fair value of investments held at balance date
Net change in fair value of property securities held at balance date	280	86
Net change in fair value of options held at balance date	(503)	15,593
Net change in fair value of other investments held at balance date	1,467	-
total change in fair value of investments held at balance date	1,244	15,679
(c) Finance costs
Interest on loans	66,229	61,495
Amortisation of fnance costs	4,756	5,383
Finance costs incurred in the merger with Abacus Storage Fund	2,058	-
total fnance costs	73,043	66,878
(d) Administrative and other expenses
Wages and salaries	11,363	11,630
Contributions to defned contribution plans	753	1,012
Other expenses	14,202	15,044
total administrative and other expenses	26,318	27,686

notes to the financial statements

30 June 2012

8. iNcoMe tAX

8. iNcoMe tAX
	2012	2011
	$’000	$’000
(a) income tax expense
The major components of income tax expense are:
income Statement
Current income tax
Current income tax charge	1,831	3,130
Adjustments in respect of current income tax of previous years	(123)	(1,061)
Deferred income tax
Movement in depreciable assets tax depreciation	201	(187)
Relatingto origination and reversal of temporarydifferences	565	1,585
income tax expense /(beneft)reported in the income statement	2,474	3,467

(b) Numerical reconciliation between aggregate tax expense recognised in the income statement and tax expense calculated per the statutory income tax rate

A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the Group’s applicable income tax rate is as follows:

Proft before income tax expense	10,500	54,668
Prima facie income tax expense calculated at 30%	2,743	16,400
Prima facie income tax expense calculated at 28%	380	-
Lessprima facie income tax expense onproft from Trusts	(1,541)	(12,595)
Prima facie income tax of entities subject to income tax	1,582	3,805
Entertainment	21	18
Foreign exchange translation adjustments	(51)	-
Impairment of property, plant and equipment	-	311
Adjustment of prior year tax applied	(123)	(1,061)
Derecognition of deferred tax assets	857	(69)
Other items (net)	188	463

income tax expense	2,474	3,467

income tax expense reported in the consolidated income statement	2,474	3,467

The Group has capital tax losses for which no deferred tax asset is recognised on the balance sheet of gross $6.82 million (2011: $6.46 million), which are available indefinitely for offset against future gains subject to continuing to meet relevant statutory tests.

abacus property group

==> picture [115 x 63] intentionally omitted <==

8. iNcoMe tAX (coNtiNUeD)
	2012	2011
	$’000	$’000
(c) recognised deferred tax assets and liabilities
Deferred income tax at 30 June 2012 relates to the following:
Deferred tax liabilities
Revaluation of investment properties at fair value	7,317	6,506
Revaluation of fnancial instruments at fair value	2,123	1,972
Revaulation of property, plant and equipment	229	-
Reset of tax cost bases	1,048	1,048
Other	871	1,052
Gross deferred income tax liabilities	11,588	10,578
Set off of deferred tax assets	(1,405)	(1,778)
Net deferred income tax liabilities	10,183	8,800
Deferred tax assets
Revaluation of fnancial instruments at fair value	5,355	4,773
Provisions - other	5,387	5,543
Provisions - employee entitlements	1,028	941
Losses available for offset against future taxable income	5,791	6,066
Other	164	426
Gross deferred income tax assets	17,725	17,749
Set off of deferred tax assets	(1,405)	(1,771)
Net deferred income tax assets	16,320	15,978

Unrecognised temporary differences

At 30 June 2012, the Group has unrecognised deferred tax assets on capital account in relation to the fair value of investments ($0.9 million gross) and fair value of investment properties ($3.8 million gross) (2011: $6.0 million).

tax consolidation

AGHL and its 100% owned Australian resident subsidiaries, ASOL and its 100% owned Australian resident subsidiaries and AHL and its 100% owned Australian resident subsidiaries have formed separate tax consolidated groups. AGHL, ASOL and AHL are the head entity of their respective tax consolidated groups. The head entity and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The current and deferred tax amounts are measured in a manner that is consistent with the broad principles in AASB 112 Income Taxes. The nature of the tax funding agreement is discussed further below.

Nature of the tax funding agreement

Members of the respective tax consolidated groups have entered into tax funding agreements. The tax funding agreements require payments to/from the head entity to be recognised via an inter-entity receivable (payable) which is at call. To the extent that there is a difference between the amount allocated under the tax funding agreement and the allocation under uIG 1052, the head entity accounts for these as equity transactions.

The amounts receivable or payable under the tax funding agreements are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments.

30 June 2012

notes to the financial statements

9. DiStriBUtioNS PAiD AND ProPoSeD
	2012	2011
ABPGROuP	$’000	$’000
(a) Distributions paid during the year
June 2011 half: 8.25 cents per stapled security (2010: 8.25 cents)	31,217	29,842
December 2011 half: 8.25 centsper stapled security (2010: 8.25 cents)	31,963	30,592
	63,180	60,434
(b) Distributions proposed and not recognised as a liability*
June 2012 half: 8.25 centsper stapled security (2011: 8.25 cents)	35,886	31,225

Distributions were paid from Abacus Trust and Abacus Income Trust (which do not pay tax provided they distribute all their taxable income) hence, there were no franking credits attached. *The final distribution of 8.25 cents per stapled security was declared on 2 July 2012. The distribution being paid on or about 15 August 2012 will be approximately $35.9 million. No provision for the distribution has been recognised in the balance sheet at 30 June 2012 as the distribution had not been declared by the end of the year.

	2012	2011
ABACuSHOSPITALITY FuND	$’000	$’000
(a) Distributions paid during the year
June 2011 quarter: 1.125 cents per security (2010: 2.0625 cents)	551	1,011
September 2011 quarter: 1.125 cents per security (2010: 2.0625 cents)	551	1,011
December 2011 quarter: 1.125 cents per security (2010: 2.625 cents)	551	1,011
March 2012quarter: 1.125 centsper security (2011: 1.125 cents)	551	553
	2,204	3,586
(b) Distributions proposed and recognised as a liability
June 2012quarter: 1.125 centsper stapled security (2011: 1.125 cents)	551	533

	2012	2011
ABACuS STORAGE FuND(PRE MERGER)	$’000	$’000
(a) Distributions paid during the year
June 2011 quarter: 2.1875 cents per security (2010: 2.1875 cents)	1,909	1,907
September 2011 quarter: 2.1875 cents per security (2010: 2.1875 cents)	1,910	1,907
December 2011 quarter: 2.1875 cents per security (2010: 2.1875 cents)	1,910	1,908
March 2012quarter: Nil(2011: 2.1875 cents)	-	1,909
	5,729	7,631
(b) Distributions proposed and recognised as a liability
June 2012quarter: Nil(2011: 2.1875 cents)	-	1,909
(c) Dividends paid during the year
February2012: 8.7 centsper share*(2011: Nil)	6,080	-

A merger capital distribution of 5.3 cents was also paid by Abacus Storage Property Trust.

abacus property group

==> picture [115 x 63] intentionally omitted <==

9. DiStriBUtioNS PAiD AND ProPoSeD (coNtiNUeD)

9. DiStriBUtioNS PAiD AND ProPoSeD (coNtiNUeD)
	2012	2010
ABACuSDIVERSIFIED INCOME FuND II	$’000	$’000
(a) Distributions paid during the year
Final distributions for fnancial year 30 June 2011: rate as per unit class
Class A units 2.125 cents per unit (2010: 2.125 cents)	233	654
Class B units 2.250 cents per unit (2010: 2.125 cents)	562	110
Class C units 1.668 centsper unit(2010: 1.500 cents)	268	9
	1,063	773
September 2011: rate as per unit class
Class A units 0.75 cents per unit (2010: 2.125 cents)	80	650
Class B units 2.331 cents per unit (2010: 2.125 cents)	590	113
Class C units 1.748 cents per unit (2010: 1.545 cents)	374	54
December 2011: rate as per unit class
Class A units 0.75 cents per unit (2010: 2.125 cents)	80	650
Class B units 2.331 cents per unit (2010: 2.125 cents)	590	113
Class C units 1.748 cents per unit (2010: 1.545 cents)	374	54
March 2012: rate as per unit class
Class A units 0.75 cents per unit (2011: 2.125 cents)	80	338
Class B units 2.331 cents per unit (2011: 2.250 cents)	590	447
Class C units 1.748 centsper unit(2011: 1.688 cents)	469	186
	3,287	2,662

(b) Distributions proposed and recognised as a liability
Final distribution payable for the June 2012 quarter: rate as per unit class
Class A units 0.75 cents per unit (2011: 2.125 cents)	80	235
Class B units 2.331 cents per unit (2011: 2.250 cents)	590	564
Class C units 1.748 centsper unit(2011: 1.688 cents)	469	269
	1,139	1,068

	2012	2010
ABACuS MILLER STREET HOLDING TRuST	$’000	$’000
(a) Distributions paid during the year
September 2011 quarter: 1.125 cents per unit (2010: Nil)	214	-
December 2011 quarter: 1.125 cents per unit (2010: Nil)	214	-
March 2012quarter: 1.125 centsper unit(2011: Nil)	214	-
	642	-
(b) Distributions proposed and recognised as a liability
June 2012quarter: 1.125 centsper unit(2011: Nil)	214	-

30 June 2012

notes to the financial statements

9. DiStriBUtioNS PAiD AND ProPoSeD (coNtiNUeD)

9. DiStriBUtioNS PAiD AND ProPoSeD (coNtiNUeD)
	2012	2011
	$’000	$’000
(c) Franking credit balance
The amount of franking credits available for the subsequent fnancial year are:
Franking account balance as at the beginning of the fnancial year at 30% (2011: 30%)	10,396	10,396
Merger of Abacus Storage Operations Limited	1,693	-
	12,089	10,396
10. eArNiNGS Per StAPLeD SecUrity
	2012	2011
	$’000	$’000
Basic and diluted earnings per stapled security (cents)	2.11	7.68
reconciliation of earnings used in calculating earnings
per stapled security
Basic and diluted earnings per stapled security
Netproft	8,470	28,587
Weighted average number of shares:
Weighted average number of stapled securities for basic earningsper security	400,921	372,327

abacus property group

==> picture [115 x 63] intentionally omitted <==

11. CASH AND CASH EQUIVALENTS

2012	2011
$’000	$’000

	2012 $’000	2011 $’000
reconciliation to cash Flow Statement
For the purposes of the Cash Flow Statement, cash and
cash equivalents comprise the following at 30 June 2012:
Cash at bank and in hand(i)	54,129	64,648
(i) Cash at bank earns interest at foating rates. The carrying amounts of cash and cash equivalents represent fair value.
(a) reconciliation of net proft after tax to net cash fows from operations
Net proft	8,026	51,541
Adjustments for:
Depreciation and amortisation of non-current assets	7,800	8,182
Provision for doubtful debts	348	5,000
Diminution of inventory	1,500	-
Restructuring charge - related parties	3,507	-
Net change in fair value of derivatives	54,315	1,825
Net change in fair value of investment properties held at balance date	2,235	(8,096)
Net change in fair value of investments held at balance date	1,244	15,679
Net change in fair value of investment properties derecognised	(9,456)	(1,955)
Net change in fair value of investments and fnancial instruments derecognised	(132)	(4,761)
Increase/(decrease) in payables	(2,518)	50,843
Decrease/(increase) in receivables and other assets	19,381	27,901
Net cash from operatingactivities	86,250	146,159

(b) Disclosure of financing facilities

Refer to note 20d.

(c) Disclosure of non-cash financing activities

Non-cash financing activities include capital raised pursuant to APG’s distribution reinvestment plan. During the year 18.9 million stapled securities were issued with a cash equivalent of $36.2 million.

notes to the financial statements

30 June 2012

12. trADe AND otHer receiVABLeS

12. trADe AND otHer receiVABLeS
	2012	2011
	$’000	$’000
(a) current
Trade debtors	935	3,471
Other debtors	13,549	13,129
Gross receivables	14,484	16,600
Lessprovision for doubtful debts	(2,566)	(1,017)
Net current receivables	11,918	15,584
(b) Non-current
Other debtors	6,212	6,000
Non-current receivables	6,212	6,000
13. ProPerty LoANS AND otHer FiNANciAL ASSetS
	2012	2011
	$’000	$’000
(a) current property loans
Secured loans - amortised cost(i)	17,713	17,794
Interest receivable on secured loans - amortised cost	1,385	1,530
	19,098	19,324
(b) current other fnancial assets
Investments in securities - listed - fair value	168	959
Other fnancial assets - fair value(ii)	7,885	-
	8,053	959
(c) Non-current property loans
Secured loans - amortised cost(i)	137,938	129,797
Interest receivable on secured loans - amortised cost	16,820	24,096
	154,758	153,893
(d) Non-current other fnancial assets
Investments in securities - unlisted - fair value	4,489	4,796
Other fnancial assets - fair value(ii)	20,000	27,381
	24,489	32,177

(i) Mortgages are secured by real property assets. The current facilities are scheduled to mature and are expected to be realised on or before 30 June 2013 and the non-current facilities will mature between 1 July 2013 and 24 December 2018. An amount of $33.1 million (30 June 2011: $31.8 million) is a loan to Abacus Wodonga Land Fund, a related party.

