REGION GROUP — Annual Report 2023

Aug 14, 2023

Appendix 4E Preliminary Final Report

APPENDIX 4E

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Full Year Report

For the year ended 30 June 2023

Name of Entity: Region Group (RGN)

Region Group comprises the stapled securities in two trusts, being Region Management Trust (ARSN 160 612 626) and Region Retail Trust (ARSN 160 612 788) (collectively the Trusts) and their controlled entities. Region RE Limited (ABN 47 158 809 851; AFSL 426603) is the Responsible Entity for the Trusts.

For the year ended	30 June 2023 $m	30 June 2022 $m	Variance %
Revenue from ordinary activities ($m)	377.1	350.3	7.7%
Net profit/(loss) from ordinary activities after tax attributable to members ($m)	(123.6)	487.1	(125.4%)
Net profit/(loss) for the year attributable to members ($m)	(123.6)	487.1	(125.4%)
Funds from Operations (FFO)1($m)	192.5	192.7	(0.1%)
For the year ended	30 June 2023	30 June 2022	Variance
Basic earnings per security (cents per security)	(10.9)	44.0	(124.8%)
Weighted average FFO per security (cents per security)1	16.94	17.40	(2.6%)
Distributions	Record date	Amount per security	Franked amount per security
Final Distribution	30 June 2023	7.70	0.0 cents
Interim distribution	31 December 2022	7.50	0.0 cents
The total distribution per stapled security is 15.20 cents. The final distribution of 7.70 cents was declared on 13 June 2023 and will be paid on or about 31 August 2023. The interim distribution of 7.50 cents was declared on 8 December 2022 andpaid on 31 January2023.

Net Tangible Assets	30 June 2023	30 June 2022	Variance
Net tangible assets per security ($ per stapled security)	2.55	2.81	(9.2%)

Notes:

1. Region Group reports net profit/(loss) attributable to security holders in accordance with International Financial Reporting Standards (IFRS). The Responsible Entity considers the Property Council of Australia’s definition of Funds from Operations (FFO) to be a measure that reflects the underlying performance for the year.

Details of entities over which control has been gained or lost during the year:

None.

Details of any associates and Joint Venture entities required to be disclosed:

Region Group has a 20.0% interest in the SCA Metro Convenience Shopping Centre Fund (Metro Fund). Refer to the attached Financial Report, note B2.

Audit

The accounts have been audited with unqualified audit opinion. Refer to attached Financial Report.

Distribution Reinvestment Plan (DRP)

The Group has a Distribution Reinvestment Plan (DRP) under which security holders may elect to have all or part of their distribution entitlements satisfied by the issue of new securities rather than being paid in cash. The DRP was activated for both the interim and final distributions.

In accordance with the DRP Rules, this issue price has been calculated as the arithmetic average of the daily volume weighted average price of all sales of securities sold through a Normal Trade recorded on ASX, for the first 10 ASX Trading Days following the business day after the record date, less 1.0% (being the Board approved DRP discount for this distribution) and rounded to the nearest whole cent. Additional details are below:

Interim distribution : The DRP applied to the interim distribution for the half year ended 31 December 2022, paid on 31 January 2023. The cut-off for electing to participate or change an existing election to participate in the DRP was 5.00 pm on 3 January 2023. On this basis the issue price of the DRP was $2.61.

Final distribution : The DRP applied to the final distribution for the year ended 30 June 2023, to be paid on or about 31 August 2023. The cut-off for electing to participate or change an existing election to participate in the DRP was 5.00 PM on 3 July 2023. On this basis the issue price of the DRP was $2.27.

Other significant information and commentary on results

See attached ASX announcement and materials referred to below.

For all other information required by Appendix 4E including a results commentary, please

refer to the following attached documents:

• Directors’ Report including the Remuneration Report

• Financial Report

• Results presentation

Erica Rees Company Secretary

14 August 2023

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Financial Report

Year ended 30 June 2023

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Region Group comprises the stapled securities in two trusts, being Region Management Trust (ARSN 160 612 626) and Region Retail Trust (ARSN 160 612 788) (collectively the Trusts) and their controlled entities. Region RE Limited (ABN 47 158 809 851, AFSL 426603) is the Responsible Entity for the Trusts and is incorporated and domiciled in Australia. The registered office of Region RE Limited is Level 5, 50 Pitt Street, Sydney, New South Wales.

Contents

• 1 Directors’ Report

• 13 Remuneration Report (forms part of the Directors’ Report)

• 40 Auditor’s Independence Declaration

• 41 Consolidated Financial Statements

• 46 Notes to the Consolidated Financial Statements

• 77 Directors’ Declaration

• 78 Independent Auditor’s Report

Region Group Directors’ Report For the year ended 30 June 2023

Directors’ Report

Region Group (RGN or the Group) comprises the stapled securities in two Trusts, being Region Management Trust (Management Trust) and Region Retail Trust (Retail Trust) and their controlled entities (collectively the Trusts).

Region RE Limited (Responsible Entity) is the Responsible Entity for the Trusts, which presents its report together with the Trusts’ Financial Statements for the year ended 30 June 2023 and the auditor’s report thereon.

The Directors’ Report is a combined Directors’ Report that covers the Trusts. The financial information for the Group is taken from the Consolidated Financial Statements and notes.

1. Directors

The Directors of the Responsible Entity at any time during or since the end of the financial year are:

Mr Steven Crane

Non-Executive Director and Chair (appointed 13 December 2018; Chair from 1 December 2022)

Independent:	Yes.
Other listed Directorships	Non-Executive Director of APA Group (comprising Australian Pipeline Trust and APT Investment Trust)
held in last 3 years:	(January 2011 to September 2022) and Chair and Non-Executive Director of nib holdings limited (Non- Executive Director from September 2010 and Chair from October 2011 to July 2021).
Special responsibilities	Chair of Nomination Committee (since 18 August 2022) and of Remuneration Committee (until 18
and other positions held:	August 2022), Member of Nomination Committee, and Member of Investment Committee (until 18
	August 2022).
	Other positions currently held unrelated to the Group include Chair of Global Value Technology
	Limited.
Other experience:	Mr Crane has held a number of other positions unrelated to the Group including Chair of the Taronga
	Conservation Society (2010-2021), Non-Executive Director of Bank of Queensland (2008-2015), Non-
	Executive Director of Transfield Services (2008-2015), Non-Executive Director of APA Ethane Limited
	(2008-2011), Trustee of Australian Reward Investment Alliance (2007-2009), Chair of Adelaide
	Managed Funds Limited (2006-2008), Chair of Investa Property Group (2006-2007), Non-Executive
	Director of Adelaide Bank (2005-2007), Non-Executive Director of Foodland Associated (2003-2005),
	Deputy Chair of Australian Chamber Orchestra and Director of Sunnyfield Association.
	Mr Crane brings specific skills in the following areas:
	 Funds management
	 Investment banking including M & A and capital markets
	 Finance and accounting including audit
	 Remuneration
	 Stakeholder engagement
Qualifications:	BComm, FAICD.

