DEXUS — Annual Report 2023

Aug 15, 2023

Dexus (ASX: DXS)

ASX release

16 August 2023

2023 Financial Statements

In addition to Dexus's 2023 Annual Report, which includes the Financial Statements for Dexus Property Trust, Dexus provides the 2023 Financial Statements for Dexus Operations Trust.

Authorised by the Board of Dexus Funds Management Limited

For further information please contact:

Investors

Rowena Causley Head of Listed Investor Relations +61 2 9017 1390 +61 416 122 383 rowena.causley@dexus.com

Media Louise Murray Senior Manager, Corporate Affairs and Communications +61 2 9017 1446 +61 403 260 754 louise.murray@dexus.com

About Dexus

Dexus (ASX: DXS) is a leading Australasian fully integrated real asset group, managing a high-quality Australasian real estate and infrastructure portfolio valued at \$61.0 billion (pro forma post final completion of the AMP Capital acquisition). We believe that the strength and quality of our relationships will always be central to our success and are deeply connected to our purpose: Unlock potential, create tomorrow. We directly and indirectly own \$17.4 billion of office, industrial, healthcare, retail and infrastructure assets and investments. We manage a further \$43.6 billion of investments in our funds management business (pro forma post final completion of the AMP Capital acquisition) which provides third party capital with exposure to quality sector specific and diversified real asset products. The funds within this business have a strong track record of delivering performance and benefit from Dexus's capabilities. The group's \$17.4 billion real estate development pipeline provides the opportunity to grow both portfolios and enhance future returns. Our sustainability aspiration is to unlock the potential of real assets to create lasting positive impact and a more sustainable tomorrow, and is focused on the priorities of customer prosperity, climate action and enhancing communities. Dexus is supported by more than 34,000 investors from 25 countries. With four decades of expertise in property investment, funds management, asset management and development, we have a proven track record in capital and risk management and delivering returns for investors. www.dexus.com

Dexus Funds Management Ltd ABN 24 060 920 783, AFSL 238163, as Responsible Entity for Dexus (ASX: DXS) Level 30, 50 Bridge Street, Sydney NSW 2000

Financial Statements 2023

Dexus Operations Trust Annual Report 30 June 2023

Contents
Directors' Report		2
	Auditor's Independence Declaration	8
	Consolidated Statement of Comprehensive Income	9
	Consolidated Statement of Financial Position	10
	Consolidated Statement of Changes in Equity	11
	Consolidated Statement of Cash Flows	12
	Notes to the Consolidated Financial Statements	13
Trust performance		16
Note 1	Operating segments	16
Note 2	Management fees and other revenue	16
Note 3	Property revenue and expenses	16
Note 4	Management operations, corporate and administration expenses	17
Note 5	Finance costs	17
Note 6	Taxation	18
Note 7	Earnings per unit	19
Note 8	Distributions paid and payable	20
Investments		21
Note 9	Investment properties	21
Note 10	Investments accounted for using the equity method	24
Note 11	Inventories	30
Note 12	Non-current assets classified as held for sale	30
	Capital and financial risk management and working capital	31
Note 13	Capital and financial risk management	31
Note 14	Lease liabilities	34
Note 15	Commitments and contingencies	35
Note 16	Contributed equity	36
Note 17	Reserves	36
Note 18	Working capital	37
Other disclosures		40
Note 19	Plant and equipment	40
Note 20	Intangible assets	40
Note 21	Business combination	43
Note 22	Financial assets at fair value through other comprehensive income	44
Note 23	Audit, taxation and transaction service fees	44
Note 24	Cash flow information	45
Note 25	Security-based payments	45
Note 26	Related parties	47
Note 27	Parent entity disclosures	48
Note 28	Subsequent events	49
	Directors' Declaration	50
	Independent Auditor's Report	51

Dexus consists of two stapled managed investment schemes, Dexus Property Trust and Dexus Operations Trust, collectively referred to as DXS or the Group. Dexus stapled securities are listed on the Australian Securities Exchange under the "DXS" code.

The registered office of the Group is Level 30, Quay Quarter Tower, 50 Bridge Street, Sydney, NSW 2000.

Directors	Appointed
Warwick M Negus, BBus, MCom, SF Fin 1	1 February 2021
Patrick N J Allaway, BA/LLB 2	1 February 2020
Penny Bingham-Hall, BA (Industrial Design), FAICD, SF Fin	10 June 2014
Paula J Dwyer, BCom, FCA, SF Fin, FAICD	1 February 2023
Tonianne Dwyer, BJuris (Hons), LLB (Hons) 3	24 August 2011
Mark H Ford, Dip. Tech (Commerce), CA, FAICD	1 November 2016
Rhoda Phillippo, MSc (Telecommunications Business), GAICD	1 February 2023
The Hon. Nicola L Roxon, BA/LLB (Hons), GAICD	1 September 2017
Elana Rubin AM, BA (Hons), MA, SF Fin, FAICD	28 September 2022
W Richard Sheppard, BEc (Hons), FAICD 3	1 January 2012
Darren J Steinberg, BEc, FAICD, FRICS, FAPI	1 March 2012

	Main meetings held	Main meetings attended	Special meetings held	Special meetings attended
Warwick M Negus 1	11	11
Patrick N J Allaway 2	4	4
Penny Bingham-Hall	$\mathbf{H}$	11
Paula J Dwyer 3	5	5
Tonianne Dwyer 4	4	4
Mark H Ford	11	11
Rhoda Phillippo 3	5	5
The Hon. Nicola L Roxon	11	10
Elana Rubin AM 5	9	9
W Richard Sheppard 4	4	4
Darren J Steinberg	11	11

		Board Audit Committee		Board Risk Committee		Board Nomination Committee		Board People and Remuneration Committee		Board Environmental, Social and Governance Committee		Joint "Organisational Risk" Session
	Held	Attended Held						Attended Held Attended Held Attended Held		Attended Held		Attended
Warwick M Negus 1	4	4	4	4	2	2	5	5	3	3	$\overline{2}$	$\overline{2}$
Patrick N J Allaway 2	1						$\qquad \qquad -$			-
Penny Bingham-Hall					2	2	8	8	5	5	$\overline{2}$	2
Paula J Dwyer 3						1	$\overline{\phantom{a}}$			-
Tonianne Dwyer 4
Mark H Ford	4	4			2	2	$\overline{\phantom{a}}$	$\overline{\phantom{m}}$	5	5	$\overline{2}$	$\overline{2}$
Rhoda Phillippo 3										-
The Hon, Nicola L Roxon					2	2	8	8	5	5	$\overline{2}$
Elana Rubin AM 5			3	3	2	$\overline{2}$	3	3	۰	-	$\overline{2}$	2
W Richard Sheppard 4							4	3

Directors	No. of securities
Warwick M Negus 1	50,000
Patrick N J Allaway 2	N/A
Penny Bingham-Hall	32,773
Paula J Dwyer 3	25,000
Tonianne Dwyer 4	N/A
Mark H Ford	17,339
Rhoda Phillippo 3	2,500
The Hon. Nicola L Roxon 5	25,669
Elana Rubin AM 6	18,348
W Richard Sheppard 4	N/A
Darren J Steinberg 7	1,377,611

Directors	Company	Date appointed
Warwick M Negus	Pengana Capital Group Limited (Chairman) 1	1 June 2017
	Bank of Queensland	22 September 2016
	Washington H. Soul Pattison and Company Ltd 1	1 November 2014
Patrick N J Allaway 2	Bank of Queensland	1 May 2019
Penny Bingham-Hall	BlueScope Steel Limited 3	29 March 2011
	Fortescue Metals Group Ltd	16 November 2016
Paula J Dwyer	AMCIL Limited	6 June 2023
	ANZ Group Holdings Ltd 4	1 April 2012
	Tabcorp Holdings Ltd 4	30 August 2005
Tonianne Dwyer 5	Metcash Limited 6	24 June 2014
	ALS Limited	1 July 2016
	Oz Minerals Limited	21 March 2017
	Incitec Pivot Limited	20 May 2021
Mark H Ford	Kiwi Property Group Limited 7	16 May 2011
Rhoda Phillippo	APA Group	1 June 2020
The Hon, Nicola L Roxon	Lifestyle Communities Limited	1 September 2017
Elana Rubin AM	Telstra Corporation	14 February 2020
	Slater and Gordon 8	6 March 2018
	Afterpay Ltd 9	30 March 2017
W Richard Sheppard 5	Star Entertainment Group	21 November 2012
Darren J Steinberg	VGI Partners Limited 10	12 May 2019

Subject to specified exclusions, the liabilities insured are for costs that may be incurred in defending civil or criminal proceedings that may be brought against Directors and Officers in their capacity as Directors and Officers of DXFM, its subsidiaries or such other entities, and other payments arising from liabilities incurred by the Directors and Officers in connection with such proceedings.

PricewaterhouseCoopers (PwC or the Auditor), is indemnified out of the assets of the Trust pursuant to the Dexus Specific Terms of Business agreed for all engagements with PwC, to the extent that the Trust inappropriately uses or discloses a report prepared by PwC. The Auditor is not indemnified for the provision of services where such an indemnification is prohibited by the Corporations Act 2007.

Audit

Auditor

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001. In accordance with section 324DAA of the Corporations Act 2001, the Group's lead auditor and review auditor must be rotated every five years unless the Board grants approval to extend the term for up to a further two years.

Non-audit services

The Trust may decide to employ the Auditor on assignments, in addition to its statutory audit duties, where the Auditor's expertise and experience with the Trust or DXS are important.

Details of the amounts paid or payable to the Auditor for audit and non-audit services provided during the year are set out in note 23 of the Notes to the Consolidated Financial Statements.

The Board Audit Committee is satisfied that the provision of non-audit services provided during the year by the Auditor (or by another person or firm on the Auditor's behalf) is compatible with the standard of independence for auditors imposed by the Corporations Act 2001.

The reasons for the Directors being satisfied are:

• All non-audit services have been reviewed by the Board Audit Committee to ensure that they do not impact the impartiality and objectivity of the Auditor
• None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants

The above Directors' statements are in accordance with the advice received from the Board Audit Committee.

Auditor's Independence Declaration

A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2007 is set out on page 8 and forms part of this Directors' Report.

Corporate governance

DXFM's Corporate Governance Statement is available at: www.dexus.com/corporategovernance

Rounding of amounts and currency

As the Trust is an entity of the kind referred to in AS1C Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/791, the Directors have chosen to round amounts in this Directors' Report and the accompanying Financial Report to the nearest thousand dollars, unless otherwise indicated. All figures in this Directors' Report and the Consolidated Financial Statements, except where otherwise stated, are expressed in Australian dollars.

Directors' authorisation

The Directors' Report is made in accordance with a resolution of the Directors. The Consolidated Financial Statements were authorised for issue by the Directors on 15 August 2023.

Warwick M e.us Chair 15 August 2023

Darren J Steinberg Chief Executive Officer 15 August 2023

Auditor's Independence Declaration

As lead auditor for the audit of Dexus Operations Trust for the year ended 30 June 2023, I declare that to the best of my knowledge and belief, there have been:

• (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
• (b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Dexus Operations Trust and the entities it controlled during the period.

A S Wood Sydney Partner PricewaterhouseCoopers

15 August 2023

PricewaterhouseCoopers, ABN 52 780 433 757 One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2023

		2023	2022
	Note	\$'000	\$'000
Revenue from ordinary activities
Property revenue	3	20,398	21,727
Development revenue	11	113,754	172,023
Distribution revenue		1,314	640
Interest revenue		3,031	161
Management fees and other revenue	2	360,020	288,239
Total revenue from ordinary activities		498,517	482,790
Share of net profit of investments accounted for using the equity method	10	21,306	12,469
Gain on dilution of equity accounted investments		604	—
Other income		3,930	1,975
Total income		524,357	497,234
Expenses
Property expenses	3	(8,643)	(9,214)
Development costs	11	(61,004)	(138,640)
Finance costs	5	(25,013)	(13,970)
Impairment of intangibles	20	(65,532)	(1,868)
Impairment of investments accounted for using the equity method	10	(192)	(886)
Net fair value loss of investment properties	9	(52,356)	(29,033)
Net loss on sale of investment properties		(553)	—
Transaction costs		(90,570)	(26,552)
Management operations, corporate and administration expenses	4	(269,372)	(228,640)
Total expenses		(573,235)	(448,803)
(Loss)/profit for the year before tax		(48,878)	48,431
Income tax expense (Loss)/profit for the year	6(a)	(11,151) (60,029)	(15,243) 33,188
Other comprehensive (loss)/income:
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations	17	71	—
Changes in financial assets at fair value through other comprehensive income	17	(1,516)	(2,040)
Total comprehensive (loss)/income for the year		(61,474)	31,148
		Cents	Cents
Earnings per unit on profit/(loss) attributable to unitholders of the Trust (parent entity)
Basic earnings per unit	7	(5.58)	3.09
Diluted earnings per unit	7	(5.58)	3.01

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

As at 30 June 2023

		2023	2022
	Note	\$'000	\$'000
Current assets
Cash and cash equivalents	18(a)	81,717	42,848
Receivables	18(b)	92,477	103,674
Non-current assets classified as held for sale	12	113,808	—
Inventories	11	30,575	54,355
Current tax receivable	6(c)	11,249	—
Other	18(c)	78,382	22,695
Total current assets		408,208	223,572
Non-current assets
Investment properties	9	37,213	212,650
Plant and equipment	19	11,318	11,674
Right-of-use assets	14	20,313	42,570
Investments accounted for using the equity method	10	181,088	125,011
Intangible assets	20	679,370	493,537
Loans with related parties	26	—	32,874
Financial assets at fair value through other comprehensive income	22	19,326	21,050
Other	26	1,247	72,044
Total non-current assets		949,875	1,011,410
Total assets		1,358,083	1,234,982
Current liabilities
Payables	18(d)	85,708	62,195
Lease liabilities	14	4,802	8,574
Current tax liabilities	6(c)	—	16,059
Provisions	18(e)	119,606	101,337
Contract liabilities	18(f)	—	4,349
Loans with related parties	26	21,502	33,059
Contingent consideration	21	50,000	—
Other		418	225
Total current liabilities		282,036	225,798
Non-current liabilities
Lease liabilities	14	17,886	38,525
Deferred tax liabilities	6(f)	124,864	102,186
Provisions	18(e)	23,562	18,016
Loans with related parties	26	667,942	497,222
Unearned revenue related to performance fees	2	19,318	19,318
Total non-current liabilities		853,572	675,267
Total liabilities		1,135,608	901,065
Net assets		222,475	333,917
Equity
Equity attributable to unitholders of the Trust (parent entity)
Contributed equity	16	107,185	107,185
Reserves	17	40,082	41,495
Retained profits		75,208	185,237
Parent entity unitholders' interest		222,475	333,917
Total equity		222,475	333,917