(ii) Abacus enters into loans and receivables with associated options that provide for a variety of outcomes including repayment of principal and interest, satisfaction through obtaining interests in equity or property or combinations thereof. At the end of the period, the maximum exposure to credit risk in relation to these instruments was $27.9 million (30 June 2011 $27.4 million).

abacus property group

==> picture [115 x 63] intentionally omitted <==

14. ProPerty, PLANt AND eQUiPMeNt

14. ProPerty, PLANt AND eQUiPMeNt
	2012	2011
	$’000	$’000
Land and buildings
At 1 July, net of accumulated depreciation	144,999	161,709
Additions	205	561
Disposals	(13,663)	(9,688)
Revaluations	7,452	(3,275)
Effect of movements in foreign exchange	444	(2,034)
Depreciation charge for theyear	(1,025)	(2,274)
At 30 June,net of accumulated depreciation	138,412	144,999
Fair value	150,653	156,237
Accumulated depreciation	(12,241)	(11,238)
Net carryingamount at end ofyear	138,412	144,999
Plant and equipment
At 1 July, net of accumulated depreciation	18,239	18,471
Additions	1,371	3,129
Disposals	(298)	(108)
Effect of movements in foreign exchange	47	(154)
Depreciation charge for theyear	(3,706)	(3,099)
At 30 June,net of accumulated depreciation	15,653	18,239
Fair value	36,689	35,970
Accumulated depreciation	(21,036)	(17,731)
Net carryingamount at end ofyear	15,653	18,239

total	154,065	163,238
Property, plant and equipment
Hotel properties(1)	152,155	149,330
Budget lodge / hostel accommodation	-	12,028
Storage properties	1,823	1,747
Offce equipment / furniture and fttings	87	133
totalproperty, plant and equipment	154,065	163,238

(1)Includes pub properties but excludes the value of licences that are accounted for separately as intangibles.

The property, plant and equipment 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, latest independent update or directors’ valuation. Total acquisition costs include incidental costs of acquisition such as property taxes on acquisition, legal and professional fees and other acquisition related costs.

The key underlying assumptions, on a portfolio basis, contained within the independent and directors’ valuations above for the Hotel properties are as follows:

A weighted average capitalisation rate for the hotel properties is 9.33% (2011: 8.90%)
The current weighted average occupancy rate for the hotel properties is 72% (2011: 71.3%)

The independent and directors’ valuations are based on common valuation methodologies including capitalisation and discounted cash flow approaches, which have regard to recent market sales evidence. Accordingly, the directors’ valuations at 30 June 2012 have regards to market sales evidence in adopting a market valuation for each property including the key assumptions outlined.

notes to the financial statements

30 June 2012

15. iNVeNtory

15. iNVeNtory
	2012	2011
	$’000	$’000
(a) current
Hotel supplies	479	600
Projects
-purchase consideration	26,000	22,782
	26,479	23,382
(b) Non-current
Projects
- purchase consideration	81,246	44,048
- development costs	11,821	6,842
- other costs (including fnance costs)	9,407	6,705
- diminution	(1,500)	-
	100,974	57,595

total inventories	127,453	80,977

Inventories are held at the lower of cost and net realisable value.

Other costs as described in note 2(z).

abacus property group

==> picture [115 x 63] intentionally omitted <==

16. iNVeStMeNt ProPertieS

16. iNVeStMeNt ProPertieS
	2012	2011
	$’000	$’000
investment properties held for sale
Retail	23,801	62,769
Commercial	144,550	-
Industrial	9,220	26,840
Other	13,250	1,522
total investmentproperties held for sale	190,821	91,131
investment properties
Retail	296,507	285,686
Commercial	310,395	497,143
Industrial	198,740	177,019
Storage	357,761	347,983
Other	17,800	30,299
total investmentproperties	1,181,203	1,338,130

total investmentproperties includingheld for sale	1,372,024	1,429,261

The current investment properties represent 11 properties which are either subject to a sales contract or an active sales campaign. All properties are expected to be sold by 30 June 2013.

reconciliation

A reconciliation of the carrying amount of investment properties excluding properties held for sale at the beginning and end of the year is as follows:

	2012	2011
	$’000	$’000
Carrying amount at beginning of the fnancial year	1,338,130	1,194,459
Straight lining rental assets	(167)	(147)
Additions and capital expenditure	35,152	213,959
Fair value adjustments for properties held at balance date	(2,263)	9,678
Disposals	(61,636)	(15,970)
Effect of movements in foreign exchange	368	(3,229)
Properties transferred to held for sale	(158,621)	(28,746)
Transfers	30,240	(31,874)
carryingamount at end of the fnancialyear	1,181,203	1,338,130

30 June 2012

notes to the financial statements

16. iNVeStMeNt ProPertieS (coNtiNUeD)

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, latest independent update or directors’ valuation. Total acquisition costs include incidental costs of acquisition such as property taxes on acquisition, legal and professional fees and other acquisition related costs.

Reflecting the stabilisation of market values, the Directors during the year approved a revised valuation policy for the Group that requires all assets to be independently valued at least every two years (previously annually). The key underlying assumptions, on a portfolio basis, contained within the independent and director valuations above are as follows:

Abacus Property Group*

A weighted average capitalisation rate for each category is as follows;
Group – 8.69% (30 June 2011: 8.50%)
Retail – 8.18% (30 June 2011: 8.07%)
Commercial – 8.38% (30 June 2011: 8.56%)
Industrial – 9.78% (30 June 2011: 9.41%)
Storage – 9.18% (30 June 2011: 9.2%)
Other – 8.75% (30 June 2011: 8.76%)
The current occupancy rate for the principal portfolio excluding development and self-storage assets is 94.3% (30 June 2011: 92.8%). The current occupancy rate for self-storage assets is 82.1%.
A weighted average rent review for the 12 months to 30 June 2012 of 3.7% (30 June 2011: 3.0%).

During the year ended 30 June 2012, 62% of the number of properties in the portfolio was subject to external valuations, the remaining 38% was subject to internal valuation.

Abacus Diversified income Fund ii

A weighted average capitalisation rate for each category is as follows;
Commercial – 9.34% (30 June 2011: 9.27%)
Industrial – 8.86% (30 June 2011: 8.75%)
The current occupancy rate for the portfolio is 97% (30 June 2011: 94%)
A weighted average rent review for the 12 months to 30 June 2012 of 4.08% (30 June 2011: 3.74%)

During the year ended 30 June 2012, 52% of the number of properties portfolio was subject to external valuations, the remaining 48% was subject to internal valuation.

Abacus Miller Street Holding trust

A capitalisation rate of 8.75% (30 June 2011: 8.25%)
The current occupancy rate of the property is 98% (30 June 2011: 98%) which is not expected to materially change during the period relevant to the valuation based on a conservative 50% tenant retention rate
A weighted average rent review for the 12 months to 30 June 2012 of 4.0% (30 June 2011: 4.0%)

The property was internally valued as at 30 June 2012.

The independent and director valuations are based on common valuation methodologies including capitalisation and discounted cash flow approaches, which have regard to recent market sales evidence. Accordingly, the directors’ valuations at 30 June 2012 have regard to market sales evidence in adopting a market valuation for each property including the key assumptions outlined.

The majority of the investment properties are used as security for secured bank debt.

*Excludes Abacus Hospitality Fund, Abacus Diversified Income Fund II and Abacus Miller Street Holding Trust.

abacus property group

==> picture [115 x 63] intentionally omitted <==

17. iNVeStMeNtS AccoUNteD For USiNG tHe eQUity MetHoD

		2012	2011
	NOTES	$’000	$’000
Investment in associates	17(i)	-	-
Investment injoint ventures	17(ii)	121,833	99,195
		121,833	99,195

(a) Details of Associates and Joint Ventures

(i) Associates

(i) Associates
		OWNERSHIP	INTEREST	CARRYING VALuE
		30 JuN 2012	30 JuN 2011	30 JuN 2012	30 JuN 2011
	PRINCIPAL ACTIVITY	%	%	$’000	$’000
Abacus Wodonga Land Fund(1)	Land subdivision	15	15	-	-
				-	-

(ii) Joint Ventures

(ii) Joint Ventures
		OWNERSHIP	INTEREST		CARRYING VALuE
		JuN 2012	JuN 2011	JuN 2012	JuN 2011
	PRINCIPAL ACTIVITY	%	%	$’000	$’000
309 George St JV Trust	Property investment	25	-	11,478	-
Abacus Aspley Village Trust	Property investment	33	33	10,459	9,944
Abacus Rosebery Property Trust	Property development	50	50	1,284	1,900
Abwill 350 George St Trust	Property development	50	50	6,842	6,862
Australian Aggregation Head Trust	Property investment	25	25	14,241	4,962
Birkenhead Point Marina Pty Ltd(2)	Marina operator	50	50	583	248
Fordtrans Pty Ltd (Virginia Park)	Property investment	50	50	60,412	57,524
Hampton Residential Retirement Trust	Property development	50	50	4,519	4,657
Jigsaw Trust	Childcare operator	50	50	9,784	9,013
Pakenham Valley unit Trust	Land subdivision	50	50	21	150
The Abacus Colemans Road Trust	Property development	50	50	1,672	1,717
The Mount Druitt unit Trust	Property investment	50	50	538	452
The Tulipunit Trust	Propertydevelopment	50	50	-	1,766
				121,833	99,195

(1) Abacus Funds Management Limited acts as the Responsible Entity of the Fund

(2) Operates the marina adjacent to the Birkenhead Point Shopping Centre in Drummoyne NSW.

(iii) related Parties

There were no impairment losses or contingent liabilities relating to the investment in the associates and joint ventures other than the debt forgiveness on the loan facility owed by Abacus Wodonga Land Fund ($3.5 million). The Group also incurred non-recurring costs of $2.1 million as a result of the merger with ASF.

notes to the financial statements

30 June 2012

17. iNVeStMeNtS AccoUNteD For USiNG tHe eQUity MetHoD (coNtiNUeD)

(b) extract from associates and joint ventures’ profit & loss statements

	2012	2011
	$’000	$’000
Revenue	73,781	144,051
Expenses	(56,880)	(162,581)
Netproft /(loss)	16,901	(18,530)
Share of netproft / (loss)	7,379	(6,021)

	2012	2011
	$’000	$’000
Current assets	48,492	42,662
Non-current assets	524,846	387,664
	573,338	430,326
Current liabilities	(18,485)	(29,872)
Non-current liabilities	(239,282)	(160,286)
	(257,767)	(190,158)
Net assets	315,571	240,168
Share of net assets	121,833	99,195

Material investments in joint ventures follows.

Fordtrans Pty Ltd (Virginia Park) (“VP”)

The Group has a 50% interest in the ownership and voting rights of Fordtrans Pty Ltd. VP’s principal place of business is in Bentleigh East, Victoria.

VP owns a sizeable Business Park providing a mixture of industrial and office buildings as well as supporting facilities including gymnasium, swim centre, child care centre, children’s play centre, cafe, yoga centre and martial arts centre. The site has recently been enhanced following the purchase of a neighbouring site by the Group that offers expansion potential and residential opportunity.

The Group jointly controls the venture with the other partner under the terms of unitholders Agreement and requires unanimous consent for all major decisions over the relevant activities.

The Group’s share of income (including distributions) for the year ended 30 June 2012 was $4.54 million (30 June 2011: $4.08 million).

abacus property group

==> picture [115 x 63] intentionally omitted <==

17. iNVeStMeNtS AccoUNteD For USiNG tHe eQUity MetHoD (coNtiNUeD)

Fordtrans Pty Ltd (Virginia Park) (“VP”) (continued) Summarised Financial information

Summarised financial information in respect of VP is as follows:

Fordtrans Pty Ltd (Virginia Park) (“VP”) (continued) Summarised Financial information Summarised fnancial information in respect of VP is as follows:
	2012	2011
	$’000	$’000
Cash and cash equivalents	1,134	865
Other current assets	11,233	6,705
total current assets	12,367	7,570
total non-current assets	176,286	186,506
other current liabilities	188,653	194,076
Other current liabilities	3,377	1,149
total current liabilities	3,377	1,149
Non-current fnancial liabilties	64,389	64,389
total non-current liabilities	64,389	64,389
total liabilities	67,766	65,538
Net assets	120,887	128,538

Summarised Steatement of comprehensive income

Summarised Steatement of comprehensive income
	2012	2011
	$’000	$’000
Revenue	15,559	14,767
Interest income	2,416	2,903
Interest expense	(4,026)	(4,281)
Proft before tax	8,853	7,297
Income tax expense	-	-
total comprehensive income	8,853	7,297

30 June 2012

notes to the financial statements

18. iNtANGiBLe ASSetS AND GooDWiLL

18. iNtANGiBLe ASSetS AND GooDWiLL
	2012	2011
	$’000	$’000
Goodwill
Balance at 1 July	32,461	32,461
Balance at 30 June	32,461	32,461
Licences and entitlements
At 1 July, net of accumulated amortisation	2,712	2,712
Disposal	(1,700)	-
Impairment	(12)	-
At 30 June,net of accumulated amortisation	1,000	2,712

totalgoodwill and intangibles	33,461	35,173

Description of the Group’s intangible assets and goodwill

Goodwill

After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not amortised but is subject to impairment testing on an annual basis or whenever there is an indication of impairment.

Licences and entitlements

Licences and entitlements represent intangible assets acquired through the acquisition of certain hotel assets. Licences and entitlements essentially relate to gaming and liquor licence rights attaching to the hotel assets. These intangible assets have been determined to have indefinite useful lives and the cost model is utilised for their measurement. These licences and entitlements have been granted for an indefinite period by the relevant government department. This supports the Group’s assertion that these assets have an indefinite useful life. As these licences and entitlements are an integral part of owning a hotel asset, they are subjected to impairment testing on an annual basis or whenever there is an indication of impairment as part of the annual property valuation and review process of the hotels as a going concern.

impairment tests for goodwill and intangibles with indefinite useful lives

(i) Description of the cash generating units and the other relevant information

Goodwill acquired through business combinations and management rights, licences and entitlements have been allocated to two individual cash generating units, each of which is a reportable segment, for impairment testing as follows:

Funds Management - property / asset management business
Property - or specifically the hotel assets

Funds Management

The recoverable amount of the Funds Management unit has been determined based on a value in use calculation using cash flow projections as at 30 June 2012 covering a five-year period.