Mr Michael Herring

Non-Executive Director (appointed 18 August 2022)

Independent:	Yes.
Other listed Directorships	None.
held in last 3years:
Special responsibilities	Member of Audit, Risk Management and Compliance Committee (since 18 August 2022), Nomination
and other positions held:	Committee (since 18 August 2022) and Investment Committee (since 18 August 2022).
	Other positions currently held unrelated to the Group include Non-Executive Director of the Taronga
	Conservation Society.

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Region Group Directors’ Report For the year ended 30 June 2023

Other experience:	Mr Herring has over 30 years of experience in the legal and finance services industries. Mr Herring was
	previously the General Counsel of Macquarie Group. Mr Herring was also the Head of Financial
	Institutions Group at Macquarie Capital. Prior to joining the Macquarie Group, Mr Herring was
	Managing Partner of Mallesons Stephen Jaques. Mr Herring is also a former director and chair of the
	Skin and Cancer Foundation Australia.
	Mr Herring brings specific skills in the following areas:
	 Investment banking, M&A, capital markets and corporate finance
	 Risk and compliance
	 Corporate governance
	 Tax
	 Litigation
	 Leveraged leasing
Qualifications:	B. Com, LLB and Master of Laws.

Mr Angus James

Non-Executive Director (appointed 9 December 2021)

Independent:	Yes.
Other listed Directorships	None.
held in last 3years:
Special responsibilities	Chair of Remuneration Committee (since 18 August 2022), and Member of Audit, Risk Management and
and other positions held:	Compliance Committee, Nomination Committee and Investment Committee.
Other experience:	Mr James has over 30 years of finance experience and is currently CEO of Aquasia Pty Limited, an
	independent corporate advisory and funds management business based in Sydney. Prior to
	establishing Aquasia in 2009, Mr James was the Chief Executive of ABN AMRO Australia and New
	Zealand and a member of its Asian management team which oversaw all of ABN AMRO’s retail,
	wholesale, investment banking and asset management businesses in 17 countries throughout Asia
	Pacific. Mr James was also previously a Director of the Business Council of Australia, the Australian
	Curriculum, Assessment and Reporting Authority and Deputy Chair of the Australian Chamber
	Orchestra.
	Mr James brings specific skills in the following areas:
	 Investment banking, M&A, capital markets, strategy and corporate finance
	 Capital management, including debt, derivatives and equity raising
	 Funds management
	 Stakeholder engagement
Qualifications:	BEcon.

Ms Beth Laughton

Non-Executive Director (appointed 13 December 2018)

Independent:	Yes.
Other listed Directorships held	Director of JB Hi-Fi Limited (May 2011 to current).
in last 3years:
Special responsibilities and	Chair of Audit, Risk Management and Compliance Committee and Member of the Remuneration
other positions held:	Committee and Nomination Committee.
	Other positions currently held unrelated to the Group include Non-Executive Director of GPT Funds
	Management Limited.
Other experience:	Ms Laughton began her career with Peat, Marwick, Mitchell (now KPMG) in audit and then spent 25
	years advising companies in mergers and acquisitions, valuations and equity capital markets. She has
	worked at senior levels with Ord Minnett Corporate Finance (now JP Morgan), TMT Partners and Wilson
	HTM, advising companies in a range of industries including, property, retail and the information,
	communication and media sectors. She has held a number of other positions unrelated to the Group
	including a Member of Defence SA’s Advisory Board (2007-2016), Non-Executive Director of the Co-
	operative Research Centre for Contamination, Assessment, Remediation of the Environment (2012-
	2014), Non-Executive Director of Australand Property Group (2012-2014), and Director of Sydney Ferries
	(2004-2010).
	Ms Laughton brings specific skills in the following areas:
	 Property investment and funds management

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Region Group Directors’ Report For the year ended 30 June 2023

 M & A and equity capital markets  Finance and accounting/audit  Corporate governance  Retail  Remuneration  Risk management and sustainability Qualifications: BEcon, FCA and FAICD.

Ms Antoinette Milis

Non-Executive Director (appointed 8 December 2022)

Independent:	Yes.
Other listed Directorships held	None.
in last 3years:
Special responsibilities and	Member of the Nomination Committee and Investment Committee (since 8 December 2022).
otherpositions held:
Other experience:	Ms Milis is an experienced property industry executive having worked with Lendlease Group for more
	than 30 years. Most recently as Executive– Build to Rent and Affordable Housing in Australia, Ms Milis
	led the development of these alternative real estate classes. In a previous role as Head of Lendlease
	Communities Australia, Ms Milis was responsible for the development of over 25 large scale master
	planned communities, which included the critical delivery of Neighbourhood and Town Centres to
	provide a range of retail, business, entertainment, and community uses.
	Ms Milis brings specific skills in the following areas:
	 Real estate, in particular mixed-use assets including retail and residential and spanning all
	aspects of real estate including property and development management, portfolio and
	investment management, facilities management, asset management and funds management
	 M&A
	 Risk management
	 Corporate governance
	 International experience
	 Stakeholder engagement
	 Government advisory
Qualifications:	BComm.

Ms Belinda Robson

Non-Executive Director (appointed 27 September 2012)

Independent:	Yes.
Other listed directorships held	Director of Goodman Limited and Goodman Funds Management Limited (March 2023 to current).
in last 3 years:
Special responsibilities and	Chair of the Investment Committee and of the Nomination Committee (from 1 July 2022 until 18 August
other positions held:	2022), Member of Nomination Committee (since 18 August 2022), Member of the Remuneration
	Committee, and Member of Audit, Risk Management and Compliance Committee (until 18 August
	2022).
	Other positions currently held unrelated to the Group include Non-Executive Director of GPT Funds
	Management Limited and Non-Executive Director of several Lendlease Asian Retail Investment Funds.
Other experience:	Ms Robson is an experienced real estate executive and people leader, having previously worked with
	Lendlease Group for nearly 30 years in a range of roles including as Fund Manager of Australian Prime
	Property Retail Fund (APPF Retail) (APPF Retail is managed by the Lendlease Group).
	Ms Robson brings specific skills in the following areas:
	 Real estate, in particular retail assets, spanning all aspects of real estate including property and
	development management, portfolio and investment management, asset management and
	funds management
	 Retail industry, investor and consumer sentiment experience and the way in which retail formats
	should and can evolve to capitalise on sector opportunities
	 Corporate governance

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Region Group Directors’ Report For the year ended 30 June 2023

 Remuneration

 International experience Qualifications: BComm (Honours).