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity

For the year ended 30 June 2023

		Contributed		Retained
		equity	Reserves	profits	Total
	Note	\$'000	\$'000	\$'000	\$'000
Opening balance as at 1 July 2021		107,185	43,702	202,049	352,936
Net profit/(loss) for the year		—	—	33,188	33,188
Other comprehensive income/(loss) for the year	17	—	(2,040)	—	(2,040)
Total comprehensive income/(loss) for the year		—	(2,040)	33,188	31,148
Transactions with owners in their capacity as unitholders
Issue of additional equity, net of transaction costs	17	—	(194)	—	(194)
Security-based payments expense	17	—	27	—	27
Distributions paid or provided for	8	—	—	(50,000)	(50,000)
Total transactions with owners in their capacity as unitholders		—	(167)	(50,000)	(50,167)
Closing balance as at 30 June 2022		107,185	41,495	185,237	333,917
Opening balance as at 1 July 2022		107,185	41,495	185,237	333,917
Net profit/(loss) for the year		—	—	(60,029)	(60,029)
Other comprehensive income/(loss) for the year	17	—	(1,445)	—	(1,445)
Total comprehensive income/(loss) for the year		—	(1,445)	(60,029)	(61,474)
Transactions with owners in their capacity as unitholders
Purchase of securities, net of transaction costs	17	—	(192)	—	(192)
Issue of additional equity, net of transaction costs	17	—	—	—	—
Security-based payments expense	17	—	224	—	224
Distributions paid or provided for	8	—	—	(50,000)	(50,000)
Total transactions with owners in their capacity as unitholders		—	32	(50,000)	(49,968)
Closing balance as at 30 June 2023		107,185	40,082	75,208	222,475

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows

For the year ended 30 June 2023

	2023	2022
Note	\$'000	\$'000
Cash flows from operating activities
Receipts in the course of operations (inclusive of GST)	480,375	304,487
Payments in the course of operations (inclusive of GST)	(452,405)	(207,171)
Interest received	2,859	116
Finance costs paid	(27,677)	(15,246)
Distributions received from investments accounted for using the equity method	18,246	608
Income and withholding taxes paid	(56,821)	(8,604)
Proceeds from sale of property classified as inventory and development services	113,754	172,023
Payments for property classified as inventory and development services	(10,943)	(14,831)
Net cash inflow/(outflow) from operating activities 24	67,388	231,382
Cash flows from investing activities
Proceeds from sale of investment properties	88,579	75,378
Proceeds from sale of investments accounted for using the equity method	68,511	839,799
Payments for capital expenditure on investment properties	(80,468)	(8,414)
Payments for investments accounted for using the equity method	(41,143)	(870,821)
Payments for acquisition of investment properties	—	(32,725)
Payments for plant and equipment	(4,325)	(4,895)
Payments for intangibles	(3,599)	(1,530)
Payment for acquisition of subsidiaries, net of cash acquired	(216,116)	(385,803)
Net cash inflow/(outflow) from investing activities	(188,561)	(389,011)
Cash flows from financing activities
Borrowings received from related parties	1,097,519	2,002,072
Borrowings provided to related parties	(927,509)	(1,769,389)
Proceeds from loan with related party	55,462	33,057
Payment of lease liabilities	(9,056)	(9,530)
Purchase of securities for security-based payments plans	(7,676)	(16,292)
Distributions paid to unitholders	(50,012)	(50,027)
Distributions received	1,314	640
Net cash inflow/(outflow) from financing activities	160,042	190,531
Net increase/(decrease) in cash and cash equivalents	38,869	32,902
Cash and cash equivalents at the beginning of the year	42,848	9,946
Cash and cash equivalents at the end of the year	81,717	42,848

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Notes to the Consolidated Financial Statements

In this section

This section sets out the basis upon which the Trust's Consolidated Financial Statements are prepared. Specific accounting policies are described in their respective Notes to the Consolidated Financial Statements.

Basis of preparation

These Consolidated Financial Statements are general purpose financial statements which have been prepared in accordance with the requirements of the Constitutions of the entities within the Trust, the Corporations Act 2001, Australian accounting standards issued by the Australian Accounting Standards Board and the International Financial Reporting Standards adopted by the International Accounting Standards Board.

Unless otherwise stated the Consolidated Financial Statements have been prepared using consistent accounting policies in line with those of the previous financial year. Where required, comparative information has been restated for consistency with the current year's presentation.

The Consolidated Financial Statements are presented in Australian dollars, with all values rounded to the nearest thousand dollars in accordance with ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191, unless otherwise stated.

The Consolidated Financial Statements have been prepared on a going concern basis using historical cost conventions, except for the following which are stated at their fair value:

• Investment properties
• Investment properties within equity accounted investments
• Non-current assets classified as held for sale
• Derivative financial instruments
• Security-based payments
• Financial assets at fair value through other comprehensive income
• Contingent consideration

Significant change from the previous annual financial report

During the year, the Group entered into a business combination to acquire Collimate Capital's real estate and domestic infrastructure equity business from AMP. Details of the acquisition are outlined in note 21 Business combination. The accounting policy for business combinations and related goodwill is outlined below.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at fair value at the acquisition date and adjusted for the amount of any non-controlling interests in the acquiree. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at their fair values at the acquisition date. The Trust recognises any noncontrolling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest's proportionate share of the net identifiable assets of the acquired entity. Acquisition related costs are expensed as incurred.

Goodwill is the sum of the consideration transferred, the amount of any non-controlling interest in the acquired entity, and the acquisition date fair value of any previous equity interest in the acquired entity, less the fair value of the net identifiable assets acquired. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured at fair value with changes in fair value recognised in profit or loss.

Where the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is remeasured at fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses and is tested for impairment annually. Where a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the acquirer shall retrospectively adjust the provisional amounts recognised at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognised as of that date.

Critical accounting estimates

The preparation of the Consolidated Financial Statements requires the use of certain critical accounting estimates and management to exercise its judgement in the process of applying the Trust's accounting policies.

In the process of applying the Trust's accounting policies, management has considered the current economic environment including the impacts of inflation and rising interest rates.

Critical accounting estimates (continued)

Other than inflationary and interest rate impacts and the estimates and assumptions used for the measurement of items held at fair value such as:

• Investment properties;
• Investment properties within equity accounted investments;
• Non-current assets classified as held for sale;
• Derivative financial instruments;
• Security-based payments;
• Financial assets at fair value through other comprehensive income;
• Contingent consideration;
• Assumptions for assessing intangible assets for impairment; and
• Net realisable value for inventories;

no key assumptions concerning the future or other estimation of uncertainty at the end of each reporting period could have a significant risk of causing material adjustments to the Consolidated Financial Statements.

Climate change

The Group is continuing to develop its assessment of the impact of climate change in line with emerging industry and regulatory guidance in preparing the Consolidated Financial Statements.

Refer to specific considerations relating to Investment Properties within note 9 to the Consolidated Financial Statements.

On 26 June 2023, the International Sustainability Standards Board (ISSB) released its new sustainability standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. With the standards now officially released, the Australian Government has announced its second round of consultation on Climaterelated financial disclosures indicating an intention to adopt the new sustainability standards and potential to mandate for large businesses and financial institutions. The Trust will assess the potential impact of these new standards on the Consolidated Financial Statements once they have been adopted by the Australian Accounting Standards Board (AASB).

Principles of consolidation

These Consolidated Financial Statements incorporate the assets, liabilities and results of all subsidiaries as at 30 June 2023.

a. Controlled entities

Subsidiaries are all entities over which the Trust has control. The Trust controls an entity when the Trust is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Trust. They are deconsolidated from the date that control ceases.

b. Joint arrangements

Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations each investor has, rather than the legal structure of the joint arrangement.

Joint operations

Where assets are held directly as tenants in common, the Trust's proportionate share of revenues, expenses, assets and liabilities are included in their respective items of the Consolidated Statement of Financial Position and Consolidated Statement of Comprehensive Income.

Joint ventures

Investments in joint ventures are accounted for using the equity method. Under this method, the Trust's share of the joint ventures' post-acquisition profits or losses is recognised in the Consolidated Statement of Comprehensive Income and distributions received from joint ventures are recognised as a reduction of the carrying amount of the investment.

c. Employee share trust

The Trust has formed a trust to administer the Trust's security-based employee benefits. The employee share trust is consolidated as the substance of the relationship is that the trust is controlled by the Trust.

Foreign currency

The Consolidated Financial Statements are presented in Australian dollars.

Foreign currency transactions are translated into the Australian dollars functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of financial assets and liabilities denominated in foreign currencies are recognised in the Consolidated Statement of Comprehensive Income, except for qualifying cash flow hedges, which are deferred to equity.

On consolidation, the assets, liabilities, income and expenses of foreign operations are translated into Australian dollars using the following applicable exchange rates:

• Income and expenses: Average exchange rate
• Assets and liabilities: Reporting date
• Equity: Historical date
• Reserves: Reporting date

Foreign exchange differences resulting from translation of foreign operations are initially recognised in the foreign currency translation reserve and subsequently transferred to the Consolidated Statement of Comprehensive Income on disposal of the foreign operation.

Goods and services tax

Revenues, expenses and capital assets are recognised net of any amount of Australian Goods and Services Tax (GST), except where the amount of GST incurred is not recoverable. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis. The GST component of cash flows arising from investing and financing activities that is recoverable from or payable to the Australian Taxation Office is classified as cash flows from operating activities.

Notes to the Consolidated Financial Statements

The Notes include information which is required to understand the Consolidated Financial Statements and is material and relevant to the operations, financial position and performance of the Trust.

The Notes are organised into the following sections:

					Capital and financial risk management and working
	Trust performance		Investments		capital		Other disclosures
1.	Operating segments	9	Investment properties		13. Capital and financial risk management	19.	Plant and equipment
2.	Management fees and other revenue		10. Investments accounted for using the equity method		14. Lease liabilities		20. Intangible assets
3.	Property revenue and expenses	11.	Inventories		15. Commitments and contingencies	21.	Business combination
4.	Management operations, corporate and administration expenses	12.	Non-current assets classified as held for sale		16. Contributed equity	22.	Financial assets at fair value through other comprehensive income
5.	Finance costs			17.	Reserves	23.	Audit, taxation and transaction service fees
6.	Taxation				18. Working capital		24. Cash flow information
7.	Earnings per unit					25.	Security-based payments
8.	Distributions paid and payable					26.	Related parties
							27. Parent entity disclosures
						28.	Subsequent events

Trust performance

In this section

This section explains the results and performance of the Trust.

It provides additional information about those individual line items in the Consolidated Financial Statements that the Directors consider most relevant in the context of the operations of the Trust, including:

• Results by operating segment
• Management fees and other revenue
• Property revenue and expenses
• Management operations, corporate and administration expenses
• Finance costs
• Taxation
• Earnings per unit
• Distributions paid and payable

Note 1 Operating segments

Description of segments

The Trust's operating segments have been identified based on the sectors analysed within the management reports reviewed in order to monitor performance across the Group and to appropriately allocate resources.

The operating segments within DXS are reviewed on a consolidated basis and are not monitored at an individual trust level. Disclosures concerning DXS's operating segments are presented in the Group's Consolidated Financial Statements included within the Dexus Financial Report.

Note 2 Management fees and other revenue

Management fees are brought to account on an accruals basis and, if not received at the end of the reporting period, are reflected in the Consolidated Statement of Financial Position as a receivable.

	2023	2022
	\$'000	\$'000
Investment management and responsible entity fees	206,378	166,067
Rent and lease renewal fees	22,682	17,451
Property management fees	51,858	44,309
Capital works and development fees	50,105	32,209
Other fund fees1	1,417	8,328
Wages recovery and other fees	27,580	19,875
Total management fees and other revenue	360,020	288,239

1 Other fund fees include performance, acquisition and advisory fees.

Performance fees are for performance obligations fulfilled over time and for which consideration is variable. The fees are determined in accordance with the relevant agreement which stipulates out-performance of a benchmark over a given period. Performance fee revenue is recognised to the extent that it is highly probable that the amount of variable consideration recognised will not be significantly reversed when the uncertainty is resolved. Detailed calculations and an assessment of the risks associated with the recognition of the fee are completed to inform the assessment of the appropriate revenue to recognise. There is unearned revenue of \$19.32 million recorded within non-current liabilities as at 30 June 2023 (30 June 2022: \$19.32 million).

Note 3 Property revenue and expenses

Property rental revenue is derived from holding properties as investment properties and earning rental yields over time. Rental revenue is recognised on a straight line basis over the lease term for leases with fixed rent review clauses.

Prospective tenants may be offered incentives as an inducement to enter into operating leases. The costs of incentives are recognised as a reduction of rental revenue on a straight line basis from the lease commencement date to the end of the lease term. The carrying amount of the lease incentives is reflected in the fair value of investment properties.

Within its lease arrangements, the Trust provides certain services to tenants (such as utilities, cleaning, maintenance and certain parking arrangements) which are accounted for within AASB 15 Revenue from Contracts with Customers. A portion of the consideration within the lease arrangements is therefore allocated to services revenue within property revenue.

Note 3 Property revenue and expenses (continued)

2023	2022
\$'000	\$'000
18,939	19,677
2,031	2,452
(1,792)	(2,141)
1,220	1,739
20,398	21,727

Property expenses

Property expenses include:

• Rates
• Taxes

– Expected credit losses on receivables

– Other property outgoings incurred in relation to investment properties

These expenses are recognised in the Consolidated Statement of Comprehensive Income on an accrual basis. If these items are recovered from a tenant by the Trust, they are recorded within services revenue or direct recoveries within Property revenue.

	2023	2022
	\$'000	\$'000
Recoverable outgoings and direct recoveries	4,441	4,681
Other non-recoverable property expenses	4,202	4,533
Total property expenses	8,643	9,214

Note 4 Management operations, corporate and administration expenses

	2023	2022
	\$'000	\$'000
Audit, taxation, legal and other professional fees	17,226	6,974
Depreciation and amortisation	13,781	14,829
Employee benefits expense	190,576	169,592
Administration and other expenses	43,660	26,445
Software customisation expenses	4,129	10,800
Total management operations, corporate and administration expenses	269,372	228,640

Note 5 Finance costs

Finance costs include:

• Interest
• Amortisation or other costs incurred in connection with arrangement of borrowings
• Finance costs on lease liabilities
• Realised interest rate swaps

Finance costs are expensed as incurred unless they relate to qualifying assets which are capitalised to the cost of the asset.