A post tax discount rate of 9.49% (2011: 9.49%) and a terminal growth rate of 3% (2011: 3%) has been applied to the cash flow projections.

Property

The recoverable amount of the indefinite life intangible assets have been determined based on the independent and directors’ valuations of the hotels on a going concern basis. Common valuation methodologies including capitalisation and discounted cash flow approaches are used, with assumptions referenced to recent market sales evidence. Accordingly, the directors’ valuations at 30 June 2012 have regards to market sales evidence in adopting a market valuation for each property including the key assumptions outlined.

abacus property group

==> picture [115 x 63] intentionally omitted <==

18. iNtANGiBLe ASSetS AND GooDWiLL (coNtiNUeD)

impairment tests for goodwill and intangibles with indefinite useful lives

(ii) carrying amounts of goodwill, management rights, licences and entitlements allocated to each of the cash generating units

The carrying amounts of goodwill, management rights, licences and entitlements are allocated to Funds Management and Property as follows:

and Property as follows:
	FuNDS MANAGEMENT			PROPERTY		TOTAL
	2012	2011	2012	2011	2012	2011
	$’000	$’000	$’000	$’000	$’000	$’000
Goodwill	32,394	32,394	67	67	32,461	32,461
Management rights, licences and entitlements	-	-	1,000	2,712	1,000	2,712

(iii) Key assumptions used in valuation calculations

Funds Management Goodwill

The calculation of value in use is most sensitive to the following assumptions:

a. Fee income
b. Discount rates
c. Property values of the funds/properties under management

Fee income – fee income is based on actual income in the year preceding the start of the budget period and actual funds under management.

(iii) Key assumptions used in valuation calculations (continued)

Discount rates – discount rates reflect management’s estimate of the time value of money and the risks specific to each unit that are not reflected in the cash flows.

Property values – property values are based on the fair value of properties which are valued annually by independent valuers.

Hotel intangible Assets

The calculation of the hotel valuations is most sensitive to the following assumptions:

a. Hotel income
b. Discount rates and capitalisation rates with reference to market sales evidence
c. Other value adding or potential attributes of the hotel asset

Hotel income – hotel income is based on actual income in the year preceding the start of the budget period, adjusted based on industry norms for valuation purposes.

Discount rates and capitalisation rates – these rates reflect the independent valuers’ and management’s estimate of the time value of money and the risks specific to each unit that are not reflected in the cash flows, with reference to recent market sales evidence. The weighted average capitalisation rate used for the two hotel valuations at June 2012 was 12.5% (2011: 11.65%).

Other value adding or potential attributes – unique features of individual hotel assets that will add or have the potential to add value to the property in determining the total fair value of the hotel.

(iv) Sensitivity to changes in assumptions

Significant and prolonged property value falls and market influences which could increase discount rates could cause goodwill to be impaired in the future, however, the goodwill valuation as at 30 June 2012 has significant head room thus changes in the assumptions such as discount rate and revenue assumptions would not cause any significant impairment.

Intangibles have been impaired on the basis that they now represent recoverable amount. A decrease in hotel income or increase in discount rate have already been taken into consideration in the sensitivity of market factors as part of the external valuation.

notes to the financial statements

30 June 2012

19. trADe AND otHer PAyABLeS

19. trADe AND otHer PAyABLeS
	2012	2011
	$’000	$’000
(a) current
Trade creditors	962	3,308
Other creditors	13,028	17,556
Rental guarantee	900	900
Goods and services tax	6,907	2,009
Accrued expenses	8,629	6,736
	30,426	30,509
(b) Non-current
unearned revenue	10,125	10,008
Rentalguarantee	2,600	3,567
	12,725	13,575

abacus property group

==> picture [115 x 63] intentionally omitted <==

20. iNtereSt BeAriNG LoANS AND BorroWiNGS

20. iNtereSt BeAriNG LoANS AND BorroWiNGS
	2012	2011
	$’000	$’000
Abacus Property Group*
current
Bank loans - A$	29,950	13,450
	29,950	13,450
Abacus Miller Street Holding trust
current
Bank loans - A$	-	34,000
Less: unamortised borrowingcosts	-	(84)
	-	33,916

(a)total current	29,950	47,366
Abacus Property Group*
Non-current
Bank loans - A$	484,484	546,002
Other loans - A$	29,354	18,680
Bank loans - A$ value of NZ$ denominated loan	53,038	52,301
Less: unamortised borrowingcosts	(6,546)	(7,790)
	560,330	609,193
Abacus Hospitality Fund
Non-current
Bank loans - A$	49,240	49,240
Bank loans - A$ value of NZ$ denominated loan	20,020	19,739
Loans from other parties	25,267	23,339
Less: unamortised borrowingcosts	(469)	(606)
	94,058	91,712
Abacus Diversifed income Fund ii
Non-current
Bank loans - A$	84,319	91,718
Less: unamortised borrowingcosts	(427)	(755)
	83,892	90,963
Abacus Miller Street Holding trust
Non-current
Bank loans - A$	34,000	-
Less: unamortised borrowingcosts	(20)	-
	33,980	-

(b)total non-current	772,260	791,868
(c) Maturity profle of current and non-current interest bearing loans
Due within one year	29,950	47,450
Due between one and fve years	779,722	742,072
Due after fveyears	-	58,947
	809,672	848,469

*Excludes Abacus Hospitality Fund, Abacus Diversified Income Fund II and Abacus Miller Street Holding Trust. The comparative balances include amounts attributable to Abacus Storage Fund of $176.1 million.

30 June 2012

notes to the financial statements

20. iNtereSt BeAriNG LoANS AND BorroWiNGS (coNtiNUeD)

Abacus Property Group*

The Group maintains a range of interest-bearing loans and borrowings. The sources of funding are spread over a number of counterparties and the terms of the instruments are negotiated to achieve a balance between capital availability and cost of debt.

Bank loans are $A denominated and are provided by several banks at interest rates which are set periodically on a floating basis. The loans are denominated in $A and $NZ and the term to maturity varies from August 2012 to April 2016. The bank loans are secured by charges over the investment properties, certain inventory and certain property, plant and equipment.

Approximately 97% (2011: 58%) of bank debt drawn was subject to fixed rate hedges with a weighted average term to maturity of 3 years (2011: 4 years). At 30 June 2012, 25% of the 97% fixed rate hedge cover related to legacy ASF hedges. Hedge cover as a percentage of available facilities at 30 June 2012 is 69.7% (2011: 41.1%)**.

APG’s weighted average interest rate as at 30 June 2012 was 7.27% (2011: 7.81%). Line fees on undrawn facilities contributed to 0.40% of the weighted average interest rate at 30 June 2012 (2011: 0.87%). APG’s weighted average interest rate excluding the undrawn facilities line fees as at 30 June 2012 was 6.87% (2011: 6.94%**).

Excludes Abacus Hospitality Fund, Abacus Diversified Income Fund II and Abacus Miller Street Holding Trust.

** Excludes Abacus Storage Fund which merged with Abacus Property Group on 6 March 2012.

Abacus Hospitality Fund

AHF’s $A and $NZ bank facility was refinanced in June 2011 and matures in June 2014. The facility is secured by a charge over AHF’s hotel assets and at 30 June 2012 approximately 62.0% (2011: 67.9%) of drawn bank debt facilities were subject to fixed rate hedges with a weighted average term to maturity of 5.1 years (2011: 5.6 years).

AHF’s weighted average interest rate as at 30 June 2012 was 8.1% (2011: 6.0%). Line fees on undrawn facilities contributed to 0.18% of the weighted average interest rate at 30 June 2012 (2011: 0.02%). AHF’s weighted average interest rate excluding the undrawn facilities line fees as at 30 June 2012 was 7.9% (2011: 5.98%).

Abacus Diversified income Fund ii

ADIF II has financed its Australian investment property portfolio via two $A facilities provided by a two major Australian banks which mature in September 2013 and November 2014 respectively.

The facilities are secured by charges over ADIF II’s investment properties and at 30 June 2012 approximately 93.1% (2011: 85.6%) of drawn bank debt facilities were subject to fixed rate hedges with a weighted average term to maturity of 3.8 years (2011: 1.4 years).

ADIF II’s weighted average interest rate as at 30 June 2012 was 8.85% (2011: 8.93%). Line fees on undrawn facilities contributed to 0.20% of the weighted average interest rate at 30 June 2012 (2011: 0.10%). ADIF II’s weighted average interest rate excluding the undrawn facilities line fees as at 30 June 2012 was 8.65% (2011: 8.83%).

Abacus Miller Street Holding trust

The Miller Street investment property is financed by a major Australian bank secured against the Miller Street investment property. The facility expires September 2013. AMSHT has hedged 97.1% of its drawn debt (2011: 97.1%) and at reporting date AMSHT’s weighted average interest rate as at 30 June 2012 was 8.38% (2011: 8.60%). Line fees on undrawn facilities contributed to 0.02% of the weighted average interest rate at 30 June 2012 (2011: 0.00%). AMSHT’s weighted average interest rate excluding the undrawn facilities line fees as at 30 June 2012 was 8.36% (2011: 8.60%).

abacus property group

==> picture [115 x 63] intentionally omitted <==

20. iNtereSt BeAriNG LoANS AND BorroWiNGS (coNtiNUeD)

(d) Financing facilities available

At reporting date, the following financing facilities had been negotiated and were available:

	2012	2011
	$’000	$’000
Abacus Property Group
Total facilities - bank loans	789,950	797,907
Facilities used at reportingdate - bank loans	(567,472)	(611,745)
Facilities unused at reportingdate - bank loans	222,478	186,162
Abacus Hospitality Fund
Total facilities - bank loans	78,646	78,261
Facilities used at reportingdate - bank loans	(69,260)	(68,979)
Facilities unused at reportingdate - bank loans	9,386	9,282
Abacus Diversifed income Fund ii
Total facilities - bank loans	104,577	104,577
Facilities used at reportingdate - bank loans	(84,319)	(91,719)
Facilities unused at reportingdate - bank loans	20,258	12,858
Abacus Miller Street Holding trust
Total facilities - bank loans	35,000	34,000
Facilities used at reportingdate - bank loans	(34,000)	(34,000)
Facilities unused at reportingdate - bank loans	1,000	-

30 June 2012

notes to the financial statements

20. iNtereSt BeAriNG LoANS AND BorroWiNGS (coNtiNUeD)

(e) Assets pledged as security

The carrying amounts of assets pledged as security for current and non-current interest bearing liabilities are:

	2012	2011
	$’000	$’000
current
First mortgage
Investmentproperties held for sale	190,821	91,131
total current assetspledged as security	190,821	91,131
Non-current
First mortgage
Freehold land and buildings	5,609	19,325
Property, plant and equipment	148,456	143,897
Inventory	54,663	80,378
Investmentproperties	1,173,163	1,338,130
total non-current assetspledged as security	1,381,891	1,581,730

total assetspledged as security	1,572,712	1,672,861

(f) Defaults and breaches

During the current and prior years, there were no defaults or breaches on any of the loans.

abacus property group

==> picture [115 x 63] intentionally omitted <==

21. PAreNt eNtity FiNANciAL iNForMAtioN

21. PAreNt eNtity FiNANciAL iNForMAtioN
	2012	2011
	$’000	$’000
results of the parent entity
Proft / (loss) for the year*	(72,912)	(1,163)
Other comprehensive income	-	-
total comprehensive income /(expense)for theyear	(72,912)	(1,163)
Financial position of the parent entity at year end
Current assets	21,808	14,381
total assets	155,723	176,138
Current liabilities	11,884	2,519
total liabilities	35,539	88,970
Net assets	120,184	87,168
total equity of the parent entity comprising of
Issued capital	160,673	54,745
Retained earnings	(45,937)	26,975
Employee options reserve	5,448	5,448
total equity	120,184	87,168

*Includes diminution of subsidiary of $98 million in 2012 which is eliminated in the consolidation of the Group’s results.

Parent entity contingencies

The parent entity has entered into the following agreement as at 30 June 2011 which is current as at 30 June 2012:

Provide a corporate guarantee to the Bank to increase the amount of drawn funds available and to guarantee the payment of interest on a tranche. The maximum liability is approximately $6.8 million (2011: $4 million). No property security has been provided by the parent.

Parent entity capital commitments

There are no capital commitments of the parent entity as at 30 June 2012 (2011: Nil).