Mr Philip Marcus Clark AO

Chair and Non-Executive Director (appointed 19 September 2012; retired 30 November 2022)

Independent:	Yes.
Other listed directorships	None.
held in last 3years:
Special responsibilities	Chair of Nomination Committee (until 1 July 2022) and Member of Nomination Committee (until 30
and other positions held:	November 2022)
	Other positions held during his directorship, unrelated to the Group, include member of the JP Morgan
	Australia Advisory Council and Council of Charles Sturt University. Chair of a number of government
	and private boards including: Australian Antarctic Science Council, Trustees of the Royal Botanic
	Gardens & Domain Trust and Trustees of the NSW Public Purpose Fund. Director of Food Agility
	Cooperative Research Centre.
Other experience:	Mr Clark was the Managing Partner of the law firm Minter Ellison from 1995 to 2005. Prior to joining
	Minter Ellison, Mr Clark was a Director and Head of Corporate with ABN AMRO Australia, and prior to
	that he was the Managing Partner of the law firm Mallesons Stephen Jaques for 16 years. Mr Clark has
	been a Director of several listed AREITs (including most recently Ingenia until December 2017) and Chair
	and Non-Executive Director of Hunter Hall Global Value Limited (July 2013 to December 2015).
	Mr Clark brings specific skills in the following areas:
	 M & A and capital markets
	 Audit, risk management and compliance
	 Corporate governance
	 Real estate, including property management, portfolio and investment management, asset
	management and funds management
	 Remuneration
Qualifications:	BA, LLB, and MBA (Columbia University).

Mr Anthony Mellowes

Executive Director and Chief Executive Officer (CEO) (appointed Executive Director 2 October 2012)

Independent:	No.
Other listed directorships held	None.
in last 3years:
Special responsibilities and	In addition to be being an Executive Director and Chief Executive Officer (CEO), Mr Mellowes is a
other positions held:	Member of the Investment Committee and is a member of the SCA Metro Convenience Shopping
	Centre Fund (Metro Fund) Investment Committee.
	Other positions currently held unrelated to the Group include Chair of Shopping Centre Council of
	Australia and Director of Property Council of Australia.
Other experience:	Mr Mellowes is an experienced property executive. Prior to joining Region Group as an Executive
	Director, Mr Mellowes worked at Woolworths Limited from 2002 to 2012 and held a number of senior
	property related roles including Head of Asset Management and Group Property Operations Manager.
	Prior to Woolworths Limited, Mr Mellowes worked for Lendlease Group and Westfield Limited.
	Mr Mellowes was appointed Chief Executive Officer of Region Group on 16 May 2013 after previously
	acting as interim Chief Executive Officer. Mr Mellowes was a key member of the Woolworths Limited
	team which created Region Group.
	Mr Mellowes brings specific skills in the following areas:
	 Real estate, in particular retail assets, spanning all aspects of real estate including property and
	development management, portfolio and investment management and funds management
	 Retail experience spanning all retail asset classes
	 M&A and capital markets
	 Equity placements
Qualifications:	Bachelor of Financial Administration and Macquarie Graduate School of Management’s Strategic
	Management Program.

4 |

Region Group Directors’ Report For the year ended 30 June 2023

Mr Mark Fleming

Executive Director and Chief Operating Officer and Head of Funds Management and Strategy (COO) (appointed Executive Director 26 May 2015; appointed COO 1 September 2022; Chief Financial Officer until 31 August 2022).

Independent:	No.
Other listed Directorships held	None.
in last 3years:
Special responsibilities and	In addition to being an Executive Director, COO, and Member of the Investment Committee (until 31
other positions held:	August 2022), Mr Fleming is a member of the Metro Fund Investment Committee.
	Other positions currently held unrelated to the Group include Trustee of the Royal Botanical Gardens &
	Domain Trust.
Other experience:	Mr Fleming was CFO of Treasury Wine Estates from 2011 to 2013. Mr Fleming worked at Woolworths
	Limited from 2003 to 2011, firstly as General Manager Corporate Finance, and then as General
	Manager Supermarket Finance. Prior to Woolworths Limited, Mr Fleming worked in investment banking
	at UBS, Goldman Sachs and Bankers Trust.
	Mr Fleming brings specific skills in the following areas:
	 Investment banking, M&A, capital markets, strategy, and corporate finance
	 Capital management, including debt, derivatives and equity raising
	 Retail industry expertise across a range of retail categories including supermarkets and
	experience in fast moving consumer goods
	 Real estate expertise, particularly in retail, including valuations and funds management
	 Sustainability strategy, reporting, operational implementation and investment analysis
	 Listed company CFO experience, including treasury, tax, accounting/financial control/audit,
	corporate governance/risk management/compliance, systems, stakeholder
	engagement/investor relations
Qualifications:	LLB, BEcon (First Class Honours), CPA.

Company secretary

Ms Erica Rees

General Counsel and Company Secretary (appointed 5 February 2020)

Experience: Ms Rees is an experienced funds and property lawyer with over 15 years’ experience in legal practice including property transactions, property developments, leasing, funds management, corporate and debt. Ms Rees joined Region Group in late 2012 and was previously a Senior Associate in a national law firm. Qualifications: BA, LLB (Hons), AGIA, ACIS.

Directors’ relevant interests

The relevant interest of each Director (and their close family members) in ordinary stapled securities in the Group at the date of signing of this report are shown below.

Director	Number of stapled	Net movement	Number of stapled	Number of unvested
	securities at	increase / (decrease)	securities at date	performance rights at
	30 June 2022		of this report	date of this report
S Crane	200,000	50,000	250,000	-
M Herring	-	70,000	70,000	-
A James	61,500	34,436	95,936	-
B Laughton	31,937	24,058	55,995	-
A Milis	-	27,837	27,837	-
B Robson	62,495	-	62,495	-
P Clark1	180,000	(180,000)	-	-
A Mellowes	1,000,000	229,410	1,229,410	1,957,394
M Fleming	338,779	51,221	390,000	1,008,569

1 P Clarkretired on 30 November 2022 and therefore the number of stapled securities is shown as nil at the date of this report.

