GDI PROPERTY GROUP

GDI Property Group (ASX: GDI) GDI Property Group Limited ACN 166 479 189 GDI Property Trust ARSN 166 598 161

Appendix 4E Results for announcement to the market Period ended 30 June 2020

Rule 4.3A

Appendix 4E Results for announcement to the market GDI PROPERTY GROUP

This Appendix 4E should be read in conjunction with the annual financial report of GDI Property Group for the year ended 30 June 2020.

1. GDI Property Group

This report is for GDI Property Group (“GDI”), comprising the stapled entities GDI Property Group Limited (ACN 166 479 189) (“the Company”) and GDI Property Trust (ARSN 166 598 161) (“the Trust”).

GDI was formed on 16 December 2013 by the stapling of shares in the Company to units in the Trust. Each stapled security consists of one share in the Company and one unit in the Trust, which pursuant to a Co‐operation Deed dated 25 November 2013, cannot be dealt with or traded separately.

The responsible entity of the Trust is GDI Funds Management Limited (ACN 107 354 003, AFSL 253 142), a wholly owned subsidiary of the Company.

For the purposes of statutory reporting, the stapled entity, GDI, is accounted for as a consolidated group. Accordingly, one of the stapled entities must be the ‘deemed acquirer’ of the other, with the Company being chosen as the deemed acquirer of the Trust.

2. Reporting period

The financial information contained in this report is for the year ended 30 June 2020.

3. Highlights of the results

. Highlights of the results
	2020	2019	Change
	$m	$m	%
Revenue from ordinary activities	70.3	77.8	(9.65)
Comprehensive net profit attributable to securityholders after tax	67.1	81.6	(17.77)
Funds from operations (FFO1)	44.5	48.3	(7.83)
Distribution to security holders	(42.0)	(41.8)
	Cents	cents	%
Funds from operations per security	8.22	8.96	(8.29)
Distributions per security	7.75	7.75	‐
Payout ratio
‐ Distributions as a % of FFO	94.3%	86.6%
‐ Distributions as a % of AFFO2	169.1%	110.4%
Basic earnings per security3	12.39	15.14	(18.19)
Diluted earnings per security3	12.30	15.01	(18.08)
	$m	$m	%
Total assets	968.4	816.8	18.58
Total borrowings	159.4	69.1	130.71
Security holder’s equity	721.4	696.2	3.62
Market capitalisation	602.7	747.3	(19.35)
	$	$	%
Net tangible assets per security	1.300	1.255	3.59
Security price	1.115	1.385	(19.49)
Securities on issue	540,503,681	539,579,646	0.17
Weighted average securities on issue	541,764,558	539,172,751	0.48

GDI Property Group (ASX: GDI) GDI Property Group Limited ACN 166 479 189 GDI Property Trust ARSN 166 598 161

Appendix 4E Results for announcement to the market Period ended 30 June 2020

4. Commentary on the results

Refer to the Directors’ Report of the 2020 annual financial report for a commentary on the results of GDI.

5. Dividends/distributions declared and paid and dividend/distribution reinvestment plan

Distributions/dividends declared or paid in respect of the reporting period were:

Amount per security	Total distribution Franked amount per security
cents 2019 final – paid 31 August 2019 3.875 2020 interim – paid 28 February 2020 3.875 2020 final – declared 17 June 2020 3.875	$’000 cents 20,909 ‐ 21,015 ‐ 20,945 ‐

No distribution reinvestment plan was operated by GDI.

6. Changes in control over group entities

There were no acquisitions or disposals of controlled entities during the period.

7. Compliance statement

This Appendix 4E has been prepared in accordance with AASB Standards (including Australian interpretations) and other standards acceptable to ASX. This Appendix 4E and the financial reports upon which it is based use the same accounting policies. The information contained in this Appendix 4E is based on the attached audited financial report for the financial year ended 30 June 2020, which together with the auditor’s opinion, has been lodged with the ASX.

1 FFO is a Property Council of Australia definition which adjusts AIFRS net profit for non‐cash changes in investment properties, non‐cash impairment of goodwill, non‐cash fair value adjustments to financial instruments, amortisation of incentives, straight‐line adjustments and other unrealised one‐off items. A reconciliation of total comprehensive income for the period to FFO is provided at page 6, section 1.4 of the Directors’ Report.
2 AFFO adjusts FFO for incentives paid during the year, maintenance capex and other adjustments.
3 This calculation is based on the comprehensive profit attributable to stapled security holders of GDI.

GDI Property Group Limited ACN 166 479 189

GDI Property Trust ARSN 166 598 161

Annual Financial Report 30 June 2020

GDI Property Group comprises GDI Property Group Limited ACN 166 479 189 (the Company) and its subsidiaries and GDI Property Trust ARSN 166 598 161 (the Trust) and its subsidiaries. The responsible entity of the Trust is GDI Funds Management Limited ACN 107 354 003, AFSL 253 142, a wholly owned subsidiary of the Company.

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

Directors’ Report ......................................................................................................................................................................... 2 Auditors’ Independence Declaration ....................................................................................................................................... 33 Financial Report ........................................................................................................................................................................ 34 Consolidated Statement of Profit or Loss and Other Comprehensive Income ..................................................................... 34 Consolidated Statement of Financial Position ...................................................................................................................... 35 Consolidated Statement of Changes in Equity ...................................................................................................................... 36 Consolidated Statement of Cash Flows ................................................................................................................................. 38 Notes to the Financial Statements ........................................................................................................................................ 39 1. Summary of significant accounting policies .............................................................................................................. 39 2. Revenue ..................................................................................................................................................................... 50 3. Finance costs ............................................................................................................................................................. 51 4. Corporate and administration expenses ................................................................................................................... 51 5. Income tax expense/benefit ...................................................................................................................................... 52 6. Cash and cash equivalents ......................................................................................................................................... 52 7. Trade and other receivables ...................................................................................................................................... 52 8. Other assets ............................................................................................................................................................... 54 9. Non‐current assets held for sale ............................................................................................................................... 54 10. Investment properties ............................................................................................................................................... 54 11. Plant and equipment ................................................................................................................................................. 57 12. Deferred tax assets .................................................................................................................................................... 57 13. Intangible assets ........................................................................................................................................................ 58 14. Derivative financial instruments ................................................................................................................................ 59 15. Trade and other payables .......................................................................................................................................... 59 16. Provisions .................................................................................................................................................................. 59 17. Borrowings ................................................................................................................................................................ 60 18. Contributed equity .................................................................................................................................................... 61 19. Reserves and retained earnings ................................................................................................................................ 62 20. Dividends/Distributions paid/payable ....................................................................................................................... 62 21. Earnings per security/unit ......................................................................................................................................... 63 22. Parent entity disclosures ........................................................................................................................................... 63 23. Segment reporting ..................................................................................................................................................... 64 24. Commitments ............................................................................................................................................................ 67 25. Reconciliation of net profit to cash inflow from operating activities ........................................................................ 67 26. Key management personnel compensation .............................................................................................................. 67 27. Related party transactions ........................................................................................................................................ 69 28. Capital and financial risk management ..................................................................................................................... 70 29. Fair value measurements .......................................................................................................................................... 73 30. Security‐based payments .......................................................................................................................................... 75 31. Controlled entities ..................................................................................................................................................... 78 32. Auditors’ remuneration ............................................................................................................................................. 79 33. Business combinations .............................................................................................................................................. 79 34. Non‐controlling interests ........................................................................................................................................... 79 35. Contingent liabilities .................................................................................................................................................. 81 36. Events after the reporting date ................................................................................................................................. 81 Directors’ Declaration ................................................................................................................................................. 82 Independent Auditors’ Report .................................................................................................................................... 83

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

The Directors of GDI Property Group Limited ACN 166 479 189 (“the Company”) present their report together with the financial report of the Company and its controlled entities and GDI Property Trust ARSN 166 598 161 (“the Trust”) and its controlled entities for the financial year ended 30 June 2020. Shares in the Company are stapled to units in the Trust to form GDI Property Group (“GDI”).

The Financial Reports of the Company and its subsidiaries and the Trust and its subsidiaries have been presented jointly in accordance with ASIC Class Order 13/1050 relating to combining or consolidating accounts under stapling and for the purpose of fulfilling the requirements of the Australian Securities Exchange (“ASX”). The Responsible Entity of the Trust is GDI Funds Management Limited ACN 107 354 003, AFSL 253 142. GDI Funds Management Limited is a wholly owned subsidiary of the Company and shares a common board.

The Company was incorporated on 5 November 2013 and the Trust established on 4 November 2013, becoming registered as a managed investment scheme on 18 November 2013. The Company and the Trust remained dormant until shares in the Company were stapled to units in the Trust on 16 December 2013 as part of an Initial Public Offer (“IPO”) of stapled securities, forming GDI, with trading on the ASX commencing on 17 December 2013.

The registered office and principal place of business of the Company and its subsidiaries and the Trust and its subsidiaries is Level 23, 56 Pitt Street, Sydney NSW 2000.

1. Operating and financial review

1.1 About GDI Property Group

GDI is an integrated, internally managed property and funds management group with capabilities in ownership, management, refurbishment, leasing and syndication of predominantly office properties.

The Trust is internally managed and owns a portfolio of office properties across Australia (“Portfolio”). As at 30 June 2020, the Portfolio comprised three wholly owned properties in CBD locations with a combined independent value of $771.5 million:

Mill Green Complex, which comprises three Buildings: 197 St Georges Terrace, 5 Mill Street and 1 Mill Street, Perth;
Westralia Square, 141 St George Terrace, Perth; and
50 Cavill Avenue, Surfers Paradise.

The Company owns an established funds business (“Funds Business”) which, in addition to managing the Trust, manages seven unlisted and unregistered managed investment schemes with Assets Under Management (“AUM”) of approximately $504.7 million.

In addition to its wholly owned Portfolio, the Trust may also hold stakes in the unlisted and unregistered managed investment schemes managed by the Funds Business. As at 30 June 2020, GDI Property Trust owns 43.68% of GDI No. 42 Office Trust and 47.26% of GDI No. 46 Property Trust. GDI No. 42 Office Trust owns Stanley Place, 235 Stanley Street, Townsville and GDI No. 46 Property Trust owns a portfolio of 17 metropolitan Perth properties occupied by high profile car dealerships and service centres (IDOM Portfolio).

GDI has a disciplined value‐based investment approach and a philosophy of acquiring properties that offer an opportunity to create value through active asset management, including leasing and selective capital improvements.

1.2 Strategy

GDI has two operating segments, property (“Property”) and funds management (“Funds Business”). All property assets owned are held by the Trust via wholly owned subsidiaries. The Company operates the Funds Business.

GDI’s strategy is to generate total returns (distributions plus net tangible asset growth) by:

maximising the income and capital potential in the existing Portfolio by continuing the asset management strategies adopted for each property;

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

acquiring well located properties at below replacement cost that offer an opportunity to create value through active asset management, including leasing and selective capital improvements;
optimising the outcome for investors in the existing unlisted property funds and therefore generating performance fees; and
continuing to grow the AUM in the Funds Business by establishing new unlisted property funds.

We believe that this active strategy is unique in the Australian REIT market.

Property

GDI is an owner of well‐located CBD office properties diversified by geography, tenant and lease terms. Properties are intended to be acquired below management’s opinion of value, having regard to replacement cost, with multiple exit options and which have typically been under managed or undercapitalised.

Over time, it is the intention to increase net rental income and/or capital values via asset management strategies including:

improved leasing and tenant diversity;
selective capital improvements;
focusing on improving a property’s sustainability credentials;
management of outgoings;
incremental revenue initiatives including signage rent, additional car park income, storage, communications and other means; and
pursuing adaptive re‐use options.

It is expected the investment in Australian office properties on balance sheet will result in a reliable source of rental income for securityholders. Over time, GDI may divest some properties, if in the opinion of the Board and management, the value has been maximised or it no longer meets our investment objectives.

We also intend to acquire properties, funded by either recycling capital or utilising headroom within the gearing policy of a loan to value ratio (LVR) of less than 40%. The investment mandate of the Trust is to acquire well‐located CBD office properties, which are typically at least $100.0 million in value.

Funds management

The Company, through wholly owned subsidiaries, manages seven unlisted, unregistered managed investment schemes with total AUM of approximately $504.7 million. The Company has an investor base of approximately 1,500 high net worth investors, many of whom have a history of repeat investment.

The Funds Business generates income by way of:

due diligence and acquisition fees;
asset management fees;
performance fees;
disposal fees;
other fees including leasing, project management and financing; and
where a stake in a fund is held, distributions and capital gains.

The Company intends to continue to establish unlisted, unregistered managed investment schemes and as a consequence grow its funds management fee income.

1.3 Sustainability

GDI has been a market leader in sustainability since 2008 and were one of the first to receive Government grants to improve the sustainability of our buildings. We have embraced the “Green Space” by implementing an energy performance

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

programme designed to measure, assess and improve the utility (energy & water) performance of all the properties in our management. This programme includes:

Utility audits;
NABERS (National Australian Built Environment Ratings System) ratings;
Energy procurement improvements; and
A formal utility monitoring programme.

We are proud of our sustainability track record. When Mill Green Complex, Perth, was acquired, 197 St Georges Terrace had a NABERS Energy rating of 3 stars. After a refurbishment and re‐leasing programme, it now has a 5 Star Energy Rating. This property was awarded the 2016 PCWA Commercial Property Award for Ecologically Sustainable Development (ESD) – Premium/A Grade Asset Category. Subsequently, 5 Mill Street, Perth also achieved a 5 Star NABERS Energy Rating, having been rated 3 Stars when originally acquired.

When buying a building, the NABERS potential is an important factor. Westralia Square, Perth, acquired in 2017, had excellent services and a NABERS Energy rating of 5 stars, a rating we will strive to maintain by continually monitoring and improving the services of the building.

Sustainability is not just about a NABERS rating. For example, our buildings are all located within close proximity to public transport. Location, as well as access to public transport and the provision of End of Trip Facilities are key criteria for all GDI properties and prove to be an attractive option for our tenants.

We are pleased to have released with this Financial Report our first ESG Report. Following internal stakeholder engagement, we identified the 12 most material topics and have reported using the reporting principles and disclosures set out in the Global Reporting Initiative (GRI) Standards. The GRI Standards have been issued by the Global Sustainability Standards Board to allow organisations to report on impacts related to environmental, social and governance matters. The ESG Report should be read in conjunction with the separately issued Governance Statement, also released with this Financial Report. In the interests of good corporate governance, GDI adopted the principles and recommendations outlined in the 4[th] Edition of the Corporate Governance Principles and Recommendations for the entire reporting period.

1.4 Review of operations

COVID‐19

COVID‐19 has had a significant impact on GDI and all our stakeholders, and we believe the true impact will not be known for some time. However, we have a high degree of confidence that GDI is well placed to not only deal with the current health and economic crisis, but also capitalise on opportunities that will invariably follow.

In a counter‐cyclical strategy, since the beginning of 2017 we have been repositioning GDI’s portfolio away from the East coast markets to Perth, while at the same time retaining a very conservative capital structure. Perth has limited new prime grade office supply until the end of 2023, and although the headline vacancy rate is the highest of the Australian CBDs, the vacancy is concentrated in secondary grade assets, not the prime grade assets that we own. We believe that the resource centric CBDs like Perth will be beneficiaries of the probable global response of governments investing into new projects to stimulate their economies. Therefore, notwithstanding the uncertain economic outlook, we anticipate strong growth in effective rents in Perth.

The combination of our Perth exposure and our balance sheet means that we have a certain financial flexibility to continue our asset management strategies, announce a buy‐back of up to 5% of our securities, and look at acquisition opportunities. We believe that COVID‐19 will generate some unique opportunities for GDI.

The Board is extremely proud of how your entire team at GDI performed during the height of the lockdown and subsequently as we take slow steps back to normalcy. GDI and all its service providers had systems in place to work remotely. Although we are Sydney based, we have an excellent team of consultants, property managers and leasing agents that have been able to continue the asset management strategies of each of our assets while the State borders remain closed. Our assets were and are still open for business, albeit some of our tenants were not able to operate and some sought and received rent relief

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

(discussed below). Obviously, things like cleaning regularity increased, but by and large it has been business as usual for GDI and its assets.

Notwithstanding the impact of ‘work from home’ and the consequent demand for workplace flexibility, we believe the office will continue to be an important part of business life. The office provides an organisation with the ability to foster its own identity and culture; promote innovation and productivity improvements through staff collaboration; on‐the‐job and tacit learnings for junior employees from their more experienced colleagues; marks the boundary between work and home; and enhances the social aspect of work. However, while we are aware how effectively most organisations managed to operate remotely, we consider the near‐term impact on office market demand will be primarily from a slowing economy, particularly for the East coast markets, rather than a long‐term trend of working from home.

Another outcome of the crisis that we will continue to monitor, will be on capital pricing following the Federal Government’s Commercial Tenancy Code of Conduct (the Code), now enacted in some form by all the States. We are grateful that most of our tenants negotiated in good faith and in many instances, we have provided more short‐term relief than a tenant would otherwise have received under the Code.

Our approach to rent relief requests depended on the tenant. Detailed in the table below is the breakdown of how much rent relief we provided to tenants in our wholly owned portfolio during the financial year ended 30 June 2020. Waived rent, either by agreement or in accordance with the Code, has been written off. Deferred rent has been capitalised. Several tenants agreed to restructure existing incentives and we do not consider this to have any material economic cost to GDI. Other tenants agreed to extend leases on commercial terms that we would have agreed to with or without the pandemic, with the incentive taken as rent relief upfront.

with the incentive taken as rent relief upfront.
	FY20
	$’000
Rent waived	518
Rent deferred (to be paid back)	149
Rent free (incentive)	126
Restructure of incentives	238
Relief notyet agreed	503
Total rent not collected	1,534

At the time of signing this Financial Report we anticipate that the total relief provided to tenants in our wholly owned portfolio in FY21 will be less than FY20.

We also provided rent relief in three of our unlisted, unregistered managed investment schemes, GDI No. 33 Brisbane CBD Office Trust, GDI No. 43 Property Trust and GDI No. 46 Property Trust. Most of the relief provided in dollar terms to tenants in these three funds was simply a deferral of part of the tenants’ rent for the period April – June 2020. As GDI No. 46 Property Trust is consolidated into the accounts, the impact of this relief ($981,000) is included in the results for GDI but is not included in the above table.

In the markets that we operate, principally Perth, we are starting to see an increased level of tenant enquires and inspections. However, it is still too early to say whether this is the result of pent up demand or the first signs of positive absorption, noting that the Perth market experienced two quarters of negative absorption to June 2020. Our assets are well positioned to meet tenant demand; they have easily divisible floor plates, natural light, have been or are in the process of being refurbished, are well located near transport hubs and have ample parking.

We do not pretend to know how the current health and economic crisis will end. However, through good corporate governance, a disciplined approach to acquisitions and the use of our capital, and a strategic positioning of our business to Perth, we believe that we are well positioned to navigate through the current crisis.

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

Results summary

The Board monitors a range of financial information and operating performance indicators to measure performance over time. We use several measures to monitor the success of our overall strategy, most importantly Funds From Operations (“FFO”) versus budgets and GDI’s total return ‐ calculated as the movement in Net Tangible Assets(“NTA”) per security plus distributions per security. FFO is a Property Council of Australia definition which adjusts statutory AIFRS net profit for non‐ cash changes in investment properties, non‐cash impairment of goodwill, non‐cash fair value adjustments to financial instruments, amortisation of incentives, straight‐line adjustments and other unrealised one‐off items.

The reconciliation between GDI’s FFO and its statutory profit is as follows:

	GDI
	2020 2019 $’000 $'000
Total comprehensive income for the year Acquisition expenses and discontinued acquisition Contribution resulting from consolidation of GDI No. 42 Office Trust Distributions / funds management fees received from GDI No. 42 Office Trust Contribution resulting from consolidation of GDI No. 46 Property Trust Distributions / funds management fees received from GDI No. 46 Property Trust Straight lining adjustments Amortisation and depreciation Net fair value (gain)/loss on investment property Net fair value loss/(gain) on interest rate swaps (Profit)/Loss on sale of non‐current asset held for sale	66,740 85,070 5,448 7 (4,772) (6,594) 1,913 2,719 (2,481) ‐ 1,836 ‐ 1,032 330 7,335 5,274 (32,862) (36,011) 326 (377) ‐ (2,124)
Funds From Operations	44,516 48,294

Operating segment results

Individual operating segment results are provided below:

Property FFO1 Funds Business FFO1 Other	FY20 FY19 $’000 $’000
	49,146 54,306 5,955 4,848 358 30
FFOpre corporate, administration and net interest	55,460 59,184
Less: Net interest expense Corporate and administration expenses Provision for impairment of debts Income tax(expense) /benefit	(2,137) (2,286) (7,824) (8,111) (463) (485) (520) (8)
Total FFO	44,516 48,294

Property FFO and Funds Business FFO only refers to the revenue related items included / excluded from FFO. See Segment reporting, Note 23 of the Financial Report for a detailed breakdown of all items included in the Property and Funds Business segment results.

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

Property

GDI’s Property portfolio is now heavily weighted to Perth, with our two major assets centrally located in the Perth CBD. With limited forecast new supply until 2023, limited available prime grade contiguous floors and a steady improvement in demand year on year, we believe that currently the Perth CBD offers better returns over the medium term than any other major office market in Australia. Although Perth’s headline vacancy of 18.4% is the highest of the Australian capital city CBDs, it is concentrated in secondary grade buildings and not the prime grade buildings that GDI owns. With no new supply in the medium term, we anticipate Perth will be one of the only office markets in Australia to achieve positive net absorption during CY21, CY22 and CY23 and consequentially, one of the only office markets to also achieve growth in effective rents. Our properties, most notably Westralia Square, are well positioned to capture this anticipated upside.

Property FFO for the year ended 30 June 2020 was $49.1 million (FY19 $54.3 million). The largest contributor to this was Westralia Square (FFO of $22.5 million vs FY19 of $27.1 million). Westralia Square was purchased in October 2017 for $216.3 million on a passing yield of approximately 11.3% and a rate per square metre of approximately $6,800, well below replacement cost. We were able to buy Westralia Square on such attractive terms due to its lease expiry profile, with most leases expiring in the first half of 2020. Minister for Works (MFW) has been a long‐term tenant at Westralia Square, occupying 25,664sqm of the total 32,635sqm of lettable area, with leases that expired in February and April 2020. The MFW leases were principally for three departments, Births, Deaths and Marriages (BDM), the Department of Justice, and the Western Australia Police Force (WAPOL). Pleasingly, during the year the MFW signed two new leases to occupy 14,522sqm of office accommodation. WAPOL has leased 12,689sqm over levels 1‐5, 8 and 9 for a period of five years[2] commencing 1 February 2021, and BDM has agreed to a new six‐year lease for 1,833sqm over level 10, also commencing on 1 February 2021. The existing leases over 25,664sqm with the Minister of Works were varied, largely to facilitate WAPOL’s relocation within Westralia Square from the upper levels to the lower levels, and the departure of the Department of Justice. UGL Limited, which occupied the top two levels of Westralia Square (Levels 17 and 18), departed on lease expiry in January 2020. These two floors have now been refurbished. The departure of UGL Limited and the lease variations to MFWs were the primary reasons for the lower contribution from Westralia Square compared to FY19.