30 June 2012

notes to the financial statements

22. FiNANciAL iNStrUMeNtS

(i) credit risk

credit risk exposures

The Group’s maximum exposure to credit risk at the reporting date was:

	CARRYING	AMOuNT
	2012	2011
	$’000	$’000
Receivables	18,130	21,583
Secured property loans	173,856	173,217
Other fnancial assets	32,542	33,136
Cash and cash equivalents	54,129	64,648
	278,657	292,584

As at 30 June 2012, the Group had the following concentrations of credit risk:

Secured property loans: a loan which represents 36% of the portfolio covers three large projects at Riverlands, Camelia and Lewisham;
Other financial assets (fair value) is represented by 2 issuers (2011: 2 issuers)

Secured property loans

The following table illustrates grouping of the Group’s investment in secured loans. As noted in disclosure note 3, the Group mitigates the exposure to this risk by evaluation of the credit submission before acceptance, ensuring security is obtained and consistent and timely monitoring of the financial instrument to identify any potential adverse changes in the credit quality:

the credit quality:
	TOTAL	ORIGINAL TERM	ExTENDED TERM(1)	PAST DuE TERM(2)	IMPAIRED(3)
30 JuNE 2012	$’000	$’000	$’000	$’000	$’000
Loans	173,856	150,121	23,735	-	-
less:provisioning	-	-	-	-	-
Total	173,856	150,121	23,735	-	-

	TOTAL	ORIGINAL TERM	ExTENDED TERM(1)	PAST DuE TERM(2)	IMPAIRED(3)
30 JuNE 2011	$’000	$’000	$’000	$’000	$’000
Loans	173,217	145,593	14,119	13,505	-
less:provisioning	-	-	-	-	-
Total	173,217	145,593	14,119	13,505	-

1) Terms are extended typically in recognition of traditional project delays (e.g. weather, development approvals).
2) For loans with past due terms all are less than two years old and are expected to be recovered.
3) In considering the impairment of loans, the Group will undertake a market analysis of the secured property development which is used to service the loan and identify if a deficiency of security exists and the extent of that deficiency, if any. If there is an indicator of impairment, fair value calculations of expected future cashflows are determined and if there are any differences to the carrying value of the loan, an impairment is recognised.

Other financial assets of $32.5 million (2011: $32.2 million) include options totalling $27.9 million (2011: $27.4 million) which are both on original terms.

The movement in the allowance for impairment in respect of secured property loans and receivables during the year was as follows:

as follows:
	2012	2011
	$’000	$’000
Balance at 1 July 2011	-	2,200
Impairment loss recognised	-	-
Impairment loss utilised	-	(2,200)
Balance at 30 June 2012	-	-

100

abacus property group

==> picture [115 x 63] intentionally omitted <==

22. FiNANciAL iNStrUMeNtS (coNtiNUeD)

(ii) Liquidity risk

The table below shows an analysis of the contractual maturities of key liabilities which form part of the Group’s assessment of liquidity risk.

Abacus Property Group*

Abacus Property Group*
	CARRYING	CONTRACTuAL	1 YEAR	OVER 1 YEAR	OVER
	AMOuNT	CASH FLOWS	OR LESS	TO 5 YEARS	5 YEARS
30 JuNE 2012	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	32,735	32,735	20,010	12,725	-
Interest bearing loans and borrowings incl derivatives#	643,566	724,007	82,846	635,311	5,850
total liabilities	676,301	756,742	102,856	648,036	5,850

	CARRYING	CONTRACTuAL	1 YEAR	OVER 1 YEAR	OVER
	AMOuNT	CASH FLOWS	OR LESS	TO 5 YEARS	5 YEARS
30 JuNE 2011	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	30,972	30,972	17,397	13,575	-
Interest bearing loans and borrowings incl derivatives#	473,925	548,841	50,021	496,635	2,185
total liabilities	504,897	579,813	67,418	510,210	2,185

Carrying amount includes fair value of derivative liabilities. Contractual cash flows includes contracted debt and net swap payments using prevailing forward rates

*Excludes Abacus Hospitality Fund, Abacus Diversified Income Fund II and Abacus Miller Street Holding Trust

Abacus Hospitality Fund

Abacus Hospitality Fund
	CARRYING	CONTRACTuAL	1 YEAR	OVER 1 YEAR	OVER
	AMOuNT	CASH FLOWS	OR LESS	TO 5 YEARS	5 YEARS
30 JuNE 2012	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	6,895	6,895	6,895	-	-
Interest bearing loans and borrowings incl derivatives#	85,969	96,700	8,117	88,584	-
total liabilities	92,864	103,595	15,012	88,584	-

	CARRYING	CONTRACTuAL	1 YEAR	OVER 1 YEAR	OVER
	AMOuNT	CASH FLOWS	OR LESS	TO 5 YEARS	5 YEARS
30 JuNE 2011	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	7,628	7,628	7,628	-	-
Interest bearing loans and borrowings incl derivatives#	75,003	91,776	5,458	85,236	1,081
total liabilities	82,631	99,404	13,086	85,236	1,081

Carrying amount includes fair value of derivative liabilities. Contractual cash flows includes contracted debt and net swap payments using prevailing forward rates.

101

30 June 2012

notes to the financial statements

22. FiNANciAL iNStrUMeNtS (coNtiNUeD)

(ii) Liquidity risk (continued)

Abacus Diversified income Fund ii

(ii) Liquidity risk (continued) Abacus Diversifed income Fund ii
	CARRYING	CONTRACTuAL	1 YEAR	OVER 1 YEAR	OVER
	AMOuNT	CASH FLOWS	OR LESS	TO 5 YEARS	5 YEARS
30 JuNE 2012	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	2,724	2,724	2,724	-	-
Interest bearing loans and borrowings incl derivatives#	92,233	100,615	7,380	93,235	-
total liabilities	94,957	103,339	10,104	93,235	-

	CARRYING	CONTRACTuAL	1 YEAR	OVER 1 YEAR	OVER
	AMOuNT	CASH FLOWS	OR LESS	TO 5 YEARS	5 YEARS
30 JuNE 2011	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	1,742	1,742	1,580	162	-
Interest bearing loans and borrowings incl derivatives#	95,078	107,038	8,148	98,890	-
total liabilities	96,820	108,780	9,728	99,052	-

Carrying amount includes fair value of derivative liabilities. Contractual cash flows includes contracted debt and net swap payments using prevailing forward rates

Abacus Miller Street Holding trust

Abacus Miller Street Holding trust
	CARRYING	CONTRACTuAL	1 YEAR	OVER 1 YEAR	OVER
	AMOuNT	CASH FLOWS	OR LESS	TO 5 YEARS	5 YEARS
30 JuNE 2012	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	828	828	828	-	-
Interest bearing loans and borrowings incl derivatives#	35,843	38,073	2,749	35,324	-
total liabilities	36,671	38,901	3,577	35,324	-

	CARRYING	CONTRACTuAL	1 YEAR	OVER 1 YEAR	OVER
	AMOuNT	CASH FLOWS	OR LESS	TO 5 YEARS	5 YEARS
30 JuNE 2011	$’000	$’000	$’000	$’000	$’000
Liabilities
Trade and other payables	610	610	610	-	-
Interest bearing loans and borrowings incl derivatives#	34,970	37,573	36,925	648	-
total liabilities	35,580	38,183	37,535	648	-

Carrying amount includes fair value of derivative liabilities. Contractual cash flows includes contracted debt and net swap payments using prevailing forward rates.

102

abacus property group

==> picture [115 x 63] intentionally omitted <==

22. FiNANciAL iNStrUMeNtS (coNtiNUeD)

(iii) currency risk

The following table shows the Group’s investments denominated in a foreign currency.


	2012	2011	2012	2011	2012	2011
	$’000	$’000	$’000	$’000	£’000	£’000
Assets
Other fnancial assets	8,028	2,243	10,253	2,905	-	-
Investment in securities	4,026	3,889	-	-	2,629	2,593
total assets	12,054	6,132	10,253	2,905	2,629	2,593
Liabilities
Interest bearing loans and borrowings	73,058	77,003	93,303	99,742	-	-
total liabilities	73,058	77,003	93,303	99,742	-	-

The Abacus Property Group and Abacus Hospitality Fund borrow loan funds in New Zealand dollars to substantially match the foreign currency property asset value exposure with a corresponding foreign currency liability and therefore expects to substantially mitigate the foreign currency risk on their New Zealand denominated asset values.

The following sensitivity is based on the foreign risk exposures in existence at the balance sheet date.

At 30 June 2012, had the Australian Dollar moved, as illustrated in the table below, with all other variables held consistent, post tax profit and equity would have been affected as follows:

JuDGEMENTS OF REASONABLY		POST TAx PROFIT		EquITY
POSSIBLE MOVEMENTS:		HIGHER/(LOWER)		HIGHER/(LOWER)
	2012	2011	2012	2011
	$’000	$’000	$’000	$’000
AuD/GBP + 10%	(366)	(354)	-	-
AuD/GBP - 10%	447	432	-	-
AuD/NZD + 10%	(287)	(24)	-	-
AuD/NZD - 10%	351	29	-	-

103

30 June 2012

notes to the financial statements

22. FiNANciAL iNStrUMeNtS (coNtiNUeD)

(iv) interest rate risk

The Group’s exposure to interest rate risk and the effective weighted average interest rates for each class of financial asset and financial liability are:

Abacus Property Group*

Abacus Property Group*
		FIxED
	FLOATING	INTEREST	FIxED	FIxED	NON
	INTEREST	LESS THAN 1	INTEREST 1	INTEREST	INTEREST
	RATE	YEAR	TO 5 YEARS	OVER 5 YEARS	BEARING	TOTAL
30 JuNE 2012	$’000	$’000	$’000	$’000	$’000	$’000
Financial Assets
Cash and cash equivalents	43,114	-	-	-	-	43,114
Receivables	-	-	-	-	14,170	14,170
Secured loans	-	19,068	154,759	-	30	173,857
total fnancial assets	43,114	19,068	154,759	-	14,200	231,141
Weighted average interest rate*	3.30%	13.11%	10.70%
Financial liabilities
Interest bearing liabilities - bank	560,926	-	-	-	-	560,926
Interest bearing liabilities - other	-	-	25,062	-	4,292	29,354
Derivatives	-	-	-	-	53,286	53,286
Payables	-	-	-	-	32,735	32,735
total fnancial liabilities	560,926	-	25,062	-	90,313	676,301
Notional principal swap balance maturities*	-	98,703	306,999	225,000	-	630,702
Weighted average interest rate on drawn bank debt*	7.27%
30 JuNE 2011
Financial Assets
Cash and cash equivalents	49,486	-	-	-	-	49,486
Receivables	-	-	-	-	19,471	19,471
Secured loans	-	19,031	131,343	22,522	323	173,219
total fnancial assets	49,486	19,031	131,343	22,522	19,794	242,176
Weighted average interest rate*	4.58%	13.01%	12.31%	8.78%
Financial liabilities
Interest bearing liabilities - bank	605,910	-	-	-	-	605,910
Interest bearing liabilities - other	-	-	18,680	-	-	18,680
Derivatives	-	-	-	-	18,291	18,291
Payables	-	-	-	-	30,972	30,972
total fnancial liabilities	605,910	-	18,680	-	49,263	673,853
Notional principal swap balance maturities*	-	10,000	377,213	-	-	387,213
Weighted average interest rate on drawn bank debt*	7.81%

*rate calculated at 30 June.

104

abacus property group

==> picture [115 x 63] intentionally omitted <==

22. FiNANciAL iNStrUMeNtS (coNtiNUeD)

(iv) interest rate risk (continued)

The Group’s exposure to interest rate risk and the effective weighted average interest rates for each class of financial asset and financial liability are:

Abacus Hospitality Fund

Abacus Hospitality Fund
		FIxED
	FLOATING	INTEREST	FIxED	FIxED	NON
	INTEREST	LESS THAN 1	INTEREST 1	INTEREST	INTEREST
	RATE	YEAR	TO 5 YEARS	OVER 5 YEARS	BEARING	TOTAL
30 JuNE 2012		$’000	$’000	$’000	$’000	$’000
Financial Assets
Cash and cash equivalents	9,990	-	-	-	-	9,990
Receivables	-	-	-	-	3,238	3,238
total fnancial assets	9,990	-	-	-	3,238	13,228
Weighted average interest rate*	2.19%
Financial liabilities
Interest bearing liabilities - bank	68,790	-	-	-	-	68,790
Related party loans	-	5,635	19,632	-	-	25,267
Derivatives	-	-	-	-	16,709	16,709
Payables	-	-	-	-	6,895	6,895
total fnancial liabilities	68,790	5,635	19,632	-	23,604	117,661
Notional principal swap balance maturities*	-	-	42,942	-	-	42,942
Weighted average interest rate on drawn bank debt*	8.10%
30 JuNE 2011
Financial Assets
Cash and cash equivalents	9,407	-	-	-	-	9,407
Receivables	-	-	-	-	3,192	3,192
total fnancial assets	9,407	-	-	-	3,192	12,599
Weighted average interest rate*	3.55%
Financial liabilities
Interest bearing liabilities - bank	68,372	-	-	-	-	68,372
Related party loans	-	3,705	19,635	-	-	23,340
Derivatives	-	-	-	-	6,024	6,024
Payables	-	-	-	-	7,628	7,628
total fnancial liabilities	68,372	3,705	19,635	-	13,652	105,364
Notional principal swap balance maturities*	-	-	46,803	-	-	46,803
Weighted average interest rate on drawn bank debt*	6.00%

*rate calculated at 30 June.