A qualifying asset is an asset under development which takes a substantial period of time, where the works being carried out to bring it to its intended use or sale are expected to exceed 12 months in duration. Finance costs incurred for the acquisition and construction of a qualifying asset are capitalised to the cost of the asset for the period of time that is required to complete the asset. To the extent that funds are borrowed generally to fund development, the amount of borrowing costs to be capitalised to qualifying assets must be determined by using an appropriate capitalisation rate.

	2023	2022
	\$'000	\$'000
Interest paid to related parties	26,573	14,356
Amount capitalised	(3,070)	(1,852)
Finance costs - leases	1,305	1,321
Other finance costs	205	145
Total finance costs	25,013	13,970

The average capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 3.70% (2022: 2.73%).

Note 6 Taxation

DXO is liable for income tax and has formed a tax consolidated Trust with its wholly owned and controlled Australian entities. As a consequence, these entities are taxed as a single entity.

Income tax expense is comprised of current and deferred tax expense. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case it is recognised in other comprehensive income or directly in equity, respectively.

Current tax expense represents the expense relating to the expected taxable income at the applicable rate of the financial year.

Deferred tax expense represents the tax expense in respect of the future tax consequences of recovering or settling the carrying amount of an asset or liability. Deferred income tax liabilities are recognised for all taxable temporary differences. Deferred income tax assets are recognised for all deductible temporary differences and unused tax losses, to the extent that it is probable that future taxable profit will be available to utilise them.

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 reporting date.

The carrying amount of deferred income tax assets is reviewed at balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to utilise them.

a. Income tax (expense)/benefit

	2023	2022
	\$'000	\$'000
Current income tax expense	(30,555)	(45,265)
Deferred income tax benefit	19,404	30,022
Income tax expense	(11,151)	(15,243)
Deferred income tax expense included in income tax (expense) / benefit comprises:
Increase in deferred tax assets	3,626	3,446
Decrease in deferred tax liabilities	15,778	26,576
Total deferred tax benefit	19,404	30,022

b. Reconciliation of income tax (expense)/benefit to net profit

	2023	2022
	\$'000	\$'000
(Loss)/profit before income tax	(48,878)	48,431
Add: loss attributed to entities not subject to tax	—	—
(Loss)/profit subject to income tax	(48,878)	48,431
Prima facie tax expense/(benefit) at the Australian tax rate of 30% (2022: 30%)	14,663	(14,529)
Tax effect of amounts which are not deductible/(assessable) in calculating taxable income:
(Non-assessable)/non-deductible items and others	(25,814)	(714)
Income tax expense	(11,151)	(15,243)

c. Current tax assets/liabilities

	2023	2022
	\$'000	\$'000
(Decrease)/increase in current tax assets	11,249	(21,279)
Decrease/(increase) in current tax liabilities	16,059	(16,059)
Decrease/(increase) in current tax assets	27,308	(37,338)

d. Deferred tax assets

	2023	2022
	\$'000	\$'000
The balance comprises temporary differences attributable to:
Employee provisions	27,213	21,745
Software expenditure	9,835	13,046
Other	26,783	7,770
Total non-current assets - deferred tax assets	63,831	42,561
Movements:
Opening balance at the beginning of the year	42,561	39,115
Deferred tax assets arising from employee provisions on business combination	17,644	—
Movement in deferred tax asset arising from temporary differences	3,626	3,446
Closing balance at the end of the year	63,831	42,561

Note 6 Taxation (continued)

e. Deferred tax liabilities

	2023	2022
	\$'000	\$'000
The balance comprises temporary differences attributable to:
Intangible assets	168,390	117,427
Investment properties	16,622	25,426
Other	3,683	1,894
Total non-current liabilities - deferred tax liabilities	188,695	144,747
Movements
Opening balance at the beginning of the year	144,747	132,027
Deferred tax liabilities arising from management rights on business combination	59,726	39,296
Movement in deferred tax liability arising from temporary differences	(15,778)	(26,576)
Closing balance at the end of the year	188,695	144,747

f. Net deferred tax liabilities

	2023	2022
	\$'000	\$'000
Deferred tax assets	63,831	42,561
Deferred tax liabilities	(188,695)	144,747
Net deferred tax liabilities	(124,864)	102,186

Note 7 Earnings per unit

Earnings per unit are determined by dividing the net profit or loss attributable to unitholder by the weighted average number of ordinary units outstanding during the year. Diluted earnings per unit are adjusted from the basic earnings per unit by taking into account the impact of dilutive potential units.

a. Net profit used in calculating basic and diluted earnings per unit

	2023	2022
	\$'000	\$'000
(Loss)/profit attributable to unitholders of the Trust	(60,029)	33,188

b. Weighted average number of securities used as a denominator

	2023	2022
	No. of units	No. of units
Weighted average number of units outstanding used in calculation of basic earnings per unit	1,075,565,246	1,075,565,246
Effect on exchange of Exchangeable Notes	53,412,698	28,333,333
Weighted average number of units outstanding used in calculation of diluted earnings per unit	1,128,977,944	1,103,898,579

Note 8 Distributions paid and payable

Distributions are recognised when declared.

a. Distribution to unitholders

	2023	2022
	\$'000	\$'000
30 June (payable 30 August 2023)	50,000	50,000
Total distribution to unitholders	50,000	50,000

b. Distribution rate

	2023	2022
	Cents per unit	Cents per unit
30 June (payable 30 August 2023)	4.65	4.65
Total distributions	4.65	4.65

c. Franked dividends

	2023	2022
	\$'000	\$'000
Opening balance at the beginning of the year	114,317	132,455
Franking credits transferred in	—	1,531
Income tax paid during the year	61,755	1,760
Franking credits utilised for payment of distribution	(21,429)	(21,429)
Closing balance at the end of the year	154,643	114,317

Investments

In this section

The following table summarises the investments of the Trust detailed in this section.

		Office	Industrial	Co investment	Other	Total
30 June 2023	Note	\$'000	\$'000	\$'000	\$'000	\$'000
Investment properties	9	—	14,812	—	22,401	37,213
Investments accounted for using the equity method	10	7,993	35,501	34,889	—	78,383
Inventories	11	25,690	4,885	—	—	30,575
Non-current assets classified as held for sale	12	99,000	14,808	—	—	113,808
Total		132,683	70,006	34,889	22,401	259,979

Investments are used to generate the Trust's performance. The assets are detailed in the following notes:

• Investment properties: relates to investment properties (including ground leases where relevant), both stabilised and under development.
• Investments accounted for using the equity method: provides summarised financial information on the joint ventures and investments with significant influence. The Trust's interests in its joint venture portfolio assets are held through investments in trusts.
• Inventories: relates to the Trust's ownership of industrial and office assets or land held for repositioning, development, and sale.
• Non-current assets classified as held for sale: relates to investment properties which are expected to be sold within 12 months of the reporting date and are being marketed for sale or contracts have already exchanged.

Note 9 Investment properties

The Trust's investment properties consist of properties held for long-term rental yields and/or capital appreciation and property that is being constructed or developed for future use as investment property. Investment properties are initially recognised at cost including transaction costs. Investment properties are subsequently recognised at fair value.

The basis of valuations of investment properties is fair value, being the price that would be received to sell the asset in an orderly transaction between market participants at the measurement date.

Changes in fair values are recorded in the Consolidated Statement of Comprehensive Income. The gain or loss on disposal of an investment property is calculated as the difference between the carrying amount of the asset at the date of disposal and the net proceeds from disposal and is included in the Consolidated Statement of Comprehensive Income in the year of disposal.

Subsequent redevelopment and refurbishment costs (other than repairs and maintenance) are capitalised to the investment property where they result in an enhancement in the future economic benefits of the property.

Leasing fees incurred and incentives provided are capitalised and amortised over the lease periods to which they relate.

a. Reconciliation

		Office	Industrial	Other	2023	2022
	Note	\$'000	\$'000	\$'000	\$'000	\$'000
Opening balance at the beginning of the year		163,000	28,400	21,250	212,650	288,845
Additions		61	80,174	233	80,468	11,479
Acquisitions		—	—	—	—	17,932
Lease incentives		471	—	167	638	951
Amortisation of lease incentives		(1,755)	—	(4)	(1,759)	(2,075)
Rent straightlining		(534)	—	493	(41)	(71)
Disposals		—	(88,345)	(234)	(88,579)	(75,378)
Transfer to non-current assets classified as held for sale	12	(99,000)	(14,808)	—	(113,808)	—
Net fair value gain/(loss) of investment properties		(62,243)	9,391	496	(52,356)	(29,033)
Closing balance at the end of the year		—	14,812	22,401	37,213	212,650

Disposals

On 30 June 2023, settlement occurred for the disposal of 141 Anton Road, Hemmant QLD for \$88.5 million excluding transaction costs.

Note 9 Investment properties (continued)

b. Valuation process

It is the policy of the Trust to obtain independent valuations for each individual property at least once every three years by a member of the Australian Property Institute of Valuers. It has been the Trust's practice in most cases to have such valuations performed every six months. Each valuation firm and its signatory valuer are appointed on the basis that they are engaged for no more than three years except for properties under development and co-owned properties where it is deemed appropriate to extend beyond this term. Independent valuations may be undertaken earlier where the Responsible Entity believes there is potential for a change in the fair value of the property, being 5% of the asset value. At 30 June 2023, all investment properties held were externally valued.

The Trust's policy requires investment properties, including those held within investments accounted for using the equity method, to be internally valued at least every six months at each reporting period (interim and full-year) unless they have been independently externally valued. Internal valuations are compared to the carrying value of investment properties at the reporting date. Where the Directors determine that the internal valuations present a more reliable estimate of fair value the internal valuation is adopted as book value. Internal valuations are performed by the Trust's internal valuers who hold recognised relevant professional qualifications and have previous experience as property valuers from major real estate valuation firms.

An appropriate valuation methodology is utilised according to asset class. In relation to office and industrial assets this includes the capitalisation approach (market approach) and the discounted cash flow approach (income approach). The valuation is also compared to, and supported by, direct comparison to recent market transactions. The adopted capitalisation rates and discount rates are determined based on industry expertise and knowledge and, where possible, a direct comparison to third party rates for similar assets in a comparable location. Rental revenue from current leases and assumptions about future leases, as well as any expected operational cash outflows in relation to the property, are also built into each asset assessment of fair value.

In relation to development properties under construction for future use as investment property, where reliably measurable, fair value is determined based on the market value of the property on the assumption it had already been completed at the valuation date (using the methodology as outlined above) less costs still required to complete the project, including an appropriate adjustment for industry benchmarked profit and development risk.

c. Sustainability valuation considerations

The Trust engages independent valuation firms to assist in determining fair value of the investment property assets at each reporting period. As qualified valuers, they are required to follow both the RICS Valuation - Global Standards and the Australian Property Institute's International Valuation Standards, and accordingly their valuations are required to take into account the sustainability features of properties being valued and the implications such factors could have on property values in the short, medium and longer term.

Where relevant, the Trust's independent valuation firms note in their valuation reports that sustainability features are considered as part of the valuation approach and outline that sustainability features have been influencing value for some time.

Where the independent valuation firms give consideration to the impacts of sustainability, they are incorporating their understanding of how market participants include sustainability in their bids and the impact on market valuations, noting that valuers should reflect markets and not lead them.

d. Fair value measurement, valuation techniques and inputs

The following table represents the level of the fair value hierarchy and the associated unobservable inputs utilised in the fair value measurement for each class of investment property.

				Range of unobservable inputs
Class of property	Fair value hierarchy	Inputs used to measure fair value	2023	2022
Office1	Level 3	Adopted capitalisation rate	—	5.38%
		Adopted discount rate	—	6.5%
		Adopted terminal yield	—	5.88%
		Net market rental (per sqm)	—	\$566
Industrial	Level 3	Adopted value (per sqm of land)2	\$633	\$115 - \$190
Other	Level 3	Adopted capitalisation rate	5.00% - 5.50%	4.75% - 5.50%
		Adopted rate (per licensed place)	\$52,500 - \$77,391	\$52,292 - \$79,130
		Net market rental (per licensed place)	\$2,900 - \$3,872	\$2,900 - \$3,760

1 No office investment properties were held as at 30 June 2023.

2 The direct comparison approach is used as the primary method of determining the market value of industrial development land.

Note 9 Investment properties (continued)

d. Fair value measurement, valuation techniques and inputs (continued)

Key estimates: inputs used to measure fair value of investment properties

Judgement is required in determining the following significant unobservable inputs:

• Adopted value (per sqm of land): The market evidence is compared with the subject property to determine a value on a rate per square metre basis whilst considering the location, nature and development potential of the property.
• Adopted capitalisation rate: The rate at which net market rental revenue is capitalised to determine the value of a property. The rate is determined with regard to market evidence and the prior external valuation.
• Adopted rate (per licensed place): The market evidence is compared with the subject property to determine a value on a rate per licensed place basis whilst considering the location, nature and condition of each property.
• Net market rental (per licensed place): The net market rent is the estimated amount for which a property should lease between a lessor and a lessee on appropriate lease terms in an arm's length transaction.

e. Impact of the current economic environment on the fair value of investment properties

The elevated levels of economic uncertainty, coupled with a lack of recent comparable transactions in the market, has created heightened levels of judgment when deriving the fair value of the Trust's investment property portfolio.

To address this increased estimation uncertainty, the Directors have reviewed relevant market information on an ongoing basis (including post year end and up until the date of signing this report).

Whilst the fair values of investment property can be relied upon at the date of valuation, a higher level of valuation uncertainty than normal is assumed. A sensitivity analysis has been included in note 9(f), showing indicative movements in investment property valuations should certain significant unobservable inputs differ by reasonably possible amounts from those assumed in the valuations.

f. Sensitivity information

Significant movement in any one of the inputs listed in the table above may result in a change in the fair value of the Trust's investment properties as shown below.

The estimated impact of a change in certain significant unobservable inputs would result in a change in the fair value as follows:

	Office1		Other
	2023	2022	2023	2022
	\$'000	\$'000	\$'000	\$'000
A decrease of 25 basis points in the adopted capitalisation rate	—	7,951	1,190	1,180
An increase of 25 basis points in the adopted capitalisation rate	—	(7,244)	(1,010)	(1,110)
A decrease of 25 basis points in the adopted discount rate	—	6,520	—	—
An increase of 25 basis points in the adopted discount rate	—	(6,037)	—	—
A decrease of 5% in the net market rental (per sqm)	—	(8,150)	(1,090)	(1,050)
An increase of 5% in the net market rental (per sqm)	—	8,150	1,150	1,230

1 No office investment properties were held as at 30 June 2023.

Generally, a change in the assumption made for the adopted capitalisation rate is often accompanied by a directionally similar change in the adopted terminal yield. The adopted capitalisation rate forms part of the capitalisation approach while the adopted terminal yield forms part of the discounted cash flow approach.