We also progressed a development opportunity on excess land at Westralia Square. In accordance with an adjoining owners’ agreement, the adjoining owners must not unreasonably refuse to execute the development application. GDI is currently seeking judicial redress to enforce the adjoining owners to execute the development application. The total money spent to date on the development ($2.1 million) has been capitalised.

The second largest contributor to Property FFO was Mill Green, Perth (FFO of $19.5 million vs FY19 of $20.5 million). Mill Green comprises three buildings all on one title, 197 St Georges Terrace, 5 Mill Street and 1 Mill Street. 197 St Georges Terrace is the largest of the three properties with approximately 26,216sqm of lettable area. As at 30 June 2020, occupancy was steady at 85.3% of lettable area (30 June 2019: 85.8%). Included in this vacancy is approximately 5% of lettable area that is being offered to the market as conferencing facilities but is considered vacant as there is no lease with the operator of the space.

Occupancy in 5 Mill Street fell to 83.1% of lettable area, down from 89.5% at 30 June 2019. Notwithstanding the attractiveness of 5 Mill Street to potential occupiers, the market for fitted out suites of less than 300sqm has become very competitive, with many competing owners offering inferior products but at much cheaper pricing. Welcomely, interest in 5 Mill Street has again increased with some of our new asset management initiatives, and although there is further impending vacancy of an additional 10%, we do believe that 5 Mill Street remains very well placed to capture the anticipated recovery in demand from smaller tenants.

As disclosed at 30 June 2019, we are not looking at any immediate long‐term leasing of 1 Mill Street given both the time of the cycle and its redevelopment opportunities. There are several large tenants that have/will have briefs in the market that GDI continues to pursue as anchor tenants to a new building at 1 Mill Street.

Property FFO at GDI’s only other wholly owned property, 50 Cavill Avenue, Surfers Paradise, increased to $7.1 million (FY19: $6.6 million). This improvement was largely a result of rent increases and higher face rents being achieved on new leasing and renewals. Occupancy remained steady at 94.03% of NLA (FY19: 94.35%). However, with interest in the vacant space we anticipate most of this being leased in the near term.

WAPOL has certain 12‐month lease extension and termination rights on the giving of at least 18 months‐notice, and in the case of termination, compensation to GDI.

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

During the year we undertook a marketing campaign to sell 50 Cavill Avenue and accordingly reclassified the asset as a Non‐ current asset held for sale. Although we were confident in achieving a sale in the second half of the year, COVID‐19’s impact on capital markets meant that a sale did not occur. However, we continue to hold the asset as a Non‐current asset held for sale.

Each of the wholly owned properties, other than the strata unit at 38/46 Cavill Avenue, Surfers Paradise, was independently revalued at least once during the year. Westralia Square was revalued to $327.5 million, up from $285.0 million a year before. This valuation uplift is largely attributed to the two new MFW leases commencing in February 2021 and the consequential assumptions around market rents, letting up periods and incentives, and capital expenditure incurred including incentives. Westralia Square was valued in both December 2019 and at 30 June 2020. The valuation gain in the December half ($28.9 million) was partially offset by a valuation loss in the second half ($5.1 million). This valuation loss was primarily a result of the increased independent valuation between December and June ($11.5 million) being less than the capital expenditure incurred including incentives in the period ($16.6 million).

Mill Green was revalued in December 2019 to $343.0 million (FY19: $330.0 million) due to an improvement in the Perth market generally, the assumptions around average net market rent, incentives and market capitalisation rates and 50 Cavill Avenue was revalued to $101.0 million (FY19: $100.0 million). Our wholly owned portfolio is now independently valued at $771.5 million.

As GDI also owns 43.68% of the units on issue of GDI No. 42 Office Trust and 47.26% of the units on issue of GDI No. 46 Property Trust, for statutory accounting purposes we consolidate both trusts, but for FFO we recognise in the Funds Business (see below) the funds management fees generated on the units we don’t own and the quarterly distributions on the units we do.

GDI No. 42 Office Trust owns a 13,786sqm property at 235 Stanley Street, Townsville (“Stanley Place”). Stanley Place’s major tenant, the ATO, lease expires in August 2020. The property’s second largest tenant, Services Australia (The Department of Human Services), has signed a new 6.5‐year lease commencing 1 March 2020 for all the 4,644sqm of space it previously occupied under a direct lease and sublease (from the ATO). We remain confident that there will be minimal downtime from the vacancy created by the departure of the ATO in August 2020.

Detailed in the table below are the comparison occupancy, weighted average lease expiry and weighted average capitalisation rates between 30 June 2020 and 30 June 2019, excluding the IDOM Portfolio.

	GDI
	As at 30 June 2020 As at 30 June 2019
Occupancy3,4 Weighted average lease expiry3,4 Weighted average capitalisation rate3,5	81.1% 84.9% 2.6 years 2.4 years 6.92% 7.02%

GDI No. 46 Property Trust owns the IDOM Portfolio. The Portfolio is independently valued at $98.0 million and is fully leased for a term of approximately 10.4 years, with the tenant[6] having 5 x 5‐year options. The leases have annual CPI[7] + 1% rental increases, with market reviews[7] in 2023 and 2028.

Excludes the IDOM Portfolio held by GDI No. 46 Property Trust.
Based on NLA.
Weighted average by property valuation.
The tenant is either Buick Holdings Pty Limited (Buick), or wholly owned subsidiaries of Buick. Buick is owned 67% by IDOM Automotive Group Pty Limited, a wholly owned subsidiary of IDOM Inc, an entity listed on the Tokyo Stock Exchange, and 33% by entities associated with the DiVirgilio family.

CPI is Perth Capital City CPI and the market reviews have a 10% cap and 5% collar.

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

Funds management

GDI’s funds management business has a 27‐year track record of successfully managing unlisted, unregistered managed investment schemes. Over that time GDI has established nearly 40 unlisted, unregistered managed investment schemes, with over 30 of those now having been terminated. To date, no unlisted, unregistered managed investment scheme has returned a negative Internal Rate of Return (‘IRR’). Our successful track record is partly a result of our disciplined approach to acquisition opportunities and we will continue to review opportunities cautiously, albeit the current health and economic crisis may generate some asset, portfolio or business opportunities.

The highlight for the year was the establishment of GDI No. 46 Property Trust. The $98.0 million IDOM Portfolio was settled in mid‐February following the capital raising that saw GDI Property Trust subscribe for approximately 47.26% of the units on issue. Although a small number of units have been transferred post balance date, it is intended that GDI Property Trust hold these units’ long term.

The Funds Business delivered FFO of $6.0 million (FY19: $4.5 million). A large contributor to this is the distributions received from the consolidated funds, GDI No. 42 Office Trust ($1.7 million) and GDI No. 46 Property Trust ($0.7 million). Transaction fees relating to the establishment of GDI No. 46 Property Trust totalled $1.2 million, with the balance of FFO largely being ongoing management fees.

Net interest expense

As at 30 June 2020, GDI’s Principal Facility was drawn to $120.0 million (FY19: $59.4 million), secured by a security pool independently valued at $771.5 million, a loan to value ratio (LVR) of 15.6%. The $60.6 million increase in drawn debt was used to fund the acquisition of the stake in GDI No. 46 Property Trust ($35.0 million), capital expenditure including incentives at Westralia Square ($16.6 million), and general working capital purposes ($9.0 million).

Including the interest expense of the consolidated trusts, the interest expense for the year totalled $3.2 million (FY19: $3.6 million). Although the interest expense of the consolidated trusts is included in the statutory accounts, it is not included in GDI’s FFO.

Corporate and administration expenses

GDI’s operating expenses decreased slightly year on year to $7.8 million (FY19: $8.1 million), largely as a result of the lower bonuses paid to KMP compared to FY19. The largest component of corporate and administration expenses is employee benefits, including $2.1 million expensed or accrued for the issue of performance rights in FY17, FY18, FY19 and this financial year.

Capital management

GDI’s balance sheet is in a strong position with an LVR on the Principal Facility of 15.6%, below the Board’s maximum LVR of 40% and the bank’s covenant of 50%. During the year, we increased GDI’s Principal Facility to $210.0 million, with drawn debt of $120.0 million, undrawn debt of $85.0 million and a $5.0 million bank guarantee supporting the AFSL of GDI Funds Management Limited. The term of the Principal Facility was also extended to 31 July 2022. Post balance date, a further $12.8 million of debt was drawn to fund the acquisition of 180 Hay Street, Perth.

As GDI No. 42 Office Trust and GDI No. 46 Property Trust are both consolidated into the statutory accounts of GDI, their facilities are also shown in GDI’s accounts. GDI No. 42 Office Trust has drawn debt of $10.0 million, 18.7% of the independent value of the asset held by GDI No. 42 Office Trust, and undrawn debt of $1.5 million, with an expiry June 2022. GDI No. 46 Property Trust has drawn debt of $30.0 million, 30.6% of the independent value of the DVG Portfolio, with an expiry of February 2023.

This strong financial position enabled us to announce an on‐market securities buyback to acquire up to 5% of the securities on issue and take advantage of the extreme volatility in GDI’s security price in the second half of the year. During the period from announcing the buyback in late March 2020 to 30 June 2020, we bought back and cancelled 1,824,220 securities. In August 2019, we also issued 2,748,255 new securities to satisfy performance rights granted in FY16 that vested on the signing of the FY19 financial accounts. Securities on issue at 30 June 2020 totalled 540,503,681.

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

Hedging policy

GDI’s hedging policy is to allow management more flexibility in determining the level of interest rate hedging, particularly when total drawn debt is below $100.0 million. This new policy may mean that at times we may have no interest rate hedges and be subject to upward movements in interest rates. However, during FY20 we entered into two $25.0 million interest rates swaps, one for three years (0.38% expiry May 2023) and one for five years (0.60% expiry May 2025).

As at 30 June 2020, neither GDI No. 42 Office Trust nor GDI No. 46 Property Trust had any interest rate hedges or fixed rate borrowings.

Dividends/distributions declared and paid and dividend/distribution reinvestment plan

Distributions/dividends declared or paid in respect of the reporting period were:

				Franked
		Amount per	Total	amount per
		security	distribution	security
		cents	$’000	cents
2019	final – paid 30 August 2019	3.875	20,909	‐
2020	interim – paid 28 February 2020	3.875	21,015	‐
2020	final – declared 17 June 2020	3.875	20,945	‐

No distribution reinvestment plan was operated by GDI.

Significant changes in GDI Property Group’s state of affairs

During the year there were no significant changes in GDI’s state of affairs.

1.5 Future prospects

As discussed above, we believe that COVID‐19 will generate some unique opportunities for GDI. In the interim and regardless, we are going to continue the asset management strategies of the assets in both the Property and Funds Business, as described below.

Property – existing

Our portfolio comprises well located properties, with four sides of natural light and floor plates that are easily divisible. Each property in the portfolio has leasing opportunities, either through current vacancy or impending expiry. We believe that leasing up the current vacancy and addressing the impending expiries will significantly increase the value of the portfolio.

The strategy for FY21 for each of the properties in the portfolio is summarised below:

Asset	Strategy
Mill Green Complex, Perth	 Address the existing vacancies, particularly at 5 Mill Street, albeit taking a
	patient approach given the improving Perth CBD leasing market
	 Continue to explore alternate uses for 1 Mill Street
Westralia Square, Perth	Notwithstanding the MFW leases, the property still has a significant amount of its
	net lettable area that is or will become vacant. We intend to relet this space at
	significantly better net effective rents than are currently being achieved in Perth.
	The strategy for FY21 is to progress the capital expenditure and refurbishment
	programme (End of Trip facilities, refurbishment of levels 11 – 18 on availability)
	and continue the reletting programme on the back of both an improved product
	and market. In addition, subject to the receipt of relevant approvals, we
	anticipate commencing the development of the bespoke office building on the
	excess land

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

50 Cavill Avenue, Surfers Paradise	 Increase occupancy and drive rental growth through higher net effective
	rents and increased car parking rates
	 Continue to explore exit opportunities
235 StanleyStreet,Townsville	Complete the leasingupof the vacant space on ATO’s departure
	Finalise the asset management strategies for the Portfolio as a whole and the 17
IDOM Portfolio	assets individually

In July 2019 we entered into a conditional contract to acquire 180 Hay Street, Perth for $12.6 million. 180 Hay Street was constructed in 1999 and comprises 4,925sqm of well‐presented office space over four floors of over 1,000sqm each and a mezzanine level. The conditions were satisfied, and the property was settled post balance date on 31 July 2020. On settlement the property was 100% vacant. We negotiated early access to commence refurbishment works and have appointed agents to market the property for lease. The property was independently valued in July 2020 at $15.0 million.

Funds management

GDI intends to continue to manage the seven unlisted, unregistered managed investment schemes. We also intend to establish at least one new unlisted, unregistered managed investment scheme in FY21.

Distribution guidance

Our aim is for GDI to deliver a consistent 12.0+% total return on equity, measured both annually and on a three‐year rolling basis. Total return is measured as NTA growth per security plus distributions per security. This total return could be heavily skewed to distributions per security, or in the alternative, NTA growth per security.

Historically, GDI’s distributions have been referenced to GDI’s FFO, not AFFO. In all but it’s first financial year since the Initial Public Offer of securities, distributions have been in excess of its AFFO, but not its FFO. The resulting cash shortfall to pay the distribution has been funded from the proceeds of asset sales or funded out of capital through utilising GDI’s conservative balance sheet. Given the significant value of lease expiries in FY21, particularly at Westralia Square, there is a higher degree of uncertainty than usual in estimating GDI’s FY21 FFO on an existing business basis. That said, in the absence of any acquisitions GDI believes that FY21 FFO will be materially lower than its FY20 FFO.

We have previously stated that in the absence of any asset sale(s) GDI is unlikely to pay distributions materially in excess of FFO[8] . However, given the strength of our balance sheet our intent is to pay a cash distribution of 7.75 cents per security for FY21, regardless of our level of FFO, subject to no material change in circumstances or unforeseen events[9] . If this happens, we would expect that a proportion of any distribution for FY21 would be paid out of capital.

See the FY19 Annual results presentation and FY20 Half year results presentation

The ability to pay a capital distribution in excess of GDI’s earnings will require compliance with the terms of its bank facility at the time of payment.

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

1.6 Risks

Risk	Description	Risk mitigation
Property values	There is a risk that the value of GDI’s portfolio, or	 GDI has a policy of obtaining independent
	individual assets in the portfolio, may fall.	valuations for each of its properties at least
		annually.
		 GDI’s portfolio comprises well located
		properties, has limited exposure to multi floor
		tenants and has floor plates that are easily
		divisible, somewhat insulating the portfolio
		from adverse influences on property
		valuations.
Adverse	There is a risk that the Australian economy enters	 GDI’s wholly owned portfolio has a weighted
economic	in to either a recession or depression, due to	average lease expiry profile of 2.6 years and is
conditions	domestic policies, global influences, a global	leased to a diverse range of tenants
	pandemic, or a combination thereof	 GDI has a conservative balance sheet with
		access to $85.0 million of undrawn debt
		facilities to fund initiatives aimed at retaining
		and attractingtenants
Re‐leasing and	There is a risk that GDI may not be able to	 GDI has deliberately weighted its portfolio to
vacancy	negotiate suitable lease extensions with existing	Perth, a market with limited new supply and
	tenants or replace outgoing tenants with new	solid prospects for increasing demand
	tenants on the same terms (if at all) or be able to	 GDI’s Portfolio comprises well located
	find new tenants to take over space that is	properties and has floor plates that are easily
	currently unoccupied.	divisible, enabling it to meet the demands of
		both larger and smaller space users
		 GDI’s conservative capital structure allows it to
		absorb the impact of vacancies in its portfolio
		without breachinganyof its lendingcovenants
Funding	GDI’s ability to raise capital on favourable terms	 GDI does not intend to raise any additional
	is dependent upon the general economic climate,	equity capital during FY21.
	the state of the capital markets and the	 GDI’s Principal Facility is drawn to only $120.0
	performance, reputation and financial strength	million, with an LVR of 15.6% against the value
	of GDI.	of the Principal Facility’s security pool
		 GDI’s Principal Facility does not expire until July
		2022
		 GDI would not seek to acquire a new property
		unless it was able to obtain funding on
		favourable terms.
Income from	 There is a risk that GDI might not be able to	 GDI has a track record of establishing new
Funds Business	establish new unlisted funds due to limited	unlisted funds based on the past performance
	investment opportunities, and/or limited	of its unlisted funds
	availability of investor capital.	 GDI’s investor base consists of approximately
	 GDI’s ability to raise new equity for future	1,500 high net worth investors who have
	unlisted funds may be dependent on our	historically had a high level of repeat
	performance managing all the unlisted funds.	investment.
	 In the circumstances where GDI funds the	 GDI will only risk option fees and due diligence
	payment of costs associated with the proposed	costs when it has a high degree of confidence
	acquisition of a property by an unlisted fund,	in the eventual success of an unlisted fund.
	and the fund does not successfully complete
	the acquisition of that property, there is a risk
	that the monies will not be repaid to GDI.
Loss of key	The loss of key management personnel could	 GDI has a competitive remuneration structure
management	cause material disruption to GDI’s activities in the	to retain key talent.
personnel	short to medium term and could result in the loss

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

	of key relationships and expertise which could	 Steve Gillard has a significant interest (+5.5%)
	have a material adverse impact on current and	in GDI.
	future earnings.
Capital	While GDI will undertake reasonable due	 GDI and its executives have extensive
expenditure	diligence investigations prior to acquiring	experience in acquiring properties and
requirements	properties, there can be no assurance that	undertaking due diligence investigations.
	properties will not have defects or deficiencies, or
	that unforeseen capital expenditure or other
	costs will not arise.
Gearing and	 GDI’s gearing could exceed the maximum level	 GDI remains well within both its own gearing
breach of	of 40% under the Board’s gearing policy from	policy of less than 40% LVR and the covenants
covenants	time to time (for example where GDI uses debt	imposed on it under its debt facility.
	to acquire new properties or the valuation of
	properties in GDI falls).
	 The Debt Facility contains undertakings to
	maintain certain Covenant LVR and Covenant
	ICR, and an event of default would occur if GDI
	fails to maintain these financial levels.
Impacts of	 GDI’s properties may be impacted by adverse	 Climate related risks and potential financial
climate change	impacts of climate related events such as	impacts are assessed with GDI’s enterprise
and other	severe storms and flooding, and heatwaves	wide risk management framework
environmental	that disrupt power supply	 GDI has a history of investing into its properties
considerations	 Changes to environmental legislation may	to improve their environmental credentials, as
	mean GDI’s properties need a significant	measured by an industry accepted NABERS
	amount of capital expenditure to comply or	ratings system
	become obsolete
Business	 GDI’s business or a supplier’s business might be	 Business disruption risks and technology
disruption,	subject to a cyber‐attack or data breach	changes are assessed with GDI’s enterprise
including data	 GDI’s properties or business practices may be	wide risk management framework
breaches	impacted bydisruptive technologies

2 Events subsequent to balance date

On 31 July 2020, GDI No. 45 Pty Limited atf GDI No. 45 Property Trust settled the acquisition of 180 Hay Street, Perth, for $12.6 million. 180 Hay Street was independently valued at $15.0 million.

Other than the above, no matter or circumstance has arisen since the end of the period that has significantly affected or may significantly affect the operation of GDI, the results of those operations or the state of affairs of GDI in subsequent financial years.

3 Environmental regulation

GDI’s senior management, with oversight from the Board, oversee the policies, procedures and systems that have been implemented to ensure the adequacy of GDI’s environmental risk management practices. It is our opinion that adequate systems are in place for the management of GDI’s environmental responsibilities and compliance with its various licence requirements and regulations. Further, we are not aware of any breaches of these requirements.

4 Directors and Company Secretary

Directors

Independent Chairman

Ms Gina Anderson

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

Managing Director

Mr Steve Gillard

Independent Non‐executive Directors

Mr John Tuxworth Mr Giles Woodgate Mr Stephen Burns

Information on Directors

Ms Gina Anderson

Chairman, Independent Non‐Executive Director

Ms Anderson is a professional non‐executive director with wide experience in private, not‐for‐profit and government boards. She has senior executive experience in a diverse range of organisations in business, property, and the not‐for‐profit sector, having held chief executive, corporate affairs, stakeholder engagement, communications, project management and human resources roles. Ms Anderson was appointed as a director in November 2013.

Mr Steven Gillard

Managing Director

Mr Gillard has had over 30 years of experience in property related industries including 11 years’ experience in property management and sales and seven years’ experience as a senior analyst and advisor for international stockbroking firms, particularly in the property and tourism sectors. Mr Gillard was managing director of GDI’s predecessor companies from 2005, became a director of the Company in November 2013 and Managing Director on 16 December 2013.

Mr John Tuxworth

Independent Non‐Executive Director

Mr Tuxworth has nearly 40 years’ experience in senior executive and non‐executive roles in financial services and management consulting businesses, including over nine years with Rothschild Australia Asset Management as an Executive Director and most recently as a founder and the Managing Director of PeopleFirst & Associates, a management consultancy specialising in financial services. He was appointed as a director of the Company in February 2017.

Mr Giles Woodgate

Independent Non‐Executive Director

Mr Woodgate is a highly respected chartered accountant with more than 40 years of extensive professional practice experience in audit, compliance and turnaround & insolvency, both locally and internationally. Having worked for prominent firms like KPMG, Deloittes and Crowe Horwath, as well as being responsible for publishing several widely acknowledged articles and presentations on topics such as insolvency, voluntary administrations, and bankruptcy, Mr Woodgate has been the senior partner of Woodgate & Co since its inception in 1989. He was appointed as a director of the company in November 2017.

Mr Stephen Burns

Independent Non‐Executive Director

Mr Burns is currently a Managing Director at Stanton Road Partners and was previously head of real estate investment banking at Credit Suisse, Australia, a role he held for nine years after holding a similar position at Deutsche Bank, Australia. Mr Burns possesses vast experience as a Real Estate specialist advisor and expertise in capital markets, mergers, acquisitions and other corporate transactions. Mr Burns has expert skills and deep relationships demonstrated over many years and multiple cycles, over the past +30 years. He was appointed as a director of the company in November 2018.

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

Number of meetings attended

The number of Board meetings, including Committees, held during the period and the number of those meetings attended by each director is set out below:

Board Audit Risk and Compliance Committee	Nomination and Remuneration Committee
Number of meetings eligible to attend Number of meetings attended Number of meetings eligible to attend Number of meetings attended	Number of meetings eligible to attend Number of meetings attended
Current chairman Gina Anderson Giles Woodgate	John Tuxworth
Gina Anderson 14 14 4 4	3 3
Steve Gillard 14 14
John Tuxworth 14 14	3 3
Giles Woodgate 14 14 4 4
Stephen Burns 14 14 4 4	3 3

Other directorships

Details of other directorships of listed entities held by existing directors in the last three years are set out below:

Director	Other directorships
Gina Anderson	‐
Steve Gillard	‐
John Tuxworth	‐
Giles Woodgate	‐
Stephen Burns	‐

Company secretary

GDI has joint company secretaries, with their details provided below:

Mr David Williams

Chief Financial Officer and Joint Company Secretary

Mr Williams has over 25 years’ experience in the accounting and financial services industry with major accounting firms, commercial banks and international investment banks. Mr Williams joined GDI in early 2013 as a consultant, and from the time GDI listed was formally appointed as Chief Financial Officer and joint Company Secretary.