105

30 June 2012

notes to the financial statements

22. FiNANciAL iNStrUMeNtS (coNtiNUeD)

(iv) interest rate risk (continued)

Abacus Diversified income Fund ii

(iv) interest rate risk (continued) Abacus Diversifed income Fund ii
		FIxED
	FLOATING	INTEREST	FIxED	FIxED	NON
	INTEREST	LESS THAN 1	INTEREST 1	INTEREST	INTEREST
	RATE	YEAR	TO 5 YEARS	OVER 5 YEARS	BEARING	TOTAL
30 JuNE 2012		$’000	$’000	$’000	$’000	$’000
Financial Assets
Cash and cash equivalents	226	-	-	-	-	226
Receivables	-	-	-	-	1,058	1,058
total fnancial assets	226	-	-	-	1,058	1,284
Weighted average interest rate*	2.30%
Financial liabilities
Interest bearing liabilities - bank	83,932	-	-	-	-	83,932
Derivatives	-	-	-	-	7,914	7,914
Payables	-	-	-	-	2,724	2,724
total fnancial liabilities	83,932	-	-	-	10,638	94,570
Notional principal swap balance maturities*	-	-	78,500	-	-	78,500
Weighted average interest rate on drawn bank debt*	8.85%
30 JuNE 2011
Financial Assets
Cash and cash equivalents	1,866	-	-	-	-	1,866
Receivables	-	-	-	-	272	272
total fnancial assets	1,866	-	-	-	272	2,138
Weighted average interest rate*	4.05%
Financial liabilities
Interest bearing liabilities - bank	91,014	-	-	-	-	91,014
Derivatives	-	-	-	-	3,359	3,359
Payables	-	-	-	-	1,741	1,741
total fnancial liabilities	91,014	-	-	-	5,100	96,114
Notional principal swap balance maturities*	-	-	78,500	-	-	78,500
Weighted average interest rate on drawn bank debt*	8.93%

*rate calculated at 30 June.

106

abacus property group

==> picture [115 x 63] intentionally omitted <==

22. FiNANciAL iNStrUMeNtS (coNtiNUeD)

(iv) interest rate risk (continued)

Abacus Miller Street Holding trust

(iv) interest rate risk (continued) Abacus Miller Street Holding trust
		FIxED
	FLOATING	INTEREST	FIxED	FIxED	NON
	INTEREST	1 YEAR OR	INTEREST 1	INTEREST	INTEREST
	RATE	LESS"	TO 5 YEARS	OVER 5 YEARS	BEARING	TOTAL
30 JuNE 2012		$’000	$’000	$’000	$’000	$’000
Financial Assets
Cash and cash equivalents	799	-	-	-	-	799
Receivables	-	-	-	-	9	9
Total fnancial assets	799	-	-	-	9	808
Weighted average interest rate*	2.30%
Financial liabilities
Interest bearing liabilities - bank	34,000	-	-	-	-	34,000
Derivatives	-	-	-	-	1,843	1,843
Payables	-	-	-	-	828	828
total fnancial liabilities	34,000	-	-	-	2,671	36,671
Notional principal swap balance maturities*	-	-	33,000	-	-	33,000
Weighted average interest rate on drawn bank debt*	8.38%
30 JuNE 2011
Financial Assets
Cash and cash equivalents	2,287	-	-	-	-	2,287
Receivables	-	-	-	-	167	167
total fnancial assets	2,287	-	-	-	167	2,454
Weighted average interest rate*	4.05%
Financial liabilities
Interest bearing liabilities - bank	34,000	-	-	-	-	34,000
Derivatives	-	-	-	-	970	970
Payables	-	-	-	-	610	610
Total fnancial liabilities	34,000	-	-	-	1,580	35,580
Notional principal swap balance maturities*	-	33,000	-	-	-	33,000
Weighted average interest rate on drawn bank debt*	8.60%

*rate calculated at 30 June.

107

30 June 2012

notes to the financial statements

22. FiNANciAL iNStrUMeNtS (coNtiNUeD)

(iv) interest rate risk (continued)

Summarised interest rate sensitivity analysis

The table below illustrates the potential impact a change in $A interest rates by +/- 1% would have had on the Group’s profit and equity on a pre-tax basis:

			AuD
	CARRYING AMOuNT	-1%		+1%
	FLOATING	PROFIT	EquITY	PROFIT	EquITY
30 JuNE 2012	$’000	$’000	$’000	$’000	$’000
Financial assets	54,129	(541)	-	541	-
Financial liabilities	123,113	(29,555)	-	25,101	-
			AuD
	CARRYING AMOuNT	-1%		+1%
	FLOATING	PROFIT	EquITY	PROFIT	EquITY
30 JuNE 2011	$’000	$’000	$’000	$’000	$’000
Financial assets	64,648	(646)	-	646	-
Financial liabilities	242,915	(22,952)	-	16,611	-

The analysis for the interest rate sensitivity of financial liabilities includes derivatives.

(v) Price risk

The Group is exposed to equity securities risk. Equity securities price risk arises from investments in listed and unlisted securities. The key risk variable is the quoted price of the securities, which is influenced by a range of factors, most of which are outside the control of the Group. As a result, the Group does not use financial instruments to manage the price risk exposure on property securities but instead regularly monitors levels of exposure and conducts sensitivity analysis for fluctuations in the quoted securities prices.

A fluctuation of 15% in the price of the equity securities would impact the net profit after income tax expense of the Group, with all other variables held constant, by an increase/(decrease) of $0.22 million (2011: $1.04 million).

108

abacus property group

==> picture [115 x 63] intentionally omitted <==

22. FiNANciAL iNStrUMeNtS (coNtiNUeD)

(vi) Fair values

The fair value of the Group’s financial assets and liabilities are approximately equal to that of their carrying values.

In accordance with AASB 7 Financial Instruments: Disclosures the Group’s financial instruments are classified into the following fair value measurement hierarchy:

(a) Level 1 quoted prices (unadjusted) in active market for identical assets or liabilities;
(b) Level 2 Inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
(c) Level 3 Inputs for the asset or liability that are not based on observable market data.

The following table presents the Group’s assets and liabilities measured and recognised at fair value at 30 June 2012.

	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL
	2012	2012	2012	2012
30 JuNE 2012	$’000	$’000	$’000	$’000
current
Investment in securities - listed	168	-	-	168
Investment in options	-	-	7,885	7,885
total current	168	-	7,885	8,053
Non-current
Investment in securities - unlisted	-	-	4,490	4,490
Investment in options	-	-	20,000	20,000
Derivative liabilities	-	(79,752)	-	(79,752)
total non-current	-	(79,752)	24,490	(55,262)

Investment in securities - unlisted Investment in options Derivative liabilities total non-current	- - - -	- - (79,752) (79,752)	4,490 20,000 - 24,490	4,490 20,000 (79,752) (55,262)
	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL
	2011	2011	2011	2011
30 JuNE 2011	$’000	$’000	$’000	$’000

current
Investment in securities - listed	959	-	-	959
total current	959	-	-	959
Non-current
Investment in securities - unlisted	-	-	4,795	4,795
Investment in options	-	-	27,382	27,382
Derivative liabilities	-	(28,644)	-	(28,644)
total non-current	-	(28,644)	32,177	3,533

There were no transfers between Levels 1, 2 and 3 during the year.

109

30 June 2012

notes to the financial statements

22. FiNANciAL iNStrUMeNtS (coNtiNUeD)

(vi) Fair values (continued)

The following table is a reconciliation of the movements in unlisted securities and options classified as Level 3 for the year ended 30 June 2012.

	uNLISTED
	SECuRITIES	OPTIONS	TOTAL
	$’000	$’000	$’000
opening balance as at 30 June 2011	4,795	27,382	32,177
Fair value movement through the income statement	(50)	503	453
Redemptions / conversions	(255)	-	(255)
closingbalance as at 30 June 2012	4,490	27,885	32,375

opening balance as at 30 June 2010	11,485	42,303	53,788
Fair value movement through the income statement	(6,453)	(8,984)	(15,437)
Purchases / additions	93	63	156
Redemptions	(330)	(6,000)	(6,330)
closingbalance as at 30 June 2011	4,795	27,382	32,177

Determination of fair value

The fair value of listed securities is determined by reference to the quoted bid price of the entity at balance date. The fair value of unlisted securities is determined by reference to the net assets of the underlying entities.

The fair value of interest rate swaps is determined using a generally accepted pricing model on a discounted cash flow analysis using assumptions supported by observable market rates.

The fair value of the options is determined using generally accepted pricing models including Black-Scholes and adjusted for specific features of the options including share price, underlying net assets and property valuations and prevailing exchange rates.

Sensitivity of Level 3

The potential effect of using reasonable possible alternative assumptions based on a change in the property valuations by 5%, a change in the property capitalisation rate by 0.5% and a change in the unit price of securities of 10% would have the effect of reducing the fair value by up to $0.4 million (2011: $0.5 million) or increase the fair value by $8.2 million (2011: $4.9 million).

110

abacus property group

==> picture [115 x 63] intentionally omitted <==

coNtriBUteD eQUity

23. coNtriBUteD eQUity
	2012	2011
	$’000	$’000
(a) issued stapled securities
Stapled securities	1,271,794	1,172,136
Issue costs	(39,800)	(32,312)
total contributed equity	1,231,994	1,139,824

(b) Movement in stapled securities on issue

	STAPLED	SECuRITIES
	NuMBER	VALuE
	‘000	$’000
At 30 June 2011	378,484	1,139,824
- distribution reinvestment plan	18,920	36,188
- merger of Abacus Storage Fund	37,579	63,468
- less transaction costs	-	(7,486)
Securities on issue at 30 June 2012	434,983	1,231,994

111

30 June 2012

notes to the financial statements

24. cAPitAL MANAGeMeNt

Abacus Property Group*

The Group seeks to manage its capital requirements through a mix of debt and equity funding. It also ensures that Group entities comply with capital and distribution requirements of their constitutions and/or trust deeds, the capital requirements of relevant regulatory authorities and continue to operate as going concerns. The Group also protects its equity in assets by taking out insurance.

The Group assesses the adequacy of its capital requirements, cost of capital and gearing (i.e. debt/equity mix) as part of its broader strategic plan. In addition to tracking actual against budgeted performance, the Group reviews its capital structure to ensure sufficient funds and financing facilities, on a cost effective basis are available to implement the Group’s strategy that adequate financing facilities are maintained and distributions to members are made within the stated distribution guidance (i.e. paid out of underlying profits).

The Group actively manages its capital via the following strategies: issuing new stapled securities, activating its distribution reinvestment plan (presently active at 2.5% discount to VWAP but not underwritten), electing to have the dividend reinvestment plan underwritten, adjusting the amount of distributions paid to members, activating a security buyback program, divesting assets, active management of the Group’s fixed rate swaps, directly purchasing assets in managed funds and joint ventures, or (where practical) recalibrating the timing of transactions and capital expenditure so as to avoid a concentration of net cash outflows.

The Group manages the cash flow effect of interest rate risk by entering into interest rate swap agreements that are used to convert floating interest rate borrowings to fixed interest rates. Such interest rate swaps are entered into with the objective of hedging the risk of interest rate fluctuations in respect of underlying borrowings. under the interest rate swaps, the Group agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.

Interest rate swap contracts have been recorded on the Statement of Financial Position at their fair value in accordance with AASB 139 Financial Instruments: Recognition and Measurement. The AIFRS documentation, designation and effectiveness requirements cannot be met in all circumstances, as a result derivatives do not qualify for hedge accounting and are recorded at fair value through the Statement of Income.

The change in fair value of derivatives this year has been a result of falling interest rates and volatility in interest rate curves.

*Excludes Abacus Hospitality Fund, Abacus Diversified Income Fund II and Abacus Miller Street Holding Trust

A summary of the Group’s key banking covenants are set out below:

COVENANT	COVENANT REquIREMENT	KEY DETAILS
Nature of facilities	Secured, non recourse1	The Group has no unsecured facilities
ICR	> 1.5	Net rental income / Interest expense (on bank loans)
ICR Covenant for Storage Assets	≥1.5	underlying EBITDA (ex fair value P&L / interest expense paid to banks for loans secured byself storageproperties
Group ICR	≥2.02	Group EBITDA (ex fair value P&L and impairment to goodwill & intangibles) / Total Interest Expense
Total Gearing	≤50%2	Total Liabilities (net of cash) / Total Tangible Assets (net of cash)
LVR	≤55% to 67.5%3	Drawn Loan / Bank accepted valuations
Gearing ratio on a look through basis	≤60%4	ABP gearing plus gearing from proportional consolidation of equityaccounted investments

There are no market capitalisation covenants.
Condition of the current $400m Syndicated facility, $100m Working Capital facility and the $70m Bilateral facility.
The 67.5% LVR for the new Working Capital Facility will step down to 65.0% from 1 July 2014.
Condition of the $100m Working Capital Facility and $400m Syndicated facility.

112

abacus property group

==> picture [115 x 63] intentionally omitted <==

24. cAPitAL MANAGeMeNt (coNtiNUeD)

The Capital Management approach and strategies employed by the Group are also deployed for the funds ABP manages and which are consolidated in these accounts – AHF, ADIF II and AMSHT (or the Consolidated Funds).

Points unique to the capital management of these respective funds are:

The Consolidated Funds via their responsible entities comply with capital and distribution requirements of their constitutions and/or deeds, the capital requirements of relevant regulatory authorities and continue to operate as going concerns
There is currently no DRP for any of the Funds.

A summary of banking covenants – by fund – is set out below:

COVENANT	AHF	ADIF II	AMSHT
Nature of facilities	Secured, non	Secured, non	Secured, non
	recourse	recourse	recourse
LVR Covenant	≤55%1	≤50% - 60%3	≤57.5%3
ICR Covenant	≥1.52	> 1.54	> 1.54

Drawn loan less cash secured / bank accepted valuations.
underlying EBITDA (ex fair value P&L) / interest expense paid to banks.
Drawn loan / bank accepted valuations.
Net rental income / interest expense paid to banks.