Under the capitalisation approach, the net market rental has a strong interrelationship with the adopted capitalisation rate as the fair value of the investment property is derived by capitalising, in perpetuity, the total net market rent receivable. An increase (softening) in the adopted capitalisation rate may offset the impact to fair value of an increase in the net market rent. A decrease (tightening) in the adopted capitalisation rate may also offset the impact to fair value of a decrease in the net market rent. A directionally opposite change in the net market rent and the adopted capitalisation rate may increase the impact to fair value.

The discounted cash flow is primarily made up of the discounted cash flow of net income over the cash flow period and the discounted terminal value (which is largely based upon market rents grown at forecast market rental growth rates capitalised at an adopted terminal yield). An increase (softening) in the adopted discount rate may offset the impact to fair value of a decrease (tightening) in the adopted terminal yield. A decrease (tightening) in the discount rate may offset the impact to fair value of an increase (softening) in the adopted terminal yield. A directionally similar change in the adopted discount rate and the adopted terminal yield may increase the impact to fair value.

A decrease (softening) in the forecast rental growth rate may result in a negative impact on the discounted cash flow approach value while a strengthening may have a positive impact on the value under the same approach.

The 30 June 2023 industrial investment property asset is non-income producing development land valued using a direct comparison approach. There is a directly proportional impact between adopted sales price per sqm and fair value.

a. Interest in joint ventures and associates

The following investments are accounted for using the equity method of accounting in the Consolidated Financial Statements.

All entities were formed in Australia and their principal activity is either property or infrastructure investment related in Australia or investment in Australian and global listed real estate and infrastructure investment trusts.

	Ownership interest
	2023	2022	2023	2022
Name of entity	%	%	\$'000	\$'000
Dexus RBR Ravenhall Pty Limited1	50.1	—	36,222	—
Dexus Real Estate Partnership 1 (DREP1)2	21.3	36.6	35,333	8,156
Dexus Chester Hill Trust3	50.0	—	25,120	—
Jandakot Airport Holdings Trust (JAHT)	32.0	32.0	24,239	21,246
Jandakot Airport Domestic Trust (JADT)	34.7	34.7	20,790	17,357
Dexus Core Infrastructure Fund (DCIF)4	1.3	—	10,788	—
Dexus Convenience Retail REIT (DXC)	1.7	1.7	9,005	9,620
Dexus Walker Street Trust	50.0	50.0	7,659	9,079
Dexus Regional Property Fund	3.3	3.3	1,030	1,483
Dexus Development Fund No. 2	4.8	4.8	756	1,243
Divvy Parking Pty Limited	24.8	24.8	—	—
SAHMRI2 Holding Trust5	—	50.0	—	46,598
Other6	32.9	32.9	10,146	10,229
Total assets - investments accounted for using the equity method7	181,088	125,011

1 In August 2022, DXO acquired a 50.1% interest in Dexus RBR Ravenhall Pty Ltd.

2 In December 2022, DREP1 had its final equity close resulting in a dilution of DXH's interest from 36.6% to 21.3%.

3 In October 2022, DXO acquired a 50.0% interest in Dexus Chester Hill Trust.

4 Acquired as part of the AMP Capital transaction. Refer to note 21 Business combination for further details.

5 In December 2022, DXO exchanged and settled on the sale of units held in SAHMRI2 Holding Trust to Dexus Healthcare Property Fund (DHPF).

6 Includes investments in entities where the Company has an immaterial interest.

7 The Trust's share of investment properties, inventory and non-current assets held for sale in the investments for using the equity method was \$78.4 million (2022: \$143.0 million). These investments are accounted for using the equity method as a result of contractual arrangements requiring unanimous decisions on all relevant matters.

b. Impairment assessment on Investments accounted for using the equity method

At each reporting date, management assess whether there is any indication of impairment to the carrying value of Investments accounted for using the equity method, which in certain instances may include notional goodwill recognised on acquisition where relevant. As a result, the entire carrying amount of the investment is tested for impairment in accordance with AASB 136 Impairment of Assets as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. During the year, impairment losses of \$0.2 million were recognised (30 June 2022: impairment losses of \$0.9 million were recognised).

c. Summarised financial information for individually material joint ventures and associates and equity accounted investments

The following table provides summarised financial information for the joint ventures and associates and equity accounted investments which, in the opinion of the Directors, are material to the Group. The information disclosed reflects the amounts presented in the Financial Statements of the relevant joint ventures and associates and not the Trust's share of those amounts.

d. Summarised financial information for individually material joint ventures and associates

	Dexus RBR Ravenhall Pty Limited		Partnership 1	Dexus Real Estate	Dexus Chester Hill Trust
	2023	2022	2023	2022	2023	2022
Summarised Statement of Financial Position	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Current assets
Cash and cash equivalents	6	—	7,731	18,364	160	—
Inventories	—	—	37,526	—	—	—
Non-current assets classified as held for sale	—	—	—	—	—	—
Loan receivables	—	—	97,252	—	—	—
Other current assets	—	—	133	33,065	—	—
Total current assets	6	—	142,642	51,429	160	—
Non-current assets
Inventories	—	—	22,770	—	51,150	—
Investment properties	—	—	—	—	—	—
Investments accounted for using the equity			61,432	—	—	—
method	—	—
Loans with related parties	—	—	—	—	—	—
Other non-current assets	72,299	—	3,185	17,390	—	—
Total non-current assets	72,299	—	87,387	17,390	51,150	—
Current liabilities
Provision for distribution	—	—	2,105	—	160	—
Borrowings	—	—	57,408	—	—	—
Other current liabilities	4	—	4,754	1,267	1,245	—
Total current liabilities	4	—	64,267	1,267	1,405	—
Non-current liabilities
Borrowings	—	—	—	45,267	—	—
Other non-current liabilities Total non-current liabilities	— —	— —	62 62	— 45,267	— —	— —
Net assets	72,301	—	165,700	22,285	49,905	—
Reconciliation to carrying amounts:
Opening balance at the beginning of the year	—	—	22,285	—	—	—
Additions	72,303	—	160,193	24,865	49,905	—
Profit/(loss) for the year	(2)	—	(14,673)	(2,580)	160	—
Distributions received/receivable	—	—	(2,105)	—	(160)	—
Closing balance at the end of the year	72,301	—	165,700	22,285	49,905	—
Trust's share in \$'000	36,222	—	35,333	8,156	24,953	—
Capitalised transaction costs	—	—	—	—	167	—
Impairment	—	—	—	—	—	—
Notional goodwill	—	—	—	—	—	—
Trust's carrying amount	36,222	—	35,333	8,156	25,120	—
Summarised Statement of Comprehensive Income
Property revenue	—	—	1,146	—	266	—
Property revaluations	—	—	—	—	—	—
Gain/(loss) on sale of investment properties	—	—	—	—	—	—
Interest income	1	—	3,724	773	2	—
Other income	—	—	677	78	—	—
Cost of sales on disposal of development properties	—	—	—	—	—	—
Impairment of inventory	—	—	(12,135)	—	—	—
Finance costs	—	—	(2,422)	(376)	—	—
Income tax benefit/(expense)	—	—	—	—	—	—
Other expenses	(3)	—	(5,663)	(3,055)	(108)	—
Net profit/(loss) for the year	(2)	—	(14,673)	(2,580)	160	—
Total comprehensive income/(loss) for the year	(2)	—	(14,673)	(2,580)	160	—

d. Summarised financial information for individually material joint ventures and associates (continued)

	Jandakot Airport		Jandakot Airport		Dexus Core
	Holdings Trust		Domestic Trust		Infrastructure Fund
	2023	2022	2023	2022	2023	2022
Summarised Statement of Financial Position	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Current assets
Cash and cash equivalents	37	—	685	122	—	—
Inventories	—	—	—	—	—	—
Non-current assets classified as held for sale	—	—	—	—	—	—
Loan receivables	—	—	—	—	—	—
Other current assets	100	—	—	—	23,818	—
Total current assets	137	—	685	122	23,818	—
Non-current assets
Inventories	—	—	—	—	—	—
Investment properties	—	—	—	—	—	—
Investments accounted for using the equity	75,184	65,751	70,997	61,179	1,945	—
method
Loans with related parties	—	—	—	—	—	—
Other non-current assets	—	—	—	—	817,851	—
Total non-current assets	75,184	65,751	70,997	61,179	819,796	—
Current liabilities
Provision for distribution	245	—	267	1	6,500	—
Borrowings	—	—	—	—	3,430	—
Other current liabilities	265	533	11,527	11,396	2,319	—
Total current liabilities	510	533	11,794	11,397	12,249	—
Non-current liabilities
Borrowings	—	—	—	—	—	—
Other non-current liabilities	—	—	—	—	8,556	—
Total non-current liabilities	—	—	—	—	8,556	—
Net assets	74,811	65,218	59,888	49,904	822,809	—
Reconciliation to carrying amounts:
Opening balance at the beginning of the year	65,218	—	49,904	—	—	—
Additions	—	54,493	—	57,044	825,618	—
Profit/(loss) for the year	11,788	10,725	12,308	(7,140)	3,681	—
Distributions received/receivable	(2,195)	—	(2,324)	—	(6,490)	—
Closing balance at the end of the year Trust's share in \$'000	74,811 23,940	65,218 20,870	59,888 20,781	49,904 17,317	822,809 10,788	— —
Capitalised transaction costs	—	77	—	31	—	—
Impairment	—	—	—	—	—	—
Notional goodwill	299	299	9	9	—	—
Trust's carrying amount	24,239	21,246	20,790	17,357	10,788	—
Summarised Statement of Comprehensive Income
Property revenue	—	—	—	—	—	—
Property revaluations	—	—	—	—	—	—
Gain/(loss) on sale of investment properties	—	—	—	—	—	—
Interest income	5	—	12	—	532	—
Other income	12,514	11,258	13,024	4,156	6,039	—
Cost of sales on disposal of development properties	—	—	—	—	—	—
Impairment of inventory	—	—	—	—	—	—
Finance costs	—	—	—	—	—	—
Income tax benefit/(expense)	—	—	—	—	(37)	—
Other expenses	(731)	(533)	(728)	(11,296)	(2,853)	—
Net profit/(loss) for the year	11,788	10,725	12,308	(7,140)	3,681	—
Total comprehensive income/(loss) for the year	11,788	10,725	12,308	(7,140)	3,681	—

d. Summarised financial information for individually material joint ventures and associates (continued)

	Dexus Convenience Retail REIT		Trust	Dexus Walker Street	Dexus Regional Property Fund
	2023	2022	2023	2022	2023	2022
Summarised Statement of Financial Position	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Current assets
Cash and cash equivalents	5,454	5,178	37	118	620	693
Inventories	—	—	—	—	—	—
Non-current assets classified as held for sale	7,050	—	—	—	—	—
Loan receivables	—	—	—	—	—	—
Other current assets	8,601	4,876	69	53	399	175
Total current assets	21,105	10,054	106	171	1,019	868
Non-current assets
Inventories	—	—	—	—	—	—
Investment properties	774,170	850,050	15,985	18,900	54,700	61,500
Investments accounted for using the equity method	—	—	—	(30)	—	—
Loans with related parties	—	—	—	—	—	—
Other non-current assets	7,588	13,018	—	37	819	1,014
Total non-current assets	781,758	863,068	15,985	18,907	55,519	62,514
Current liabilities
Provision for distribution	7,645	6,737	692	692	135	167
Borrowings	—	—	—	—	—	—
Other current liabilities	14,155	11,256	81	227	1,407	562
Total current liabilities	21,800	17,993	773	919	1,542	729
Non-current liabilities
Borrowings	263,420	299,611	—	—	23,424	23,113
Other non-current liabilities	1,260	1,000	—	—	—	—
Total non-current liabilities	264,680	300,611	—	—	23,424	23,113
Net assets	516,383	554,518	15,318	18,159	31,572	39,540
Reconciliation to carrying amounts:
Opening balance at the beginning of the year	554,518	— 503,938	18,159	18,469	39,540	— 46,921
Additions Profit/(loss) for the year	— (8,380)	82,617	190 (3,031)	— (286)	— (6,343)	(5,319)
Distributions received/receivable	(29,755)	(32,037)	—	(24)	(1,625)	(2,062)
Closing balance at the end of the year	516,383	554,518	15,318	18,159	31,572	39,540
Trust's share in \$'000	9,005	9,620	7,659	9,079	1,030	1,483
Capitalised transaction costs	—	—	—	—	—	—
Impairment	—	—	—	—	—	—
Notional goodwill	—	—	—	—	—	—
Trust's carrying amount	9,005	9,620	7,659	9,079	1,030	1,483
Summarised Statement of Comprehensive Income
Property revenue	59,376	55,277	435	514	4,116	3,956
Property revaluations	(41,283)	30,836	(2,968)	(276)	(7,764)	(8,235)
Gain/(loss) on sale of investment properties	—	125	—	—	—	—
Interest income	59	146	2	—	19	—
Other income	15	13,136	—	—	—	135
Cost of sales on disposal of development properties	—	—	—	—	—	—
Impairment of inventory	—	—	—	—	—	—
Finance costs	(11,370)	(3,398)	—	—	(685)	(535)
Income tax benefit/(expense)	—	—	—	—	—	—
Other expenses	(15,177)	(13,505)	(500)	(524)	(2,029)	(640)
Net profit/(loss) for the year	(8,380)	82,617	(3,031)	(286)	(6,343)	(5,319)
Total comprehensive income/(loss) for the year	(8,380)	82,617	(3,031)	(286)	(6,343)	(5,319)

d. Summarised financial information for individually material joint ventures and associates (continued)