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Region Group Directors’ Report For the year ended 30 June 2023

Directors’ attendance at meetings

The number of Directors’ meetings, including meetings of committees of the Board of Directors, held during the year and the number of those meetings attended by each of the Directors at the time they held office are shown below.

Number of meetings held	Number of meetings held	Number of meetings held				Number
Board of Directors (Board)						17
Audit, Risk Management and Compliance Committee (ARMCC)						6
Remuneration Committee (Remuneration)						4
Nomination Committee (Nomination)						2
Investment Committee (Investment)						5
	Board	ARMCC	Remuneration	Nomination	Investment
Director	A B	A B C	A B C	A B C	A B C
S Crane	17 17	- - 6	1 1 3	2 2 -	1 1 4
M Herring	13 13	4 4 -	- - 2	2 2 -	4 4 -
A James	17 17	6 6 -	3 3 1	2 2 -	5 5 -
B Laughton	17 17	6 6 -	4 4 -	2 2 -	- - 3
A Milis	6 6	- - 2	- - 2	1 1 -	3 3 -
B Robson	17 16	2 2 3	4 4 -	2 2 -	5 5 -
P Clark	9 4	- - -	- - -	1 - -	- - -
A Mellowes	17 17	- - 6	- - 4	- - 2	5 5 -
M Fleming	17 17	- - 6	- - 4	- - 2	1 1 4

• A: Number of meetings held while a member of the Board or a member of the committee during the year.

• B: Number of meetings attended while a member of the Board or a member of the committee during the year.

• C: Number of meetings attended as a guest.

2. Principal activities

The principal activity of the Group during the year was investment in and management of convenience based retail properties in Australia. The materials in this Directors’ Report deal with the operational and financial review of the Group. Additional material is in the other ASX announcements released related to the Group’s results for the year ended 30 June 2023.

3. Investment property portfolio

At 30 June 2023 the investment property portfolio consisted of 95 shopping centres valued at $4,411.6 million (30 June 2022: 91 shopping centres valued at $4,460.9 million). The portfolio consists of convenience-based retail properties with a strong weighting towards non-discretionary retail tenants.

Acquisitions

During the year, the Group completed the following property acquisitions for $180.0 million (excluding transaction expenses). Details of these properties are listed below:

Property State	Settlement Date	Purchase price ($m)	30 Jun 2023 fair value ($m)
Dernancourt Shopping Centre SA	July 2022	46.0	41.6
Fairview Green Shopping Centre SA	July 2022	39.5	33.1
Brassall Shopping Centre QLD	July 2022	46.5	46.3
Port Village Shopping Centre QLD	July 2022	36.0	35.7
Tyne Square WA	July 2022	12.0	12.3
		180.0	169.0

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Region Group Directors’ Report For the year ended 30 June 2023

Disposals

The Group completed the sale of Carrara Shopping Centre for $23.5 million during the year.

Revaluations

During the year, all investment properties were internally valued with over 40% also independently valued. The weighted average market capitalisation rate (cap rate) of the portfolio at 30 June 2023 was 5.85% (30 June 2022: 5.43%).

The movement in the carrying value of the investment properties during the year resulted from a reduction in the fair value primarily due to the expansion of cap rates offset by income growth and net acquisitions.

4. Financial review

A summary of the Group and Retail Trust’s results for the year is set out below:

	Region Group Retail Trust
	30 Jun 2023 30 Jun 2022 30 Jun 2023 30 Jun 2022
Net profit/(loss) after tax $m Basic earnings/(loss) per security (cents per security) Diluted earnings/(loss) per security (cents per security) Funds from operations $m Funds from operations per security (cents per security) Adjusted funds from operations $m Adjusted funds from operations per security (cents per security) Distributions paid and payable to security holders $m Distributions (cents per security) Net tangible assets ($ per security) Weighted average number of securities used as the denominator in calculating basic earnings per security (millions of securities) Weighted average number of securities used as the denominator in calculating diluted earnings per security (millions of securities)	(123.6) 487.1 (124.9) 487.0 (10.87) 44.00 (10.99) 44.00 (10.87) 43.80 (10.99) 43.80 192.5 192.7 191.2 192.6 16.94 17.40 16.82 17.40 173.9 169.5 172.6 169.4 15.30 15.30 15.19 15.30 173.4 169.2 173.4 169.2 15.20 15.20 15.20 15.20 2.55 2.81 2.54 2.80 1,136.6 1,107.7 1,136.6 1,107.7 1,136.6 1,112.9 1,136.6 1,112.9

Funds from operations and adjusted funds from operations

The Group reports statutory net profit/(loss) after tax attributable to security holders in accordance with International Financial Reporting Standards (IFRS). The Responsible Entity considers the non-IFRS measure and Property Council of Australia’s (PCA) definition of Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) to be measures that better reflect the underlying performance of the Group. AFFO is an important indicator of the underlying cash earnings and is the basis of our distribution during the respective year.

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Region Group Directors’ Report For the year ended 30 June 2023

	Region Group	Region Group	Retail Trust	Retail Trust
	30 Jun 2023 $m	30 Jun 2022	30 Jun 2023	30 Jun 2022 $m
		$m	$m
Net profit/(loss) after tax (statutory) Adjustments for specific non-cash items Revaluation of investment properties Net loss / (gain) on financial instruments Share of net loss / (gain) from associates relating to non-cash items Straight-lining of rental income and amortisation of lease incentives Other non-cash items Other adjustments Technology project expenses Net insurance proceeds Other expenses Funds from Operations Maintenance capital expenditure Capital leasing incentives and leasing costs Adjusted Funds from Operations	(123.6) 264.1 36.9 3.8 10.7 3.9 3.4 (8.1) 1.4	487.1 (354.0) 35.8 1.1 13.6 2.2 1.1 (1.2) 7.0	(124.9) 264.1 36.9 3.8 10.7 3.9 3.4 (8.1) 1.4	487.0 (354.0) 35.8 1.1 13.6 2.2 1.1 (1.2) 7.0
	192.5	192.7	191.2	192.6
	(8.4) (10.2)	(12.9) (10.3)	(8.4) (10.2)	(12.9) (10.3)
	173.9	169.5	172.6	169.4

5. Contributed equity

Distribution Reinvestment Plan (DRP)

The Group has a DRP under which security holders may elect to have their distribution entitlements satisfied by the issue of new securities at the time of the distribution payment rather than being paid in cash. The DRP was in place for the distribution declared in June 2022 (paid in August 2022), distribution declared in December 2022 (paid in January 2023) and distribution declared in June 2023 (expected to be paid on or about 31 August 2023).