113

30 June 2012

notes to the financial statements

25. iNtereSt iN SUBSiDiArieS

(a) interest in subsidiaries with material non-controlling interest (“Nci”)

The Group has the following subsidiaries with material non-controlling interest:

			PROFIT/(LOSS)
	PRINCIPAL		ALLOCATED TO	ACCuMuLATED
	PLACE OF	% HELD BY	NCI	NCI
NAME OF ENTITY	BuSINESS	NCI	$'000	$'000
30 June 2012
Abacus Hospitality Fund	Australia	90	3,874	32,039
Abacus Storage Fund*	Australia	80	(3,098)	-
Abacus Miller Street HoldingTrust	Australia	70	358	5,375
			1,134	37,414
30 June 2011
Abacus Hospitality Fund	Australia	90	(6,557)	33,803
Abacus Storage Fund	Australia	80	(15,605)	92,777
Abacus Miller Street HoldingTrust	Australia	70	(1,156)	6,335
			(23,318)	132,915

The country of incorporation is the same as the principal place of business, unless stated otherwise

*The Abacus Storage Fund merged with the Abacus Property Group in March 2012. Therefore, the only profit and loss had material non-controlling interest for the period 1 July 2011 to 6 March 2012 with the statement of financial position being Nil.

Significant restrictions

There are no significant restrictions.

(b) Summarised financial information about subsidiary with material Nci

Summarised statement of financial position

Summarised statement of fnancial position
	2012	2011
ABACuS HOSPITALITY FuND	$’000	$’000
Current assets	27,326	12,285
Current liabilities	(7,461)	(7,090)
Net current assets	19,865	5,195
Non-current assets	152,190	159,414
Non-current liabilities	(184,925)	(170,267)
Net non-current assets	(32,735)	(10,853)

Net defciency	(12,870)	(5,658)

114

abacus property group

==> picture [115 x 63] intentionally omitted <==

25. iNtereSt iN SUBSiDiArieS (coNtiUNeD)

(b) Summarised financial information about subsidiary with material Nci (continued)

	2012	2011
ABACuS MILLER STREET HOLDING TRuST	$’000	$’000
Current assets	63,365	2,503
Current liabilities	(828)	(34,526)
Net current assets	62,537	(32,023)
Non-current assets	-	62,808
Non-current liabilities	(54,859)	(21,727)
Net non-current assets	(54,859)	41,081

Net assets	7,678	9,058

Summarised statement of comprehensive income

Summarised statement of comprehensive income
	2012	2011
ABACuS HOSPITALITY FuND	$’000	$’000
Revenue	51,064	60,163
Proft / (loss) before income tax	(9,802)	8,687
Income tax expense	8	733
Proft / (loss) after tax	(9,794)	9,420
Other comprehensive income	4,789	(1,646)
total comprehensive income / (expense)	(5,005)	7,774

	2012	2011
ABACuS STORAGE FuND	$’000	$’000
Revenue	28,954	40,393
Proft / (loss) before income tax	4,667	23,262
Income tax expense	(890)	(3,327)
Proft / (loss) after tax	3,777	19,935
Other comprehensive income	2,544	(554)
total comprehensive income	6,321	19,381

	2012	2011
ABACuS MILLER STREET HOLDING TRuST	$’000	$’000
Revenue	5,627	5,939
Loss before income tax	(515)	1,652
Income tax expense	-	-
Loss after tax	(515)	1,652
Other comprehensive income	-	-
total comprehensive income / (expense)	(515)	1,652

115

30 June 2012

notes to the financial statements

26. reLAteD PArty DiScoSUreS

(a) Subsidiaries

The consolidated financial statements include the financial statements of the following entities:

		EquITY INTEREST
	2012	2011
ENTITY	%	%
Abacus Group Holdings Limited and its subsidiaries:
Abacus (343 George St Sydney) Pty Ltd	100	100
Abacus AAVT Pty Ltd	100	100
Abacus Airways NZ Trust	100	100
Abacus Castle Hill Trust	100	-
Abacus CIH Pty Ltd	100	100
Abacus Finance Pty Limited	100	100
Abacus Forrest Lodge Trust	100	100
Abacus Funds Management Limited	100	100
Abacus Griffth Avenue Trust	100	100
Abacus HP Operating Co Pty Ltd	100	100
Abacus HP Trust	100	100
Abacus Investment Pty Ltd	100	100
Abacus Jigsaw Investments Pty Ltd	100	100
Abacus Mariners Lodge Trust	100	100
Abacus Mortgage Fund	100	100
Abacus Mount Druitt Trust	100	100
Abacus Musswellbrook Pty Ltd	100	100
Abacus Nominee Services Pty Limited	100	100
Abacus Nominees (No 5) Pty Limited	100	100
Abacus Nominees (No 7) Pty Limited	100	100
Abacus Nominees (No 9) Pty Limited	100	100
Abacus Note Facilities Pty Ltd	100	100
Abacus Pitt Street Property Trust	100	100
Abacus Property Income Fund	100	100
Abacus Property Services Pty Ltd	100	100
Abacus SP Note Facility Pty Ltd	100	100
Abacus Storage Funds Management Limited	100	100
Abacus unitel Pty Ltd	100	100
Abacus unitel Trust	100	100
Amiga Pty Limited	100	100
Bay Street Brighton unit Trust	100	100
Birkenhead Point Marina Pty Ltd	50	50
Childcare Trust 2	100	100
Clarendon Property Investments Pty Ltd	100	100
Corporate Helpers Pty Ltd	100	100
Main Street Pakenham unit Trust	100	100
Clarendon Property Investments Pty Ltd	100	100
Corporate Helpers Pty Ltd	100	100
Main Street Pakenham unit Trust	100	100
Abacus Group Projects Limited and its subsidiaries:
Abacus Property Pty Ltd	100	100
Abacus Allara Street Trust	50	50
Abacus Jigsaw Holdings Pty Limited	50	50
Abacus Repository Trust	50	50
AbacusVenturesTrust	51	51

116

abacus property group

==> picture [115 x 63] intentionally omitted <==

			EquITY INTEREST
		2012	2011
ENTITY		%	%
Abacus	trust and its subsidiaries:
Abacus	1769 Hume Highway Trust	100	100
Abacus	Alderley Trust	100	100
Abacus	Alexandria Trust	100	100
Abacus	Ashfeld Mall Property Trust	100	100
Abacus	Birkenhead Point Trust	100	100
Abacus	Campbell Property Trust	100	100
Abacus	Epping Park Property Trust	100	100
Abacus	Greenacre Trust	100	100
Abacus	Heitman Investment Trust	100	100
Abacus	Hurstville Trust	100	100
Abacus	Industrial Property Trust	100	100
Abacus	Lisarow Trust	100	100
Abacus	Liverpool Plaza Trust	100	100
Abacus	Macquarie Street Trust	100	100
Abacus	Moorabbin Trust	100	100
Abacus	Moore Street Trust	100	100
Abacus	Northshore Trust 1	25	25
Abacus	Northshore Trust 2	25	25
Abacus	North Sydney Car park Trust	100	100
Abacus	Premier Parking Trust	100	100
Abacus	Sanctuary Holdings Pty Limited	25	25
Abacus	Shopping Centre Trust	100	100
Abacus	Smeaton Grange Trust	100	100
Abacus	SP Fund	100	100
Abacus	Varsity Lakes Trust	100	100
Abacus	Virginia Trust	100	100
Abacus	Westpac House Trust	100	100
Abacus	14 Martin Place Trust	100	100
Abacus	171 Clarence Street Trust	100	100
Abacus	309 George Street Trust
Abacus	income trust and its subsidiaries:
Abacus	Campbellfeld Trust	100	100
Abacus	Chermside Trust	100	100
Abacus	Eagle Farm Trust	100	100
Abacus	Independent Retail Property Trust	75	75
Abacus	Lennons Plaza Trust	100	100
Abacus	Mertz Apartments	100	100
Abacus	Retail Property Trust	100	100
Abacus	Stafford Trust	100	100
Abacus	Tamworth Retail Trust	100	100
Abacus	WollongongPropertyTrust	100	100

117

30 June 2012

notes to the financial statements

26. reLAteD PArty DiScoSUreS (coNtiNUeD)

(a) Subsidiaries (continued)

(a) Subsidiaries (continued)
		EquITY INTEREST
	2012	2011
ENTITY	%	%
Abacus Storage operations Limited and its subsidiaries:
Balmain Storage Pty Limited	100	100
Abacus Storage (Bulleen and Greensborough) Pty Limited	100	100
Abacus Storage NZ Operations Pty Limited	100	100
Abacus Storage Solutions Pty Limited	100	100
Abacus Storage Solutions NZ Pty Limited	100	100
Abacus uSI C Trust	100	100
Abacus u Stow It A1 Trust	100	100
Abacus u Stow It B1 Trust	100	100
Abacus u Stow It A2 Trust	100	100
Abacus u Stow It B2 Trust	100	100
u Stow It Holdings Limited	100	100
u Stow It Pty Limited
Abacus Storage Property trust and its subsidiary:
Abacus Storage NZ Property Trust	100	100
Abacus Diversifed Income Fund II	-	-
Abacus Hospitality Fund	10	10
Abacus MillerStreet HoldingTrust	30	30

Subsidiaries controlled by the Group with material non-controlling interest

Abacus Hospitality Fund: Based upon work undertaken by the Group in assessing the impact of AASB 10, the Group is deemed under the standard to have control of AHF based upon the aggregate impact of (a) the Group’s role as responsible entity of AHF and (b) the size and variable nature of returns arising from the Group’s loans to AHF (as the loans provided by the Group to AHF rank pari passu for downside but not on upside at fund wind up).

Abacus Diversified income Fund ii: Based upon work undertaken by the Group in assessing the impact of AASB 10, the Group is deemed under the new standard to have control of ADIFII based upon the aggregate impact of (a) the Group’s role as responsible entity of ADIFII (b) the size and variable nature of returns arising from the Group’s loans to ADIFII (as the Abacus Working Capital Facility provided by the Group to ADIFII ranks pari passu on downside, but not the upside, at wind up) and (c) the capital and income guarantees made by the Group to unitholders of ADIFII under the ADIFII offer documents.

Abacus Miller Street Holding trust: Based upon work undertaken by the Group in assessing the impact of AASB 10, the Group is deemed under the new standard to have control of AMSHT a) the Group’s role as responsible entity of AMSHT and (b) the Group’s 30% direct interest in the fund and the relative dispersion of the remaining interests not held by the Group.

(b) Ultimate parent

AGHL has been designated as the parent entity of the Group.

(c) Key Management Personnel

Details of key management personnel are disclosed in Note 28(b).

118

abacus property group

==> picture [115 x 63] intentionally omitted <==

26. reLAteD PArty DiScoSUreS (coNtiNUeD)

(d) transactions with related parties

(d) transactions with related parties
	2012	2011
	$’000	$’000
transactions with related parties other than associates and joint ventures
revenues
Asset management fees received / receivable	-	42
Property management fees received / receivable	153	118
Interest revenue from related funds	-	498
transactions with associates and joint ventures
revenues
Management fees received / receivable from joint ventures	1,394	480
Management fees received / receivable from associates	557	646
Distributions received / receivable from joint ventures	5,818	1,382
Interest revenue from associates	3,507	2,817
Interest revenue fromjoint ventures	1,122	2,965
other transactions
Loan advanced to associates	(8,186)	(5,117)
Loan repayments from associates	4,527	3,739
Loan advanced to joint ventures	(134)	(1,471)
Loan repayments from joint ventures	2,860	2,889
Loan advanced from joint ventures	1,929	-
Loan repayments to joint ventures	-	(1,299)
Impairment charge - Abacus Wodonga Land Fund	(3,507)	-

terms and conditions of transactions

Sales and fees to and purchases and fees charged from related parties are made in arm’s length transactions both at normal market prices and on normal commercial terms.

Outstanding balances at year-end are unsecured and settlement occurs in cash.

No provision for doubtful debts has been recognised or bad debts incurred with respect to amounts payable or receivable from related parties during the year.

entity with significant influence

Calculator Australia Pty Ltd (“Kirsh”) is a significant securityholder in the Group with a holding of approximately 41% of the ordinary securities of the Group (2011: 37%).

During the year, Abacus Property Services Pty Ltd was engaged to manage the following properties:

Property	relationshipwith Kirsh	chargeper annum	Amt $
Birkenhead Point Shopping Centre	Tenants in common	3% of gross rental	248,455
14 Martin Place	Tenants in common	3% of gross rental	147,067
4 Martin Place	100% owned by Kirsh	3% of gross rental	153,326
Birkenhead Point Marina Pty Ltd	Joint Venture	3% of gross rental	59,860

During the year, Abacus Funds Management Limited charged an asset management fee to the following entities:

Property	relationshipwith Kirsh	chargeper annum	Amt $
Birkenhead Point Shopping Centre	Tenants in common	0.2% of gross assets	197,126

Mrs Myra Salkinder is a non-executive director of the Group and is a senior executive of Kirsh.

119

30 June 2012

notes to the financial statements

27. MerGer oF ASF

On 24 February 2012 securityholders in both Abacus Property Group and Abacus Storage Fund (an unlisted fund managed by Abacus Storage Funds Management Limited as responsible entity) agreed to merge the two entities effective 6 March 2012. The merger resulted in the shares in Abacus Storage Operations Limited and the units in Abacus Storage Property Trust being stapled to the shares in Abacus Group Holdings Limited and Abacus Group Projects Limited and units in Abacus Trust and Abacus Income Trust under a stapled security listed on the Australian Securities Exchange.