	Dexus Development				Other1
	Fund No. 2 SAHMRI2 Holding Trust
	2023	2022	2023	2022	2023	2022
Summarised Statement of Financial Position	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Current assets
Cash and cash equivalents	184	1,142	—	601	15,792	7,775
Inventories	30,000	—	—	—	—	—
Non-current assets classified as held for sale	—	—	—	—	—	—
Loan receivables	—	—	—	—	—	—
Other current assets	149	—	—	3,921	1,317	4,444
Total current assets	30,333	1,142	—	4,522	17,109	12,219
Non-current assets
Inventories	—	32,300	—	—	—	—
Investment properties	—	—	—	230,500	—	—
Investments accounted for using the equity method	—	—	—	—	708	5,674
Loans with related parties	—	—	—	—	10	10
Other non-current assets	2,897	15,804	—	—	18	4,118
Total non-current assets	2,897	48,104	—	230,500	736	9,802
Current liabilities
Provision for distribution	—	—	—	1,772	—	—
Borrowings	12,820	12,075	—	—	—	—
Other current liabilities	1,623	81	—	401	1,911	1,101
Total current liabilities	14,443	12,156	—	2,173	1,911	1,101
Non-current liabilities
Borrowings	—	—	—	74,464	—	—
Other non-current liabilities Total non-current liabilities	2,897 2,897	10,910 10,910	— —	65,569 140,033	198 198	199 199
Net assets	15,890	26,180	—	92,816	15,736	20,721
Reconciliation to carrying amounts:
Opening balance at the beginning of the year	26,180	—	—	—	15,845	15,548
Additions	—	26,823	—	54,164	—	3,265
Profit/(loss) for the year	(10,290)	(643)	—	39,618	(109)	1,908
Distributions received/receivable	—	—	—	(966)	—	—
Closing balance at the end of the year	15,890	26,180	—	92,816	15,736	20,721
Trust's share in \$'000	756	1,243	—	46,598	7,068	8,037
Capitalised transaction costs	—	—	—	—	—	—
Impairment	—	—	—	—	—	(886)
Notional goodwill	—	—	—	—	3,078	3,078
Trust's carrying amount	756	1,243	—	46,598	10,146	10,229
Summarised Statement of Comprehensive Income
Property revenue	142	142	—	—	—	—
Property revaluations	—	—	—	40,542	—	—
Gain/(loss) on sale of investment properties	—	—	—	—	—	—
Interest income	14	1	—	1	290	139
Other income	1	—	—	—	5,105	4,415
Cost of sales on disposal of development properties	(1,374)	—	—	—	—	—
Impairment of inventory	(3,531)	—	—	—	—	—
Finance costs	(1)	(1)	—	—	—	—
Income tax benefit/(expense)	(4,894)	275	—	—	—	—
Other expenses	(647)	(1,060)	—	(925)	(5,504)	(2,646)
Net profit/(loss) for the year	(10,290)	(643)	—	39,618	(109)	1,908
Total comprehensive income/(loss) for the year	(10,290)	(643)	—	39,618	(109)	1,908

1 Includes investments in entities where the Company has an immaterial interest.

d. Summarised financial information for individually material joint ventures and associates (continued)

	Total
	2023	2022
Summarised Statement of Financial Position	\$'000	\$'000
Current assets
Cash and cash equivalents	30,706	33,993
Inventories	67,526	—
Non-current assets classified as held for sale	7,050	—
Loan receivables	97,252	—
Other current assets	34,586	46,534
Total current assets	237,120	80,527
Non-current assets
Inventories	73,920	32,300
Investment properties	844,855	1,160,950
Investments accounted for using the equity method	210,266	132,574
Loans with related parties	10	10
Other non-current assets	904,657	51,381
Total non-current assets	2,033,708	1,377,215
Current liabilities
Provision for distribution	17,749	9,369
Borrowings	73,658	12,075
Other current liabilities	39,291	26,824
Total current liabilities	130,698	48,268
Non-current liabilities
Borrowings	286,844	442,455
Other non-current liabilities	12,973	77,678
Total non-current liabilities Net assets	299,817 1,840,313	520,133 889,341
Reconciliation to carrying amounts:
Opening balance at the beginning of the year	791,649	34,017
Additions	1,108,209	771,513
Profit/(loss) for the year	(14,891)	118,900
Distributions received/receivable	(44,654)	(35,089)
Closing balance at the end of the year	1,840,313	889,341
Trust's share in \$'000	177,535	122,403
Capitalised transaction costs	167	108
Impairment	—	(886)
Notional goodwill	3,386	3,386
Trust's carrying amount	181,088	125,011
Summarised Statement of Comprehensive Income
Property revenue	65,481	59,889
Property revaluations	(52,015)	62,867
Gain/(loss) on sale of investment properties	—	125
Interest income	4,660	1,060
Other income	37,375	33,178
Cost of sales on disposal of development properties	(1,374)	—
Impairment of inventory	(15,666)	—
Finance costs	(14,478)	(4,310)
Income tax benefit/(expense)	(4,931)	275
Other expenses	(33,943)	(34,184)
Net profit/(loss) for the year Total comprehensive income/(loss) for the year	(14,891) (14,891)	118,900 118,900

Note 11 Inventories

Development properties held for repositioning, construction and sale are recorded at the lower of cost or net realisable value. Cost is assigned by specific identification and includes the cost of acquisition, and development and holding costs such as borrowing costs, rates and taxes. Holding costs incurred after completion of development are expensed.

Development revenue includes proceeds on the sale of inventory and revenue earned through the provision of development services on assets sold as inventory. Revenue earned on the provision of development services is recognised using the percentage complete method. The stage of completion is measured by reference to costs incurred to date as a percentage of estimated total costs for each contract. Where the project result can be reliably estimated, development services revenue and associated expenses are recognised in profit or loss. Where the project result cannot be reliably estimated, profits are deferred and the difference between consideration received and expenses incurred is carried forward as either a receivable or payable. Development services revenue and expenses are recognised immediately when the project result can be reliably estimated.

Transfers from investment properties to inventories occur when there is a change in intention regarding the use of the property from an intention to hold for rental income or capital appreciation purposes to an intention to develop and sell. The transfer price is recorded as the fair value of the property as at the date of transfer. Development activities will commence immediately after they transfer.

Key estimates: Net Realisable Value (NRV) of inventories

NRV is determined using the estimated selling price in the ordinary course of business less estimated costs to bring inventories to their finished condition, including marketing and selling expenses. NRV is based on the most reliable evidence available at the time and the amount the inventories are expected to be realised. These key assumptions are reviewed annually or more frequently if indicators of impairment exist. No impairment provisions have been recognised.

a. Properties held for sale

	2023	2022
	\$'000	\$'000
Current assets
Properties held for sale	30,575	54,355
Total current assets - inventories	30,575	54,355
Total assets - inventory	30,575	54,355

b. Reconciliation

	2023	2022
	\$'000	\$'000
Opening balance at the beginning of the year	54,355	178,164
Acquisitions and additions	36,633	14,831
Disposals	(60,413)	(138,640)
Closing balance at the end of the year	30,575	54,355

Disposals

On 22 December 2022, settlement occurred for the disposal of 12 Frederick Street, St Leonards NSW for \$112.8 million.

Note 12 Non-current assets classified as held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use, and a sale is considered highly probable.

Non-current assets classified as held for sale are presented separately from the other assets in the Consolidated Statement of Financial Position. Non-current assets classified as held for sale relate to investment properties measured at fair value.

At 30 June 2023, the balance relates to 130 George Street, Parramatta NSW and 20 Distribution Drive, Truganina VIC (30 June 2022: nil).

Capital and financial risk management and working capital

In this section

The Trust's overall risk management program focuses on reducing volatility from impacts of movements in financial markets and seeks to minimise potential adverse effects on the financial performance of the Trust.

Note 13 Capital and financial risk management outlines how the Trust manages its exposure to a variety of financial risks (interest rate risk, foreign currency risk, liquidity risk and credit risk) and details the various derivative financial instruments entered into by the Trust.

The Board of the Responsible Entity determines the appropriate capital structure of the Trust, how much is borrowed from financial institutions and capital markets (debt), and how much is raised from security holders (equity) in order to finance the Trust's activities both now and in the future. This capital structure is detailed in the following notes:

• Debt: Lease liabilities in note 14, and Commitments and contingencies in note 15
• Equity: Contributed equity in note 16 and Reserves in note 17.

Note 18 provides a breakdown of the working capital balances held in the Consolidated Statement of Financial Position .

Note 13 Capital and financial risk management

Capital and financial risk management is carried out through a centralised treasury function which is governed by a Board approved Treasury Policy. The Trust has an established governance structure which consists of the Group Management Committee and Capital Markets Committee.

The Board has appointed a Group Management Committee responsible for achieving Dexus' goals and objectives, including the prudent financial and risk management of the Trust. A Capital Markets Committee has been established to advise the Group Management Committee.

The Capital Markets Committee is a management committee that is accountable to the Board. It convenes at least quarterly and conducts a review of financial risk management exposures including liquidity, funding strategies and hedging. It is also responsible for the development of financial risk management policies and funding strategies for recommendation to the Board, and the approval of treasury transactions within delegated limits and powers.

a. Capital risk management

The Trust manages its capital to ensure that entities within the Trust will be able to continue as a going concern while maximising the return to owners through the optimisation of the debt and equity balance.

The capital structure of the Trust consists of debt, cash and cash equivalents and equity attributable to security holders. The Trust continuously monitors its capital structure and it is managed in consideration of the following factors:

• The cost of capital and the financial risks associated with each class of capital
• Gearing levels and other debt covenants
• Potential impacts on net tangible assets and security holders' equity
• Potential impacts on the Trust's credit rating
• Other market factors

DXFM is the responsible entity for the Trust. DXFM has been issued with an Australian Financial Services Licence (AFSL). The licence is subject to certain capital requirements including the requirement to maintain liquidity above specified limits. DXFM must also prepare rolling cash projections over at least the next 12 months and demonstrate it will have access to sufficient financial resources to meet its liabilities that are expected to be payable over that period. Cash projections and assumptions are approved, at least quarterly, by the Board of the Responsible Entity.

AFSLs have been issued to the following wholly owned entities:

• Dexus Wholesale Property Limited (DWPL), as the responsible entity for Dexus Wholesale Property Fund (DWPF)
• Dexus Wholesale Management Limited (DWML), as the trustee of third party managed funds
• Dexus Wholesale Funds Limited (DWFL), as the responsible entity for Dexus Healthcare Property Fund (DHPF)
• Dexus Investment Management Limited (DIML), as the responsible entity for Dexus Industrial Fund (DIF)
• Dexus Asset Management Limited (DXAM), as the responsible entity of third party managed funds
• Dexus RE Limited (DXRE), as the responsible entity for APD Trust, a wholly owned entity
• AMP Capital Funds Management Limited (AMPCFML), as the responsible entity of third party managed funds
• AMP Investment Services Pty Limited (AMPIS), as the trustee of third party managed funds

Note 13 Capital and financial risk management (continued)

b. Financial risk management

The Trust's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Trust. The Trust's principal financial instruments, other than derivatives, comprise cash, bank loans and capital markets issuance. The main purpose of financial instruments is to manage liquidity and hedge the Trust's exposure to financial risks namely:

• Interest rate risk
• Liquidity risk
• Credit risk

i. Market risk

Interest rate risk

Interest rate risk arises from interest bearing financial assets and liabilities that the Trust utilises. Non-derivative interest bearing financial instruments are predominantly short term liquid assets and long term debt issued at fixed rates which expose the Trust to fair value interest rate risk as the Trust may pay higher interest costs than if it were at variable rates. The Trust's borrowings which have a variable interest rate give rise to cash flow interest rate risk due to movements in variable interest rates.

The Trust's risk management policy for interest rate risk seeks to minimise the effects of interest rate movements on its asset and liability portfolio through active management of the exposures. The policy prescribes minimum and maximum hedging amounts for the Trust, which is managed on a portfolio basis.

Sensitivity analysis on interest expense

The table below shows the impact on the Trust's net interest expense of a 100 basis point movement in market interest rates. The sensitivity on cash flow arises due to the impact that a change in interest rates will have on the Trust's floating rate debt and derivative cash flows on average during the financial year. Net interest expense is only sensitive to movements in market rates to the extent that floating rate debt is not hedged.

	2023	2022
	(+/-) \$'000	(+/-) \$'000
+/- 1% (100 basis points)	6,679	4,972
Total A\$ equivalent	6,679	4,972

The movement in interest expense is proportional to the movement in interest rates.

ii. Liquidity risk

Liquidity risk is associated with ensuring that there are sufficient funds available to meet the Trust's financial commitments as and when they fall due and planning for any unforeseen events which may curtail cash flows. The Trust identifies and manages liquidity risk across the following categories:

• Short-term liquidity management covering the month ahead on a rolling basis with continuous monitoring of forecast and actual cash flows
• Medium-term liquidity management of liquid assets, working capital and standby facilities to cover the Trust cash requirements over the next 1-24 month period. The Trust maintains a level of committed borrowing facilities above the forecast committed debt requirements (liquidity headroom buffer). Committed debt includes future expenditure that has been approved by the Board or Investment Committee (as required within delegated limits)
• Long-term liquidity management through ensuring an adequate spread of maturities of borrowing facilities so that refinancing risk is not concentrated in certain time periods and ensuring an adequate diversification of funding sources where possible, subject to market conditions

Refinancing risk

Refinancing risk is the risk that the Trust:

• Will be unable to refinance its debt facilities as they mature
• Will only be able to refinance its debt facilities at unfavourable interest rates and credit market conditions (margin price risk)

The Trust's key risk management strategy for margin price risk on refinancing is to spread the maturities of debt facilities over different time periods to reduce the volume of facilities to be refinanced and the exposure to market conditions in any one period.

Note 13 Capital and financial risk management (continued)

• b. Financial risk management (continued)
• ii. Liquidity risk (continued)

Refinancing risk (continued)

	2023					2022
	Within one year	Between one and two years	Between two and five years	After five years	Within one year	Between one and two years	Between two and five years	After five years
	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Payables	(85,708)	—	—	—	(62,195)	—	—	—
Lease liabilities	(4,802)	(4,199)	(9,431)	(4,256)	(8,574)	(7,256)	(20,175)	(11,094)
Total payables and lease liabilities	(90,510)	(4,199)	(9,431)	(4,256)	(70,769)	(7,256)	(20,175)	(11,094)
Interest bearing liabilities & interest
Interest bearing loans with related parties and interests1	(31,660)	(30,792)	(89,471)	(758,315)	(18,944)	(22,773)	(69,064)	(566,286)
Total interest bearing liabilities & interest1	(31,660)	(30,792)	(89,471)	(758,315)	(18,944)	(22,773)	(69,064)	(566,286)

1 Includes estimated interest.

iii. Credit risk

Credit risk is the risk that the counterparty will not fulfil its obligations under the terms of a financial instrument and will cause financial loss to the Trust. The Trust has exposure to credit risk on financial assets included in the Trust's Consolidated Statement of Financial Position.