In June 2022, $44.6 million was raised ($23.4 million was pursuant to an underwriting agreement) through the DRP with 15.9 million securities being issued. In December 2022, $42.3 million was raised ($23.1 million was pursuant to an underwriting agreement) through a DRP with 16.3 million securities being issued. For the distribution that was declared in June 2023, $26.8 million is expected to be raised through the issue of 11.8 million securities.

Other equity movements

During the year 365,355 securities were issued in respect of executive compensation plans and 22,143 for employee compensation plans for nil consideration.

6. Significant changes and developments during the year

Investment properties – acquisitions and disposals

Details of the acquisitions and disposals during the year are above.

Capital management – debt

In August 2022 the Group restructured an existing $150.0 million interest rate swap, where the Group paid a fixed rate of 2.61% expiring in February 2032, with a $250.0 million interest rate swap, where the Group pays a fixed rate of 1.44% starting in August 2022 and expiring in July 2024.

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Region Group Directors’ Report For the year ended 30 June 2023

In November 2022 the Group entered into forward starting interest rate swaps with a face value of $200.0 million where the Group pays a fixed rate of 3.82% starting in July 2023 and expiring in July 2025.

In March 2023 the Group entered into forward starting interest rate swaps with a face value of $300.0 million where the Group pays a fixed rate of 3.36% starting in July 2024 and expiring in July 2026.

During the year the Group also extended the maturity of two debt facilities increasing the facility limit of one of these. At 30 June 2023, the Group had cash and available undrawn debt facilities (or financing capacity) of $385.7 million (30 June 2022: $452.7 million) which is in excess of the 30 June 2023 net current asset deficiency position of $297.5 million.

The Group’s only debt expiry in FY24 is a $225.0 million AU$ Medium Term Note with a coupon of 3.9% which expires in June 2024. The Group has no debt expiries in FY25. The cash and undrawn debt at 30 June 2023 of $385.7 million is in excess of the $225.0 million debt expiry in FY24 and therefore it is expected this expiry will be repaid from the cash and undrawn debt.

The average debt facility maturity of the Group at 30 June 2023 was 4.4 years (30 June 2022: 5.3 years), with 79.7% of the Group’s debt being fixed or hedged (30 June 2022: 69.6%).

Gearing

The Group maintains a prudent approach to managing the balance sheet with gearing of 31.3% at 30 June 2023 (30 June 2022: 28.3%). The Group’s target gearing range is 30-40%, however, the Group prefers gearing to be around the lower end of the range at this point in the cycle.

Change of corporate name and ASX code

In November 2022 SCA Property Group announced the change of the company name to Region Group. Consequently, on 28 November 2022, Shopping Centres Australasia Property Group RE Limited, Shopping Centres Australasia Property Retail Trust and Shopping Centres Australasia Property Management Trust were renamed to Region RE Limited, Region Retail Trust and Region Management Trust, respectively. Additionally, from the commencement of trading on 28 November 2022 the Australian Securities Exchange (ASX) code changed from SCP to RGN.

7. Major business risk profile

Senior management is responsible for identifying risks and implementing appropriate mitigation processes and controls.

The Audit, Risk Management and Compliance Committee, is responsible for establishing, reviewing and monitoring the process of risk management, with the Board ultimately responsible for the Group’s risk management process and the internal control systems.

The table below summarises the key business risks as set out in the Group’s risk register.

Key Risks	Cause(s) Effect	Mitigation
Strategic
Economic slowdown leading to subdued retail sales	Macroeconomic environment and other external shocks Reduced Net Operating Income with potential impact on leasing activity and the ability for tenants to meet their rental obligations	High proportion of income from supermarket anchor tenants with long leases and specialty tenants in non-discretionary categories
Changes to anchor tenant lease structures to exclude online sales	Anchor tenants seeking to exclude online sales from turnover rent Reduced rental income and impacted investment property valuations	Majority of anchor tenant leases do not have these clauses; increase diversification to a variety of non- discretionary specialty tenants
Acquisition volume is below expectations	Investment hurdles cannot be achieved Reduced earnings growth	Closely monitor and have a disciplined approach to all potential acquisitions
Climate risk	Weather events cause damage to property Financial loss	Geographically dispersed portfolio, insurance, climate risk assessments including for potential acquisitions

9 |

Region Group Directors’ Report For the year ended 30 June 2023

Key Risks	Cause(s)	Effect	Mitigation
Financial
Cost of equity increases	Market disruption or demand for RGN equity declines	Inability to fund acquisitions or reposition existing properties may impact earnings and distributions which may result in lower security price	Management monitor equity markets continuously with the Group having raised equity every year since inception; maintain strong and diversified equity capital market relationships
Cost of debt increases	Increase in market interest rates	Lack of availability of capital or debt to fund acquisitions or reposition existing properties, inability to refinance debt and/or material increase in costs associated with debt funding may impact earnings	Management ensures diversification of funding sources, actively managing debt maturities. Interest rate exposures are managed via the Group’s hedging policy and strategy.
Reduction in property valuations	Increase in market cap and discount rates, decrease in net operating income or expected future cash flows	Decrease in net tangible assets and increase in gearing	Conservative level of gearing, geographic diversification, long dated lease agreements to quality anchor tenants
Operational
Key outsourced service providers do not perform to satisfaction	Inadequate supervision of outsourced functions and/or unsatisfactory quality control	Unsatisfactory quality control resulting in loss to security holders, impacted tenants, breach of financial services law, or loss of reputation	Appropriate policies, procedures and operational practices adopted, reviewed and maintained, training, insurance
Technology and cyber security	Inadequate controls over systems including services provided by outsourced managed service providers	Business interruption, financial loss and/or loss of confidential information including breach of legislation or loss of reputation	Use of outsourced technology expert service provider who ensures that the Group’s systems have adequate security; other key service providers provide annual assurance of technology security measures, training, disaster recovery and backup
Death or permanent disability – foreseeable and within RGN’s control	An incident that is as a result of an act, or failure to act, by RGN or where RGN can reasonably influence the outcome	Death, serious injury or adverse health outcomes for RGN employees, contractors, tenants or customers	Conservative safety strategy which includes: regular reporting to the Board, ongoing training for employees and contractors, continuous improvement planned activities, safety KPIs for outsourced property and facilities managers, and appropriate workers’ compensation, public liability and property insurance
People & Culture
Poor organisational culture and employee engagement	Inadequate deployment of culture strategy, failure of leadership, training or engagement	Loss of knowledge, experience, engagement, productivity and turnover	Develop and continuously improve culture strategy alignment, cultural reviews, staff training and coaching

8. Weather events

During FY22, several properties were impacted by adverse weather events, particularly flooding on the east coast of Australia, with Lismore Central Shopping Centre being the most heavily impacted. During FY23 the Group received $11.0 million (FY22: $2.2 million) in insurance proceeds related to the damage. Of the amount received, $1.5 million relates to loss of income and $1.4 million relates to incremental non-recurring property expenses and have been included in AFFO.