The net assets of Abacus Storage Fund at the date of the merger are set out below:

	$’000
cUrreNt ASSetS
Cash and cash equivalents	1,528
Trade and other receivables	688
Other	556
totAL cUrreNt ASSetS	2,772
NoN-cUrreNt ASSetS
Investment properties	340,331
Property, plant and equipment	780
totAL NoN-cUrreNt ASSetS	341,111

totAL ASSetS	343,883
cUrreNt LiABiLitieS
Trade and other payables	12,909
Derivatives at fair value	53
Income taxpayable	170
totAL cUrreNt LiABiLitieS	13,132
NoN-cUrreNt LiABiLitieS
Interest-bearing loans and borrowings	220,154
Derivatives at fair value	3,879
Deferred tax liabilities	4,654
totAL NoN-cUrreNt LiABiLitieS	228,687

totAL LiABiLitieS	241,819

Net ASSetS	102,064

120

abacus property group

==> picture [115 x 63] intentionally omitted <==

27. MerGer oF ASF (coNtiNUeD)

The net assets of Abacus Storage Fund had been already consolidated by Abacus Property Group following its adoption of AASB 10, 11 and 12 which was applied retrospectively as at 1 July 2010.

To facilitate the merger, a series of stapling distributions were made by Abacus Trust, Abacus Income Trust and Abacus Storage Property Trust to their respective unitholders. Abacus Trust paid a capital distribution of $22.6 million ($0.0585 cents per unit) to its unitholders and Abacus Income Trust paid a capital distribution of $15.1 million ($0.0390 cents per unit) to its unitholders on the implementation date which was then applied to acquire approximately 377.4 million units in Abacus Storage Property Trust and approximately 377.4 million shares in Abacus Storage Operations Limited on behalf of existing Abacus Trust and Abacus Income Trust unitholders. Abacus Storage Property Trust also paid a capital distribution of $18.8m ($0.50 cents per unit) to its unitholders on the implementation date which was then applied to acquire approximately 37.6 million units in Abacus Trust and Abacus Income Trust and approximately 37.6 million shares in Abacus Group Holdings Limited and Abacus Group Projects Limited on behalf of existing Abacus Storage Property Trust unitholders.

In addition approximately 17.4 million units in Abacus Storage Property Trust and shares in Abacus Storage Operations Limited were distributed to existing Abacus Trust and Abacus Income Trust unitholders.

The result of making the distributions and subscription for shares and units in respective Group entities was that each of Abacus Trust, Abacus Income Trust, Abacus Storage Property Trust, Abacus Group Holdings Limited, Abacus Group Projects Limited and Abacus Storage Operations Limited had 424.3 million units or shares (as the case may be) on issue at 6 March 2012.

121

30 June 2012

notes to the financial statements

28. Key MANAGeMeNt PerSoNNeL

(a) compensation for Key Management Personnel

(a) compensation for Key Management Personnel
	2012	2011
	$	$
Short-term employee benefts	5,879,867	5,329,634
Post-employment benefts	337,730	537,515
Other long-term benefts	94,306	95,369
Security-basedpayments	-	53,524
	6,311,903	6,016,042

(b) Security holdings of Key Management Personnel

Securities held in Abacus Property Group (number)

	BALANCE			PuRCHASES	BALANCE
30 JuNE 12	1 JuLY 11			/(SALES)	30 JuNE 12
Directors
J Thame	55,364			-	55,364
F Wolf	2,837,464			-	2,837,464
W Bartlett	22,806			-	22,806
D Bastian	900,000			(355,000)	545,000
M Irving	26,718			2,345	29,063
executives
R de Aboitiz	3,939			29,486	33,425
L Lloyd	11,185			(11,185)	-
P Strain	32,590			24,987	57,577
E Varejes	61,975			13,439	75,414
total	3,952,041			(295,928)	3,656,113

30 JuNE 11	BALANCE 1 JuLY 10	CONSOLIDATION	RETIRED	PuRCHASES /(SALES)	BALANCE 30 JuNE 11
J Thame	276,820	(221,456)	-	-	55,364
F Wolf	14,187,322	(11,349,858)	-	-	2,837,464
W Bartlett	114,032	(91,226)	-	-	22,806
D Bastian	5,500,000	(4,400,000)	-	(200,000)	900,000
D Bluth	342,302	(273,842)	(71,266)	2,806	-
M Irving	123,550	(98,840)	-	2,008	26,718
executives
R de Aboitiz	435,933	(348,746)	-	(83,248)	3,939
L Lloyd	55,925	(44,740)	-	-	11,185
P Strain	150,701	(120,561)	-	2,450	32,590
E Varejes	309,875	(247,900)	-	-	61,975
total	21,496,460	(17,197,169)	(71,266)	(275,984)	3,952,041

(b) Security holdings of Key Management Personnel (continued)

All equity transactions with key management personnel other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arm’s length.

122

abacus property group

==> picture [115 x 63] intentionally omitted <==

28. Key MANAGeMeNt PerSoNNeL (coNtiNUeD)

(c) Loans to Key Management Personnel

There were no loans to individuals that exceeded $100,000 at any time in 2012 or in the prior year.

(d) other transactions and balances with Key Management Personnel and their related parties

During the financial year, transactions occur between the Group and Key Management Personnel which are within normal employee, customer or supplier relationship on terms and conditions no more favourable to than those with which it is reasonable to expect the entity would have adopted if dealing with Key Management Personnel or directorrelated entity at arm’s length in similar circumstances including, for example, performance of contracts of employment, the reimbursement of expenses and the payment of distributions on their stapled securities in the Group and on their investment in various Trusts managed by Abacus Funds Management Limited as Responsible Entity.

123

30 June 2012

notes to the financial statements

29. SecUrity BASeD PAyMeNt PLANS

(a) recognised security payment expenses

The expense recognised for employee services received during the year is as follows:

	2012	2011
	$’000	$’000
Expense arising from equity-settled payment transactions	-	83
The security-based payment are described below.

(b) type of security-based payment plan

Security Appreciation rights (SArs)

SARs issued under the Group’s long term incentive plan can only be settled in cash and vest at the end of the threeyear period provided the executive remains employed by the Group (or otherwise at the Board’s discretion). The gain is calculated as the difference between the exercise price, being the security price at the beginning of the financial year in which the SARs are granted, and the Group’s security price at maturity. A SAR is assumed to be exercised on maturity if it is in the money, and the net gain is settled in cash.

(c) Summary of SArs granted

As set out in the remuneration report all of the SARs were cancelled during the year end and the following table illustrates movements in SARs:

illustrates movements in SARs:
	2012	2011
	No.	No.
Opening balance	2,976,923	-
Granted during the year	12,785,714	2,976,923
Cancelled duringtheyear	(15,762,637)	-
outstandingat the end of theyear	-	2,976,923

exercisable at the end of theyear	-	-

124

abacus property group

==> picture [115 x 63] intentionally omitted <==

30. otHer FiNANciAL LiABiLitieS

Abacus Property Group*

The Group has provided the following guarantees to the ADIFII:

uNIT TYPE	CASH DISTRIBuTION YIELD GuARANTEE	CAPITAL RETuRN GuARANTEE
Class A $1.00	8.5% pa until 30 June 2011 and based on	$1.00 per unit at 30 September 2013
	the actual distributable cash of the Fund	if the net assets per unit are less
	thereafter.	than$1.00 at 30 June 2013.
Class B $1.00	9% pa until 30 June 2011 and 9.0% pa plus	$1.00 per unit at Fund termination
	indexation thereafter (indexed in line with	(effective on 30 June 2016).
	infation in eachyear after 1 July2011).
Class C $0.75	9% until 30 June 2011 and 9% pa plus	$0.75 per unit at Fund termination
	indexation thereafter (indexed in line with	(effective on 30 June 2016).
	infation in eachyear after 1 July2011).

The underwritten Distributions will be achieved by deferring the interest on the Working Capital Facility or by deferring any of the fees payable to the Group under the constitution of ADIFII (or a combination of these things) or in any other way the Group considers appropriate. Any interest or fee deferral or other funding support may be recovered if the actual cash distribution exceeds the cash required to meet the underwritten distribution at the expiration of the Fund term or on a winding up of the Fund.

The underwritten Capital Return will apply to all ADIFII units on issue as at 1 July 2013 (Class A) or on or after 1 July 2016 (Class B and C). At the time the Group will make an offer to acquire each Class A unit for $1.00, or ensure that each holder of Class B units receives back their $1.00 initial capital and each holder of Class C units receives back their $0.75 initial capital. The underwritten Capital returns can be satisfied at the Group’s discretion (Class A) through either a payment in cash or by the Group issuing stapled securities in APG to an equivalent value based on the 10 day volume weighted average price of APG’s stapled securities over the period ending on 30 June 2013 or prior to issuing stapled securities as applicable.

After 30 June 2016 the Group will, if required, set off all or part of the principal of the second secured Working Capital Facility loan provided to ADIFII in satisfaction of the Group’s obligations in respect of the underwritten Capital Return in respect of the Class B and Class C units.

As a result of the consolidation of ADIFII under AASB10 the underwritten capital guarantee results in ADIFII’s units on issue being classified as a liability and at the end of the period the value was $56.3 million (30 June 2011: $49.9 million). The ADIFII distribution of $4.4 million (2011: $3.7 million) is included in other expenses in note 7(d).

The offer document for ADIFII was closed in December 2011 and no further equity will be raised. The actual guarantee exposure (if any) will be determined at the maturity date of the guarantee in 2013 (c20% of the total guarantee exposure) and between 1 July 2016 and 30 June 2017 (c80% of the total guarantee exposure).

*Excludes Abacus Hospitality Fund, Abacus Diversified Income Fund II and Abacus Miller Street Holding Trust.

125

30 June 2012

notes to the financial statements

31. coMMitMeNtS AND coNtiNGeNcieS

Abacus Property Group*

operating lease commitments – Group as lessee

The Group has entered into a commercial lease on its offices. The lease has a term of three years with an option to renew for another three years.

Future minimum rentals payable under non-cancellable operating lease as at 30 June are as follows:

	2012	2011
	$’000	$’000
Within one year	374	747
After one year but not more than fve years	-	374
More than fveyears	-	-
	374	1,121

operating lease commitments – Group as lessor

Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows:

	2012	2011
	$’000	$’000
Within one year	88,768	91,647
After one year but not more than fve years	245,854	240,928
More than fveyears	108,106	112,062
	442,728	444,637

These amounts do not include percentage rentals which may become receivable under certain leases on the basis of retail sales in excess of stipulated minimums and, in addition, do not include recovery of outgoings.

capital and other commitments

At 30 June 2012 the Group had numerous commitments and contingent liabilities which principally related to property acquisition settlements, loan facility guarantees for the Group’s interest in the jointly controlled projects and funds management vehicles, commitments relating to property refurbishing costs and unused mortgage loan facilities to third parties.

Commitments planned and/or contracted at reporting date but not recognised as liabilities are as follows:

	2012	2011
	$’000	$’000
Within one year
- gross settlement of property acquisitions	7,375	24,005
- property refurbishment costs	12,605	5,123
- property development costs	13,417	9,900
- unusedportion of loan facilities to outsideparties	4,996	4,127
	38,393	43,155

*Excludes Abacus Hospitality Fund, Abacus Diversified Income Fund II and Abacus Miller Street Holding Trust.

126

abacus property group

==> picture [115 x 63] intentionally omitted <==

31. coMMitMeNtS AND coNtiNGeNcieS (coNtiNUeD)

capital and other commitments (contuinued)

In accordance with Group policy, the fair value of all guarantees are estimated each period and form part of the Group’s reported AIFRS results. There has been no other material change to any contingent liabilities or contingent assets.

	2012	2011
	$’000	$’000
contingent liabilities:
Within one year
- corporateguarantee	6,750	4,000
	6,750	4,000

Abacus Diversified income Fund ii

operating lease commitments – as lessor

Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows:

	2012	2011
	$’000	$’000
Within one year	14,168	12,246
After one year but not more than fve years	40,714	47,844
More than fveyears	16,143	23,180
	71,025	83,270

capital and other commitments

capital and other commitments
	2012	2011
	$’000	$’000
Within one year
-propertyrefurbishment costs	1,745	3,215
	1,745	3,215

Abacus Miller Street Holding trust

operating lease commitments – as lessor

Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows:

	2012	2011
	$’000	$’000
Within one year	5,047	5,259
After one year but not more than fve years	18,211	15,476
More than fveyears	3,818	9,290
	27,076	30,025

127

30 June 2012

notes to the financial statements

32. AUDitor’S reMUNerAtioN

32. AUDitor’S reMUNerAtioN
	2012	2011
		RESTATED*
Amounts received or due and receivable by Ernst & Young Australia for:
- an audit of the fnancial report of the entity and any other entity
in the consolidated entity	958,000	958,000
- transactional advisoryservices	262,300	47,441
	1,220,300	1,005,441

*Certain amounts shown here do not correspond to the 2011 financial statements as they reflect required adjustments resulting from the adoption of AASB10 as set out in note 2.

33. eVeNtS AFter BALANce SHeet DAte

128

abacus property group

==> picture [115 x 63] intentionally omitted <==

DirectorS’ DecLArAtioN

In accordance with a resolution of the Directors of Abacus Group Holdings Limited, we state that:

In the opinion of the directors:

a. the financial 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 financial position as at 30 June 2012 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Regulations 2001;
b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2(b); and
c. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration has been made after receiving the declarations required to be made to the directors in accordance with sections 295A of the Corporations Act 2001 for the financial year ended 30 June 2012.

On behalf of the Board

==> picture [111 x 43] intentionally omitted <==

John Thame Chairman

==> picture [124 x 75] intentionally omitted <==

Frank Wolf Managing Director

Sydney, 28 August 2012

129

directors’ declaration

==> picture [61 x 9] intentionally omitted <==

----- Start of picture text -----

30 June 2010
----- End of picture text -----

==> picture [593 x 34] intentionally omitted <==

130

==> picture [37 x 802] intentionally omitted <==

131

corporate governance report

30 June 2012

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

recommendation 1.1

The Board has adopted a charter that sets out the functions and responsibilities reserved by the Board, those delegated to the Managing Director and those specific to the Chairman. The conduct of the Board is also governed by the Constitution.