Ms Kate Malcolm

Accountant and Joint Company Secretary

Ms Malcolm has over 15 years’ experience in the accounting, financial services and property industries both in Australia and the United Kingdom. Ms Malcolm joined GDI in 2012 and was appointed as a Joint Company Secretary in late 2018.

5. Remuneration report

5.1 Basis of preparation

The Remuneration Report is designed to provide securityholders with an understanding of GDI’s remuneration policies and the link between our remuneration approach and performance, in particular regarding Key Management Personnel (“ KMP ”) as defined under the Corporations Act 2001. Individual outcomes are provided for GDI’s non‐executive Directors (“ NEDs ”), the Managing Director (“ MD ”) and Disclosed Executives. Disclosed Executives are defined as those direct reports to the MD with responsibility for the strategic direction of GDI and includes all members of the executive management team.

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

The Remuneration Report has been prepared in accordance with section 300A of the Corporations Act and has been audited as required by section 308(3C) of the Corporations Act 2001 and forms part of the Directors’ Report.

5.2 Key Management Personnel

The KMP disclosed in this year’s Remuneration Report are detailed in the table below.

Key Management Personnel

*Non‐Executive Directors*		*Appointed*	*Term as a KMPforyear*
Gina Anderson	Independent Chairman	5 November 2013	Full year
John Tuxworth	Independent Director	20 February 2017	Full year
Giles Woodgate	Independent Director	16 November 2017	Full year
Stephen Burns	Independent Director	15 November 2018	Full year
*Managing Director*
Steve Gillard		5 November 2013	Full year
*Disclosed Executives*
David Williams	Chief Financial Officer, Joint	Company Secretary	Full year
John Garland	Head of Property		Full year
Paul Malek	Asset Management		Full year
GregMarr	Head of Unlisted Funds		Fullyear

5.3 Role of the Board in relation to remuneration

The Board has established a Nomination and Remuneration Committee (N&RC). The N&RC is responsible for:

reviewing and making recommendations to the Board on remuneration and succession matters related to the MD and other Disclosed Executives;
reviewing and making recommendations to the Board on remuneration relating to Non‐Executive Directors;
overseeing a Board performance evaluation programme, which addresses the performance of individual directors;
designing incentive plans; and
determining remuneration structures for the Managing Director and Disclosed Executives.

The N&RC did not receive any recommendations from remuneration consultants during the period in relation to the remuneration arrangements of KMP.

5.4 Remuneration objectives

The following principles shape GDI’s remuneration strategy:

creating and enhancing value for all GDI stakeholders;
emphasising the ‘at risk’ component of total remuneration to increase alignment with security holders and encourage behaviour that supports both entrepreneurism and long‐term financial soundness within the confines of GDI’s risk management framework;
rewarding performance; and
providing a competitive remuneration proposition to attract, motivate and retain the highest quality individuals within a framework of ethical standards of behaviour.

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

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5.5 The composition of remuneration at GDI

The Board aims to find a balance between:

fixed and at‐risk remuneration;
short and long‐term incentives;
amounts paid in cash and performance rights.

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

The below chart provides an overview of the target remuneration mix for the MD and Disclosed Executives.

Remuneration mix for the Managing Director and Disclosed Executives

==> picture [408 x 257] intentionally omitted <==

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

PR LTI
PR LTI
25% 25%
30% 30%
At risk At risk
60% 50% STI
Cash /
Cash / STI PR 25% 25%
PR 30% 30%
Fixed Fixed
Fixed Cash 40% Fixed 50% Cash 50% 50%
40% 40%
MD Disclosed Executives
----- End of picture text -----

The MD’s target remuneration mix is weighted such that a higher component is at‐risk (60%), with an equal weighting of the at‐risk component between STIs and LTIs. Should an STI be granted, it can be delivered as either cash or performance rights where the principle performance condition is the employee remaining in employment at the vesting date, three years after the conclusion of the performance year.

The Disclosed Executives target remuneration mix is weighted equally between fixed and at‐risk components, with an equal weighting of the at‐risk component between STIs and LTIs. Should an STI be granted, it can be delivered as either cash or performance rights where the principle performance condition is the employee remaining in employment at the vesting date, three years after the conclusion of the performance year.

Fixed remuneration

GDI positions fixed remuneration for the MD and Disclosed Executives against relevant A‐REIT comparables taking into consideration the role, responsibilities, performance, qualifications and experience. A‐REIT comparables are considered the most relevant as this is the main pool for sourcing talent and where key talent may be lost.

Fixed remuneration is expressed as a total dollar amount which can be taken as cash salary, superannuation contributions and other nominated benefits.

At risk remuneration

The at‐risk component forms a significant part of the MD and Disclosed Executives target remuneration.

Short term incentives (STI)

The STI provides an annual opportunity for an incentive award. Individuals are assessed on a balanced scorecard based on measures relating to longer term performance outcomes aligned to GDI’s strategic objectives, as well as annual goals and workplace behaviours, including leadership and commitment. For the MD and Disclosed Executives, the weighting of these

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

measures will vary to reflect the responsibilities of each role and their individual KPIs set at the commencement of each year. Notwithstanding any individual meeting or exceeding their performance measures, or some thereof, the N&RC may determine to reduce (but not increase) their STI entitlement at its absolute discretion.

Long term incentives (LTI)

The LTI provides an annual opportunity for an equity award deferred for three years that aligns a significant portion of overall remuneration to security value over the longer term. LTI awards will remain at risk until vesting and must meet or exceed a relative Total Securityholder Return (50% of performance rights issued) and /or an Absolute Total Return (the other 50% of performance rights issued). The table below summarises the conditions that will apply to the performance rights granted for the year ended 30 June 2020. These conditions are identical to those granted for all years since GDI’s IPO. Details of the offers of performance rights are disclosed in Section 5.6 and 5.7 of this Remuneration Report.

Arrangements for theyear ended 30 June 2020	Arrangements for theyear ended 30 June 2020
Type of award	Performance right, being a right to acquire a stapled security at nil cost, subject to meeting time and performance hurdles. Upon exercise, each performance right entitles the MD and Disclosed Executives to one stapled security. The future value of the grant may range from zero to an undefined amount depending on performance against the hurdles and the security price at the time of exercise. Grants may be satisfied by a cash equivalent payment rather than stapled securities at the Board’s discretion.
Time restriction	Performance rights will be tested against the performance hurdles at the end of three years. Performance rights that do not vest will be forfeited.
Vesting conditions	Performance rights will be subject to two tests, with half the performance rights subject to one test and the other half subject to the other test. 50% ‐ Total Securityholder Return(TSR) Vesting percentage (for TSR measure)
	Does not reach the 50thpercentile of the TSR of the Comparator Group 0%
	Reaches or exceeds the 50thpercentile of the TSR of the Comparator Group but does not reach the 75th percentile 50%, plus 2% for every one percentile increase above the 50th percentile
	Reaches or exceeds the 75thpercentile of the TSR Comparator Group 100%
	50% ‐ Absolute Total Return(ATR) Vesting percentage (for ATR measure)
	Does not achieve an ATR of 10% 0%
	Achieves or exceeds an ATR of 10% but does not achieve an ATR of 12% 50% up to 100% (at 12% ATR) on a straight‐line basis
	Achieves or exceeds an ATR of 12% 100%
	Definitions
	TSR Movement in security price and distributions. For the year ended 30 June 2020, the commencing security price is based on the 30 June 2020 closingsecurity price of GDI and its Comparator Group
	ATR Movement in NTA and distributions For theyear ended 30 June 2020,the commencingNTA is based on the 30 June 2020NTA.
	Comparator Group Dexus, The GPT Group, Cromwell Property Group, Abacus Property Group, Growthpoint Properties Australia, Australian Unity Office Property Fund, Centuria Office Fund, Elanor Commercial Property Fund, Investec Australia Property Fund, Gardia Diversified Property Fund, Charter Hall Group, Centuria Capital Group, Elanor Investors Group, Primewest Group, and any other predominantly office landlord or real estate fund managers considered a comparator.
Valuation	The dollar value of the LTI grant is converted into a number of performance rights based on a valuation, taking into account factors including the performance conditions, security price volatility, term, distribution yield, and the security price at grant date. The value of the LTI performance rights are generally lower than the GDI security price at 30 June 2020. Full details of the value, and the method of calculation,areprovided in Note 30 of the GDI Financial Report.

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

Other remuneration elements

No change on previous years

GDI developed its remuneration policies and practices, its balanced scorecard approach to STIs and the vesting conditions of its LTIs as part of its IPO process in late 2013. Since that time the Board has seen no need to change any of its remuneration policies, procedures or conditions. No Board member has received a salary increase since IPO, and only David Williams (CFO and Joint Company Secretary, +$25,000) and Paul Malek (Property Manager of GDI’s WA portfolio, +$50,000) have received any base pay increases over that period. GDI’s strategy is to deliver an average of 12%p.a. total return (NTA growth + distributions), regardless of the property cycle and its capital structure. This has not changed since IPO, and nor have the remuneration measures that are linked to this, notwithstanding the significant change in GDI’s portfolio (now 87% exposed to Perth), its capital structure (Principal Facility geared to only 15.6%), or the financial impacts of COVID‐19.

Clawback

The Board will have on‐going and absolute discretion to adjust performance‐based components of remuneration downwards, or to zero, at any time. Including after the grant of such remuneration, where the Board considers such an adjustment is necessary to protect the financial soundness of GDI, or if the Board subsequently considers that having regard to information which has come to light after the grant of performance rights, the granting of performance rights was not justified.

Hedging prohibition

As specified in GDI’s Security Trading Policy and in accordance with the Corporations Act, equity allocated under a GDI incentive scheme must remain at risk until exercisable. As such, it will be a condition of grant that no schemes are entered into, either by an individual or their associated persons, which specifically protects the unvested value of performance rights. Doing so would constitute a breach of the grant conditions and would result in the forfeiture of the relevant performance rights.

Other employees

Given the relatively small number of staff at GDI, the Board believes that it is important to recognise the efforts of all employees and not just the Disclosed Executives and has granted the Managing Director discretion to grant both cash bonuses and participation in GDI’s LTI plan to all employees on a merits basis. During the year ended 30 June 2020, cash bonuses to other employees totalled $115,000 and 381,944 performance rights were issued to other employees with a value of $345,000 and a 30 June 2020 employee benefit expense of $86,250.

5.6 Performance and outcomes

5.6.1 GDI’s performance and securityholder wealth

		Opening	Movement
		security	in security	Opening	Movement			TSR		ATR
	Years	price	price	NTA	in NTA	Distribution	TSR	p.a.	ATR	p.a.
		$	$	$	$	$
Since listing	6.55	1.000	0.115	0.91	0.39	0.4975	61.3%	9.4%	97.5%	14.9%
Since 1 July 2017	3.00	1.025	0.090	1.12	0.18	0.2325	31.5%	10.5%	36.8%	12.3%
Since 1 July2019	1.00	1.385	(0.270)	1.26	0.04	0.0775	(13.9%)	(13.9%)	9.3%	9.3%
30 June 2020		1.115		1.30		0.0775

The Board considers that the financial measure that most accurately reflects GDI’s performance on an annual basis is the ATR test, rather than the often‐adopted growth in FFO or AFFO test by our Comparator Group. The nature of our business means that FFO and AFFO will be volatile, particularly where for example we buy properties that are 46% vacant (50 Cavill Avenue, Surfers Paradise), or sell assets where management believe the value has been maximised (66 Goulburn Street, Sydney) and use the proceeds to reduce gearing. Regardless of the capital structure of GDI, the assets we hold, or the time of the property cycle, our intention is to deliver an ATR of 12%p.a. on a rolling three year basis, but to take the volatility out of our

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

performance, to also deliver at least 10%p.a. each year. Therefore, an ATR test forms the basis of the financial measure in the balanced scorecard (see 5.6.4.1) and one half of the test for LTIs. We have been consistent with this measure and the hurdle rates since our IPO in 2013.

However, we also acknowledge that securityholders get rewarded through movements in the security price and distributions. Accordingly, the other half of our LTIs is tested against a peer group. Security price performance does not influence the balanced scorecard approach we utilise to determine KMP STIs.

5.6.2 Past issues of STI performance rights (FY17)

To enhance the alignment with securityholders, the FY17 STI granted to the MD and Disclosed Executives was split 50% cash, 50% performance rights where the principle performance condition was continued employment (or a good leaver) for three years from the conclusion of the performance year (FY20). In total, 609,146 performance rights were granted as part of the FY17 STI programme. The expense of these performance rights was incurred over four years, the year to which the performance period relates (FY17) and the three vesting years (FY18, FY19 and FY20). As all five employees who were granted STI performance rights in FY17 remain in employment, all these performance rights (609,146) vested. GDI intends to satisfy these performance rights by issuing 609,146 securities to the relevant employees. These securities will not be subject to any escrow or other trading restrictions.

5.6.3 Past issues of LTI performance rights (FY17)

1,919,502 performance rights were granted as part of GDI’s FY17 LTI plan. These performance rights were tested three years from issue, at which time they either vested or lapsed. As with the FY20 performance rights, the performance rights are subject to continued employment (or a good leaver) and either a TSR test (for 50% of the rights granted) or an ATR test (for 50% of the rights granted). One employee with 53,366 performance rights resigned during the vesting period, with his rights lapsing.

5.6.3.1 TSR test

As at 30 June 2020, GDI’s Comparator Group comprised 14 entities (15 including GDI). GDI’s TSR for the three‐year period ended 30 June 2020 was 10.5%p.a., ranking 4[th] out of 15 in the Comparator Group. As this placed GDI’s TSR in the 2[nd] quartile overall (73.33%) of the TSR of the Comparator Group, 96.67% of the performance rights subject to this test vested (927,759). GDI intends to satisfy these performance rights by issuing 927,759 securities to the relevant employees. These securities will not be subject to any escrow or other trading restrictions.

Total securityholder return p.a.

‐30.00%	‐30.00%	‐20.00%	‐20.00%	‐10.00%	‐10.00%	0.00%	0.00%	10.00%	10.00%	20.00%	20.00%	30.00%	30.00%	40.00%	40.00%
Comparator 1 Comparator 2 Comparator 3 GDI Comparator 4 Comparator 5 Comparator 6 Comparator 7 Comparator 8 Comparator 9 Comparator 10 Comparator 11 Comparator 12 Comparator 13 Comparator 14

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

For FY17, the Comparator Group comprised the same entities that comprise the Comparator Group for the issue of FY20 LTIs (refer page 19).

5.6.3.2 ATR test

The ATR is determined by the movement in NTA over the vesting period plus distributions, divided by the commencing NTA. This is then divided by the vesting period (in this case three years) to determine the ATR per year.

Movement in NTAper security Distributionsper security	ATRper security ATR % ATR %p.a.
30 June 2017 NTA $1.12 FY18 $0.0775 30 June 2020 NTA $1.30 FY19 $0.0775 FY20 $0.0775
Total movement $0.18 Total distributions $0.2325	$0.4125 36.83% 12.28%

As the ATR exceeded the 12% maximum threshold, all performance rights subject to this test (959,751) vested on the signing of this financial report. GDI intends to satisfy these performance rights by issuing 959,751 securities to the relevant employees. These securities will not be subject to any escrow or other trading restrictions.

5.6.4 Current year STI outcomes

5.6.4.1 KMP balanced scorecard

Detailed in the table below is a summary of the performance measures and outcomes of the balanced scorecard for the MD and Disclosed Executives.

	Financial Operational People culture and development Total
	% weighting of total STI % of total STIgranted % weighting of total STI % of total STIgranted % weighting of total STI % of total STIgranted Total STI granted %
Steve Gillard David Williams John Garland Paul Malek GregMarr	40.0% 0.0% 40.0% 25.0% 20% 20% 45.0% 30.0% 0.0% 60.0% 35.0% 10% 10% 45.0% 20.0% 0.0% 70.0% 40.0% 10% 10% 50.0% 20.0% 0.0% 70.0% 42.5% 10% 10% 52.5% 20.0% 0.0% 70.0% 35.0% 10% 10% 45.0%

The following provides an explanation of the performance measures and outcomes.

Financial

For FY20, the financial measure was meeting or exceeding the minimum ATR target. The Board considers that the ATR measure closely aligns Executive STIs to GDI’s financial objectives, regardless of capital structure or time of the cycle. This measure is used as both an annual test (STI) and for the LTIs, tested on a rolling three years basis. The Board acknowledges that the nature of GDI’s business means that its ATR will have some level of annual volatility. For LTI purposes, the impact of this annual volatility is reduced because of the three‐year testing cycle. Notwithstanding this volatility, the Board considers that an annual ATR test is the most appropriate financial measure for balanced scorecard purposes.

Executives receive a score of 50% of the balanced scorecard weighting to the financial outcome at an ATR of 10%p.a., to 100% at an ATR of 12%p.a.

Minimum FY19 ATR target	FY20 ATR	Achieved(Y/N)
10% ‐ 12%	9.3%	N

GDI PROPERTY GROUP DIRECTORS’ REPORT For the financial year ended 30 June 2020

Operational

Operational measures for the MD and Disclosed Executives reflect the responsibilities of each role. For example, the Head of Property’s performance is weighted towards asset management and sustainability, whilst the CFO and Joint Company Secretary’s are weighted towards capital management and reporting, risk management and compliance.

During FY20, a summary of the operational objectives and balanced scorecard outcomes is provided in the table below. Many of these operational objectives were impacted by the disruption COVID‐19 had on our business and that of our stakeholders. Notwithstanding this, the MD and Disclosed Executives did not request a re‐setting of any of these operational targets, and no re‐setting was undertaken. It has meant that in some instances it was not possible to achieve or exceed operational objectives.

objectives.
Executive	Key operational objectives	Commentary	Weighting as a % of total potential STI	Amount awarded as a % of total potential STI
Steve Gillard	 Oversight of all asset management strategies  Progress with developments at Westralia Square and 1 Mill Street  Management of identified capital transactions	 Partly achieved  Partly achieved  Partly achieved	40.0%	25.0%
David Williams	 Refinancing’s of expiring facilities on terms that are considered more favourable than market  Consistently high‐quality stakeholder engagement  Oversight of all of GDI’s compliance and risk managementprogrammes	 Partly achieved  Achieved  Achieved	60.0%	35.0%
Paul Malek	 Leasing, particularly at Mill Green and momentum at Westralia Square  Management of the refurbishment programme at Westralia Square  ESG initiatives (waste reduction, lower electricity) at properties under management	 Partly achieved  Achieved  Achieved	70.0%	42.5%
John Garland	 Leasing and sales momentum at 10 Market Street, Brisbane, particularly sales of Levels 6 and 8  Capital transaction management (DVG, 180 Hay and 50 Cavill Avenue)  Initiation of GDI’s first ESG report	 Achieved  Achieved  Partlyachieved	70.0%	40.0%
Greg Marr	 Stakeholder engagement with unlisted fund investors  Successful raising of new fund (DVG Portfolio)  Leasing at 6 Sunray Drive, Innaloo and StanleyPlace	 Achieved  Partly achieved  Partly achieved	70.0%	35.0%

People, culture and development

The MD and Disclosed Executives are expected to demonstrate strong leadership and commitment, with those that have direct reports also monitored by their people management and people development skills. Since IPO only one employee has resigned from GDI and this stable workforce has created a unique culture. Of particular note in FY20 was the good

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

management by the MD and Disclosed Executives of its stakeholder relationships during the height of the COVID‐19 lockdowns.

Securityholder alignment

To enhance the alignment with securityholders, the N&RC determined that any STI granted to the MD and Disclosed Executives would be granted as performance rights where the principle performance condition is continued employment (or a good leaver) for three years from the conclusion of the performance year, meaning that there was no cash bonuses paid in FY20 to the MD and Disclosed Executives. The expense of these performance rights is incurred over four years, the year to which the performance period relates (FY20) and the three vesting years (FY21, FY22 and FY23). As these performance rights had not been issued by 30 June 2020, GDI has recognised the fair value of them as an accrual with the cost recognised as an employee benefit expense. Once the rights are issued, the accrual will be reversed with a corresponding increase in the security‐based payments reserve in equity.

Although a Black‐Scholes option pricing model is used to calculate the value and consequentially the number of ‘STI’ performance rights granted to each employee, the value of each performance right is the same as the 30 June 2020 GDI closing price, meaning there is no difference between the value of the performance right or GDI’s securities as at 30 June 2020.

Further details of the STI outcomes for the MD and Disclosed Executives are provided in Section 5.7 of this Remuneration Report. The issue of performance rights to the MD is subject to securityholder approval at the Annual General Meeting to be held on 12 November 2020.

5.6.5 LTI outcomes

The Board considers it is important to both align executive remuneration with securityholders outcomes and to encourage behaviour that supports both entrepreneurism and long‐term financial soundness within the confines of GDI’s risk management framework. As a result, GDI grants performance rights to the MD and Disclosed Executives as part of their annual remuneration package. The issue of performance rights to the MD is subject to securityholder approval at the Annual General Meeting to be held on 12 November 2020. The expense of the performance rights relating to the year ended 30 June 2020 is incurred over four years, the year to which the performance period relates (FY20) and the three vesting years (FY21, FY22 and FY23). As the performance rights had not been issued by 30 June 2020, GDI has recognised the fair value of them as an accrual with the cost recognised as an employee benefit expense. Once the rights are issued, the accrual will be reversed with a corresponding increase in the security‐based payments reserve in equity.

Further details of the LTI performance rights granted for the MD (subject to approval) and Disclosed Executives are provided in Section 5.7 of this Remuneration Report.

5.7 Remuneration outcomes

Non‐Executive Directors

Principles underpinning the remuneration policy for Non‐Executive Directors (NEDs) are as provided below:

Principle	Comment	Comment
Aggregate Board fees are	The	aggregate fee pool for NED’s as disclosed in the Offer Document is $3.0 million. The
within the maximum	annual total of NEDs’ fees of $375,000, including superannuation contributions, is within
disclosed to	this	limit.
securityholders in the
Offer Document
Fees are set by reference	Board fees are set by reference to a number of relevant considerations including:
to key considerations		general industry practice and best principles of corporate governance;
		the responsibilities and risks attached to the role of NEDs;
		the expected time commitments; and
		reference to feespaid to NEDs of comparable companies.

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

The remuneration structure preserves independence	NED fees are not linked to the performance of GDI and NEDs are not eligible to participate in any of GDI’s incentive arrangements.
Annual Board fees (inclusive of superannuation)	Chairman Other NED
	$150,000 $75,000

Details of non‐executive Directors statutory remuneration are disclosed in the remuneration table in section 5.8 below.

Managing Director contract terms

The following sets out details of the contract terms relating to the MD. The contract terms are in line with industry practice and ASX Corporate Governance Principles.