The Trust manages this risk by:

• Adopting a process for determining an approved counterparty, with consideration of qualitative factors as well as the counterparty's credit rating
• Regularly monitoring counterparty exposure within approved credit limits that are based on the lower of an S&P and Moody's credit rating. The exposure includes the current market value of in-the-money contracts and the potential exposure, which is measured with reference to credit conversion factors as per APRA guidelines
• Entering into International Swaps and Derivatives Association (ISDA) Master Agreements once a financial institution counterparty is approved
• For some trade receivables, obtaining collateral where necessary in the form of bank guarantees and tenant bonds
• Regularly monitoring loans and receivables on an ongoing basis

A minimum S&P rating of A– (or Moody's equivalent) is required to become or remain an approved counterparty unless otherwise approved by the DXFM Board.

The Trust is exposed to credit risk on cash balances and on derivative financial instruments with financial institutions. The Trust has a policy that sets limits as to the amount of credit exposure to each financial institution. New derivatives and cash transactions are limited to financial institutions that meet minimum credit rating criteria in accordance with the Trust's policy requirements.

Financial instrument transactions are spread among a number of approved financial institutions within specified credit limits to minimise the Trust's exposure to any one counterparty. As a result, there is no significant concentration of credit risk for financial instruments. The maximum exposure to credit risk at 30 June 2023 is the carrying amounts of financial assets recognised on the Consolidated Statement of Financial Position.

The Trust is exposed to credit risk on trade receivable balances. The Trust has a policy to continuously assess and monitor the credit quality of trade debtors on an ongoing basis. Given the historical profile and exposure of the trade receivables, it has been determined that no significant concentrations of credit risk exists for receivables balances. The maximum exposure to credit risk at 30 June 2023 is the carrying amounts of the trade receivables recognised on the Consolidated Statement of Financial Position.

Note 13 Capital and financial risk management (continued)

b. Financial risk management (continued)

iv. Fair value

The Trust uses the following methods in the determination and disclosure of the fair value of financial instruments:

Level 1: the fair value is calculated using quoted prices in active markets.

Level 2: the fair value is determined using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: the fair value is estimated using inputs for the asset or liability that are not based on observable data.

Equity investments in Australian managed funds are measured at Level 3 having regard to unit prices which are determined by giving consideration to the unit prices and net assets of the relevant fund. The unit prices and net asset values are largely driven by the fair values of investment properties and derivatives held by the funds. Recent arm's length transactions, if any, are also taken into consideration. The fair value of equity investments in Australian managed funds is impacted by the price per security of the investment. An increase to the price per security results in an increase to the fair value of the investment.

All derivative financial instruments were measured at Level 2 for the periods presented in this report.

All investment properties, infrastructure assets, listed securities and derivatives were appropriately measured at Level 1, 2 or 3, within investments accounted for using the equity method for the periods presented in this report.

During the year, there were no transfers between Level 1, 2 and 3 fair value measurements.

Since cash, receivables and payables are short-term in nature, their fair values are not materially different from their carrying amounts. For the majority of the borrowings, the fair values are not materially different to their carrying amounts, since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short-term nature.

v. Offsetting financial assets and financial liabilities

Financial assets and liabilities are offset and the net amount reported in the Consolidated Statement of Financial Position where there is a legally enforceable right to set-off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. No financial assets and liabilities are currently held under netting arrangements.

Master Netting arrangements – not currently enforceable

Agreements with derivative counterparties are based on an ISDA Master Agreement. Under the terms of these arrangements, where certain credit events occur (such as default), the net position owing/receivable to a single counterparty in the same currency will be taken as owing and all the relevant arrangements terminated. As the Trust does not presently have a legally enforceable right of set-off, these amounts have not been offset in the Consolidated Statement of Financial Position.

Note 14 Lease liabilities

Under AASB 16 Leases, as a Lessee, the Trust recognises a right-of-use asset and lease liability on the Consolidated Statement of Financial Position for all material leases. In relation to leases of low value assets, such as IT equipment, small items of office furniture or short-term leases with a term of 12 months or less, the Trust has elected not to recognise right-ofuse assets and lease liabilities.

The Trust recognises the lease payments associated with these leases as an expense in the Consolidated Statement of Comprehensive Income on a straight line basis over the lease term. The Trust recognises a right-of-use asset and lease liability on the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, adjusted for any remeasurements of the lease liability. The cost of the right-of-use asset includes:

• The amount of initial measurement of the lease liability
• Any lease payments made at or before the commencement date, less any lease incentives received, any initial direct costs
• Make good costs

Right-of-use assets are depreciated on a straight line basis from the commencement date of the lease to the earlier of the end of the useful life of the asset or the end of the lease term, unless they meet the definition of an investment property.

The Trust tests all right-of-use assets for impairment where there is an indicator that the asset may be impaired. If an impairment exists, the carrying amount of the asset is written down to its recoverable amount as per the requirements of AASB 136 Impairment of Assets.

The lease liability is initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Trust's incremental borrowing rate. Generally, the Trust uses its incremental borrowing rate as the discount rate. The weighted rate applied was 3.12%. Variable lease payments that depend on an index or rate are included in the lease liability, measured using the index or rate as at the date of lease commencement.

Note 14 Lease liabilities (continued)

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. The liability is remeasured when there is a change in future lease payments arising from a change in index or rate or changes in the assessment of whether an extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised. Interest costs and variable lease payments not included in the initial measurement of the lease liability are recognised in the Consolidated Statement of Comprehensive Income in the period to which they relate.

The Trust has applied judgement to determine the lease term for contracts which include renewal and termination options. The Trust's assessment considered the facts and circumstances that create an economic incentive to exercise a renewal option or not to exercise a termination option.

The following table details information relating to leases where the Trust is a lessee.

	2023	2022
Note	\$'000	\$'000
Current
Lease liabilities - property leases a.	4,802	8,574
Total current liabilities - lease liabilities	4,802	8,574
Non-current
Lease liabilities - property leases a.	17,886	38,525
Total non-current liabilities - lease liabilities	17,886	38,525
Total liabilities - lease liabilities	22,688	47,099

a. Lease liabilities – property leases

Lease liabilities relating to property leases predominantly relate to Dexus offices and Dexus Place property leases. Refer to the Consolidated Statement of Financial Position for disclosure of the corresponding right-of-use asset.

Note 15 Commitments and contingencies

a. Commitments

Capital commitments

The following amounts represent capital expenditure on financial assets at fair value through profit or loss, investment properties and inventories as well as committed fit out or cash incentives contracted at the end of each reporting period but not recognised as liabilities payable:

	2023	2022
	\$'000	\$'000
Investment properties	4,789	—
Inventories and development management services	54,126	1,914
Investments accounted for using the equity method	2	36,938
Total capital commitments	58,917	38,852

Lease receivable commitments

The future minimum lease payments receivable by the Trust are:

	2023	2022
	\$'000	\$'000
Within one year	12,437	15,503
Later than one year but not more than five years	20,202	63,316
Later than five years	11,594	98,856
Total lease receivable commitments	44,233	177,675

b. Contingencies

DPT and DXO are guarantors of A\$8,042.8 million (June 2022: A\$6,948.8 million) of interest bearing liabilities. The guarantees have been given in support of debt outstanding and drawn against these facilities and may be called upon in the event that a borrowing entity has not complied with certain requirements such as failure to pay interest or repay a borrowing, whichever is earlier. During the period no guarantees were called.

The Trust has bank guarantees of A\$140.9 million, comprising A\$91.2 million held to comply with the terms of the Australian Financial Services Licences (AFSL) and A\$49.7 million largely in respect of developments, with \$34.1 million available for other corporate purposes.

The above guarantees are issued in respect of the Trust and represent an additional liability to those already existing on the Consolidated Statement of Financial Position.

As at 30 June 2023, the Group has recorded contingent consideration of \$50 million related to the acquisition of Collimate Capital's real estate and domestic infrastructure equity business from AMP Limited. Refer to note 21 Business combination for further details.

Note 15 Commitments and contingencies (continued)

b. Contingencies (continued)

Outgoings are excluded from contingencies as they are expensed when incurred.

The Directors of the Responsible Entity are not aware of any other contingent liabilities in relation to the Trust, other than those disclosed in the Consolidated Financial Statements, which should be brought to the attention of unitholders as at the date of completion of this report.

Note 16 Contributed equity

Number of units on issue

	2023	2022
	No. of units	No. of units
Opening balance at the beginning of the year	1,075,565,246	1,075,565,246
Closing balance at the end of the year	1,075,565,246	1,075,565,246

Each stapled security ranks equally with all other stapled securities for the purposes of distributions and on termination of the Trust.

Each stapled security entitles the holder to vote in accordance with the provisions of the Constitutions and the Corporations Act 2001.

During the 12 months to 30 June 2023, no Dexus securities were acquired or cancelled.

Note 17 Reserves

	2023	2022
	\$'000	\$'000
Asset revaluation reserve	42,738	42,738
Security-based payments reserve	467	465
Treasury securities reserve	(688)	(718)
Financial assets at fair value through other comprehensive income	(2,506)	(990)
Foreign currency translation reserve	71	—
Total reserves	40,082	41,495
Movements:
Asset revaluation reserve
Opening balance at the beginning of the year	42,738	42,738
Closing balance at the end of the year	42,738	42,738
Security-based payments reserve
Opening balance at the beginning of the year	465	438
Issue of securities to employees	(222)	—
Security-based payments expense	224	27
Closing balance at the end of the year	467	465
Treasury securities reserve
Opening balance at the beginning of the year	(718)	(524)
Issue of securities to employees	222	(194)
Purchase of securities Closing balance at the end of the year	(192) (688)	— (718)
Financial assets at fair value through other comprehensive income
Opening balance at the beginning of the year	(990)	1,050
Changes in the fair value	(1,516)	(2,040)
Closing balance at the end of the year	(2,506)	(990)
Foreign currency translation reserve
Opening balance at the beginning of the year	—	—
Exchange differences on translation of foreign operations	71	—
Closing balance at the end of the year	71	—

Note 17 Reserves (continued)

Nature and purpose of reserves

Asset revaluation reserve

The asset revaluation reserve is used to record the fair value adjustment arising on a business combination.

Security-based payments reserve

The security-based payments reserve is used to recognise the fair value of performance rights to be issued under the Deferred Short Term Incentive Plans (DSTI), Long Term Incentive Plans (LTI) and Senior Management Retention Awards. Refer to note 25 for further details.

Treasury securities reserve

The treasury securities reserve is used to record the acquisition of securities purchased to fulfil the obligations of the DSTI, LTI and Senior Management Retention Awards. As at 30 June 2023, DXS held 2,545,268 stapled securities which includes 941,066 acquired during the year net of 931,986 vested during the year (2022: 817,312).

Financial assets at fair value through other comprehensive income

Changes in the fair value arising on valuation of investments, classified as fair value through other comprehensive income, are recognised in other comprehensive income and accumulated in a separate reserve within equity. On disposal of these equity investments, any related balance within Financial assets at fair value through other comprehensive income reserve is reclassed to retained earnings.

Foreign currency translation reserve

The foreign currency translation reserve is used to record the exchange differences arising from the translation of the financial operations of foreign subsidiaries.

Note 18 Working capital

a. Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

b. Receivables

Rental income and management fees are brought to account on an accrual basis.

Dividends and distributions are recognised when declared and, if not received at the end of the reporting period, reflected in the Consolidated Statement of Financial Position as a receivable.

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for expected credit losses. Trade receivables are required to be settled within 30 days and are assessed on an ongoing basis for impairment. Receivables which are known to be uncollectable are written off by reducing the carrying amount directly.

A provision for expected credit losses is recognised for expected credit losses on trade and other receivables. The provision for expected credit losses is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted as the effect of discounting is immaterial.

The calculation of expected credit losses relating to rent and other receivables requires judgement to assess the future uncertainty of tenants' ability to pay their debts. Expected credit losses have been estimated using a provision matrix that has been developed with reference to the Trust's historical credit loss experience, general economic conditions and forecasts, assumptions around rent relief that may be provided to tenants and tenant risk factors such as size, industry exposure and the Trust's understanding of the ability of tenants to pay their debts. Accordingly, expected credit losses include both the part of the rent receivable that is likely to be waived and any additional amount relating to credit risk associated with the financial condition of the tenant.

In relation to distributions and fees receivables, an assessment has been performed taking into consideration the ability of the funds and mandates managed by the Trust to cash settle their distributions and pay their fees outstanding.

For any provisions for expected credit losses, the corresponding expense has been recorded in the Consolidated Statement of Comprehensive Income within property expenses.

Note 18 Working capital (continued)

b. Receivables (continued)

	2023	2022
	\$'000	\$'000
Rent receivable1	754	627
Less: provision for expected credit losses - property	(118)	(170)
Total rent receivables	636	457
Distributions receivable	1,870	17,438
Fees receivable	82,583	56,502
Receivables from related entities	4,269	25,666
Other receivables	5,885	5,610
Less: provision for expected credit losses - other	(2,766)	(1,999)
Total other receivables	91,841	103,217
Total receivables	92,477	103,674

1 Rent receivable includes outgoings recoveries.

The provision for expected credit losses for rent receivables (which includes outgoings recoveries) as at 30 June 2023 was determined as follows:

\$'000

30 June 2023	Total
0-30 days1	751
31-60 days	19
61-90 days	18
91+ days	2,096
Total provision for expected credit losses	2,884

1 0-30 days includes deferred rent receivable but not due.

The provision for expected credit losses for distributions receivable, fees receivable and other receivables that has been recorded is minimal.

The provision for expected credit losses for rent receivables as at the reporting date reconciles to the opening loss allowances as follows:

	2023	2022
	\$'000	\$'000
Opening provision for expected credit losses	2,169	1,051
Increase in provision recognised in profit or loss during the year	832	1,118
Receivables written off during the year as uncollectible	(117)	—
Closing provision for expected credit losses	2,884	2,169

c. Other current assets

	2023	2022
	\$'000	\$'000
Prepayments	8,569	7,220
Net receivable acquired through business combination1	42,665	—
Other	27,148	15,475
Total other current assets	78,382	22,695

1 Acquired as part of the AMP Capital transaction. Refer to note 21 Business combination for further details.

d. Payables

	2023	2022
	\$'000	\$'000
Trade creditors	29,673	13,423
Accruals	39,599	15,004
Accrued capital expenditure	7,922	18,456
GST payable	879	143
Payables owed to related parties	3,973	9,983
Other payables	3,662	5,186
Total payables	85,708	62,195

Note 18 Working capital (continued)

e. Provisions

A provision is recognised when an obligation exists as a result of a past event, and it is probable that a future outflow of cash or other benefit will be required to settle the obligation.