The roles of Chairman and Managing Director are not exercised by the same individual.

The primary responsibilities of the Board and the Managing Director are set out in the Board Charter.

Senior executives reporting to the Managing Director have their roles and responsibilities defined in position descriptions and are given a letter of appointment on commencement.

The Board Charter and Constitution are available on the Abacus website.

recommendation 1.2

Induction procedures are in place for all staff (including senior executives) that include a briefing on relevant aspects of Abacus’ financial position, strategies, operations and risk management policies as well as the respective rights, duties and responsibilities of the Board and senior executives,

Each year the Board, with the assistance of the Managing Director, and the Nomination and Remuneration Committee, undertakes a formal process of reviewing the performance of senior executives. The measures generally relate to the performance of Abacus and the performance of the executive individually. The Managing Director is not present at the Board or Nomination and Remuneration Committee meetings when his own remuneration and performance is being considered.

An annual review has taken place in the reporting period in accordance with the process outlined above.

PriNciPLe 2: StrUctUre tHe BoArD to ADD VALUe

recommendation 2.1

The board comprises one executive director and five non-executive directors. The majority of the Board (Messrs Thame, Irving, Bastian and Bartlett) are independent members. The board has determined that an independent director is one who:

is not a substantial security holder or an officer of, or is not otherwise associated directly with, a substantial security holder of the Group;
has not within the previous three years been employed in any executive capacity;
has not within the last three years been a principal of a material professional adviser or a material consultant to the Group; or an employee materially associated with the service provided;
is not a material supplier or customer of the Group, or an officer of or otherwise associated directly or indirectly with a material supplier or customer; or
does not have a material contractual relationship with the Group other than as a director.

No independent non-executive director has a relationship significant enough to compromise their independence on the Board. Non-executive directors confer regularly without management present.

Any change in the independence of a non-executive director would be disclosed and explained to the market in a timely manner.

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 financial performance of the Group and returns to securityholders. Details of the skills, experience and expertise of each director are set out on page 6.

Directors’ independent advice

Directors may seek independent professional advice with the Chairman’s consent, which will not be unreasonably withheld or delayed, on any matter connected with the performance of their duties, and which advice will be at the Group’s expense.

132

abacus property group

PriNciPLe 2: StrUctUre tHe BoArD to ADD VALUe (coNtiNUeD)

recommendation 2.2

The Chairman of the Board (Mr John Thame) is an independent, non-executive director.

recommendation 2.3

The roles of Chairman and Chief Executive Officer/ Managing Director are not exercised by the same individual.

The division of responsibility between the Chairman and Managing Director has been agreed by the Board and is set out in the Board Charter.

recommendation 2.4

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 8.

The Chairman of the committee is independent.

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

The Nomination and Remuneration Committee Charter and the Selection and Appointment of Non-Executive Directors Policy are available on the Abacus website.

The Board is committed to workplace diversity, with a particular focus on supporting the representation of women at a senior level of the Group and on the Board. The Diversity Policy is available on the Abacus website.

Over 45% of Abacus’ employees are women. Abacus has female representation at both the Board (17%) and senior management (11%) level. In 2011, the Board set female representation at Board level as a priority and this was met in April 2011 with the appointment of a female director. In the current period, Abacus has recruited from a diverse pool of candidates for all positions filled during the year and has a number of employees with flexible employment arrangements to take account of domestic responsibilities.

recommendation 2.5

The Board has a documented Performance Evaluation Policy which outlines the process for evaluating the performance of the board, its committees and individual directors.

An annual review has taken place in the reporting period in accordance with the policy.

==> picture [115 x 63] intentionally omitted <==

PriNciPLe 3: ProMote etHicAL AND reSPoNSiBLe DeciSioN-MAKiNG

recommendation 3.1

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

The Code of Conduct is available on the Abacus website.

recommendation 3.2

The Diversity Policy is available on the Abacus website.

The Board is committed to workplace diversity, with a particular focus on supporting the representation of women at a senior level of the Group and on the Board.

Over 45% of Abacus’ employees are women. In 2011, the Board set female representation at Board level and senior management as a priority. Abacus currently has female representation at both the Board (17%) and senior management (11%) level. Abacus has recruited from a diverse pool of candidates for all positions filled during the year and has a number of employees with flexible employment arrangements to take account of domestic responsibilities.

PriNciPLe 4: SAFeGUArD iNteGrity iN FiNANciAL rePortiNG

recommendation 4.1, 4.2 and 4.3

The board has established an Audit and Risk Committee.

The Audit and Risk Committee comprises three independent non-executive directors and one nonindependent non-executive director 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 8. Other directors that are not members of the committee, the external auditor and other senior executives attend meetings by invitation.

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

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

The Audit and Risk Committee Charter is available on the Abacus website.

133

30 June 2012

corporate governance report

PriNciPLe 5: MAKe tiMeLy AND BALANceD DiScLoSUre

recommendation 5.1

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.

The Continuous Disclosure and Shareholder Communications Policy is available on the Abacus website.

PriNciPLe 6: reSPect tHe riGHtS oF SecUrityHoLDerS

recommendation 6.1

The Group aims to keep securityholders informed of significant 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. The Abacus website also includes webcasts of the results briefings.

The Group keeps a summary record for internal use of the issues discussed at group and one-on-one briefings with investors and analysts, including a record of those present where appropriate.

The Continuous Disclosure and Shareholder Communications Policy is available on the Abacus website.

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.

reviewing the Group’s risk management framework.

The risk management framework is formally reviewed annually. This review is initially carried out by the Compliance and Risk Manager and then reviewed by the Audit and Risk Committee and the Board to assess any necessary changes.

recommendation 7.3

The Managing Director and Chief Financial Officer confirm in writing to the Board that the financial 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 confirms that the statement is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

PriNciPLe 8: reMUNerAte FAirLy AND reSPoNSiBLy

recommendation 8.1

The board has established a Nomination and Remuneration Committee.

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

A copy of the committee charter is available on the Abacus website. The Chairman of the Nomination and Remuneration Committee is independent.

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

The Nomination and Remuneration Committee may seek input from individuals on remuneration policies but no individual employee is directly involved in deciding their own remuneration.

PriNciPLe 7: recoGNiSe AND MANAGe riSK

recommendation 7.1 and 7.2

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.

The members of the committee and their attendance at meetings are provided on page 8.

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

The Group’s Risk Management Framework was developed in consultation with an external consultant. under the compliance plan, the responsible managers report regularly on the risks they manage and any emerging risks.

An independent consultant has been appointed who reviews business processes and undertakes formal assessments throughout the year. These assessments are provided to the Audit and Risk Committee for review.

The Audit and Risk Committee has responsibility for

134

ASX additional information

==> picture [115 x 63] intentionally omitted <==

ASX ADDitioNAL iNForMAtioN

Abacus Property Group is made up of the Abacus Trust, Abacus Income Trust, Abacus Storage Property Trust, Abacus Group Holdings Limited, Abacus Group Projects Limited and Abacus Storage Operations Limited. The responsible entity of the Abacus Trust and Abacus Income Trust is Abacus Funds Management Limited. The responsible entity of the Abacus Storage Property Trust is Abacus Storage Funds Management Limited. unless specified otherwise, the following information is current as at 23 August 2012.

Number of holders of ordinaryfully paid stapled securities	9,794
Votingrights attached to ordinaryfully paid stapled securities	one voteper stapled security
Number of holders holding less than a marketable parcel of ordinary fully paid stapled securities	639
Secretary, Abacus Funds Management Limited
Secretary, Abacus Storage Funds Management Limited
Secretary, Abacus Group Holdings Limited	Ellis Varejes
Secretary, Abacus Group Projects Limited
Secretary, Abacus Storage Operations Limited
Registered offce
Abacus Funds Management Limited	Level 34, Australia Square
Abacus Storage Funds Management Limited	264-278 George Street
Abacus Group Holdings Limited	Sydney NSW 2000
Abacus Group Projects Limited	(02) 9253 8600
Abacus Storage Operations Limited
	Boardroom Pty Limited
Registry	Level 7, 207 Kent Street Sydney NSW 2000
	(02) 9290 9600
Other stock exchanges on which Abacus PropertyGroupsecurities arequoted	None
Number and class of restricted securities or securities subject to voluntary escrow
that are on issue	None
There is no current on-market buy-back

SUBStANtiAL SecUrityHoLDer NotiFicAtioNS

Securityholders	Number of Securities
Calculator Australia Pty Limited	178,459,600
Perpetual Limited	39,473,995

135

ASX additional information

SecUritieS reGiSter

NuMBER OF SECuRITIES	NuMBER OF SECuRITYHOLDERS
1-1,000	1,443
1,001-5,000	3,615
5,001-10,000	2,318
10,001-100,000	2,322
100,001 – over	96
totals	9,794

toP 20 LArGeSt SecUrityHoLDiNGS

toP 20 LArGeSt SecUrityHoLDiNGS	toP 20 LArGeSt SecUrityHoLDiNGS
SECuRITYHOLDERS		NuMBER OF SECuRITIES	% OF ISSuED SECuRITIES
1	CALCuLATOR AuSTRALIA PTY LIMITED	144,888,962	32.569
2	CALCuLATOR AuSTRALIA PTY LIMITED	39,710,478	8.926
3	J P MORGAN NOMINEES AuSTRALIA LIMITED	35,731,683	8.032
4	NATIONAL NOMINEES LIMITED	26,137,497	5.875
5	RBC INVESTOR SERVICES AuSTRALIA NOMINEES PTY LIMITED	25,119,865	5.647
6	HSBC CuSTODY NOMINEES (AuSTRALIA) LIMITED	18,172,358	4.085
7	CITICORP NOMINEES PTY LIMITED	9,823,073	2.208
8	CITICORP NOMINEES PTY LIMITED	8,430,088	1.895
9	BNP PARIBAS NOMS PTY LTD	7,418,168	1.667
10	RBC INVESTOR SERVICES AuSTRALIA NOMINEES PTY LIMITED	7,237,875	1.627
11	AMP LIFE LIMITED	6,660,074	1.497
12	RBC INVESTOR SERVICES AuSTRALIA NOMINEES PTY LIMITED	4,204,427	0.945
13	JP MORGAN NOMINEES AuSTRALIA LIMITED	3,938,368	0.885
14	AuSTRALIAN ExECuTOR TRuSTEES LIMITED	3,004,853	0.675
15	EquITY TRuSTEES LIMITED	2,346,193	0.527
16	BNP PARIBAS NOMS PTY LTD	2,171,501	0.488
17	NAVIGATOR AuSTRALIA LTD	1,810,804	0.407
18	BNP PARIBAS NOMS PTY LTD	1,717,492	0.386
19	NuLIS NOMINEES (AuSTRALIA) LIMITED	1,359,717	0.306
20	PLuTEuS (NO 164) PTY LIMITED	1,102,341	0.248

136

==> picture [149 x 441] intentionally omitted <==

AI assistant

ABACUS GROUP — Annual Report 2012

64280_rns_2012-10-18_53a8c579-0926-4ca4-b9f1-dd365ebb06b1.pdf

AbAcus ProPerty grouP

glossAry

WHO IS ABACUS

1996

2001

2002

2012

Our pHilOsOpHy

asset ManageMent

direct prOperty investMents

prOperty ventures

Funds ManageMent

FINANCIAL HIGHLIGHTS

CHAIRMAN & MANAGING DIRECTOR’S REPORT

Fy12 Financial results

OperatiOnal review

investment property portfolio

sectOr diversity

geOgrapHic diversity

property ventures

Funds management

reMuneratiOn

OutlOOK

RECENT ACQUISITIONS & APPROVALS

BOARD MEMBERS

1 - rOB BaulderstOne

general Manager Finance

2 - rOd de aBOitiz

chief Financial Officer

3 - caMerOn laird

Joint director property ventures

4 - gavin lecHeM

director specialised capital

5 - JOHn l’estrange

Joint director property ventures

6 - len llOyd

7 - pHil petersOn

associate director – investments

8 - peter strain

director property

9 - neil suMMerField

Head of investor relations

10 - alan tHaKe

associate director – investments

11 - ellis vareJes

chief Operating Officer and company secretary

Managing director abacus property services

directors report

30 June 2012

PRINCIPAL ACTIVITIES

ABP GROUP STRUCTURE (Listed entities)

ABACUS PROPERTY GROUP CONSOLIDATION

abacus property group

REVIEW AND RESULTS OF OPERATIONS

directors report

30 June 2012

REVIEW AND RESULTS OF OPERATIONS (CONTINUED)

Property

Storage

abacus property group

REVIEW AND RESULTS OF OPERATIONS (CONTINUED)

Property Ventures

Funds Management

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

directors report

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS (CONTINUED)

DISTRIBUTIONS

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

DIRECTORS AND SECRETARY

SIGNIFICANT EVENTS AFTER BALANCE DATE

abacus property group

RECTORS AND SECRETARY (CONTINUED)

John Thame AIBF, FCPA - Chairman (non-executive)

Frank Wolf OAM, PhD, BA (Hons) - Managing Director

Malcolm Irving AM, FCPA, SF Fin, BCom, Hon DLitt

William J Bartlett FCA, CPA, FCMA, CA(SA)

directors report

ABACUS GROUP Annual Report 2012