9. Business strategies and prospects for future financial years

The Group’s core strategy is to invest in, manage and develop a geographically diverse portfolio of quality convenience based retail properties, anchored by long-term leases to quality tenants with a bias towards non-discretionary based tenants, to achieve resilient cash flows and distributions to the Group’s security holders. The Group achieves this by actions such as:

10 |

Region Group Directors’ Report For the year ended 30 June 2023

• Maximising the net operating income from its existing properties. This may include increasing the average rent per square metre from specialty tenants over time, reducing vacant tenancies, and controlling expenses

• Pursuing selected property refurbishment, development and acquisition opportunities, consistent with its core strategy

• Diversifying and developing other sustainable income streams including funds management

• Maintaining a capital structure that balances the cost of capital with an appropriate risk profile

It is also noted that fair value movements in property valuations and derivative financial instruments; volatility in interest and foreign exchange rates; and the availability of funding may have a material impact on the Group’s results in future years however, these cannot be reliably measured at the date of this report.

10. Environmental regulations

The Directors of the Responsible Entity are satisfied that adequate systems are in place for the management of the Group’s environmental responsibility and compliance with various licence requirements and regulations. Further, the Directors of the Responsible Entity are not aware of any material breaches of these requirements and, to the best of their knowledge, all activities have been undertaken in compliance with environmental requirements.

11. Sustainability

The Group understands that its impact on communities means acting on climate, social and environmental risks that could impact them. The Group has been measuring electrical energy use, waste disposal and water usage since 2015 and has participated in industry benchmarking since 2016. As Australia’s largest owner (by number) of convenience-based retail shopping centres, the Group has made significant progress to reduce its impact. During FY23 the Group:

• Invested $7.9 million in sustainability initiatives such as the installation of solar PV, building management systems, and LED lighting,

• Achieved a 40:40:20 gender split,

• Continued the partnership with The Smith Family,

• Achieved a 5.5 star NABERS rating for the head office, and

• Continued to increase its GRESB rating.

The Group has also set itself a range of sustainability targets including to achieve net zero for scope 1 and 2 greenhouse gas emissions by FY30 and to divert 60% of operational waste from landfill by FY30. More information is provided in the Group’s FY23 Sustainability Report which has been lodged with the ASX and can be found on the Group’s website at https://www.regiongroup.au/sustainability/.

12. Indemnification and insurance of directors, officers and auditor

The Group has Directors and Officers liability insurance. The insurance contract prohibits disclosure of details relating to the nature of the liabilities covered by the insurance, the limit of indemnity and the amount of the premiums paid under the policy.

The Directors have been provided with a Deed of Indemnity by Region RE Limited in its capacity as the responsible entity of the Management Trust and Retail Trust, which is intended, to the extent allowed by law, to indemnify the Directors against all losses or liabilities incurred by the person acting in their capacity as a Director. The Trusts’ constitutions provide that, subject to the Corporations Act 2001, the Region RE Limited has a right of indemnity out of the assets of the Trusts in respect of any liability incurred by the Responsible Entity in properly performing any of its powers or duties in relation to the Trusts.

The auditor of the Group is not indemnified by the Group.

11 |

Region Group Directors’ Report For the year ended 30 June 2023

13. Auditor’s Independence Declaration

A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 (Cth) is set out on page 40.

14. Audit and non-audit fees

Details of the amounts paid or payable to the auditor (Deloitte Touche Tohmatsu) for audit and non-audit services provided are detailed in note D6 of the Financial Statements.

There were no non-audit services during the year. The Directors are satisfied that the general standard of independence for auditors imposed by the Corporations Act 2001 has been satisfied.

As there were no non-audit services provided, the Directors are of the opinion that the services disclosed in note D6 of the Financial Statement do not compromise the external auditor’s independence. In forming this view the fundamental principles relating to auditor independence as set out in APES 110 ‘Code of Ethics for Professional Accountants’ issued by the Accounting Professional & Ethics Standards Board have been considered.

15. Subsequent events

In July 2023, the Group acquired land adjacent to the existing Delacombe Town Centre investment property for $15.0 million (excluding transaction expenses). The Group also entered into a conditional Development Management Agreement with an expected development completion cost of $31.5 million which involves the construction of an online sales fulfilment facility supporting the existing supermarket, and large format retail.

In August 2023, the Group entered into two callable interest rate swaps for $250.0 million and $150.0 million, where the Group pays a fixed rate of 3.60% and 3.65% respectively. They have a one year non call period to August 2024, thereafter callable by the banks and expire in August 2026.

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

16. Rounding of amounts

In accordance with Legislative Instrument 2016/191 issued by the Australian Securities and Investments Commission relating to the rounding off of amounts in the Financial Statements, amounts in the Financial Statements have been rounded to the nearest hundred thousand dollars in accordance with that Legislative Instrument, unless otherwise indicated.

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

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Steven Crane Chair Sydney 14 August 2023

12 |

Region Group Remuneration Report For the year ended 30 June 2023

Region Group

Remuneration Report for the Financial Year ending 30 June 2023

Dear Security holders

I am pleased to present the RGN FY23 Remuneration Report.

Despite challenging macroeconomic pressures in the form of increased interest rates and rising inflation, RGN was able to hold adjusted funds from operations per security (AFFOPS) at the same level as last financial year. This was achieved through good operational performance which mitigated the increase in interest rate expense caused by higher interest rates throughout FY23.

The Board is committed to upholding a remuneration framework that is aligned to the business strategy that focuses Executives to deliver sustainable operational performance to meet security holder expectations.

In respect of the Short-Term Incentive (STI) Plan, the Board directed Management to focus on two key performance criteria essential to delivering and growing distributions and security holder value, being AFFOPS and comparable net operating income (NOI) growth. In setting the hurdles and metrics for these performance criteria, the Board took into account the outlook for the rapidly changing macroeconomic environment and the potential adverse impact on RGN’s distributions.