Fixed remuneration	$765,000,inclusive of superannuation.	$765,000,inclusive of superannuation.
Participation in	Subject to stapled securityholder approvals, Mr Gillard is entitled to participate in the
performance rightsplan	performance rightsplan.
Length of contract	Mr	Gillard commenced as Managing Director on 16 December 2013 and is on a permanent
	contract,which is an ongoingemployment contract until notice isgiven.
Notice periods		Mr Gillard may terminate the employment contract at any time by giving six months’
		notice in writing.
		GDI may terminate the employment contract for any reason by giving 12 months’
		notice, or alternatively, payment in lieu of notice.
		In the event of wilful negligence or serious misconduct, GDI may terminate Mr Gillard’s
		employment contract immediatelybynotice in writingand withoutpayment.
Restraint of trade	Mr	Gillard will be subject to a restraintperiod of six months from termination.

Managing Director’s remuneration outcome

Actual remuneration provided to the MD for the period ended 30 June 2020 is provided below, with the expense relating to the MD’s remuneration disclosed in section 5.8 below.

Fixed remuneration	The MD received $765,000 of fixed remuneration for the year ended 30 June 2020, inclusive
	of superannuation.
STI	The MD received an STI award of $258,188, 45% of his potential entitlement, based on the
	Balanced Scorecard approach discussed above.
	Subject to securityholder approval, the STI will be paid in performance rights where the
	principle performance condition is remaining employed by a GDI entity for three years after
	the conclusion of the performance year. Further details of the actual STI awarded to the
	MD areprovided in the table below onpage 27 of this Remuneration Report.
LTI	The MD received an LTI award of $573,750 value, being 695,498 performance rights. Fifty
	percent of these are subject to a Total Securityholder Return test (versus a peer group) and
	the other fifty percent are subject to an Absolute Total Return test (NTA growth plus
	distributions). Each performance right is tested once three years after the conclusion of
	the performance year. Details of the actual LTI awarded to the MD are provided in the table
	below onpage 27 of this Remuneration Report.

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

Disclosed Executive contract terms

Fixed remuneration	David Williams John Garland Paul Malek GregMarr
	$400,000 $350,000 $350,000 $300,000
Participation in performance rightsplan	Disclosed Executives are entitled to participate in the performance rights plan.
Length of contract	Disclosed Executives are subject to an ongoingemployment contract until notice isgiven.
Notice periods	 Disclosed Executives may terminate the employment contract at any time by giving three months’ notice in writing.  GDI may terminate the employment contract for any reason by giving three months’ notice, or alternatively, payment in lieu of notice.  In the event of wilful negligence or serious misconduct, GDI may terminate a Disclosed Executive’s employment contract immediately by notice in writing and without payment.
Restraint of trade	Disclosed Executives will be subject to a restraintperiod of three months from termination.

Disclosed Executives remuneration outcomes

Actual remuneration provided to Disclosed Executives for the period ended 30 June 2020 is provided below, with the remuneration table disclosed in section 5.8 below.

Fixed remuneration	The Disclosed Executives received the fixed remuneration shown above, inclusive of
	superannuation.
STI	The Disclosed Executives received an STI as shown in the table on page 27 of this
	Remuneration Report. The STI has been paid in performance rights where the principle
	performance condition is remaining employed by a GDI entity for three years after the
	conclusion of theperformanceyear.
LTI	The Disclosed Executives received an LTI as shown in the table on page 27 of this
	Remuneration Report. Fifty percent of these are subject to a Total Securityholder Return
	test (versus a peer group) and the other fifty percent are subject to an Absolute Total Return
	test (NTA growth plus distributions). Each performance right is tested once three years
	after the conclusion of theperformanceyear.

GDI PROPERTY GROUP

DIRECTORS’ REPORT

For the financial year ended 30 June 2020

MD and Disclosed Executive STI outcomes

Steve Gillard2 David Williams John Garland Paul Malek Greg Marr	Potential STI STI STI STI Cash PR1 PR1 FY19 PR1 Total STI granted forgone granted forgone component component granted expense expense
	$ $ $ % % $ $ Number $ $
	573,750 258,188 315,563 45.0 55.0 ‐ 258,188 231,558 64,547 64,547 200,000 90,000 110,000 45.0 55.0 ‐ 90,000 80,717 22,500 22,500 175,000 87,500 87,500 50.0 50.0 ‐ 87,500 78,475 21,875 21,875 175,000 91,875 83,125 52.5 47.5 ‐ 91,875 82,399 22,969 22,969 150,000 67,500 82,500 45.0 55.0 ‐ 67,500 60,538 16,875 16,875
	1,273,750 595,063 678,688 46.7 53.3 ‐ 595,063 533,687 148,766 148,766

Performance rights.
The issue of performance rights to Steve Gillard is subject to securityholder approval at the AGM to be held on 12 November 2020.

MD and Disclosed Executive LTI outcome

		LTI PR1 FY19 PR1 granted granted expense
		$ Number $
Steve Gillard2 David Williams John Garland Paul Malek GregMarr		573,750 695,498 143,438 200,000 242,440 50,000 175,000 212,136 43,750 175,000 212,136 43,750 150,000 181,830 37,500
Total		1,273,750 1,544,040 318,438

Performance rights.
The issue of performance rights to Steve Gillard is subject to securityholder approval at the AGM to be held on 12 November 2020.

GDI PROPERTY GROUP

DIRECTORS’ REPORT

For the financial year ended 30 June 2020

MD and Disclosed Executive summary of performance rights issued[1]

Vesting date Steve Gillard David Williams John Garland Paul Malek Greg Marr	Primary performance condition employment FY18 LTI FY19 LTI FY20 LTI Total LTI FY18 FY19 FY20 Total STI STI STI4 Total TSR2 ATR3 TSR2 ATR3 TSR2,4 ATR3,4 TSR2 ATR3 PR 30‐Jun‐21 30‐Jun‐22 30‐Jun‐23 30‐Jun‐20 30‐Jun‐20 30‐Jun‐21 30‐Jun‐21 30‐Jun‐22 30‐Jun‐22 222,384 196,773 231,558 650,715 306,622 306,622 279,865 279,865 347,749 347,749 934,236 934,236 2,519,187 77,519 68,592 80,717 226,828 106,884 106,884 97,557 97,557 121,220 121,220 325,661 325,661 878,150 67,829 56,859 78,475 203,163 93,523 93,523 85,362 85,362 106,068 106,068 284,953 284,953 773,069 67,829 60,650 82,399 210,878 93,523 93,523 85,362 85,362 106,068 106,068 284,953 284,953 780,784 58,140 51,444 60,538 170,122 80,163 80,163 73,168 73,168 90,915 90,915 244,246 244,246 658,614
	493,701 434,318 533,687 1,461,706 680,715 680,715 621,314 621,314 772,020 772,020 2,074,049 2,074,049 5,609,804

Vesting date
Steve Gillard
David Williams
John Garland
Paul Malek
Greg Marr

Primary performance condition employment
FY18 LTI
FY19 LTI
FY20 LTI
Total LTI
FY18
FY19
FY20
Total
STI
STI
STI4
Total
TSR2
ATR3
TSR2
ATR3
TSR2,4
ATR3,4
TSR2
ATR3
PR
30‐Jun‐21
30‐Jun‐22
30‐Jun‐23
30‐Jun‐20
30‐Jun‐20
30‐Jun‐21
30‐Jun‐21
30‐Jun‐22
30‐Jun‐22
222,384
196,773
231,558
650,715
306,622
306,622
279,865
279,865
347,749
347,749
934,236
934,236
2,519,187

77,519
68,592
80,717
226,828
106,884
106,884
97,557
97,557
121,220
121,220
325,661
325,661
878,150
67,829
56,859
78,475
203,163
93,523
93,523
85,362
85,362
106,068
106,068
284,953
284,953
773,069
67,829
60,650
82,399
210,878
93,523
93,523
85,362
85,362
106,068
106,068
284,953
284,953
780,784
58,140
51,444
60,538
170,122
80,163
80,163
73,168
73,168
90,915
90,915
244,246
244,246
658,614

493,701
434,318
533,687
1,461,706
680,715
680,715
621,314
621,314
772,020
772,020
2,074,049
2,074,049
5,609,804

Does not include performance rights issued in relation to FY17 that were tested as at 30 June 2020 and will vest shortly after the signing of this financial report.
Total shareholder return, being movement in the security price and distributions.
Absolute total return, being movement in NTA/security and distributions.
The issue of performance rights to Steve Gillard is subject to securityholders approval at the AGM to be held on 12 November 2020.

GDI PROPERTY GROUP

DIRECTORS’ REPORT

For the financial year ended 30 June 2020

5.8 KMP remuneration table

5.8.1 KMP remuneration table for the period ended 30 June 2020

Short term benefits Post‐ employment Long term benefits Salary & fees Accrued leave1 Other2 Cash bonus Super contributions Long service leave1 $ $ $ $ $ $ Non‐executive directors G Anderson 125,034 ‐ ‐ ‐ 24,966 ‐ J Tuxworth 50,001 ‐ ‐ ‐ 24,999 ‐ G Woodgate 68,493 ‐ ‐ ‐ 6,507 ‐ S Burns 68,493 ‐ ‐ ‐ 6,507 ‐ Managing Director S Gillard 740,000 6,394 ‐ ‐ 25,000 18,806 Disclosed executives D Williams 375,000 15,574 1,170 ‐ 25,000 9,833 J Garland 325,000 11,487 759 ‐ 25,000 6,196 P Malek 328,996 15,768 840 ‐ 21,004 10,869 G Marr 275,000 11,081 1,152 ‐ 25,000 6,397	Short term benefits Post‐ employment Long term benefits	Security based payments3 Relating to prior periods Relating to current period Total remuneration4
	Salary & fees Accrued leave1 Other2 Cash bonus Super contributions Long service leave1 $ $ $ $ $ $	FY17 Performance rights FY18 Performance rights FY19 Performance rights STI Performance rights LTI Performance rights Total remuneration Performance related Performance rights $ $ $ $ $ $ % %
		‐ ‐ ‐ ‐ ‐ 150,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 75,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 75,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 75,000 ‐ ‐ 215,156 215,156 211,570 64,547 143,438 1,640,067 52% 52% 70,313 75,000 73,750 22,500 50,000 718,140 41% 41% 65,625 65,625 63,438 21,875 43,750 628,755 41% 41% 60,938 65,625 64,750 22,969 43,750 635,508 41% 41% 56,250 56,250 55,313 16,875 37,500 540,818 41% 41% 468,281 477,656 468,821 148,766 318,438 4,538,288
Total 2,356,017 60,304 3,922 ‐ 183,983 52,101

Annual and long‐term service leave are accounted on an accrual basis. The amounts represent the change in accrued leave during the period.
Other includes the cost of an annual gym membership and other items incurred by GDI as part of its employee health and wellbeing programme.
The amount shown is the fair value of performance rights under the various STI, LTI and retention plans included in the relevant financial period and does not represent actual STI or LTI awards made.
Amounts disclosed as total remuneration excludes insurance premiums paid by GDI in respect of Directors’ and Officers’ liability insurance contracts.

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

5.8.2 KMP remuneration table for the period ended 30 June 2019

Security based payments Short term benefits Post‐ employment Long term benefits Relatingtopriorperiods Relatingto currentperiod Total remuneration5 Salary & fees Accrued leave2 Other3 Cash bonus Super contributions Long service leave2 FY16 Performance rights4 FY17 Performance rights4 FY18 Performance rights4 STI Performance rights4 LTI Performance rights4 Total remuneration Performance related Performance rights Prior years’ performance rights $ $ $ $ $ $ $ $ $ $ $ % % % Non‐executive directors G Anderson1 111,561 ‐ ‐ ‐ 10,598 ‐ ‐ ‐ ‐ ‐ ‐ 122,159 ‐ ‐ ‐ J Tuxworth 50,001 ‐ ‐ ‐ 24,999 ‐ ‐ ‐ ‐ ‐ ‐ 75,000 ‐ ‐ ‐ G Woodgate 68,493 ‐ ‐ ‐ 6,507 ‐ ‐ ‐ ‐ ‐ ‐ 75,000 ‐ ‐ ‐ S Burns1 43,068 ‐ ‐ ‐ 4,091 ‐ ‐ ‐ ‐ ‐ ‐ 47,159 ‐ ‐ ‐ G Kelly1 51,370 ‐ ‐ ‐ 4,880 ‐ ‐ ‐ ‐ ‐ ‐ 56,250 ‐ ‐ ‐ Managing Director S Gillard 740,000 (3,119) ‐ 272,531 25,000 16,182 200,813 215,156 215,156 68,133 143,438 1,893,290 59% 45% 33% Disclosed executives D Williams 375,000 (6,523) 1,170 95,000 25,000 8,461 66,797 70,313 75,000 23,750 50,000 783,967 49% 36% 27% J Garland 325,000 12,842 719 78,750 25,000 6,179 61,250 65,625 65,625 19,688 43,750 704,428 48% 36% 27% P Malek 329,468 ‐ 420 84,000 20,532 10,243 53,438 60,938 65,625 21,000 43,750 689,413 48% 36% 26% G Marr 275,000 (7,338) 1,089 71,250 25,000 5,274 48,750 56,250 56,250 17,813 37,500 586,838 49% 37% 27% Total 2,368,961 (4,138) 3,398 601,531 171,607 46,339 431,047 468,281 477,656 150,383 318,438 5,033,503	Short term benefits Post‐ employment Long term benefits	Security based payments Relatingtopriorperiods Relatingto currentperiod Total remuneration5
	Salary & fees Accrued leave2 Other3 Cash bonus Super contributions Long service leave2 $ $ $ $ $ $	FY16 Performance rights4 FY17 Performance rights4 FY18 Performance rights4 STI Performance rights4 LTI Performance rights4 Total remuneration Performance related Performance rights Prior years’ performance rights $ $ $ $ $ % % %

On 15 November 2018, Mr Graham Kelly retired from the Board, Mr Stephen Burns was appointed to the Board and Ms Gina Anderson appointed as Chairman of the Board.
Annual and long‐term service leave are accounted on an accrual basis. The amounts represent the change in accrued leave during the period.
Other includes the cost of an annual gym membership and other items incurred by GDI as part of its employee health and wellbeing programme.
The amount shown is the fair value of performance rights under the various STI, LTI and retention plans included in the relevant financial period and does not represent actual STI or LTI awards made.
Amounts disclosed as total remuneration excludes insurance premiums paid by GDI in respect of Directors’ and Officers’ liability insurance contracts.

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

5.9 Transactions with KMP

5.9.1 Equity instrument disclosure relating to KMP

		Securities
	Securities held at	transferred in		Securities held at
	the beginning of the	satisfaction of	Net securities	the end of the
	period	performance rights	bought/ (sold)	period
Directors
Gina Anderson	70,000	‐	10,000	80,000
Steve Gillard	29,192,922	1,168,594	(1,061,516)	29,300,000
John Tuxworth	140,300	‐	30,000	170,300
Giles Woodgate	‐	‐	‐	‐
Stephen Burns	27,533	‐	22,000	49,533
Other key management	personnel
David Williams	1,000,000	387,190	‐	1,387,190
John Garland	577,779	356,434	(80,000)	854,213
Paul Malek	524,882	309,752	‐	834,634
Greg Marr	348,527	288,565	(109,000)	528,092

There were no other transactions with KMP in the year ended 30 June 2020.

6. Other Disclosures

6.1 Indemnification and Insurance of Directors and Officers

GDI provides a Deed of Indemnity and Access (Deed) in favour of each Director of GDI and its controlled entities. The Deed indemnifies the Directors on a full indemnity basis to the extent permitted by law for losses, liabilities, costs and charges incurred as a Director of GDI, its controlled entities or such other entities.

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, its controlled entities or such other entities, and other payments arising from liabilities incurred by the Directors in connection with such proceedings. GDI has agreed to indemnify the auditors out of the assets of GDI if GDI has breached the agreement under which the auditors are appointed.

During the financial year, GDI paid insurance premiums to insure the Directors of GDI and its controlled entities. The terms of the contract prohibit disclosure of the premiums paid.

6.2 Rounding of Amounts

GDI is of a kind referred to in ASIC Class Order 98/100. Accordingly, amounts in the financial report have been rounded to the nearest thousand in accordance with that Class Order, unless stated otherwise.

6.3 Auditor

Hall Chadwick continues in office in accordance with section 327 of the Corporations Act 2001 .

GDI PROPERTY GROUP DIRECTORS’ REPORT

For the financial year ended 30 June 2020

6.4 Non‐Audit Services

The following fees were paid or payable to Hall Chadwick for non‐audit services provided during the year ended 30 June 2020:

$ Provision of tax advice 53,000

The Directors have considered the non‐audit services and other assurance services provided by the auditor during the financial period. In accordance with advice received from the Audit, Risk and Compliance Committee, the Directors are satisfied that:

the non‐audit services provided during the financial year by Hall Chadwick as the external auditor were compatible with the general standard of independence for auditors imposed by the Act; and
any non‐audit services provided during the financial year by Hall Chadwick as the external auditor did not compromise the auditor independence requirements of the Act for the following reasons:
(i) all non‐audit services were reviewed and approved by the Audit, Risk and Compliance committee prior to commencement to ensure they would not adversely affect the integrity and objectivity of the auditor;
(ii) the fact that none of the non‐audit services provided by Hall Chadwick during the financial year had the characteristics of management, decision making, self‐review, advocacy or joint sharing of risks; and
(iii) the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

6.5 Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.

Signed in accordance with a resolution of the directors of GDI Property Group Limited and GDI Funds Management Limited.

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_______ Gina Anderson Chairman

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_______ Steve Gillard Managing Director

Sydney Dated this 24[th] day of August 2020

GDI PROPERTY GROUP AUDITORS INDEPENDENCE DECLARATION

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GDI PROPERTY GROUP FINANCIAL REPORT

For the financial year ended 30 June 2020

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Notes	GDI Trust	GDI Trust
	2020 2019 2020 2019 $'000 $'000 $'000 $'000
Revenue from ordinary activities Property revenue Funds management revenue Interest revenue Other income	67,663 74,547 67,759 74,596 2,206 2,129 ‐ ‐ 163 204 152 194 263 928 200 928
Total revenue from ordinary activities 2	70,294 77,807	68,111 75,718
Net fair value gain/(loss) on interest rate swaps Net fair value gain/(loss) on investment property 10 Profit on sale of non‐current asset	(326) 377 (326) 377 32,862 36,011 32,862 36,011 ‐ 2,124 ‐ 2,124
Total income	102,831 116,319	100,647 114,230
Expenses Property expenses Finance costs 3 Corporate and administration expenses 4 Provision for impairment of debts 7 Acquisition expenses and discounted acquisitions	18,659 19,058 18,659 19,058 3,176 3,579 3,191 3,579 7,824 8,111 5,352 6,355 463 485 536 89 5,448 7 7,408 ‐
Total expenses	35,571 31,241	35,146 29,082
Profit before tax Income tax benefit/(expense) 5	67,260 85,078 65,501 85,148 (520) (8) ‐ ‐
Netprofit from continuing operations	66,740 85,070	65,501 85,148
Other comprehensive income	‐ ‐	‐ ‐
Total comprehensive income for theyear	66,740 85,070	65,501 85,148

Profit and total comprehensive income attributable to: Company shareholders Trust unitholders	1,239 (78) ‐ ‐ 65,864 81,692 65,864 81,692
Profit and total comprehensive income attributable to: Stapled securityholders External non‐controllinginterests	67,104 81,614 65,864 81,692 (363) 3,456 (363) 3,456
Profit after tax from continuing operations	66,740 85,070	65,501 85,148
	Cents Cents Cents Cents
Basic earnings per stapled security/trust unit 21 Diluted earningsper stapled security/trust unit 21	12.39 15.14 12.16 15.15 12.30 15.01 12.07 15.03

The accompanying notes form part of these financial statements.

GDI PROPERTY GROUP FINANCIAL REPORT

As at 30 June 2020

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Note	GDI 2020 2019 $'000 $'000 10,100 18,775 5,581 2,819 8,919 2,574 102,240 ‐	Trust
		2020 2019 $'000 $'000
Current assets Cash and cash equivalents 6 Trade and other receivables 7 Other assets 8 Non‐current assets held for sale 9		6,717 17,202 4,561 1,908 10,412 3,224 102,240 ‐
Total current assets	126,841 24,169	123,930 22,335
Non‐current assets Investment properties 10 Plant and equipment 11 Deferred tax assets 12 Intangible assets 13	822,850 773,259 95 83 629 1,149 18,110 18,110	822,850 773,259 ‐ ‐ ‐ ‐ ‐ ‐
Total non‐current assets	841,685 792,601	822,850 773,259
Total assets	968,525 816,769	946,780 795,593
Current liabilities Trade and other payables 15 Provisions 16	25,520 26,303 405 289	24,984 25,005 ‐ ‐
Total current liabilities	25,926 26,592	24,984 25,005
Non‐current liabilities Borrowings 17 Derivative financial instruments 14 Provisions 16 Other liabilities	159,423 69,128 326 ‐ 206 163 ‐ 11	159,318 68,986 326 ‐ ‐ ‐ 25 ‐
Total non‐current liabilities	159,954 69,301	159,668 68,986
Total liabilities	185,880 95,893	184,652 93,991
Net assets	782,645 720,876	762,128 701,602
Equity Contributed equity 18 Reserves 19a Retained earnings 19b	22,296 22,301 203 193 (1,981) (3,221)	502,084 502,262 4,483 4,269 194,319 170,414
Equity attributable to equity holders of the
Company/Trust	20,517 19,274	700,886 676,945
Non‐controlling interests Unitholders of the Trust Contributed equity 18 Reserves 19a Retained earnings 19b	502,084 502,263 4,483 4,269 194,319 170,414	‐ ‐ ‐ ‐ ‐ ‐
Total equity attributable to trust unitholders	700,886 676,945	‐ ‐
Equity attributed to holders of stapled securities	721,403 696,218	‐ ‐
External non‐controlling interest Contributed equity Retained earnings Return of capital	64,575 36,890 (3,333) (59) ‐ (12,174)	64,575 36,890 (3,333) (59) ‐ (12,174)
Total equity attributable to external non‐controlling interest	61,242 24,657	61,242 24,657
Total equity	782,645 720,876	762,128 701,602

The accompanying notes form part of these financial statements.