In accordance with the Trust Constitutions, the Trust distributes its distributable income to security holders by cash or reinvestment. Distributions are provided for when they are approved by the Board of Directors and declared.

Provision for employee benefits relates to the liabilities for wages, salaries, annual leave and long service leave.

Liabilities for employee benefits for wages, salaries and annual leave expected to be settled within 12 months represent present obligations resulting from employees' services provided to the end of the reporting period. They are measured based on remuneration wage and salary rates that the Trust expects to pay at the end of the reporting period including related oncosts, such as workers compensation, insurance and payroll tax.

The provision for employee benefits for long service leave represents the present value of the estimated future cash outflows, to be made resulting from employees' services provided to the end of the reporting period.

The provision is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates based on turnover history and is discounted using the Australian Corporate Bond Index rates at the end of the reporting period that most closely matches the term of the maturity of the related liabilities. The provision for employee benefits also includes the employee incentives schemes which are shown separately in note 25.

	2023	2022
	\$'000	\$'000
Current
Provision for distribution	50,000	50,012
Provision for employee benefits	69,606	51,325
Total current provisions	119,606	101,337
	2023	2022
	\$'000	\$'000
Non-current
Provision for employee benefits	23,562	18,016
Total non-current provisions	23,562	18,016
	2023	2022
	\$'000	\$'000
Current provisions
Opening balance at the beginning of the year	101,337	96,864

Additional provisions	124,444	94,781
Payment of distributions	(50,000)	(50,000)
Payment of employee benefits	(56,175)	(40,308)
Closing balance at the end of the year	119,606	101,337

A provision for distribution has been raised for the period ended 30 June 2023. This distribution is to be paid on 30 August 2023.

f. Contract liabilities

This relates to a contract liability which has been accounted for as variable consideration within the scope of AASB 15 Revenue from Contracts with Customers. This liability was extinguished during the 2023 financial year.

Other disclosures

In this section

This section includes other information that must be disclosed to comply with the Accounting Standards, the Corporations Act 2001 or the Corporations Regulations.

Note 19 Plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to its acquisition. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Trust and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Consolidated Statement of Comprehensive Income during the reporting period in which they are incurred.

Plant and equipment is tested for impairment whenever events or changes in circumstances indicate that the carrying amounts exceed their recoverable amounts.

Depreciation is calculated using the straight line method so as to allocate their cost, net of their residual values, over their expected useful lives as follows:

– Furniture and fittings 10-20 years

– IT and office equipment 3-5 years

	2023	2022
	\$'000	\$'000
Opening balance at the beginning of the year	11,674	10,098
Additions	4,325	4,895
Depreciation charge	(4,681)	(3,319)
Closing balance at the end of the year	11,318	11,674

	2023	2022
	\$'000	\$'000
Cost	47,919	43,594
Accumulated depreciation	(36,601)	(31,920)
Cost - Fully depreciated assets written off	(11,613)	(8,411)
Accumulated depreciation - Fully depreciated assets written off	11,613	8,411
Net book value as at the end of the year	11,318	11,674

Note 20 Intangible assets

The Trust's intangible assets comprise management rights, goodwill and capitalised software.

Costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Trust are recognised as intangible assets. Costs associated with configuration and customisation in a cloud computing arrangement are recognised as an expense when incurred, unless they are paid to the suppliers of the SaaS arrangement to significantly customise the cloud-based software for the Trust, in which case the costs are recorded as a prepayment for services and amortised over the expected renewable term of the arrangement. Software is measured at cost and amortised using the straight line method over its estimated useful life, expected to be three to five years.

Management rights represent the asset management rights owned by Dexus Holdings Pty Limited (and its controlled entities), a wholly owned subsidiary of DXO, which entitles it to management fee revenue from both finite life trusts and indefinite life trusts. Those management rights that are deemed to have a finite useful life (held at a value of \$7.5 million (2022: \$0.8 million) are measured at cost and amortised using the straight line method over their estimated remaining useful lives of one to six years. Management rights that are deemed to have an indefinite life are held at a value of \$598.8 million (2022: \$433.7 million).

Goodwill represents the excess of the cost of an acquisition over the fair value of the Trust's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill arising from acquisitions of Investments accounted for using the equity method is included in the carrying amount of investments in associates or joint ventures. Refer to note 10 for further details.

Note 20 Intangible assets (continued)

Goodwill and management rights with 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. An impairment loss is recognised in the Consolidated Statement of Comprehensive Income for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, management rights are grouped at the lowest levels for which there are separately identifiable cash inflows, which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Goodwill has been grouped at the lowest level at which the goodwill is monitored, which may comprise of a number of cash generating units to which the goodwill relates. Impairment charges recorded in relation to management rights may be reversed at a future point in time to the extent that the recoverable amount exceeds the carrying amount. Impairment charges recorded in relation to goodwill cannot be reversed.

Increasing interest rates amid high inflation presented uncertainty both in the transaction and financial markets during the year. As a result, management performed assessments over the recoverable amount of its management rights and goodwill at both half year and year end. The Directors and management have considered the key assumptions adopted and identified an impairment associated with certain management rights and goodwill at the half year. No further impairments have been identified at year end.

Where relevant, the value-in-use has been determined using long-term forecasts in a five-year discounted cash flow model and applying a terminal value in year five. The fair value less cost of disposal has been determined using long-term forecasts in a three-year discounted cash flow model and applying a terminal value in year three. Forecasts were based on projected returns in light of current market conditions and hence classified as a Level 3 fair value.

Key assumptions: management rights

Judgement is required in determining the following key assumptions used to calculate:

Value in use

• Terminal yield multiple range of 5 to 12 times (2022: 5 to 12 times) has been applied incorporating an appropriate risk premium for a management business. A terminal yield multiple of 12 times (2022: 12 times) has been applied to the majority of the management rights.
• Cash flows have been discounted at a post-tax rate of 9.0% (2022: 9.0%) based on externally published weighted average cost of capital for an appropriate peer group plus an appropriate premium for risk.
• An average income growth rate of 3.4% (2022: 6.5%) has been applied to forecast cash flows based on past performance and management's expectations of future developments.

Fair value less cost of disposal

• A terminal growth rate range of 0% to 2.5% (2022: N/A) has been applied incorporating an appropriate risk premium for a management business.
• Cash flows have been discounted at a post-tax rate range of 7.75% to 11.75% (2022: N/A) based on externally published weighted average cost of capital for an appropriate peer group plus an appropriate premium for risk.

Sensitivity information

A significant movement in any one of the inputs listed in the table above as at the reporting date would result in a change in the recoverable amount of the Trust's management rights and goodwill.

The estimated impact of a change in certain significant inputs would result in an additional impairment of intangibles as follows:

		Intangibles
Assumption	2023	2022
Value in use	\$'000	\$'000
An increase of 0.25% in the adopted discount rate	—	(2)
A decrease of 1x the adopted terminal yield multiple	(6,284)	(540)
A decrease of 1% in the adopted income growth rate	(3,919)	—
Fair value less cost of disposal
An increase of 0.25% in the adopted discount rate	(3,773)	—
A decrease of 1% in the adopted terminal growth rate	(18,062)	—

Note 20 Intangible assets (continued)

	2023	2022
	\$'000	\$'000
Management Rights
Opening balance at the beginning of the year
Dexus Wholesale Property Fund (indefinite useful life)	261,869	258,511
Direct Property Funds (indefinite useful life)	42,000	42,000
Direct Property Funds (finite useful life)	692	444
APN Funds (indefinite useful life)	129,828	—
APN Funds (finite useful life)	126	—
Additions
Dexus Wholesale Property Fund (indefinite useful life)1	1,331	3,358
Direct Property Funds (finite useful life)	—	2,404
APN Funds (indefinite useful life)	—	129,828
APN Funds (finite useful life) AMP Capital Funds (indefinite useful life)2	—	690
	187,687	—
AMP Capital Funds (finite useful life)2	7,535	—
Impairment of management rights	(24,129)	(1,868)
Amortisation charge	(608)	(852)
Closing balance at the end of the year	606,331	434,515
Cost	641,728	445,175
Accumulated amortisation	(6,800)	(6,192)
Accumulated impairment	(28,597)	(4,468)
Total management rights	606,331	434,515
Goodwill
Opening balance at the beginning of the year	55,444	915
Additions3	54,691	54,529
Impairment	(41,403)	—
Closing balance at the end of the year	68,732	55,444
Cost	115,141	60,450
Accumulated impairment	(46,409)	(5,006)
Total goodwill	68,732	55,444
Software
Opening balance at the beginning of the year	3,578	3,595
Additions	2,268	1,531
Amortisation charge	(1,539)	(1,548)
Closing balance at the end of the year	4,307	3,578
Cost	21,428	19,160
Accumulated amortisation	(17,121)	(15,582)
Cost - Fully amortised assets written off	(16,792)	(16,638)
Accumulated amortisation - Fully amortised assets written off	16,792	16,638
Total software	4,307	3,578
Total non-current intangible assets	679,370	493,537

1 During the period Dexus incurred costs in connection with Dexus Wholesale Property Limited, a Dexus entity, being appointed as Responsible Entity of Dexus ADPF.

2 During the year, the Group entered into a business combination to acquire Collimate Capital's real estate and domestic infrastructure equity business from AMP Limited. As part of the transaction, \$195.2 million of management rights were recognised. Refer to note 21 Business combination for further details.

3 The excess between the cash consideration transferred and the fair value of the net identifiable assets acquired as part of the AMP transaction has been recorded as goodwill. Refer to note 21 Business combination for further details.

Note 21 Business combination

On 27 April 2022, Dexus agreed to acquire the real estate and domestic infrastructure equity business of Collimate Capital Limited (Collimate Capital or AMP Capital) from AMP.

The acquisition is underpinned by a compelling strategic rationale for Dexus:

• Further diversifies Dexus's fund management platform with an expanded investor base
• Expanded capabilities to drive an enhanced offering and asset performance
• Provides a scalable platform for growth, underpinned by Dexus's best practice governance and risk management framework
• Long-term value creation potential for Dexus security holders and funds management partners.

On 24 March 2023, Dexus reached First Completion under an alternative Transaction structure with a two-stage completion process.

The alternative transaction structure allowed First Completion of the Transaction without satisfaction of the condition precedent relating to the transfer of AMP's ownership interest in China Life AMP Asset Management ("CLAMP") out of entities being acquired by Dexus under the Transaction.

Under the alternative Transaction structure, First Completion enables integration of the Collimate Capital business into the Dexus platform, with Dexus entitled to the economics from First Completion. Final Completion remains dependent on the ownership of CLAMP being transferred out of the relevant entities that Dexus has agreed to purchase.

A base purchase price of \$225 million was agreed. Payment of \$50 million of the base purchase price has been deferred until Final Completion. If Final Completion does not occur by 30 September 2024, this deferred amount will be forfeited by AMP. As at 30 June 2023, it is expected that the full amount will be payable and accordingly it has been recorded as contingent consideration in the Consolidated Statement of Financial Position.

In addition, a subsidiary of DXO acquired an associated co-investment stake in AMP Capital Core Infrastructure Fund (CIF) from Collimate Capital for total cash consideration of \$10.5 million.

The amounts recognised in respect of the consideration paid and the provisionally accounted for assets and liabilities recognised are set out below.

Purchase consideration

	\$'000
Cash consideration - base purchase price	175,000
Working capital adjustments paid/payable	65,626
Contingent consideration	50,000
Equity accounted investment acquisition consideration	10,474
Total consideration	301,100

Identifiable assets recognised (provisional)

	\$'000
Cash and cash equivalents	52,096
Trade and other receivables1	93,859
Investments accounted for using the equity method	10,474
Intangible assets: management rights2	195,222
Trade and other payables	(2,730)
Current tax liabilities	(734)
Provisions	(59,696)
Deferred tax assets	17,644
Deferred tax liabilities	(59,726)
Net identifiable assets acquired	246,409
Goodwill3	54,691
Net assets acquired	301,100

1 Includes a net receivable balance of \$42.7 million recorded within other current assets in the Consolidated Statement of Financial Position.

2 Management rights recognised in connection with AMP Capital managed funds, which include both open ended and closed ended funds and mandates.

3 Goodwill is attributable to the people, established business practices and relationships obtained via the acquisition and is not deductible for tax purposes.

Payment for acquisition of subsidiary

	\$'000
Cash consideration paid/payable	251,100
Less: Cash and cash equivalents acquired	(52,096)
Net outflow of cash from investing activities	199,004

Acquisition related costs

Acquisition related costs of \$81.3 million have been included within Transaction costs in the Consolidated Statement of Comprehensive Income and in Operating cash flows in the Consolidated Statement of Cash Flows.

Note 21 Business combination (continued)

Acquired receivables

The fair value of trade and other receivables acquired was \$93.9 million and reflects the gross contractual amount at the acquisition date. Based on management's best estimate on the acquisition date, it is expected that the contractual amounts will be collected.

Note 22 Financial assets at fair value through other comprehensive income

Financial assets through other comprehensive income comprise DXS securities acquired on-market in order to fulfil the future requirements of the security-based payment plans which the Group has irrevocably elected at initial recognition to recognise in this category.

Changes in fair value arising on valuation are recognised in other comprehensive income net of tax, in a separate reserve in equity. On disposal of these equity investments, any related balance within Financial assets at fair value through other comprehensive income reserve is reclassed to retained earnings.

Note 23 Audit, taxation and transaction service fees

During the year, the Auditor and its related practices earned the following remuneration:

	2023	2022
	\$	\$
Audit and review services
Auditors of the Group - PwC
Financial statement audit and review services	1,273,147	426,411
Audit and review fees paid to PwC	1,273,147	426,411
Assurance services
Auditors of the Group - PwC
Outgoings audits	5,314	5,119
Regulatory audit and compliance assurance services	227,513	177,416
Sustainability assurance services	6,063	4,117
Other assurance services	337,500	555,000
Assurance fees paid to PwC	576,390	741,652
Total audit, review and assurance fees paid to PwC	1,849,537	1,168,063
Other services
Auditors of the Group - PwC
Taxation services	423,738	—
Other services	35,000	—
Other services fees paid to PwC	458,738	—
Total audit, review, assurance and other services fees paid to PwC	2,308,275	1,168,063

Note 24 Cash flow information

a. Reconciliation of cash flows from operating activities

Reconciliation of net profit for the year to net cash flows from operating activities.