Award payout levels were calibrated between Threshold (minimum expected performance, where a zero payout occurs) and Maximum (exceptional performance, where 100% payout occurs and which is significantly above agreed targets). In the case of AFFOPS, performance must be above Threshold and reach 50% of Maximum before any STI award is made for this component.

The results have been that AFFOPS performance was above Threshold but below Maximum, and comparable NOI growth above Threshold but below Maximum. On review, the Board was satisfied that these targets were appropriate, and that the Executive achievement against these targets is a valid reflection of their performance with the core business remaining resilient and performing well against the impact of the challenging macroeconomic conditions.

This year, RGN also introduced a carbon emissions reduction target in the STI to focus Executives on building longer term business resilience in managing RGN’s exposure to climate-related risks to support RGN’s commitment to achieve net zero carbon (scope 1 and 2 emissions) in its operations by FY30. Performance was assessed at Maximum, which reflects great progress towards our commitment.

Accordingly, the STI performance pool awarded to Executives for FY23 was $1,422,820, representing a 68% payout of the total STI maximum opportunity for each Executive. 50% of the STI award will be granted by way of deferred equity (subject to security holder approval), and 50% in cash to be paid in September 2023.

The FY20 Long-Term Incevtive (LTI) grant was tested in July 2023, with the performance conditions being relative total security holder return (TSR), growth in funds from operations per security (FFOPS) and return on equity (ROE). Performance was assessed at 100% for the relative TSR and ROE tranches. The FFOPS tranche was assessed as slightly above Threshold. This will result in a 68.2% payout of the total FY20 Long-Term Incentive (LTI) opportunity, with the award to vest following the date of this Report. The Board is satisfied that performance to the test date, and during the additional one-year deferral period, warrants this vesting and so no discretion was required.

Overall, the Board is very pleased with the Executives’ performance this year, and is confident that the remuneration outcomes for Executives detailed in this Report reflect our remuneration framework’s alignment with RGN’s performance for FY23.

On behalf of the Board, we recommend this Report to you.

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Angus James Chair, Remuneration Committee

13 |

Region Group Remuneration Report For the year ended 30 June 2023

The Remuneration Report has been audited by Deloitte Touche Tohmatsu.

Key points to note in relation to this Report are:

• The disclosures in this Report have been prepared in accordance with the provisions of section 300A of the Corporations Act 2001, even though, as stapled trusts, there is no obligation for RGN to comply with section 300A of the Corporations Act.

• The term “remuneration” has been used in this Report as having the same meaning as “compensation” as defined by AASB 124 “Related Party Disclosures”.

• For the purposes of this Report, the term “Executives” means Key Management Personnel (KMP) who are Executives and therefore excludes Non-Executive Directors (NEDs).

• Definitions to abbreviations in this Report appear on page 39.

14 |

Region Group Remuneration Report For the year ended 30 June 2023

1. Remuneration Snapshot

1.1 Remuneration Overview

Key questions	Our approach	Further information
1. Were there any pay increases in FY23?	The Chief Executive Officer (CEO), Anthony Mellowes, was awarded a Total Fixed Remuneration (TFR) increase of 3% on and from 1 October 2022. The former Chief Financial Officer (CFO), Mark Fleming, was appointed as Chief Operating Officer and Head of Funds Management and Strategy (“COO”) on 1 September 2022. Following an external remuneration benchmarking exercise, a TFR increase of 4.8% was awarded to Mr Fleming on commencement in his new role. Mr Fleming’s STI and LTI opportunity was also increased, as noted in Key question 2 below.
2. Were any changes made to the remuneration structure in FY23?	There was no change to the CEO’s STI or LTI opportunity during the period. The COO’s STI and LTI opportunity was increased on appointment to the new role, following the external remuneration benchmarking exercise. Evan Walsh was appointed to the role of CFO (and designated a KMP) on 12 December 2022. Prior to this appointment he was RGN’s Head of Finance and Technology. Except where specifically noted otherwise, all figures set out in this Report regarding Mr Walsh have been pro-rated to show remuneration earned for the period on and from his commencement in the CFO role on 12 December 2022, to 30 June 2023. Refer to key question 10 for further details.	Sections 3.1 and 3.3

Executive	FY22 STI % of TFR	FY23 STI % of TFR FY22 LTI % of TFR	FY23 LTI % of TFR
Anthony Mellowes	110%	110% 120%	120%
Mark Fleming	80%	90% 90%	100%
Evan Walsh	-	70% -	30%1

		Executive FY22 STI % of TFR FY23 STI % of TFR FY22 LTI % of TFR FY23 LTI % of TFR Anthony Mellowes 110% 110% 120% 120% Mark Fleming 80% 90% 90% 100% Evan Walsh - 70% - 30%1
		1.Note that due to Mr Walsh’s appointment part way through the period, his
		LTI opportunity is a percentage of his TFR in the role of Head of Finance and
		Technology.
3.	Were there any	The hurdles and metrics set for FY23 were modified from those used in FY22 to	Section 3.1
	changes to	reflect the post COVID 19 operating environment and to align with the FY23
	performance	strategic objectives set by the Board. Two new STI metrics were added
	measures?	replacing the FY22 metrics of rent collection, acquisitions and leasing spreads.
		AFFOPS was retained however with a re-weighting from 50% in FY22 to 40%
		for FY23.

The FY23 STI hurdles were:

• AFFOPS – 40%;

• Comparable NOI growth – 30%;

• Carbon emissions reduction – 10%; and

• Personal – 20%.