GDI PROPERTY GROUP FINANCIAL REPORT

For the financial year ended 30 June 2020

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

GDI

	Equityattributable to securityholders of GDI Contributed equity Reserves Retained earnings Total Non‐ controlling interest (Trust) Non‐ controlling interest (External) Total equity $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance as at 1 July 2018	22,214 194 (3,143) 19,265 635,153 36,160 690,578
Comprehensive income (Loss)/profit for the year Other comprehensive income	‐ ‐ (78) (78) 81,692 3,456 85,070 ‐ ‐ ‐ ‐ ‐ ‐ ‐
Total comprehensive income for theyear	‐ ‐ (78) (78) 81,692 3,456 85,070
Transactions with securityholders in their capacity as securityholders Security‐based payments expense ‐ 89 ‐ 89 1,956 ‐ 2,045 Equity issued 89 (89) ‐ ‐ ‐ ‐ ‐ On‐market securities buy‐ back (2) ‐ ‐ (2) (39) ‐ (41) Return of capital ‐ ‐ ‐ ‐ ‐ (12,174) (12,174) Distributionspaid/payable ‐ ‐ ‐ ‐ (41,817) (2,784) (44,601)
Total transactions with securityholders in their capacity as securityholders 87 ‐ ‐ 87 (39,900) (14,958) (54,771)

Balance as at 30 June 2019 22,301 193 (3,221) 19,274 676,945 24,657 720,876

Balance as at 1 July 2019 22,301 193 (3,221) 19,274 676,945 24,657 720,876
Comprehensive income Profit/(loss) for the year ‐ ‐ 1,239 1,239 65,864 (363) 66,740 Other comprehensive income ‐ ‐ ‐ ‐ ‐ ‐ ‐
Total comprehensive income for theyear ‐ ‐ 1,239 1,239 65,864 (363) 66,740
Transactions with securityholders in their capacity as securityholders Security‐based payments expense ‐ 91 ‐ 91 2,008 ‐ 2,099 Issue and formation costs ‐ ‐ ‐ ‐ (59) (65) (124) Equity issued 81 (81) ‐ ‐ ‐ 39,924 39,924 On‐market securities buy‐ back (87) ‐ ‐ (87) (1,913) ‐ (2,000) Distributionspaid/payable ‐ ‐ ‐ ‐ (41,960) (2,911) (44,871)
Total transactions with securityholders in their capacity as securityholders (5) 10 ‐ 4 (41,924) 36,948 (4,972)

Balance as at 30 June 2020 22,296 203 (1,981) 20,517 700,886 61,242 782,645

The accompanying notes form part of these financial statements.

GDI PROPERTY GROUP FINANCIAL REPORT

For the financial year ended 30 June 2020

Trust

Trust
	Equityattributable to unitholders of the Trust Contributed equity Reserves Retained earnings Total equity attributable to unitholders of the Trust External non‐ controlling interest (External) Total equity $'000 $'000 $'000 $'000 $'000 $'000
Balance as at 1 July 2018	500,335 4,279 130,539 635,153 36,160 671,313
Comprehensive income Profit for the year Other comprehensive income	‐ ‐ 81,692 81,692 3,456 85,148 ‐ ‐ ‐ ‐ ‐ ‐
Total comprehensive income for the year	‐ ‐ 81,692 81,692 3,456 85,148
Transactions with unitholders in their Security‐based payments expense Equity issued On‐market securities buy‐back Return of capital Distributionspaid/payable	capacity as unitholders ‐ 1,956 ‐ 1,956 ‐ 1,956 1,966 (1,966) ‐ ‐ ‐ ‐ (39) ‐ ‐ (39) ‐ (39) ‐ ‐ ‐ ‐ (12,174) (12,174) ‐ ‐ (41,817) (41,817) (2,784) (44,601)
Total transactions with unitholders in their capacity as unitholders	1,927 (10) (41,817) (39,900) (14,958) (54,858)

Balance as at 30 June 2019	502,263 4,269 170,414 676,945 24,657 701,602

Balance as at 1 July 2019	502,263 4,269 170,414 676,945 24,657 701,602
Comprehensive income Profit for the year Other comprehensive income	‐ ‐ 65,864 65,864 (363) 65,501 ‐ ‐ ‐ ‐ ‐ ‐
Total comprehensive income for the year	‐ ‐ 65,864 65,864 (363) 65,501
Transactions with unitholders in their Security‐based payments expense Issue and formation costs Equity issued On‐market securities buy‐back Distributionspaid/payable	capacity as unitholders ‐ 2,008 ‐ 2,008 ‐ 2,008 (59) ‐ ‐ (59) (65) (124) 1,793 (1,793) ‐ ‐ 39,924 39,924 (1,913) (1,913) ‐ (1,913) ‐ ‐ (41,960) (41,960) (2,911) (44,871)
Total transactions with unitholders in their capacity as unitholders	(179) 215 (41,960) (41,924) 36,948 (4,976)

Balance as at 30 June 2020	502,084 4,483 194,319 700,886 61,242 762,128

The accompanying notes form part of these financial statements.

GDI PROPERTY GROUP FINANCIAL REPORT

For the financial year ended 30 June 2020

CONSOLIDATED STATEMENT OF CASH FLOWS

Notes	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Cash flows from operating activities Receipts in the course of operations Payments in the course of operations Interest received Interestpaid	74,218 76,513 (25,330) (22,179) 163 204 (2,847) (3,302)	72,048 74,484 (20,238) (20,395) 152 194 (2,847) (3,301)
Net cash inflow from operating activities 25	46,205 51,236	49,115 50,982
Cash flows from investing activities Payments for investment properties Proceeds from sale of investment properties net of transaction costs Payments for capital expenditure Payments for plant and equipment Payments of incentives and leasing fees (Loan to)/repayment of loans from associated companies	(103,448) ‐ ‐ 45,274 (9,479) (13,758) (41) (26) (21,627) (7,238) (3,354) (143)	(105,408) ‐ ‐ 45,274 (9,479) (13,758) ‐ ‐ (21,628) (7,238) (6,266) (2)
Net cash used in investing activities	(137,950) 24,110	(142,781) 24,277
Cash flows from financing activities Payments for the on‐market buy‐back of securities Payment of loan transaction costs Payment of dividends/distributions Proceeds from borrowings Repayment of borrowings Return of capital Equity issue costs GDI No.46 Property Trust Equityissued in GDI No. 46 PropertyTrust	(2,000) (41) (725) (208) (44,835) (44,489) 90,831 10,960 ‐ (32,980) ‐ (12,174) (59) ‐ 39,859 ‐	(1,913) (39) (494) (208) (44,835) (44,489) 90,622 10,960 ‐ (32,980) ‐ (12,174) (59) 39,859
Net cash from financing activities	83,071 (78,932)	83,180 (78,929)
Net decrease in cash and cash equivalents	(8,674) (3,586)	(10,486) (3,671)
Cash and cash equivalents at beginningofyear	18,774 22,361	17,203 20,873
Cash and cash equivalents at the end of theyear 6	10,100 18,774	6,717 17,203

The accompanying notes form part of these financial statements.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GDI Property Group (“GDI”) was formed by the stapling of GDI Property Group Limited (the “Company”) and GDI Property Trust (the “Trust”). The Responsible Entity of the Trust is GDI Funds Management Limited, a wholly owned subsidiary of the Company. GDI was established for the purpose of facilitating a joint quotation of the Company and the Trust on the ASX. The constitutions of the Company and the Trust, together with a Co‐operation Deed dated 25 November 2013, ensure that for so long as the two entities remain jointly quoted, the number of units in the Trust and shares in the Company shall be equal and the unitholders and the shareholders be identical. Both the Responsible Entity of the Trust and the Company must at all times act in the best interests of GDI. The Company was incorporated on 5 November 2013 and the Trust established on 4 November 2013 and registered as a management investment scheme on 18 November 2013.

The Company has been deemed the parent entity of the Trust. The consolidated financial statements and notes represent those of the Company and its controlled entities, including the Trust and its controlled entities as the deemed acquiree. The financial report includes separate financial statements for:

GDI, consisting of the Company, the Trust and their controlled entities; and
the Trust, consisting of GDI Property Trust and its controlled entities.

The financial statements are authorised for issue on 24 August 2020 by the directors of the Company and the Responsible Entity of the Trust.

(a) Basis of preparation

These general‐purpose financial statements have been prepared in accordance with the Corporations Act 2001 , Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and International Financial Reporting Standards as issued by the International Accounting Standards Board. GDI is a for‐profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise.

Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non‐current assets, financial assets and financial liabilities.

(b) Consolidated financial statements

The shares of the Company and the units in the Trust are stapled and issued as stapled securities of GDI. Whilst the shares and units are stapled, they cannot be traded separately and can only be traded as stapled securities. The stapling occurred on 16 December 2013, with trading on the ASX commencing on 17 December 2013.

The stapling has been accounted for pursuant to AASB 3: Business Combinations. The Company has been identified as the acquirer of the Trust whereby the Trust’s net assets are attributed to the trust unitholders. In this regard, the unitholders are treated as the non‐controlling interest in the financial statements of GDI, despite the fact that such owners also have an equal interest in the Company.

(c) Principles of consolidation

The consolidated financial statements incorporate all of the assets, liabilities and results of all controlled entities for the year ended 30 June 2020, that is the Company and its subsidiaries and the Trust and its subsidiaries, collectively referred to as GDI.

Subsidiaries are entities GDI controls. GDI controls an entity when it 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 over the entity. A list of the controlled entities is provided in Note 31.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of GDI from the date on which control is obtained. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by GDI.

(d) New accounting policies

AASB 16 Leases

AASB16 requires recognition of a right‐of‐use asset along with the associated lease liability where the entity is a lessee. An interest expense is recognised in the profit or loss using the effective interest rate method, and the right‐of use asset is depreciated. Lessor accounting remains largely unchanged.

AASB16 does not have an impact on GDI as the only leases GDI has entered in to as a lessee are for its Head Office premises and a photocopier. Further, as the remaining term of the Head Office lease is for less than 12 months, the right to use asset and liability is nil.

(e) Business combinations

Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions).

When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument, are recognised as expenses in profit or loss when incurred.

The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

(f) Goodwill

Goodwill is carried at cost less any accumulated impairment losses.

Goodwill is calculated as the excess of the sum of:

the consideration transferred;
any non‐controlling interest (determined under either the full goodwill or proportionate interest method); and
the acquisition date fair value of any previously held equity interest;

over the acquisition date fair value of net identifiable assets acquired.

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements.

Fair value re‐measurements in any pre‐existing equity holdings are recognised in profit or loss in the period in which they arise. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates.

Goodwill is tested for impairment annually and is allocated to GDI 's cash‐generating unit or groups of cash‐generating units, representing the lowest level at which goodwill is monitored being not larger than an operating segment.

Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the disposed of entity.

Changes in the ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions and do not affect the carrying amounts of goodwill.

(g) Income Tax

(i) Trust

Under current income tax legislation, the Trust is not liable to pay tax provided its taxable income and taxable realised capital gains are distributed to unitholders. The liability for capital gains tax that may arise if the investment properties owned by the Trust, either directly or indirectly, were sold is not accounted for in this Financial Report.

(ii) Company and other taxable entities

The income tax expense/(income) for the year comprises current income tax expense/(income) and deferred tax expense/(income).

Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities/(assets) are measured at the amounts expected to be paid to/(recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.

Current and deferred income tax expense/(income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss.

Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference cannot be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set‐off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where:

a legally enforceable right of set‐off exists; and
the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

(iii) Tax consolidation

The Company and its wholly owned subsidiaries (excluding the Trust and its wholly owned subsidiaries) have formed a tax‐ consolidated group with effect from 16 December 2013 and are therefore taxed as a single entity from that date. The head entity of the tax‐consolidated group is the Company.

Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax‐consolidated group are recognised in the separate financial statements of the members of the tax‐ consolidated group, using the ‘separate taxpayer within group’ approach by reference to the carrying amounts of the assets and liabilities in the separate financial statements of each entity and the tax values applying under tax consolidation.

Any current tax liabilities or assets and deferred tax assets arising from unused tax losses of the subsidiaries are assumed by the head entity in the tax‐consolidated group and are recognised as amounts payable (receivable) to (from) other entities in the tax‐consolidated group in conjunction with any funding arrangement amounts referred to below. Any difference in these amounts is recognised by the Company as an equity contribution or distribution.

The Company recognises deferred tax assets arising from unused tax losses of the tax‐consolidated group to the extent that it is probable that the future taxable profits of the tax‐consolidated group will be available against which the asset can be utilised. Any subsequent period adjustment to deferred tax assets arising from unused tax losses, as a result of revised assessments of the probability of recoverability, is recognised by the head entity only.

(iv) Nature of tax funding arrangements and tax sharing arrangements

The Company, in conjunction with other members of the tax‐consolidated group, has entered into a tax funding arrangement, which sets out the funding obligations of the members of the tax‐consolidated group in respect of tax amounts. The tax funding arrangements require payments to/from the Company equal to the current tax liability (asset) assumed by the Company and any tax‐loss/deferred tax asset assumed by the Company, resulting in the Company recognising an inter‐entity receivable (payable) equal in amount to the liability (asset) assumed. The inter‐entity receivable (payable) are at call.

Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the Company’s obligation to make payments for tax liabilities to the relevant tax authorities.

The Company, in conjunction with other members of the tax‐consolidated group, has also entered into a tax sharing arrangement. The tax sharing arrangement provides for the determination of the allocation of income tax liabilities between the entities should the Company default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement, as payment of any amounts under the tax sharing agreement is considered remote.

(h) Plant and equipment

Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses.

Plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probably that future economic benefits associated with the item will flow to GDI and the cost of the item can be measured reliably. All repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation is calculated using both the straight line and diminishing values method to allocate costs of assets, net of their residual values, over their estimated useful lives, as follows:

Class		Rate
Furniture and fittings	2% ‐	67%

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds to the carrying amount. Any gain or loss is included in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

(i) Impairment of assets

Goodwill and tangible assets that have an indefinite useful life are not subject to amortisation and are tested at least annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired.

At each reporting date, and whenever events or changes in circumstances occur, GDI assesses whether there is any indication that any other asset may be impaired. Where an indicator of impairment exists, GDI makes a formal estimate and an impairment loss is recognised 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 to sell and its value in use.

For the purposes of assessing impairment, assets 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). Assets other than goodwill that suffer an impairment are viewed for possible reversal of the impairment at each reporting date.

(j) Investment properties

Investment properties is property which is held either to earn income or for capital appreciation or both. Investment properties also include properties that are under construction for future use as investment properties. Investment properties are measured at fair value, with acquisition and other related costs written off through the profit and loss. As part of the process of determining fair value, an external, independent valuer, having an appropriate recognised professional qualification and recent experience in the location and category of property being valued, values individual properties annually on a rotation basis or on a more regular basis if considered appropriate and as determined by management and the Board in accordance with the valuation policy of GDI.

These valuation processes are taken into consideration when determining the fair value of the investment properties. The fair value is based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms‐length transaction after proper marketing wherein the parties had each acted knowledgably, prudently and without compulsion.

The valuations are prepared by considering the capitalisation of net income and the discounting of future cash flows to their present value. These methods incorporate assumptions of future rental income and costs, appropriate capitalisation and discount rates and also consider market evidence of transaction prices of similar investment properties.

Valuations reflect, where appropriate:

the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting of vacant accommodation and the market’s general perception of their creditworthiness;
the allocation of maintenance and other operating cost responsibilities between lessor and lessee; and
the remaining economic life of the property.

Further information on assumptions underlying the assessment of fair value is contained below at Note 1 (ab) Critical accounting estimates and assumptions and in Note 10, Investment properties.

Changes in fair values are recorded in the Consolidated Statement of Profit or Loss and Other 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 Profit or Loss and Other Comprehensive Income in the year of disposal.

Repairs and maintenance costs and minor renewals are charged as expenses when incurred.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

Subsequent 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.

(k) Cash and cash equivalents

Cash and cash equivalents include cash on hand and cash at bank.

(l) Leases

GDI as lessee

At inception of a contract, GDI assesses if the contract contains or is a lease. If there is a lease present, a right‐of‐use asset and a corresponding lease liability is recognised by GDI where GDI is a lessee. However, all contracts that are classified as short‐term leases (lease with remaining lease term of 12 months or less) and leases of low value assets are recognised as an operating expense on a straight‐line basis over the term of the lease. Initially the lease liability is measured at the present value of the lease payments still to be paid at commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, GDI uses the incremental borrowing rate.

Lease payments included in the measurement of the lease liability are as follows:

fixed lease payments less any lease incentives;
variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
the exercise price of purchase options, if the lessee is reasonably certain to exercise the options;
lease payments under extension options if lessee is reasonably certain to exercise the options; and
payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.

The right‐of‐use assets comprise the initial measurement of the corresponding lease liability as mentioned above, any lease payments made at or before the commencement date as well as any initial direct costs. The subsequent measurement of the right‐of‐use assets is at cost less accumulated depreciation and impairment losses. Right‐of‐use assets are depreciated over the lease term or useful life of the underlying asset whichever is the shortest.

Where a lease transfers ownership of the underlying asset or the cost of the right‐of‐use asset reflects that GDI anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset.

GDI as lessor

GDI leases property to lessees. Upon entering into each contract as a lessor, GDI assesses if the lease is a finance or operating leases. The contract is classified as a finance lease when the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases not within this definition are classified as operating leases.

Rental income received from operating leases is recognised on a straight‐line basis over the term of the specific lease. Initial direct costs incurred in entering into an operating lease (for example legal cost, cost to setup) are included in the carrying amount of the leased asset and recognised as an expense on a straight‐line basis over the lease term. Lessees may also be offered incentives as an inducement to enter into leases. These incentives may take various forms including up‐front cash payments, rent free periods, or a contribution to certain lessee costs such as fit‐out or relocation costs. Any incentive is also recognised as an asset in the statement of financial position as a component of the carrying amount of the investment property and amortised over the lease period as a reduction in rental income.

Rental income due under finance leases is recognised as receivables at the amount of GDI’s net investment in the leases. When a contract is determined to include lease and non‐lease components, GDI applies AASB 15 to allocate the consideration under the contract to each component.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

(m) Fair value of assets and liabilities

GDI measures some of its assets and liabilities at fair value on either a recurring or non‐recurring basis, depending on the requirements of the applicable Accounting Standards.

Fair value is the price GDI would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.

As fair value is a market‐based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.

To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs).

For non‐financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.

The fair value of liabilities and the entity’s own equity instruments (excluding those related to share‐based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements.

(n) Financial Instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at amortised cost using the effective interest method, fair value through profit or loss, or for financial assets, fair value through other comprehensive income.

Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an income or expense item in profit or loss.

GDI does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of Accounting Standards specifically applicable to financial instruments.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

(i) Loans and receivables

Loans and receivables are non‐derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.

(ii) Financial liabilities

Non‐derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial liability is derecognised.

(o) Derivative financial instruments

GDI enters into various derivative financial instruments (i.e. interest rate swaps) to manage its exposure to interest rate risks. Derivative financial instruments are initially and subsequently measured at fair value. All gains and losses subsequent to the initial recognition are recognised in profit or loss.

(p) Employee benefits

(i) Short‐term employee benefits

Provision is made for GDI’s obligation for short‐term employee benefits. Short‐term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short‐term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.

GDI’s obligations for short‐term employee benefits such as wages, salaries and sick leave are recognised as a part of current trade and other payables in the statement of financial position. GDI’s obligations for employees’ annual leave and long service leave entitlements are recognised as provisions in the statement of financial position.

(ii) Long‐term employee benefits

Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long‐term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that approximate the terms of the obligations. Any re‐measurements for changes in assumptions of obligations for other long‐term employee benefits are recognised in profit or loss in the periods in which the changes occur.

GDI’s obligations for long‐term employee benefits are presented as non‐current provisions in its statement of financial position, except where GDI does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions.

(iii) Performance rights plan

GDI has established a performance rights plan and has issued performance rights to employees. Under the performance rights plan, employees will be granted performance rights which will vest if vesting conditions are satisfied, into either GDI’s securities at no cost, or an equivalent amount of cash, at the election of GDI.

The cost of the issues of performance rights are recognised as an employee benefit expense. The fair value of the performance rights is recognised in the security‐based payments reserve in equity, or, if the performance rights are yet to be granted, accrued in the Consolidated Statement of Financial Position and reversed with a corresponding increase in the security‐based payments reserve in equity once the performance rights are granted.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

Fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the rights. For relative market performance‐based vesting conditions, fair value is determined using binomial option pricing to model the performance of GDI to the selected peer group taking into account individual volatilities and correlations.

For non‐market based vesting conditions, the fair value is determined based on the likelihood of achieving the conditions having reference to budgets and management plans and is measured using a Black‐Scholes option pricing model. For non‐ market based vesting conditions, at each reporting date GDI revises its estimate of the number of performance rights that are expected to be exercisable and the employee benefit expense recognised each reporting period takes into account the most recent estimate. The impact of any revision to original estimates is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income with a corresponding adjustment to equity.

(q) Revenue and other income

GDI has applied AASB 15: Revenue from contracts with customers, which is based on the principle that revenue is recognised when control of a good or service transfers to a customer. AASB 15 applies to all contracts with customers except leases, financial instruments and insurance contracts so for GDI, principally its funds management revenue.

(i) Funds management revenue

GDI, through wholly owned subsidiaries, manages investment schemes which do not form part of the consolidated financial statements. GDI earns revenue in a number of ways such as:

Due diligence and acquisition fees
Asset management fees
Performance fees
Disposal fees

Revenue is recognised as the funds management services are provided and the transaction price is calculated in line with the fees schedule stated in the information memorandum.

(ii) Rental revenue

Rental revenue from investment property is recognised on a straight‐line basis over the lease term or until the first contingency (market or CPI review) occurs. Rental revenue not received at reporting date is reflected in the statement of financial position as a contract asset or if paid in advance, as a contract liability. Lease incentives granted are considered an integral part of the total rental revenue and are recognised as a reduction in rental income over the term of the lease, on a straight‐line basis. Contingent rents based on the future amount of a factor that changes other than with the passage of time, including turnover rents and CPI or market linked rental increases, are only recognised when contractually due.

(iii) Interest

Interest revenue is recognised as it accrues using the effective interest method.

Where an asset has been held for syndication with funding provided by GDI Property Trust by way of an at call loan, and the asset is subsequently syndicated, the interest income earned by GDI Property Trust whilst the asset is held for syndication is recognised in both the accounts of GDI Property Trust and GDI.

(r) Property expenses

Property expenses and outgoings include rates, taxes and other property outgoings incurred in relation to investment properties where such expenses are the responsibility of GDI Property Trust, and are recognised on an accruals basis.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

(s) Borrowing and borrowing costs

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost using the effective interest rate method. Under this method fees, costs, discounts and premiums directly related to the financial liability are spread over its expected life. Borrowings are classified as current liabilities unless GDI has an unconditional right to defer settlement of the liability for at least 12 months after the balance date.

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income in the period in which they are incurred.

(t) Provisions

Provisions are recognised when:

GDI has a present legal or constructive obligation as a result of past events; and
it is probable that an outflow of resources will be required to settle the obligation; and
the amount has been reliably estimated.

Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.

Provisions are not recognised for future operating losses.

(u) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers.

(v) Rounding of amounts

GDI has applied the relief available to it under ASIC Class Order 98/100. Accordingly, amounts in the financial statements and directors’ report have been rounded to the nearest $1,000.

(w) Segment reporting

An operating segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other segments. Each segment is reviewed by the entity’s chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess the performance and for which discrete financial information is available.

Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment. Segment assets include all assets used by a segment and consist primarily of operating cash, receivables, investment properties and goodwill. Due to the small size of the GDI’s team, corporate overhead expenses and property, plant and equipment are not allocated in reporting to the CODM and therefore for the purpose of segment reporting are unallocated.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

(x) Contributed equity

Ordinary shares and units are classified as equity and recognised at the fair value of the consideration received by GDI. Any transaction costs arising on the issue of ordinary stapled securities are recognised directly in equity as a reduction, net of tax, of the proceeds of the issue.

(y) Distributions and dividends

Distributions are paid to GDI stapled securityholders half yearly. A provision for distributions is made for the amount of any distribution declared on or before the end of the reporting period but not paid to securityholders at the reporting date.