	2023	2022
	\$'000	\$'000
Net (loss)/profit for the year	(60,029)	33,188
Capitalised interest	(3,070)	(1,852)
Depreciation and amortisation	13,780	14,829
Amortisation of incentives and straight line income	1,755	2,004
Impairment of intangibles	65,532	1,868
Net fair value (gain)/loss of investment properties	52,356	29,033
Share of net (profit)/loss of investments accounted for using the equity method	(21,306)	(12,469)
Net (gain)/loss on sale of investment properties	553	—
Impairment of investments accounted for using the equity method	(192)	886
Distribution revenue	(1,314)	(640)
Distributions from investments accounted for using the equity method	18,246	—
Change in operating assets and liabilities
(Increase)/decrease in receivables	27,034	(39,032)
(Increase)/decrease in inventories	23,780	123,809
(Increase)/decrease in other current assets	13,801	549
(Increase)/decrease in other non-current assets	2,659	(2)
Increase/(decrease) in payables	19,376	4,903
Increase/(decrease) in current tax	(27,356)	37,338
Increase/(decrease) in other current liabilities	(25,701)	28,035
Increase/(decrease) in other non-current liabilities	3,433	(339)
Increase/(decrease) in deferred tax liabilities	(35,949)	9,274
Net cash Inflow from operating activities	67,388	231,382

b. Net debt reconciliation

Reconciliation of net debt movements:

	2023	2022
	Loans with related parties \$'000	Loans with related parties \$'000
Opening balance	497,222	263,772
Changes from financing cash flows
Borrowings received from related parties	1,097,519	2,002,072
Borrowings provided to related parties	(927,509)	(1,769,389)
Non cash changes
Movement in deferred borrowing costs and other	710	767
Closing balance	667,942	497,222

Note 25 Security-based payments

The DXFM Board has approved a grant of performance rights to DXS stapled securities to eligible participants. Awards, via the DSTI, LTI and Senior Management Retention Awards will be in the form of performance rights awarded to eligible participants which convert to DXS stapled securities for nil consideration subject to satisfying specific service and performance conditions.

For each Plan, the eligible participants will be granted performance rights, based on performance against agreed key performance indicators, as a percentage of their remuneration mix. Participants must remain in employment for the vesting period in order for the performance rights to vest. Non-market vesting conditions, including Adjusted Funds from Operations (AFFO), Return on Contributed Equity (ROCE), successful delivery of key strategic initiatives identified by the Board and employment status at vesting, are included in assumptions about the number of performance rights that are expected to vest. Market conditions include Absolute Total Shareholder Return (ATSR) and Relative Total Shareholder Return (RTSR). When performance rights vest, the Trust will arrange for the allocation and delivery of the appropriate number of securities to the participant.

The fair value of performance rights granted is recognised as an employee benefit expense with a corresponding increase in the provision for employee benefits. The total amount to be expensed is determined by reference to the fair value of the performance rights granted.

Note 25 Security-based payments (continued)

Key assumptions: fair value of performance rights granted

Judgement is required in determining the fair value of performance rights granted. In accordance with AASB 2 Sharebased Payment, fair value is determined independently using Binomial and Monte Carlo pricing models with reference to:

• The expected life of the rights
• The security price at grant date
• The expected price volatility of the underlying security
• The expected distribution yield
• The risk free interest rate for the term of the rights and expected total security-holder returns (where applicable)

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the Trust revises its estimates of the number of performance rights that are expected to vest based on the non-market vesting conditions. The impact of the revised estimates, if any, is recognised in profit or loss with a corresponding adjustment to equity. The provision related to the performance rights at 30 June 2023 was \$20,820,978 (2022: \$20,366,121).

Outlined below is the movement schedule for the performance rights::

2023	Balance at 1 July 2022	Grant	Vested	Cancelled	Balance at 30 June 2023
DSTI	977,983	791,645	(613,137)	(33,522)	1,122,969
LTI	2,068,962	1,068,306	(318,849)	(200,030)	2,618,389
RET	663,298	—	—	—	663,298
Total	3,710,243	1,859,951	(931,986)	(233,552)	4,404,656

2022	Balance at 1 July 2021	Grant	Vested	Cancelled	Balance at 30 June 2022
DSTI	689,250	679,864	(391,041)	(90)	977,983
LTI	1,887,071	704,650	(426,271)	(96,488)	2,068,962
RET	663,298	—	—	—	663,298
Total	3,239,619	1,384,514	(817,312)	(96,578)	3,710,243

a. Deferred short term incentive plan

25% of any award under the DSTI for certain participants will be deferred and awarded in the form of performance rights to DXS securities.

The majority of the performance rights awards will vest one year after grant and some will vest two years after grant, subject to participants satisfying employment service conditions. In accordance with AASB 2 Share-based Payment, the year of employment in which participants become eligible for the DSTI, the year preceding the grant, is included in the vesting period over which the fair value of the performance rights is amortised. As applicable, 50% of the fair value of the performance rights is amortised over two years and 50% of the award is amortised over three years. An additional DSTI was granted to certain participants on 27 March 2023 and will vest over a period of one year.

The weighted average remaining contractual life for DSTI performance rights is 0.57 years (2022: 0.59 years). The weighted average fair value of all outstanding DSTI performance rights is \$7.64 (2022: \$8.71) and the weighted average fair value of grants with respect to the year ended 30 June 2023 is \$7.51 (2022: \$10.59). The total security-based payments expense recognised during the year ended 30 June 2023 was \$5,327,602 (2022: \$4,092,740).

b. Long term incentive plan

50% of the awards will vest three years after grant and 50% of the awards will vest four years after grant, subject to participants satisfying employment service conditions and performance hurdles. In accordance with AASB 2 Share-based Payment, the year of employment in which participants become eligible for the LTI, the year preceding the grant, is included in the vesting period over which the fair value of the performance rights is amortised. Consequently, 50% of the fair value of the performance rights is amortised over four years and 50% of the award is amortised over five years.

The weighted average remaining contractual life for LTI performance rights is 1.55 years (2022: 1.42 years). The weighted average fair value of all outstanding LTI performance rights is \$5.50 (2022: \$7.43) and the weighted average fair value of grants with respect to the year ended 30 June 2023 is \$4.12 (2022: \$6.85). The total security-based payments expense recognised during the year ended 30 June 2023 was \$1,969,564 (2022: \$1,433,032).

Note 25 Security-based payments (continued)

c. Senior Management Retention Awards

CEO Incentive Award

A once-off CEO incentive award was granted to the CEO on 1 June 2021. The award will vest three years after the grant date, subject to the participant satisfying employment service conditions, governance and behavioural standards and performance hurdles. Consequently, the fair value of the performance rights is amortised over three years from the grant date.

Retention Equity Award

The retention equity award is a once-off award to certain Key Management Personnel which was granted in December 2020. 50% of the once-off retention equity rights will vest three years after the grant date and 50% of the rights will vest four years after the grant date, subject to participants satisfying employment service conditions and governance and behavioural standards. Consequently, 50% of the fair value of the equity rights is amortised over three years and 50% of the rights is amortised over four years from the grant date.

The weighted average remaining contractual life for all senior management retention award is 0.98 years (2022: 1.98 years). The weighted average fair value of all outstanding senior management retention award is \$7.36 (2022: \$8.04). The total security-based payments expense related to this award recognised during the year ended 30 June 2023 was \$1,332,487 (2022: \$1,512,310).

Note 26 Related parties

Responsible Entity, Trustee and Investment Manager

DXH, a wholly owned subsidiary of DXO, is the parent entity of:

• DXFM, the responsible entity of DPT and DXO, the trustee of Dexus Office Trust Australia (DOTA) and the investment manager of DOTA, Dexus Industrial Trust Australia (DITA) and Parangool Pty Ltd
• DWPL, the responsible entity of DWPF and DADPF
• DWFL, the responsible entity of DHPF
• DIML, the responsible entity of DIF
• DWML, the trustee of third party managed funds
• Dexus Asset Management Limited, the responsible entity of Dexus Convenience Retail REIT (DXC), Dexus Industria REIT (DXI) and other third party managed funds
• Dexus RE Limited, the responsible entity of APD Trust
• Dexus Capital Funds Management Limited, the responsible entity of third party managed funds
• Dexus Investment Services Pty Limited, the trustee of third party managed funds
• Dexus Capital Private Markets NZ Limited, the manager of third party managed funds
• AMP Capital Funds Management Limited, the responsible entity of third party managed funds
• AMP Investment Services Pty Limited, the trustee of third party managed funds

Management Fees

Under the terms of the Constitutions of the entities within the Trust, the Responsible Entity and Investment Manager are entitled to receive fees in relation to the management of the Trust. Other entities within the Group are also entitled to receive property and development management fees and to be reimbursed for administration expenses incurred on behalf of the Trust.

The Trust received Responsible Entity fees, management fees and other related fees from the unlisted property funds managed by DXS during the financial year.

Related party transactions

Transactions between the consolidated entity and related parties were made on commercial terms and conditions. Agreements with third party funds and joint ventures are conducted on normal commercial terms and conditions.

Note 26 Related parties (continued)

Transactions with related parties

	2023	2022
	\$	\$
Responsible entity (investment management fees)	203,082,157	161,385,307
Property management fee income	51,609,775	44,075,561
Development services revenue (DS), Development management (DM), Project Delivery Group (PDG), capital expenditure and leasing fee income	73,421,381	54,600,998
Rent paid	5,086,277	4,295,921
Responsible entity fees receivable at the end of each reporting year (included above)	47,027,524	35,331,204
Property management fees receivable at the end of each reporting year (included above)	8,917,167	4,627,008
DS, DM, PDG, capital expenditure and leasing fees receivable at the end of each year (included above)	23,107,907	17,054,653
Loans to related parties	2,870,675	33,695,678
Payables owed to related parties	5,534,411	11,139,101
Loans from related parties	689,443,719	530,280,536

Key management personnel compensation

	2023 \$	2022 \$
Compensation
Short-term employee benefits	8,862,470	10,374,030
Post employment benefits	1,071,896	705,323
Security-based payments	5,170,549	5,982,341
Total key management personnel compensation	15,104,915	17,061,694

Information regarding individual Directors' and Senior Executives' remuneration is provided in the Remuneration Report on pages 82 to 107 of the Annual Report.

There have been no other transactions with key management personnel during the year.

Note 27 Parent entity disclosures

The financial information for the parent entity of Dexus Operations Trust has been prepared on the same basis as the Consolidated Financial Statements except as set out below.

Distributions received from associates are recognised in the parent entity's Statement of Comprehensive Income, rather than being deducted from the carrying amount of these investments.

Interests held by the parent entity in controlled entities are measured at fair value through profit and loss to reduce a measurement or recognition inconsistency.

a. Summary financial information

The individual Financial Statements for the parent entity show the following aggregate amounts:

	2023	2022
	\$'000	\$'000
Total current assets	461,244	342,883
Total assets	1,006,464	756,483
Total current liabilities	126,522	52,952
Total liabilities	774,711	515,433
Equity
Contributed equity	107,185	107,185
Reserves	814	782
Retained profit	123,754	133,083
Total equity	231,753	241,050
Net profit for the year	40,671	107,520
Total comprehensive income for the year	40,671	107,520

b. Guarantees entered into by the parent entity

There are no guarantees entered into by the parent entity. Refer to note 15 for details of guarantees entered into by the Trust.

Note 27 Parent entity disclosures (continued)

c. Contingent liabilities

The parent entity has no contingent liabilities. Refer to note 15 for the Trust's contingent liabilities.

d. Capital commitments

The parent entity had no capital commitments as at 30 June 2023 (2022: nil).

Note 28 Subsequent events

On 7 August 2023, Dexus exchanged contracts for the partial disposal of 20 Distribution Drive, Truganina VIC for \$16.8 million excluding transaction costs.

On 11 August 2023, settlement occurred for the partial disposal of 20 Distribution Drive, Truganina VIC for \$20.9 million excluding transaction costs.

The Trust has communicated with its panel of independent real estate valuation firms to understand whether any changes subsequent to the balance date would have changed their view regarding the 30 June 2023 real estate valuations. In particular, the Trust considered the economic environment, including but not limited to inflation, interest rates and capital flows. The independent valuation firms have not provided information to indicate that the independent valuations as at 30 June 2023 are not appropriate.

Since the end of the year, the Directors are not aware of any other matter or circumstance not otherwise dealt with in the Consolidated Financial Statements that has significantly or may significantly affect the operations of the Trust, the results of those operations, or state of the Trust's affairs in future financial periods.

Directors' Declaration

The Directors of Dexus Funds Management Limited as Responsible Entity of Dexus Operations Trust declare that the Consolidated Financial Statements and Notes set out on pages 9 to 49:

• i. Comply with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• ii. Give a true and fair view of the Trust's consolidated financial position as at 30 June 2023 and of its performance, as represented by the results of its operations and its cash flows, for the year ended on that date.

In the Directors' opinion:

• a. The Consolidated Financial Statements and Notes are in accordance with the Corporations Act 2001;
• b. There are reasonable grounds to believe that the Trust and its consolidated entities will be able to pay their debts as and when they become due and payable; and
• c. the Trust has operated in accordance with the provisions of the Constitution dated 15 August 1984 (as amended) during the year ended 30 June 2023.

The Consolidated Financial Statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The Directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the Directors.

Warwick M N

Chair 15 August 2023

Independent auditor's report

To the unitholders of Dexus Operations Trust

Our opinion

In our opinion:

The accompanying financial report of Dexus Operations Trust (the Trust) and its controlled entities (together the Group) is in accordance with the Corporations Act 2001, including:

• (a) giving a true and fair view of the Group's financial position as at 30 June 2023 and of its financial performance for the year then ended
• (b) complying with Australian Accounting Standards and the Corporations Regulations 2001.

What we have audited

The financial report comprises:

• the Consolidated Statement of Financial Position as at 30 June 2023
• the Consolidated Statement of Comprehensive Income for the year then ended
• the Consolidated Statement of Changes in Equity for the year then ended
• the Consolidated Statement of Cash Flows for the year then ended
• the Notes to the Consolidated Financial Statements, which include significant accounting policies and other explanatory information
• the Directors' Declaration.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial report section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Other information

The Directors of Dexus Funds Management Limited (the Directors), the Responsible Entity of the Trust are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 June 2023, but does not include the financial report and our auditor's report thereon.

PricewaterhouseCoopers, ABN 52 780 433 757

One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001 T: +61 2 8266 0000, F: +61 2 8266 9999

Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999

Liability limited by a scheme approved under Professional Standards Legislation.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the financial report

The Directors are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the Directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors\_responsibilities/ar3.pdf. This description forms part of our auditor's report.

PricewaterhouseCoopers

A S Wood Sydney Partner 15 August 2023