(z) Earnings per stapled security

Basic earnings per stapled security is calculated as net profit attributable to ordinary securityholders of GDI divided by the weighted average number of ordinary securities outstanding during the financial year. Diluted earnings per stapled security is calculated as net profit attributable to ordinary securityholders of GDI divided by the weighted average number of ordinary stapled securities and dilutive potential ordinary securities. Where there is no difference between basic and diluted earnings per stapled security, the term basic and diluted earnings per stapled security is used.

(ab) Critical accounting estimates and assumptions

The preparation of the financial reports requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial reports. Management bases its judgements and estimates on historical experience and other various factors it believes to be reasonable under the circumstances, but which are inherently uncertain and unpredictable, the results of which form the basis of the carrying values of assets and liabilities. The resulting accounting estimates may differ from the actual results under difference assumptions and conditions.

The key estimates and assumptions that have a risk of causing adjustment in the next financial year to the carrying amounts of asset and liabilities recognised in these financial reports are:

(i) Valuation of investment properties

Critical judgements are made by GDI in respect of the fair value of investment properties. The fair value of these investments is reviewed regularly by management with reference to external independent property valuations, recent offers and market conditions existing at reporting date, using generally accepted market practices. The critical assumptions underlying management’s estimates of fair value are those relating to the passing rent, market rent, occupancy, capitalisation rate, terminal yield and discount rate. If there is any change in these assumptions or regional, national or international economic conditions, the fair value of the property investments may differ. Major assumptions used in valuation of the property investments are disclosed in Note 10.

(ii) Valuation of financial instruments

The fair value of derivative assets and liabilities are based on assumptions of future events and involve significant estimates. The basis of valuation for GDI’s derivatives are set out in Note 1(n), however the fair values of derivatives reported at 30 June 2020 may differ if there is volatility in market rates in future periods. The valuation techniques are discussed in detail at Note 29 and have been developed in compliance with requirements of AASB 9 Financial Instruments: Recognition and Measurement.

(iii) Security‐based payments

GDI measures the cost of performance rights allocated to employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of performance rights is determined using Black‐Scholes option pricing model and Binomial option pricing model. The related assumptions are detailed in Note 30. The accounting estimates and the assumptions relating to performance rights will have no impact on the carrying amounts of assets and liabilities within the next reporting period, but may impact the security‐based payment expense and equity.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

(iv) Recoverability of deferred tax assets

Deferred tax assets are recognised for deductible temporary difference and unused tax losses as management considers that it is probable that future taxable profits will be available to utilise those temporary differences and unused tax losses. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits which may lead to impairment of the deferred tax asset.

(v) Consolidation of entities in which GDI holds less than 50%

Management consider that GDI has de facto control of GDI No. 42 Office Trust and GDI No. 46 Property Trust, even though it has less than 50% of the units on issue in either trust. GDI is the majority unitholder of GDI No. 42 Office Trust with a 43.68% interest and GDI No. 46 Property Trust with a 47.26% interest, while all other unitholders in both trusts indirectly hold less than 10% of the units on issue. There is no history of other unitholders forming a group to exercise their votes collectively. Entities controlled by GDI also act as Trustee and Investment Manager of both trusts.

NOTE 2 – REVENUE

a) Revenue Rent and recoverable outgoings Lease costs and incentive amortisation Funds management revenue Interest and other income	GDI 2020 2019 $'000 $'000 74,779 79,527 (7,116) (4,980) 2,206 2,129 426 1,131	Trust
		2020 2019 $'000 $'000
		74,875 79,576 (7,116) (4,980) ‐ ‐ 352 1,121
Total revenue from ordinary activities	70,294 77,807	68,111 75,718
Revenue from contracts with customers Revenue based on AASB 16 Other sources of revenue	GDI 2020 2019 $'000 $'000 2,206 2,129 67,663 74,547 426 1,131	Trust
		2020 2019 $'000 $'000
		‐ ‐ 67,759 74,596 352 1,121
Total revenue from ordinary activities	70,294 77,807	68,111 75,718

b) Disaggregated revenue

b) Disaggregated revenue
GDI Geographical markets	Funds management Lease income Total
	2020 2019 2020 2019 2020 2019 $'000 $'000 $'000 $'000 $'000 $'000
NSW WA QLD	2,206 2,129 ‐ ‐ 2,206 2,129 ‐ ‐ 53,529 58,247 53,529 58,247 ‐ ‐ 14,133 16,300 14,133 16,300
Total	2,206 2,129	67,663 74,547 69,868 76,675
Timing and recognition	$'000 $'000 $'000 $'000 $'000 $'000
Services transferred to customers: At a point in time Over time	‐ ‐ ‐ ‐ ‐ ‐ 2,206 2,129 67,663 74,547 69,868 76,675
Total	2,206 2,129 67,663 74,547		69,868 76,675

GDI PROPERTY GROUP

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financialyear ended 30 June 2020
Trust Geographical markets	Lease income	Total
	2020 2019 $'000 $'000	2020 2019 $'000 $'000
NSW WA QLD	‐ ‐ 53,625 58,297 14,133 16,300	‐ ‐ 53,625 58,297 14,133 16,300
Total	67,759 74,596	67,759 74,596
Timing and recognition	$'000 $'000	$'000 $'000
Services transferred to customers: At a point in time Over time	‐ ‐ 67,759 74,596	‐ ‐ 67,759 74,596
Total	67,759 74,596	67,759 74,596
c) Other sources of revenue Interest received ‐ unrelated parties ‐ relatedparties	GDI 2020 2019 $'000 $'000 98 204 66 ‐	Trust 2020 2019 $'000 $'000 87 194 66 ‐
Total interest received	163 204	152 194
Other	263 928	200 928
Total other sources of revenue	426 1,131	352 1,121

NOTE 3 – FINANCE COSTS

Finance costs	Finance costs	GDI 2020 2019 $'000 $'000	Trust 2020 2019 $'000 $'000
Interestpaid/ payable		3,176 3,579	3,191 3,579
Total finance costs		3,176 3,579	3,191 3,579

NOTE 4 – CORPORATE AND ADMINISTRATION EXPENSES

Total finance costs NOTE 4 – CORPORATE AND ADMINISTRATION EXPENSES	3,176 3,579	3,191 3,579
Corporate and administration expenses	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Audit and taxation fees Custodian fees Occupancy expenses Employee benefits expense Others	232 227 88 80 388 339 6,184 6,680 931 786	31 56 88 80 ‐ ‐ 2,031 1,950 3,201 4,269
Total corporate and administration expenses	7,824 8,111	5,352 6,355

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

NOTE 5 – INCOME TAX EXPENSE/BENEFIT

Income tax benefit	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
The components of tax expense/(benefit) comprise: Current tax Deferred tax	‐ ‐ 520 8	‐ ‐ ‐ ‐
Income tax expense/(benefit)	520 8	‐ ‐
Reconciliation of income tax expense/(benefit) to prima facie tax payable: Prima facie tax payable on profit from ordinary activities before income tax at 27.5% 474 (19)		‐ ‐
Add tax effect of: Tax effect of reduction in tax rate Other non‐allowable items Share option expensed Less tax effect of: Share options paid Non‐taxable trust income	36 ‐ 2 3 25 24 ‐ ‐ (17) ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Income tax expense/(benefit) attributable to GDI/ Trust	520 8	‐ ‐

NOTE 6 – CASH AND CASH EQUIVALENTS

Cash and cash equivalents	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Cash at bank	10,100 18,775	6,717 17,202
Total cash and cash equivalents	10,100 18,775	6,717 17,202
NOTE 7 – TRADE AND OTHER RECEIVABLES Trade and other receivables	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Trade receivables Others Provision for expected credit losses	5,345 3,673 453 50 (217) (904)	4,137 1,916 442 40 (17) (48)
Total trade and other receivables	5,581 2,819	4,561 1,908

NOTE 7 – TRADE AND OTHER RECEIVABLES

The movement in the provision for impairment of trade and other receivables is as follows:

Provision for expected credit losses Balance at beginning of year Charge for the year Amounts written off	GDI Trust $'000 $'000	GDI Trust $'000 $'000
	904 48 463 536 (1,150) (567)
Balance as at 30 June 2020	217	17

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

Trade receivables

Included in trade and other receivables of GDI is $1,183,000 (2019: $1,660,000) of fees charged to managed funds that remain unpaid. Of this, $200,000 (2019: $855,000) has been provisioned for expected credit losses, and $655,000 that was previously provisioned was written off.

COVID‐19 had a significant impact on some tenants’ ability to pay rent in accordance with contracted lease obligations. Where tenants received rent relief in accordance with the Commercial Tenancy Code of Conduct, at least 50% of any rent relief was to be waived, with the balance deferred. In some instances, GDI agreed to simply waive rent. Any waived rent as a result of COVID‐19 was written off in the financial year ($518,000). Any deferred or restructured rent ($1,369,000) is included in trade receivables. A further $2,299,000 (2019: $1,117,000) of rent is past due. Of this, $17,000 (2019: $48,000) has been provisioned for expected credit losses and the remainder relates to a number of tenants:

a) for whom there is no recent history of default and in most cases, as security is held for greater than the amount outstanding, there has been no impairment of receivables; or
b) where negotiations in relation to rent relief have not been concluded ($503,000).

In relation to the receivables referred to in b) above, GDI expects to come to a commercial arrangement with these tenants which will result in no rent being waived and therefore no rent being written off.

GDI applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected credit losses also incorporate forward‐looking information. The amounts written off or provision for expected credit losses charged for the year are all due to customers entering insolvency administration, or term receivables that have now become irrecoverable. GDI expects to recover in full the outstanding balance of trade and other receivables, including the amount deferred due to COVID‐19. The loss allowance provision has been determined as provided below.

GDI 2020 Expected loss rate Gross carryingamount	30 – 60 days 60 ‐ 90 days >90 days Current past due past due past due Total
	$'000 $'000 $'000 $'000 $'000 0% 0% 0% 0% 2,875 547 584 1,122 5,128
Loss allowingforprovision	‐ ‐ ‐ ‐ ‐
2019 Expected loss rate Gross carryingamount	0% 0% 0% 0% 1,118 283 175 1,194 2,769
Loss allowingforprovision	‐ ‐ ‐ ‐ ‐
Trust 2020 Expected loss rate Gross carryingamount
	30 – 60 days 60 ‐ 90 days >90 days Current past due past due past due Total
	$'000 $'000 $'000 $'000 $'000 0% 0% 0% 0% 2,875 547 584 113 4,119
Loss allowingforprovision	‐ ‐ ‐ ‐ ‐
2019 Expected loss rate Gross carryingamount	0% 0% 0% 0% 1,118 283 175 292 1,868
Loss allowingforprovision	‐ ‐ ‐ ‐ ‐

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

NOTE 8 – OTHER ASSETS

Other assets	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Interest paid in advance Prepayment Prepayment – GDI No. 45 Office Trust Development works in progress Loans to managed funds Others	10 141 249 884 1,407 ‐ 2,492 950 4,631 597 130 3	10 141 200 819 ‐ ‐ 2,492 950 3,879 597 3,830 718
Total other	8,919 2,574	10,412 3,224

NOTE 9 – NON‐CURRENT ASSETS HELD FOR SALE

During FY20, GDI engaged the services of real estate agents to market 50 Cavill Avenue, Surfers Paradise for sale. Accordingly, the property has been reclassified as a Non‐current asset held for sale. If 50 Cavill Avenue is sold, the strata unit at 46 Cavill Avenue, Surfers Paradise, would be considered non‐core and accordingly, that asset has also been reclassified as a Non‐ current asset held for sale.

Assets held for sale	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Investmentproperties	102,240 ‐	102,240 ‐
Total assets held for sale	102,240 ‐	102,240 ‐

NOTE 10 – INVESTMENT PROPERTIES

a)	Investmentproperties at fair value	GDI 2020 2019 $'000 $'000	Trust 2020 2019 $'000 $'000
	Movement in investment properties Balance at beginning of the year Additions ‐ Investment property Assets transferred to non‐current assets held for sale Capital works ‐ Property improvements ‐ Maintenance capital (GDI Property Trust) ‐ Maintenance capital (GDI No. 42 Office Trust) Straight‐lining of rental income Lease costs Amortisation of lease costs Net gain/(loss) from fair value adjustments Incentives paid (GDI Property Trust) Incentives paid (GDI No. 42 Office Trust) Non‐cash incentives paid Amortisation of incentives (GDI Property Trust) Amortisation of incentives (GDI No. 42 Office Trust) Impact of COVID‐19 ‐ Incentives paid ‐ Amortisation of incentives paid ‐ Non‐cash incentivespaid	773,259 722,042 98,000 ‐ (102,240) ‐ 6,014 9,077 1,409 3,882 455 791 (1,021) (330) 1,399 1,487 (879) (713) 32,862 36,011 19,757 5,051 ‐ 700 (53) (474) (6,121) (4,070) (87) (196) 471 ‐ (29) ‐ (345) ‐	773,259 722,042 98,000 ‐ (102,240) ‐ 6,014 9,077 1,409 3,882 455 791 (1,021) (330) 1,399 1,487 (879) (713) 32,862 36,011 19,757 5,051 ‐ 700 (53) (474) (6,121) (4,070) (87) (196) 471 ‐ (29) ‐ (345) ‐
	Balance as at 30 June	822,850 773,259	822,850 773,259

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

b) Valuation basis

The basis of valuation of investment properties is fair value, being the amounts for which the assets could be exchanged between knowledgeable willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the same location and condition and subject to similar leases. All properties, other than the strata unit at 38/46 Cavill Avenue, Surfers Paradise, have been independently valued in the last twelve months based on independent assessments by a member of the Australian Property Institute of Valuers.

The table below illustrates the key valuation assumptions used in the determination of the investment properties fair value.

	Valuation basis1	2020	2019
	Weighted average capitalisation rate (%)	6.92%	7.02%
	Weighted average lease expiry by area (years)	2.6 years	2.4 years
	Occupancy	81.1%	84.8%
1.	Excludes the assets held by GDI No. 46 Property Trust

Ten‐year discounted cash flows and capitalisation valuation methods are used together with active market evidence. In addition to the key assumptions set out in the table above, assumed portfolio downtime ranges from six to fifteen months and tenant retention ranges from 0% to 50%.

c) Assets pledged as security

Borrowings (refer Note 17) are secured by a General Security Agreement (fixed and floating charge) over each investment property plus charges over any building document, lease document, performance bond and bank guarantee in addition to a real property mortgage over each property.

d) Leases as a lessor

GDI and the Trust lease out investment properties under operating leases. The future minimum lease payments receivable under non‐cancellable leases are as follows:

Lease receivable commitments	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Within one year Later than one year but not later than five years Later than fiveyears	58,041 61,705 176,463 100,185 101,757 36,169	58,041 61,705 176,463 100,185 101,757 36,169
Total other	336,261 198,058	336,261 198,058

GDI PROPERTY GROUP

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

e) Details of investment properties

The following table presents individual properties owned by GDI and the Trust:

		Acquisition	Acquisition	Independent	Independent	Carrying	Fair value
	Title	date	price	valuation date	valuation	amount	adjustment
Investmentproperties			$'000		$'000	$'000	$'000
Mill Green Complex, Perth	Freehold	16 December 2013	332,656	31 December 2019	343,000	343,514	9,049
235 Stanley Street, Townsville	Freehold	16 June 2016	53,500	30 June 2019	53,500	53,836	‐
Westralia Square, Perth	Freehold	27 October 2017	216,250	30 June 2020	327,500	327,500	23,831
IDOM Portfolio	Freehold	14 February2020	98,000	2 September 2019	98,000	98,000	‐
Investmentproperties			700,406		822,000	822,850	32,880
Assets transferred to non‐current
assets held for sale
50 Cavill Avenue, Surfers Paradise	Freehold	1 February 2016	46,139	30 June 2020	101,000	101,000	(18)
38/46 Cavill Avenue,Surfers Paradise	Strata	12 August 2016	1,240	‐	‐	1,240	‐
Total			747,785		923,000	925,090	32,862

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

NOTE 11 – PLANT AND EQUIPMENT

a) Plant and equipment	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Furniture and fittings at cost Accumulated depreciation	125 102 (30) (19)	‐ ‐ ‐ ‐
Total other	95 83	‐ ‐

Movement in plant and equipment

Reconciliations of the carrying amounts of each class of plant and equipment are set out below:

b) Furniture and fittings Total $'000 $'000	b) Furniture and fittings Total $'000 $'000
Balance at beginning of year 75 75 Additions 27 27 Depreciation (19) (19)
Balance as at 30 June 2019 83	83
Balance at beginning of year 83 83 Additions 42 42 Depreciation (30) (30)
Balance as at 30 June 2020 95	95

NOTE 12 – DEFERRED TAX ASSETS

			(Charged)/
		(Charged)/	Credited
	Opening	Credited to	Directly to	Closing
	Balance	Profit or Loss	Equity	Balance
30 June 2020	$'000	$'000	$'000	$'000
Deferred tax asset on:
Provisions	543	(304)	‐	239
Transaction costs on equity issue	‐	‐	‐	‐
Tax losses carried forward	605	(214)	‐	390
Net amount	1,148	(519)	‐	629
			(Charged)/
		(Charged)/	Credited
	Opening	Credited to	Directly to	Closing
	Balance	Profit or Loss	Equity	Balance
30 June 2019	$'000	$'000	$'000	$'000
Deferred tax asset on:
Provisions	494	49	‐	543
Transaction costs on equity issue	29	(29)	‐	‐
Tax losses carried forward	635	(29)	‐	606
Net amount	1,158	(9)	‐	1,149

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

NOTE 13 – INTANGIBLE ASSETS

Intangible assets Goodwill ‐ at cost and at net carryingamount	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
	18,110 18,110	‐ ‐
Total intangible assets	18,110 18,110	‐ ‐

a) Impairment test for goodwill

GDI acquired from the privately owned GDI group of companies the rights, title and interest in the funds management business, and the shares of the operating companies, for total consideration of $18.5 million. The value of the shares acquired was determined by the net asset value of the relevant company, with the balance ($18.11 million) of the total consideration recognised as goodwill. The acquisition price was supported by an Independent Expert’s Report.

For subsequent measurement, goodwill is allocated to cash‐generating units which are based on GDI’s reporting segments. GDI has determined that the cash‐generating unit is the funds management business and as per reporting to the Chief Operating Decision Maker (CODM), no fee has been assumed to be charged to the Trust by the funds management business. The recoverable amount of the cash generating unit is determined based on value‐in‐use calculations. Value‐in‐use is calculated based on the present value of the forecast profit after tax from funds established since the acquisition of the funds management business and new funds to be established over a five year term, with a terminal value applied to the forecast fifth year profit after tax. The cash flows are discounted at a 17.5% discount rate.

Management has based the value‐in‐use calculations on the historical performance and future prospects of the Funds Management business as reported to the CODM, taking into consideration the historical rate at which funds are established.

As a result of the value‐in‐use calculation, no impairment of goodwill has been recorded in the Financial Statements.

b) Key assumptions used in valuation assumptions

The following key assumptions were used in the value‐in‐use calculations:

			Terminal value
30 June 2020	New funds(p.a.)	Fee income	growth rate	Discount rate
Funds management segment	$68.99 million	Management fee – 0.65%	2.0%	17.5%
		and 1.00%
		Acquisition fee – 2%
		Disposal fee – 2%
			Terminal value
30 June 2019	New funds(p.a.)	Fee income	growth rate	Discount rate
Funds management segment	$12.59 million in	Management fee – 0.65%	2.0%	17.5%
	FY20, then	and 1.00%
	$74.7 million	Acquisition fee – 2%
	each year	Disposal fee – 2%
	thereafter

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

the rate at which new funds are established and the size of these funds (property values);
fee income;
terminal growth rate; and
discount rate.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

Rate at which new funds are established – based on management’s expectations on the pace and size of new fund establishments, having regard to GDI’s past performance and future prospects. GDI’s business plan includes launching new unlisted funds with total new AUM of $100 million in each year. However, for the purpose of the value in use calculations, GDI has used the average amount of AUM raised since IPO.

Fee income – fee income is based on due diligence, management and disposal fees only, and does not include performance fees, debt arranging fees or any project management fees.

Terminal growth rate – terminal growth rate was determined based on management’s estimate of the long‐term compound annual EBITDA growth rate, consistent with the assumption that a market participant would make.

Discount rate – discount rates reflect management’s estimate of the risks specific to each cash generating unit, in particular in relation to establishing new funds.

NOTE 14 – DERIVATIVE FINANCIAL INSTRUMENTS

	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Non‐current interest rate swaps	326 ‐	326 ‐
Total derivative financial instruments	326 ‐	326 ‐

NOTE 15 – TRADE AND OTHER PAYABLES

Trade and otherpayables	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Trade payables and accruals Lease incentive payable Distribution payable Otherpayables	3,941 4,910 ‐ 124 20,945 20,909 635 360	3,547 3,769 ‐ 124 20,945 20,909 492 202
Total trade and otherpayables	25,520 26,303	24,984 25,005

Trade and other payables are generally unsecured, non‐interest bearing and settled within 30‐60 days terms. Lease incentives payable are generally unsecured, non‐interest bearing and are normally settled in cash. Distribution payable relates to the distribution for the period from 1 January 2020 to 30 June 2020, declared in June and payable in August 2020.

NOTE 16 – PROVISIONS

Provisions	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Current Employee benefits	405 289	‐ ‐
Non‐current Employee benefits	206 163	‐ ‐
Totalprovisions	611 451	‐ ‐

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

Provision for employee benefits

Provision for employee benefits represents amounts accrued for annual leave and long service leave.

The current portion for this provision includes the total amount accrued for annual leave entitlements and the amounts accrued for long service leave entitlements that have vested due to employees having completed the required period of service. Based on past experience, GDI does not expect the full amount of annual leave or long service leave balances classified as current liabilities to be settled within the next 12 months. However, these amounts must be classified as current liabilities since GDI does not have an unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement.

The non‐current portion for this provision includes amounts accrued for long service leave entitlements that have not yet vested in relation to those employees who have not yet completed the required period of service.

In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits have been discussed in Note 1(p).

NOTE 17 – BORROWINGS

Borrowings shown below are net of transaction costs which are amortised over the term of the loan.

a) Interest bearing liabilities – non‐current

Borrowings	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Secured liabilities: Loans ‐ financial institutions Transaction costs	160,000 69,379 (577) (251)	160,000 69,379 (682) (392)
Total borrowings	159,423 69,128	159,318 68,986

b) Borrowing details

Borrowings of GDI and the Trust are the same and details at balance date are set out below:

			Facility	Utilised	Unutilised
Facility	Secured	Maturitydate	$'000	$'000	$'000
Facility Tranche B1	Yes	July 2022	73,000	60,000	13,000
Facility Tranche C1	Yes	July 2022	132,000	60,000	72,000
Bank Bill Business Loan2	Yes	June 2022	11,500	10,000	1,500
Capital Loan Agreement3	Yes	February2023	30,000	30,000	‐
			246,500	160,000	86,500
FacilityTranche D4	Yes	July2022	5,000	‐	‐
Total facility			251,500	160,000	86,500

Facility Tranche B, C and D are secured by first registered mortgages over the wholly owned investment properties held by GDI and a registered General Security Agreement over the assets of GDI. Interest is payable monthly in arrears at variable rates based on the 30‐day BBSY. Line fees are payable quarterly in advance.
The Bank Bill Business Loan relates to GDI No. 42 Office Trust and is secured against the assets of that trust. Interest and line fees are payable quarterly in arrears at variable rates based on the 90‐day BBSY.
The Capital Loan Agreement relates to GDI No. 46 Property Trust and is secured against the assets of that trust. Interest is paid monthly in arrears at variable rates.
GDI also has a $5 million bank guarantee supporting the financial requirements of GDI Funds Management Limited’s AFS Licence. This is undrawn and cannot be used for general working capital purposes.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

c) Maturity profile

The maturity profile of the principal amounts of borrowings, together with estimated interest thereon, is provided in the table below:

Maturity profile	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Due within one year Due between one and five years Due after fiveyears	4,359 2,656 165,638 71,187 ‐ ‐	4,359 2,656 165,638 71,187 ‐ ‐
	169,997 73,842	169,997 73,842

The amount due within one year is the estimated interest expense. No principal amount of borrowings is current as at 30 June 2020.

NOTE 18 – CONTRIBUTED EQUITY

Contributed equity	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Contributed equity	524,380 524,564	502,084 502,262
Total contributed equity	524,380 524,564	502,084 502,262

a) Movements in ordinary securities/units

a) Movements in ordinary securities/units
	GDI No(000) $'000	Trust
		No(000) $'000
Securities on issue at beginning of the year Securities issued in satisfaction of performance rights On‐market buyback	536,665 522,549 2,947 2,056 (33) (41)	536,665 500,335 2,947 1,966 (33) (39)
Contributed equity attributable to shareholders/unitholders as at 30 June 2019	539,580 524,564	539,580 502,263
Securities on issue at beginning of the year Securities issued in satisfaction of performance rights On‐market buyback Issue and formation costs – GDI No. 46 PropertyTrust	539,580 524,564 2,748 1,874 (1,824) (2,000) ‐ (59)	539,580 502,263 2,748 1,793 (1,824) (1,913) ‐ (59)
Contributed equity attributable to shareholders/unitholders as at 30 June 2020	540,504 524,380	540,504 502,084

b) Stapled securities

The ordinary shares on the Company are stapled to the units of the Trust. Each stapled security entitles the holder to participate in dividends and distributions as declared from time to time and the proceeds on winding up. Each stapled security entitles the holder to vote in accordance with the provisions of the Constitution, Trust Deed and the Corporations Act 2001.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

NOTE 19 – RESERVES AND RETAINED EARNINGS

a) Security‐based payment reserve

a) Security‐based payment reserve
	GDI	Trust
	$'000	$'000
Balance at the beginning of the year	4,473	4,279
Security‐based payments expense	2,045	1,956
Equityissued	(2,056)	(1,966)
Balance as at 30 June 2019	4,462	4,269
Balance at the beginning of the year	4,462	4,269
Security‐based payments expense	2,099	2,008
Equityissued	(1,874)	(1,793)
Balance as at 30 June 2020	4,686	4,484

The security‐based payment reserve is used to recognise the fair value of performance rights issued under the performance rights plan. Refer to Note 30 for further details.

b) Retained earnings

	GDI	Trust
	$'000	$'000
Balance at the beginning of the year	126,666	129,808
Net profit for the financial period	85,070	85,148
Less: Dividends/distributionspaid/payable	(44,601)	(44,601)
Balance as at 30 June 2019	167,134	170,355
Balance at the beginning of the year	167,134	170,355
Net profit for the financial period	66,740	65,501
Less: Dividends/distributionspaid/payable	(44,871)	(44,871)
Balance as at 30 June 2020	189,004	190,986

c) Treasury security reserve

	Note	GDI	Trust
		$'000	$'000
Balance at the beginning of the year		‐	‐
On‐market buyback		(41)	(39)
Cancellation of treasurysecurities	18a	41	39
Balance as at 30 June 2019		‐	‐
Balance at the beginning of the year		‐	‐
On‐market buyback		(2,000)	(1,913)
Cancellation of treasurysecurities	18a	2,000	1,913
Balance as at 30 June 2020		‐	‐

The treasury securities reserve is used to recognise stapled securities that have been repurchased by GDI and not cancelled but held in treasury.

NOTE 20 – DIVIDENDS/DISTRIBUTIONS PAID/PAYABLE

a) Dividends paid/payable by the Company

There were no dividends paid or payable by GDI in respect of the 2020 and 2019 financial years.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

b) Distributions paid/payable by GDI /Trust

Distributionspaid/ payable by GDI/ Trust	GDI 2020 2019 cents/ security cents/ security	Trust
		2020 2019 cents/ unit cents/ unit
28 February 2019 30 August 2019 28 February 2020 31 August 2020	‐ 3.875 ‐ 3.875 3.875 ‐ 3.875 ‐	‐ 3.875 ‐ 3.875 3.875 ‐ 3.875 ‐
Total distributionspaid/ payable by GDI/ Trust	7.750 7.750	7.750 7.750

NOTE 21 – EARNINGS PER SECURITY/UNIT

	GDI 2020 2019 cents cents	Trust
		2020 2019 cents cents
Basic earnings per security/unit Diluted earningsper security/unit	12.39 15.14 12.30 15.01	12.16 15.15 12.07 15.03
	$'000 $'000	$'000 $'000
Earnings used to calculate basic and diluted earnings per security/unit: Profit for theyear 67,104 81,614		65,864 81,692
Profit attributable to ordinary securityholders/equityholders of the Group/Trust used in calculating basic and diluted earnings per security/unit 67,104 81,614		65,864 81,692
No.(000) No.(000)		No.(000) No.(000)
Weighted average number of ordinary securities/units used in calculatingbasic earningsper security/unit 541,765 539,173		541,765 539,173
Weighted average number of ordinary securities/units used in calculating diluted earnings per security/unit 545,741 543,601		545,741 543,601

NOTE 22 – PARENT ENTITY DISCLOSURES

GDI Property Group Limited

a) Summary financial information

The individual financial statements for GDI Property Group Limited (the Company) show the following aggregate amounts:

Results	Company
	2020 2019 $'000 $'000
Loss for theperiod	(262) (87)
Total comprehensive loss for theperiod	(262) (87)
Financialposition
Current assets Total assets Current liabilities Total liabilities	24 23 21,707 21,876 158 152 1,567 1,477
Net assets	20,141 20,399

GDI PROPERTY GROUP

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

Contributed equity	22,296	22,301
Reserves	203	193
Accumulated losses	(2,358)	(2,096)
Total equity	20,141	20,399

b) Guarantees entered in to by the parent entity

During the years ended 30 June 2020 and 30 June 2019 the Company did not enter any guarantee to entities it controlled.

c) Contingent liabilities

The Company had no contingent liabilities at year end.

d) Contractual commitments

As at 30 June 2020 and as at 30 June 2019, the Company had no commitments in relation to capital expenditure contracted for but not provided as liabilities.

NOTE 23 – SEGMENT REPORTING

a) Identification of reportable segments

GDI

The Chief Operating Decision Maker (CODM) has been identified as the Board of Directors as it is responsible for the strategic decision making within GDI. The following summary describes the operations in each of GDI’s operating segments:

Operatingsegments	Products/Services
Property investment	Investment and management of income producing properties
Funds management	Establishment and management of property investment vehicles

The Board assesses the performance of each operating sector based on FFO and AFFO. FFO is a global financial measure of the real estate operating performance after finance costs and taxes, adjusted for certain non‐cash items. AFFO adjusts FFO for incentives paid during the year and maintenance capital expenditure. The Directors consider FFO to be a measure that reflects the underlying performance of GDI. GDI’s FFO comprises net profit/loss after tax calculated in accordance with the Australian Accounting Standards and adjusts for property revaluations, impairments, derivative mark to market impacts, amortisation of tenant incentives, straight line rent adjustments, gain/loss on sale of assets, rental guarantees and performance fees charged that remain unpaid.

Trust

The Trust operates in predominately one operating segment being property investment.

b) Basis of accounting for purposes of reporting by operating segments

(i) Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent with those adopted in the annual financial statements of GDI.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

(ii) Intersegment transactions
Corporate and administration costs other than direct expenses are not allocated to divisions for segment reporting purposes; and
There is no revenue recorded by the funds management business from managing the Trust for segment reporting purposes.

c) Segment information

) Segment information	) Segment information
Property Funds management 30 June 2020 $'000 $'000		Reviewed but unallocated Total $'000 $'000
Operating earnings Net property income 49,004 ‐ Funds Management income ‐ 2,206 Other income ‐ ‐		‐ 49,004 ‐ 2,206 263 263
Total operating earnings 49,004	2,206	263	51,472
FFO adjustments Straight‐lining rental income 1,021 ‐ Amortisation and depreciation 7,116 ‐ Adjustment for GDI No. 42 Office Trust (5,064) 1,913 Adjustment for GDI No. 46 PropertyTrust (2,931) 1,836		11 1,032 30 7,146 6 (3,145) 50 (1,045)
FFO pre corporate, administration and interest
expenses/ income 49,146	5,955	358	55,460
+/‐ corporate, administration and interest expense / income Interest paid (2,281) ‐ Interest income 133 11 Corporate and administration expenses (3,231) ‐ Provision for impairment of debts (536) 73 Income tax(expense)/benefit ‐ (520)		‐ (2,281) ‐ 144 (4,593) (7,824) ‐ (463) ‐ (520)
Total FFO 43,231	5,519	(4,235)	44,516
+/‐ AIFRS adjustments from FFO to profit after tax from ordinary activities Net fair value gain on interest rate swaps (326) ‐ Net fair value gain of investment properties 32,862 ‐ Straight‐lining rental income (1,021) ‐ Amortisation of leasing fees and incentives (7,116) ‐ Amortisation of loan establishment costs (188) ‐ Depreciation ‐ ‐ Adjustment for GDI No. 42 Office Trust 4,772 (1,913) Adjustment for GDI No. 46 Property Trust 2,481 (1,836) Acquisition costs and discontinued acquisitions (5,448) ‐		‐ (326) ‐ 32,862 (11) (1,032) ‐ (7,116) ‐ (188) (30) (30) ‐ 2,859 ‐ 644 ‐ (5,448)
Profit after tax from ordinary activities 69,246	1,770	(4,275)	66,740
Segment assets and liabilities Total assets 876,950 91,576 Total liabilities (194,459) 8,579		‐ 968,525 ‐ (185,880)
Net assets 682,491	100,154	‐	782,645

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

Property Funds management 30 June 2019 $'000 $'000	Property Funds management 30 June 2019 $'000 $'000	Reviewed but unallocated Total $'000 $'000	Reviewed but unallocated Total $'000 $'000
Operating earnings Net property income 55,488 ‐ Funds Management income ‐ 2,129 Other income 926 ‐		‐ 55,488 ‐ 2,129 2 928
Total operating earnings 56,414	2,129	2	58,545
FFO adjustments Straight‐lining rental income 330 ‐ Amortisation and depreciation 4,980 ‐ Adjustment for GDI No. 42 Office Trust (7,417) 2,719		‐ 330 19 4,999 9 (4,689)
FFO pre corporate, administration and interest
expenses/ income 54,306	4,848	30	59,184
+/‐ corporate, administration and interest expense / income Interest paid (2,470) ‐ Interest income 174 10 Corporate and administration expenses (2,750) ‐ Provision for impairment of debts (89) (396) Income tax(expense)/benefit ‐ (8)		‐ (2,470) ‐ 184 (5,361) (8,111) ‐ (485) ‐ (8)
Total FFO 49,170	4,454	(5,330)	48,294
+/‐ AIFRS adjustments from FFO to profit after tax from ordinary activities Net fair value gain on interest rate swaps 377 ‐ Net fair value gain of investment properties 36,011 ‐ Straight‐lining rental income (330) ‐ Amortisation of leasing fees and incentives (4,980) ‐ Amortisation of loan establishment costs (275) ‐ Depreciation ‐ ‐ Profit on sale of non‐current asset 2,124 ‐ Adjustment for GDI No. 42 Office Trust 6,594 (2,719) Acquisition costs and discontinued acquisitions (7) ‐		‐ 377 ‐ 36,011 ‐ (330) ‐ (4,980) ‐ (275) (19) (19) ‐ 2,124 ‐ 3,875 ‐ (7)
Profit after tax from ordinary activities 88,685	1,735	(5,350)	85,070
Segment assets and liabilities Total assets 772,225 44,545 Total liabilities (89,576) (6,317)		‐ 816,769 ‐ (95,893)
Net assets 682,648	38,228	‐	720,876

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

NOTE 24 – COMMITMENTS

Commitments	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Capital commitments Investment properties Capital expenditure	‐ 1,250 1,230	‐ 1,230
Total capital commitments	1,250 1,230	1,230
Lease payable commitments Within one year Later than one year but not later than five years Later than fiveyears	282 319 295 9 316 ‐	‐ ‐ ‐ ‐ ‐ ‐
Total leasepayable commitments	893 328	‐ ‐

NOTE 25 – RECONCILIATION OF NET PROFIT TO CASH INFLOW FROM OPERATING ACTIVITIES

a) Reconciliation of cash from operations with profit after tax

	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Netprofit	66,740 75,761	65,501 75,579
Non‐cash and other movements Amortisation of loan establishment costs and depreciation Amortisation of lease incentives and lease costs Straight‐lining rental income Fair value adjustments to: ‐ Investment properties ‐ Interest rate swaps (Profit) on sale of non‐current asset Acquisition expenses Net movement in provision for bad debts Movement in employee incentive scheme reserve Settlement of performance rights (Increase)/decrease from operating activities in Trade and other receivables Other assets Trade and other payables Provisions Other liabilities Deferred tax	218 295 7,116 4,980 1,021 330 (32,862) (36,011) 326 (377) ‐ (2,124) 5,448 ‐ (687) (249) 2,099 2,044 ‐ ‐ (1,546) 315 (1,580) (815) (759) (2,290) 160 61 (10) ‐ 520 8	203 275 7,116 4,980 1,021 330 (32,862) (36,011) 326 (377) ‐ (2,124) 7,408 ‐ (31) 48 2,008 1,956 ‐ ‐ (2,220) (320) 620 (779) 29 (2,143) ‐ ‐ ‐ ‐ ‐ ‐
Net cashprovided by operating activities	46,205 51,236	49,115 50,982

b) Credit standby facilities with bank

Refer to Note 17 for details of unutilised finance facilities.

NOTE 26 – KEY MANAGEMENT PERSONNEL COMPENSATION

Refer to the remuneration report contained in the Directors’ Report for details of the remuneration paid or payable to each member of GDI’s key management personnel (KMP) for the years ended 30 June 2020 and 30 June 2019.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

The totals of remuneration paid to KMP of the company and GDI and Trust during the period are as follows.

a) Key management personnel compensation

KMP compensation	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Short term employee benefits Post‐employment benefits Other long‐term benefits Security‐basedpayments	2,420 2,970 184 172 52 46 1,882 1,846	‐ ‐ ‐ ‐ ‐ ‐ 1,800 1,766
Total KMP compensation	4,538 5,034	1,800 1,766

Short term employee benefits

These amounts include fees and benefits paid to the non‐executive Chair and non‐executive directors as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other KMP.

Post‐employment benefits

These amounts are the current year’s cost of superannuation contributions made during the period.

Other long‐term benefits

These amounts represent long service leave benefits accrued during the period.

Security‐based payments

These amounts represent the expense accrued for the participation of KMP in the performance rights plan as disclosed in Note 30 and the issue of performance rights for the years ended 30 June 2019, 30 June 2018 and 30 June 2017.

b) Equity instrument disclosure relating to key management personnel

		Securities	Net		Securities	Net
		granted as	securities		granted as	securities
	Securities	part of a	acquired /	Securities	part of a	acquired /	Securities
	held at	performance	(sold)	held at	performance	(sold)	held at
	30 June	rights plan	during the	30 June	rights plan	during the	30 June
	2018		year	2019		year	2020
Directors
Gina Anderson	70,000	‐	‐	70,000	‐	10,000	80,000
Steve Gillard	29,200,000	1,304,143	(1,311,221)	29,192,922	1,168,594	(1,061,516)	29,300,000
John Tuxworth	140,300	‐	‐	140,300	‐	30,000	170,300
Giles Woodgate	‐	‐	‐	‐	‐	‐	‐
Stephen Burns1	‐	‐	‐	27,533	‐	22,000	49,533
Graham Kelly2	250,000	‐	‐	‐	‐	‐	‐
Other key management personnel
David Williams	596,875	440,477	(37,352)	1,000,000	387,190	‐	1,387,190
John Garland	236,250	392,064	(50,535)	577,779	356,434	(80,000)	854,213
Paul Malek	182,500	352,382	(10,000)	524,882	309,752	‐	834,634
GregMarr	64,717	283,810	‐	348,527	288,565	(109,000)	528,092

Stephen Burns was appointed as a Director on 15 November 2018
Graham Kelly resigned as a Director on 15 November 2018 and held 250,000 securities at that time

Securities held includes indirect holdings and holdings held by related parties of key management personnel.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

NOTE 27 – RELATED PARTY TRANSACTIONS

Related parties for GDI

a) Identification of related parties

(i) Key management personnel:

Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity, are considered key management personnel. For details of disclosures relating to key management personnel, refer to Note 26 and the Remuneration Report contained in the Directors’ Report.

(ii) Entities exercising control over GDI:

The ultimate parent entity that exercises control over GDI is GDI Property Group Limited, which is incorporated in Australia.

b) Transactions with related parties

Transactions with related parties in the year ended 30 June 2020

There are no transactions with KMP in the year ended 30 June 2020.

Transactions with related parties in the year ended 30 June 2019

There are no transactions with KMP in the year ended 30 June 2019.

Related parties for GDI Property Trust

a) Identification of related parties

(i) Responsible Entity, Investment Manager and Custodian

The Responsible Entity of GDI Property Trust is GDI Funds Management Limited (ACN 107 354 003), a wholly owned subsidiary of GDI Property Group Limited. GDI Funds Management Limited has appointed The Trust Company (Australia) Limited as Custodian for all the assets of the Trust and GDI Investment Management Pty Limited as Investment Manager of the Trust.

(ii) Key management personnel

The Trust does not employ personnel in its own right. However, it is required to have an incorporated Responsible Entity to manage the activities of the Trust and this is considered the KMP. The directors of the Responsible Entity are key management personnel of that entity, their names being:

Gina Anderson
John Tuxworth
Giles Woodgate
Stephen Burns
Steve Gillard

b) Transactions with related parties

The Responsible Entity is entitled to a fee calculated on a cost recovery basis only. During the year ended 30 June 2020 the Responsible Entity charged $286,000 (2019: $215,000), with no balance owing as at 30 June 2020.

GDI PROPERTY GROUP

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

Pursuant to an Investment Management Agreement dated 15 November 2013, GDI Investment Management Pty Limited is entitled to fees for acting as the Investment Manager of GDI Property Trust. During the year ended 30 June 2020, GDI Investment Management Pty Limited charged $2,063,000 (2019: $3,048,000), with no balance owing as at 30 June 2020.

No compensation is paid to the key management personnel of the Responsible Entity directly by the Trust.

All transactions with related parties are conducted on normal commercial terms and conditions. From time to time the key management personnel of the Responsible Entity, or their related entities, may invest in or sell units (stapled securities) of the Trust on the same terms and conditions as those of other Trust investors and are immaterial and domestic in nature.

NOTE 28 – CAPITAL AND FINANCIAL RISK MANAGEMENT

Capital risk management

GDI’s capital management strategy is to maximise securityholders returns through active capital management whilst mitigating the inherent risks associated with both debt and equity.

In determining the appropriate mix of debt and equity, GDI reviews both commercial and regulatory considerations:

Commercial	Commercial	Regulatory	Regulatory
	The underlying real estate fundamentals		Need to comply with the capital and distribution
	The relative cost and availability of debt and equity		requirements of GDI Property Trust’s trust deed
	Forecast cash flows and capital expenditure		Need to comply with the capital requirements of
	requirements		relevant regulatory authorities and licences.
	Current and future debt covenants

Financial risk management

GDI’s Gearing Policy is to target a Loan to Value ratio of less than 40%. GDI is able to manage its capital through a number of means, including but not limited to:

asset recycling;
new debt financing;
issuing new stapled securities;
adjusting the level of distributions paid to securityholders; and
active management of interest rate exposures.

Capital and interest expense risk management is monitored in two main ways, having reference to the covenants on the Principal Facility:

	Boardpolicy	2020	2019	Bank covenant	2020	2019
LVR1	< 40%	16%	8%	< 50%	16%	8%
ICR2	> 2.5X	14.5X	15.8X	> 2X	14.5X	15.8X

Bank covenant LVR is total debt on the Principal Facility (including net derivative exposures) divided by the value of the secured properties as determined by the last independent valuation.
Bank covenant ICR is EBIT/Interest expense and for the year ended 30 June 2020, any acquisition expenses have been reversed from the EBIT calculation.

GDI also protects its equity in its assets by taking out insurance.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

The gearing ratio as at 30 June 2020 of GDI and Trust was 16% (2019: 6%) and 16% (2019: 7%) respectively (as detailed below).

Net debt and adjusted assets Note	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Total borrowings 17 Less: cash and cash equivalents 6	159,423 69,128 (10,100) (18,775)	159,318 68,986 (6,717) (17,202)
Net debt	149,322 50,353	152,600 51,784
Total assets Less: intangible assets and deferred tax assets 13/12 Less: cash and cash equivalents 6	968,525 816,769 (18,740) (19,259) (10,100) (18,775)	946,780 795,593 ‐ ‐ (6,717) (17,202)
Adjusted assets	939,685 778,735	940,063 778,391
Gearing ratio	16% 6%	16% 7%

Financial risk management

The financial risks that result from GDI’s activities are credit risk, liquidity risk, refinancing risk and market risks (interest rates). GDI manages it exposure to these key financial risks in accordance with its risk management policy and focuses on mitigating the impact of volatility in financial markets.

GDI’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, borrowings and interest rate hedge derivatives. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as described in a) Credit risk, b) Liquidity risk and c) Market risk below.

See Note 1(n) for how GDI classifies financial assets and liabilities.

a) Credit risk

Exposure to credit risk relating to financial assets arises from the potential non‐performance by counterparties of contract obligations that could lead to a financial loss to GDI or Trust.

Credit risk arises principally from GDI’s and the Trust’s receivables from customers and amounts due from the leasing of premises in accordance with lease agreements with property tenants. GDI and the Trust have a diverse range of customers and tenants and therefore there is no significant concentration of credit risk with any single counterparty or group of counterparties.

The Board has established a credit policy under which each new customer is analysed individually for creditworthiness before GDI does business with them. GDI and the Trust request security deposits or bank guarantees from new tenants in order to secure the premises and tenants are invoiced monthly in advance. Ongoing checks are performed by management to ensure settlement terms detailed in individual contracts are adhered to.

The maximum exposure to credit risk at the end of the reporting period is equivalent to the carrying amount of the financial assets (net of any provisions) as presented in the Consolidated Statement of Financial Position. GDI and the Trust typically hold bank guarantees or cash from tenants’ equivalent to six‐month rent as security. There are no significant financial assets that have had renegotiated terms that would otherwise have been overdue or impaired.

Risk is also minimised through investing surplus funds in Australian financial institutions. Interest rate derivative counterparties are also Australian financial institutions.

Trade and other receivables that are neither overdue nor impaired are considered to be of high credit quality. Aggregates of such amounts are detailed in Note 7.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

The aging analysis of lease receivables overdue but not impaired is shown below:

	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
One ‐ three months Three ‐ six months Over six months	3,539 798 117 319 11 ‐	3,539 798 117 319 11 ‐
Total	3,667 1,117	3,667 1,117

b) Liquidity risk

Liquidity risk arises from the possibility that GDI might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial instruments.

GDI believes that prudent risk management requires maintaining sufficient cash reserves and finance facilities to meet the ongoing operational requirements of the business. It is GDI’s policy to maintain sufficient funds in cash and undrawn finance facilities to meet the expected near‐term operational requirements.

GDI also monitors the maturity profile of borrowings and puts in place strategies designed to ensure that all maturing borrowings are refinanced within required timeframes.

The weighted average debt maturity of GDI is 2.09 years (2019: 1.62 years).

Contractual maturity of financial liabilities (borrowings and payables) of GDI, including interest, is as follows:

	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Due within one year Due between one and five years Due after fiveyears	29,880 28,959 165,638 71,187 ‐ ‐	29,343 27,660 165,638 71,187 ‐ ‐
Total	195,518 100,145	194,981 98,847

c) Market risk

i. Interest rate risk

GDI’s interest rate risk primarily arises from borrowings. Borrowings issued at variable rates expose GDI to interest rate risk. Borrowing issued at fixed rates expose GDI to fair value interest rate risk. At balance date, 41.7% (2019: 0%) of GDI’s Principal Facility’s borrowings were effectively hedged. None of the borrowings of either GDI No. 42 Office Trust or GDI No. 46 Property Trust are hedged.

GDI may manage its cash flows interest rate risk by using interest rate derivatives. Such interest rate derivatives have the economic effect of converting borrowings from floating interest rates to fixed interest rates. Generally, GDI raises longer term borrowings at floating rates and may hedge a portion of the borrowings into fixed or capped rates. Under the interest rate derivatives, GDI agrees with other counter parties to exchange, at specified intervals the difference between contract rates and floating rates interest amounts calculated by reference to the agreed notional principal amounts. Because GDI’s interest rate derivatives do not meet the accounting requirements to qualify for hedge accounting treatment, gains or losses arising from changes in fair value have been reflected in the profit or loss.

GDI’s and the Trust’s borrowings are the same.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

At balance date, the expiry profile of GDI’s interest rate derivatives is shown below (2019: Nil):

Notional Principal Effective average fixed rate Principal Facility $'000 %	Notional Principal Effective average fixed rate Principal Facility $'000 %
Floating (30 day)1 70,000 0.14% Expiry May 2023 (FY23) 25,000 0.38% ExpiryMay2025(FY25) 25,000 0.60%
Total/ average	120,000 0.29%

Based on the 30‐day bank bill swap rate on the last roll date of GDI’s borrowings prior to 30 June 2020

Because GDI’s interest rate derivatives do not meet the accounting requirements to qualify for hedge accounting treatment, gains or losses arising from changes in fair value have been reflected in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Information on borrowings and the maturity profile of borrowings (including interest) is provided in Note 17.

ii. Sensitivity

At balance date, if interest rates on GDI’s Principal Facility for all relevant time periods had changed by +/‐ 100 basis points (1%) for the year ended 30 June 2020 and 30 June 2019 with all other variables held constant, profit would have been higher/(lower) as shown below:

Sensitivity to interest rates	+1% GDI Trust 2020 2020 $'000 $'000	‐1% GDI Trust 2020 2020 $'000 $'000	+1% GDI Trust 2019 2019 $'000 $'000	‐1%
				GDI Trust 2019 2019 $'000 $'000
Increase/(decrease) to interest income (Increase)/decrease to interest expense Increase/(decrease) to valuation of interest rate derivatives	654 654 (2,900) (2,900) 973 973	(654) (654) 2,900 2,900 (1,846) (1,846)	163 163 (1,465) (1,465) ‐ ‐	(163) (163) 1,465 1,465 ‐ ‐
Total	(1,273) (1,273)	400 400	(1,302) (1,302)	1,302 1,302

NOTE 29 – FAIR VALUE MEASUREMENTS

a) Valuation techniques

GDI selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques selected by GDI are consistent with one or more of the following valuation approaches:

Market approach: valuation techniques that use prices and other relevant information generated by market transactions for identical or similar assets or liabilities.
Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single discounted present value.
Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including assumptions about risks. When selecting a valuation technique, GDI gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are considered unobservable.

b) Financial instruments

The following table represents a comparison between the carrying amounts and fair values of financial assets and liabilities:

	30 June 2020 Carrying Amount Fair Value $'000 $'000	30 June 2019
		Carrying Amount Fair Value $'000 $'000
Financial assets at amortised cost Cash and cash equivalents Trade and other receivables	10,100 10,100 5,581 5,581	18,775 18,775 2,819 2,819
Total financial assets	15,681 15,681	21,594 21,594
Financial liabilities at amortised cost Trade and other payables 25,520 25,520 Provisions 611 611 Borrowings 159,423 159,423 Financial liabilities at fair value Derivative financial instruments 326 326		26,303 26,303 451 451 69,128 69,128 ‐ ‐
Total financial liabilities 185,880 185,880		95,883 95,883

c) Fair value hierarchy

GDI and Trust measures and recognises the following assets and liabilities at fair value on a recurring basis after initial recognition:

Derivative financial instruments; and
Investment properties.

GDI and Trust do not subsequently measure any other liabilities (other than derivative financial instruments) at fair value on a non‐recurring basis.

AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised into as follows:

Level 1	Level 2	Level 3
Measurements based on quoted	Measurements based on inputs other	Measurements based on
prices (unadjusted) in active markets	than quoted prices included in Level 1	unobservable inputs for the asset or
for identical assets or liabilities that	that are observable for the asset or	liability.
the entity can access at the	liability, either directly or indirectly.
measurement date.

The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3.

GDI PROPERTY GROUP

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

The following tables provide the fair values of GDI’s and Trust’s assets and liabilities measured and recognised on a recurring basis after initial recognition and their categorisation within the fair value hierarchy:

	As at 30 June 2020 Level 1 Level 2 Level 3 $'000 $'000 $'000 ‐ 925,090 ‐	As at 30 June 2020 Level 1 Level 2 Level 3 $'000 $'000 $'000 ‐ 925,090 ‐	As at 30 June 2019
	Level 1 Level 2		Level 1 Level 2 Level 3 $'000 $'000 $'000
	$'000 $'000
Recurring fair value measurements Non‐financial assets ‐ Investmentproperties			‐ 773,259 ‐

	‐ 925,090
Total non‐financial assets recognised at fair value on a recurring basis	‐ 925,090	‐	‐ 773,259 ‐
Financial liabilities ‐ Interest rate swaps		‐	‐ ‐ ‐
	‐ 326
Total financial liabilities recognised at fair value on a recurring basis	‐ 326	‐	‐ ‐ ‐

d) Valuation techniques and inputs used to measure Level 2 Fair Values

	30 June 2020	30 June 2019	Valuation	Inputs
	$’000	$’000	technique	Used
Financial assets/liabilities
Interest rate swaps	326	‐	Income approach	BBSY swap rate
			using discounted
			cash flow
			methodology
Non‐financial assets
Investment properties1	925,090	773,259	Market approach	Comparable
			using discounted	discount rates,
			cash flow, rent	capitalisation
			capitalisation and	rates and price
			recent observable	per square
			market data	metres of NLA
			methodologies

The fair value of Investment properties is determined annually based on valuations by an independent valuer who has recognised and appropriate professional qualifications and recent experience in the location and category of investment property being valued. The total includes investment properties held for sale.

e) 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 GDI’s investment properties as follows:

	Fair value measurement sensitivity to:	Fair value measurement sensitivity to:
Inputs	Significant increase in input	Significant decrease in input
Discount rate	Decrease	Increase
Capitalisation rate	Decrease	Increase
Assumed market rent per square metre of NLA	Increase	Decrease
Price per square metre of NLA	Increase	Decrease

N OTE 30 – SECURITY‐BASED PAYMENTS

GDI has established a performance rights plan under which employees (including the Managing Director) of GDI may be offered performance rights representing an entitlement to acquire stapled securities, subject to meeting certain performance conditions as determined by the Board and, in the case of the Managing Director, subject to receipt of stapled securityholder

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

approval. The performance rights and stapled securities allocated under the performance rights plan are intended to be allocated free of charge provided that the relevant performance conditions are met.

a) STI performance rights

For the year ended 30 June 2020, the Board determined that 100% of any STI granted to a KMP and 50% of any STI granted to all other employees would be by way of performance rights where the sole performance condition is that the employee remains employed by a member of GDI for three years from the conclusion of the performance period (30 June 2023). As these performance rights had not been issued at 30 June 2020, GDI has recognised in the financial statements the fair value of the performance rights as an accrual with the cost expensed in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. The total number of STI performance rights to be issued for 30 June 2020 will be 636,825, with 231,558 granted to the Managing Director subject to securityholder approval.

b) LTI performance rights

For the year ended 30 June 2020, GDI intends to offer 1,822,846 performance rights to all staff, with 695,498 offered to the Managing Director subject to securityholder approval. As these performance rights had not been issued at 30 June 2020, GDI has recognised in the financial statements the fair value of the performance rights as an accrual with the cost expensed in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

The performance conditions that relate to the LTI performance rights for previous years (FY18, FY19) and the year ended 30 June 2020 are identical and are summarised below:

Number of LTI	performance rights	Performance condition
Relatingtopreviousyears	Relatingto FY20year
		Relative performance (stapled security price
1,542,020	911,423	movement + distributions)versus apeergroup
		Total return (NTA growth + distributions) vs
1,542,020	911,423	internal benchmark

GDI PROPERTY GROUP

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

c) Valuation of performance rights

The assessed fair value of the intended issue of performance rights was determined using the Black‐Scholes option pricing model and the Binomial option pricing model using the inputs as disclosed below:

the inputs as disclosed below:
	Relatingtoprioryears Relatingto theyear ended 30 June 2020
	STI PR(Retention) Relative return PR Total return PR STI PR(Retention) Relative return PR Total return PR
Issue size Exercise price Life Initial valuation methodology Cost apportioned over (years) Expected volatility Risk‐free interest rate Valuation	928,019 1,542,020 1,542,020 636,825 911,423 911,423 $nil $nil $nil $nil $nil $nil 3 years 3 years 3 years 3 years 3 years 3 years Black‐Scholes option pricing Binomial option pricing Black‐Scholes Option pricing Black‐Scholes option pricing Binomial option pricing Black‐Scholes Option pricing 4 – Year to which the grant relates + vesting period 4 – Year to which the grant relates + vesting period 4 – Year to which the grant relates + vesting period 4 – Year to which the grant relates + vesting period 4 – Year to which the grant relates + vesting period 4 – Year to which the grant relates + vesting period N/A 16% ‐ 21% N/A N/A N/A N/A 1.5% ‐ 3% N/A N/A N/A $1,238,405 $958,173 $2,059,352 $710,063 $487,515 $1,016,237

The expected security price volatility is based on the historic volatility adjusted for any expected changes to future volatility due to publicly available information.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2020

d) Expense arising from issued and intended issue of performance rights

Total expense arising from the issued and intended issue of security‐based payments transactions recognised during the year/period are as follows:

Amount expensed in year/period

	FY17 STI/LTI	FY18 STI/LTI	FY19 STI/LTI	FY20 STI	FY20 LTI	Total
30 June 2020	$'000	$'000	$'000	$'000	$'000	$'000
GDI	506	535	528	178	376	2,123
Trust	484	512	506	170	360	2,031
		FY16 STI/LTI	FY17 STI/LTI	FY18 STI/LTI	FY19 STI/LTI	Total
30 June 2019		$'000	$'000	$'000	$'000	$'000
GDI		469	506	535	528	2,038
Trust		448	484	512	506	1,950

The retention performance rights have been classified as an Initial public offer costs, with all other performance rights recognised as corporate and administration expenses in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

NOTE 31 – CONTROLLED ENTITIES

	Principal place of
The Company’s investment in controlled entities is shown below:	business	2020	2019
Entities controlled by the Company (Parent Entity)
GDI Funds Management Limited	Sydney, Australia	100%	100%
GDI Investment Management Pty Limited	Sydney, Australia	100%	100%
GDI Investor Pty Limited	Sydney, Australia	100%	100%
GDI No. 27 Pty Limited	Sydney, Australia	100%	100%
GDI No. 29 Pty Limited	Sydney, Australia	100%	100%
GDI No. 35 Pty Limited	Sydney, Australia	100%	100%
GDI No. 38 Pty Limited	Sydney, Australia	100%	100%
GDI No. 38 Asset Pty Limited	Sydney, Australia	100%	100%
GDI No. 41 Pty Limited	Sydney, Australia	100%	100%
GDI No. 42 Pty Limited	Sydney, Australia	100%	100%
GDI No. 43 Pty Limited	Sydney, Australia	100%	100%
GDI No. 44 Pty Limited	Sydney, Australia	100%	100%
GDI No. 45 Pty Limited	Sydney, Australia	100%	100%
GDI No. 45 Property Trust	Sydney, Australia	100%	100%
GDI No. 46 Pty Limited	Sydney, Australia	100%	‐
Amour Morley Pty Limited	Sydney, Australia	100%	‐
Brass Broun Pty Limited	Sydney, Australia	100%	‐
Copper Great Eastern Hwy Pty Limited	Sydney, Australia	100%	‐
Dusk Midland Pty Limited	Sydney, Australia	100%	‐
Engine Hwy Pty Limited	Sydney, Australia	100%	‐
First Bellevue Pty Limited	Sydney, Australia	100%	‐
Garden Eastern Pty Limited	Sydney, Australia	100%	‐
Hill Great Pty Limited	Sydney, Australia	100%	‐
Island Albany Pty Limited	Sydney, Australia	100%	‐
Jungle Maddington Pty Limited	Sydney, Australia	100%	‐
Kite Leach Pty Limited	Sydney, Australia	100%	‐
Lava Myaree Pty Limited	Sydney, Australia	100%	‐
Moss Thurso Pty Limited	Sydney, Australia	100%	‐

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

New Melville Pty Limited	Sydney, Australia	100%	‐
Orbit Hwy Pty Limited	Sydney, Australia	100%	‐
Pocket Lancaster Pty Limited	Sydney, Australia	100%	‐
Quest Wangara Pty Limited	Sydney, Australia	100%	‐
	Principal place of
The Trust’s investment in controlled entities is shown below:	business	2020	2019
Entities controlled by GDI Property Trust (Head Entity with the Trust)1
GDI No. 35 Perth Prime CBD Office Trust	Sydney, Australia	100%	100%
GDI No. 41 Trust	Sydney, Australia	100%	100%
GDI No. 42 Office Trust	Sydney, Australia	44%	44%
GDI No. 44 Trust	Sydney, Australia	100%	100%
GDI No. 46 Property Trust	Sydney, Australia	47%	‐

1 Units in GDI Property Trust are stapled to the shares of the Parent Entity. The Trust and its controlled entities listed above are consolidated as part of GDI as required under accounting standards, refer to Note 1(b). Controlled entity financial statements used in the preparation of these consolidated financial statements have also been prepared as at the same reporting date as GDI’s and the Trust’s financial statements.

NOTE 32 – AUDITORS’ REMUNERATION

During the year the following fees where paid or payable for services provided by the auditor of GDI (Hall Chadwick) and its related entities.

	GDI 2020 2019 $'000 $'000	Trust
		2020 2019 $'000 $'000
Audit services Auditing or reviewing financial reports Auditing of controlled entity’s AFS Licence Auditingof controlled entity’s complianceplan	161 142 4 4 15 15	27 52 4 4 ‐ ‐
	180 161	31 56
Other services Provision of tax advice	53 66	‐ ‐
Total	232 227	31 56

NOTE 33 – BUSINESS COMBINATIONS

30 June 2020

Neither GDI nor the Trust undertook any business combinations during the year ended 30 June 2020.

30 June 2019

Neither GDI nor the Trust undertook any business combinations during the year ended 30 June 2019.

NOTE 34 – NON‐CONTROLLING INTERESTS

a) Non‐controlling interest – Trust

To account for the stapling, Australian Accounting Standards require an acquirer (the Company) to be identified and an acquisition to be recognised. The net assets of the acquiree (the Trust) are recognised as non‐controlling interests as they are not owned by the acquirer in the stapling arrangement.

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

Movements in non‐controlling interest	Non‐controllinginterests
	2020 2019 $'000 $'000
Opening balance Profit for the period Security‐based payments expense On‐market securities buy‐back Issue and formation costs Return of capital Equity issued Distributionspaid/payable	701,602 671,313 65,501 85,148 2,008 1,956 (1,913) (39) (124) ‐ ‐ (12,174) 39,924 ‐ (44,871) (44,601)
Balance as atyear end	762,128 701,602

GDI and the Trust has a $5 million bank guarantee supporting the financial requirements of GDI Funds Management Limited’s AFS Licence.

b) Non‐controlling interest

GDI No. 42 Office Trust

On 16 June 2016, GDI Funds Management Limited arranged an issue of 65.5 million units of GDI No. 42 Office Trust to fund the acquisition of 235 Stanley Street, Townsville and settle an inter‐company loan with GDI Property Trust that was used to fund the acquisition of 223‐237 Liverpool Road, Ashfield (which was subsequently sold on 31 January 2019). Following the arrangement, GDI Property Trust effectively holds 43.68% of units on issue in GDI No. 42 Office Trust, with the other 56.32% units on issue held by unrelated parties and shown in the financial statements, together with the non‐controlling interests of GDI No. 46 Property Trust (see below), as non‐controlling interests – Unlisted Property Funds.

GDI No. 46 Property Trust

On 31 January 2020, GDI Funds Management Limited arranged an issue of 75.7 million units of GDI No. 46 Property Trust to fund the acquisition of a portfolio of 17 properties occupied by high profile car dealerships and service centres in metropolitan Perth. Following the raising, GDI Property Trust effectively holds 47.26% of units on issue in GDI No. 46 Property Trust, with the other 52.74% units on issue held by unrelated parties and shown in the financial statements, together with the non‐ controlling interests of GDI No. 42 Office Trust (see above) as non‐controlling interests – Unlisted Property Funds.

Results	GDI No. 42 Office Trust GDI No. 46 PropertyTrust Total Unlisted PropertyFunds
	2020 2019 2020 2019 2020 2019 $'000 $'000 $'000 $'000 $'000 $,000
Profit/ (loss)for theperiod	4,221 6,136 (5,197) ‐ (975) 6,136
Total comprehensive profit / (loss) for theperiod	4,221 6,136 (5,197) ‐ (975) 6,136
Financialposition
Current assets Total assets Current liabilities Total liabilities	590 404 363 ‐ 953 404 54,426 53,904 99,345 ‐ 153,771 53,904 269 159 525 ‐ 794 159 10,265 10,124 30,386 ‐ 40,650 10,124
Net assets	44,162 43,780 68,959 ‐ 113,121 43,780
Contributed equity Retained earnings	43,885 43,885 75,574 ‐ 119,459 43,885 277 (105) (6,615) ‐ (6,338) (105)
Total equity	44,162 43,780 68,959 ‐ 113,121 43,780

GDI PROPERTY GROUP NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2020

NOTE 35 – CONTINGENT LIABILITIES

GDI and Trust had no contingent liabilities as at 30 June 2020 and as at 30 June 2019.

NOTE 36 – EVENTS AFTER THE REPORTING DATE

On 31 July 2020, GDI No. 45 Pty Limited atf GDI No. 45 Property Trust settled the acquisition of 180 Hay Street, Perth, for $12.6 million. 180 Hay Street, Perth, was independently valued at $15.0 million.

DIRECTORS’ DECLARATION

GDI Property Group Limited and GDI Funds Management Limited as Responsible Entity for GDI Property Trust

Directors’ Declaration For the period ended 30 June 2020

The directors of GDI Property Group Limited and GDI Funds Management Limited as Responsible Entity for GDI Property Trust, declare that:

(a) the financial statements and notes that are set out on pages 34 to 81 are in accordance with the Corporations Act 2001, including:
(i) complying with Australian Accounting Standards which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and
(ii) giving a true and fair view of the financial position as at 30 June 2020 and of the performance for the period ended on that date;
(b) there are reasonable grounds to believe that GDI will be able to pay its debts as and when they become due and payable; and
(c) The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing Director and Chief Financial Officer.

This declaration is made in accordance with a resolution of the directors of GDI Property Group Limited and GDI Funds Management Limited.

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Gina Anderson Chairman

Dated this 24[th] day of August 2020

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AI assistant

GDI PROPERTY GROUP — Annual Report 2020

64974_rns_2020-08-23_59a72117-cad7-46ea-be41-c74d810cb6c2.pdf

Appendix 4E Results for announcement to the market GDI PROPERTY GROUP

1. GDI Property Group

2. Reporting period

3. Highlights of the results

4. Commentary on the results

5. Dividends/distributions declared and paid and dividend/distribution reinvestment plan

6. Changes in control over group entities

7. Compliance statement

GDI Property Group

GDI PROPERTY GROUP DIRECTORS’ REPORT

Contents

1. Operating and financial review

1.1 About GDI Property Group

1.2 Strategy

Property

Funds management

1.3 Sustainability

1.4 Review of operations

COVID‐19

Results summary

Operating segment results

Property

Funds management

Net interest expense

Corporate and administration expenses

Capital management

Hedging policy

Dividends/distributions declared and paid and dividend/distribution reinvestment plan

Significant changes in GDI Property Group’s state of affairs

1.5 Future prospects

Property – existing

GDI PROPERTY GROUP DIRECTORS’ REPORT

Funds management

Distribution guidance

1.6 Risks

2 Events subsequent to balance date

3 Environmental regulation

4 Directors and Company Secretary

Directors

GDI PROPERTY GROUP DIRECTORS’ REPORT

Managing Director

Independent Non‐executive Directors

Information on Directors

Ms Gina Anderson

Chairman, Independent Non‐Executive Director

Mr Steven Gillard

Managing Director

Mr John Tuxworth

Independent Non‐Executive Director

Mr Giles Woodgate

Independent Non‐Executive Director

Mr Stephen Burns

Independent Non‐Executive Director

Number of meetings attended

Other directorships

Company secretary

Mr David Williams

Chief Financial Officer and Joint Company Secretary

Ms Kate Malcolm

Accountant and Joint Company Secretary

5. Remuneration report

5.1 Basis of preparation

5.2 Key Management Personnel

Key Management Personnel

5.3 Role of the Board in relation to remuneration

5.4 Remuneration objectives

GDI PROPERTY GROUP DIRECTORS’ REPORT

5.5 The composition of remuneration at GDI

Remuneration mix for the Managing Director and Disclosed Executives

Fixed remuneration

At risk remuneration

Short term incentives (STI)

Long term incentives (LTI)

Other remuneration elements

No change on previous years

Clawback

Hedging prohibition

GDI PROPERTY GROUP Annual Report 2020