15 |

Region Group Remuneration Report For the year ended 30 June 2023

Key questions	Key questions	Our approach	Further information
		These hurdles were chosen in order to focus Executives on maximising AFFOPS,
		and NOI as well as building longer term business resilience in managing our
		climate-related risks to support RGN’s commitment to achieve net zero
		carbon (scope 1 and 2 emissions) in our operations by FY30. The FY23 LTI
		hurdles were the same as for FY22, being relative TSR and AFFOPS growth. The
		metrics were the same as for FY22, with the exception of the AFFOPS growth
		Maximum being reduced from 5.0% in FY22, to 4.0% in FY23 as a reflection of
		the operating environment.
4.	What is the FY23 STI	The STI performance pool awarded to Executives for FY23 was $1,422,820,	Section 3.3
	payout to Executives	representing a 68% payout of the total STI maximum opportunity for each
	and why?	Executive. 50% of the STI award will be granted by way of deferred equity
		(subject to security holder approval), and 50% in cash to be paid in September
		2023.
		The payout ratio is a direct function of RGN’s performance in FY23, which saw
		Executives deliver the following:
		• AFFOPS of 15.3 cents per security;
		• Comparable NOI growth of 4.3%; and
		• Carbon emissions reduction of more than 2,250 tonnes of CO2.
5.	Did any LTI awards	FY19 LTI awards vested in August 2022. The FY19 performance hurdles were
	vest in FY23, or were	weighted as follows:
	any LTI awards	• Relative TSR against the S&P/ASX 200 A-REIT Accumulation Index (33.33%
	tested in FY23?	of grant);
		• Specified FFOPS growth (33.33% of grant); and
		• Specified ROE (33.33% of grant).
		FY19 performance was severely impacted by the COVID-19 pandemic, and
		consequently performance was assessed as slightly above Threshold for the
		Relative TSR tranche only. The remaining two tranches had a 0% payout. This
		resulted in a 9.74% payout of the total FY19 LTI maximum opportunity for each
		Executive.
		Further details of the performance period and metrics were set out in Sections
		3.3 and 3.5 of the FY19 Remuneration Report, and details of actual
		performance against metrics were set out in Sections 1.1 and 1.3 of the FY22
		Remuneration Report.
		The FY20 LTI performance period for the FFOPS and return on equity (ROE)
		performance conditions ended on 30 June 2022, and the performance period
		for the relative total security holder return (TSR) performance condition ended
		on 30 September 2022. Performance was tested in July 2023, and was
		consequently assessed as 100% payout for the relative TSR and ROE tranches.
		The FFOPS tranche was assessed as slightly above threshold. This will result in a

16 |

Region Group Remuneration Report For the year ended 30 June 2023

Key questions	Key questions		Our approach	Further information
			68.2% payout of the total FY20 LTI maximum opportunity for both the CEO
			and COO, with the award to vest following the date of this Report.
6.	Did the Board		The Board did not exercise discretion in determining the FY23 awards to
	exercise discretion		Executives.
	when considering
	Executive awards in
	FY23?
7.	Were any changes		NED base and committee fees were increased by 2.5% from 1 January 2023.
	made to NED fees in		Total NED remuneration payable in FY23 was $1,199,770, up from $998,128 in
	FY23?		FY22 due to the timing of Philip Clark’s retirement in November 2022, and the
			appointment of Michael Herring in August 2022 and Antoinette Milis in
			December 2022.
			The maximum aggregate NED fee pool was increased from $1,300,000 to
			$1,600,000 p.a following security holder approval at the 2022 Annual General
			Meeting (AGM). This is the first time the aggregate fee pool has been
			increased since RGN listed in 2012.
Remuneration Framework
8.	How does the Board		The Board focuses the STI and LTI performance conditions and hurdles on	Section 2.1
	set remuneration		areas where it believes the Executives can create the best value for security
	hurdles?		holders, build on prior-year performance, properly consider market conditions
			and opportunities, and provide Executives with meaningful and robust stretch
			targets within RGN’s stated risk parameters.
			The hurdles and metrics set for the FY23 STI awards were modified from those
			used in FY22 to focus on the influenceable key performance drivers in an
			environment where retail was expected to recover following the heavy
			impacts of the COVID 19 pandemic in FY20 and FY21, and to a lesser extent in
			FY22. These strategic priorities included:
			• Maximising AFFOPS and comparable NOI, in an increasing interest rate
			and inflationary environment; and
			• Building longer term business resilience in managing our climate-related
			risks to support RGN’s commitment to achieve net zero carbon (scope 1
			and 2 emissions) in our operations by FY30.
9.	How and when does		As a general principle, where a formulaic application of the relevant
	the Board determine		remuneration metrics could produce a material and perverse remuneration
	if it uses discretion?		outcome, or where it is in the best interests of security holders for the Board to
			do so, the Board will consider and may exercise its discretion in determining
			the awards.

The Board determined that it was not necessary to exercise discretion in FY23.

17 |

Region Group Remuneration Report For the year ended 30 June 2023

Key questions	Our approach	Further information
10. What portion of	STI and LTI awards are variable with performance and are therefore	Section 3.2
remuneration is at-	considered at-risk.
risk?	For FY23:
	• 69.9% of the CEO’s total remuneration opportunity (TRO) was at-risk;
	• 65.7% of the COO’s TRO was at-risk; and
	• 47.2% of the CFO’s TRO was at-risk.
11. Are there any	All incentives contain “malus” provisions allowing for the forfeiture of unvested
clawback provisions	rights in certain circumstances, including in the event of termination for cause
for incentives?	or for failing to meet prescribed minimum business and individual
	performance standards.
12. Do all Board	Yes, all members of the RGN Board, including both Executive Directors, hold
members, including	securities in RGN
Executive Directors,	In May 2023, RGN adopted a minimum security holding requirements policy
hold securities in	(MSRP) that applies to all KMP. In summary, the MSRP requires:
RGN?
	• NEDs to hold the equivalent of one year’s base fees in securities within 3
	years of appointment or adoption of the MSRP (May 2023), whichever is
	later; and
	• Executives to hold the equivalent of one year’s TFR in securities. There is no
	timeframe for accumulation and no requirement to acquire on-market.
	However, Executive KMP are not permitted to sell any STI or LTI securities
	awarded until such time as the minimum security holding threshold is met.
13. How does the	Risk is managed at various points in the Remuneration Framework through:
Remuneration	• Part deferral of STI awards for Executives with the vesting of STI rights
Framework mitigate	deferred for one year;
against excessive risk	• LTI performance hurdles that reflect the long-term performance of RGN,
taking by Executives	measured over a three-year performance period with a further one-year
to generate	deferral;
remuneration	• RGN’s incentive plan contains broadly framed malus provisions that allow
outcomes?	the Board in its sole discretion to determine that all, or part, of any
	unvested incentive awards be forfeited in certain circumstances; and
	• Board discretion on performance outcomes where a formulaic application
	of the relevant remuneration metrics is likely to produce a material and
	perverse remuneration outcome, or where it is in the best interests of
	security holders for the Board to do so.
14. Can STI and LTI	No. STI and LTI participants must not use any hedging strategy that has the	Section 3.1
participants hedge	effect of reducing or eliminating the impact of market movements on any
their unvested	unvested rights that are still subject to disposal restrictions.
rights?

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Region Group Remuneration Report For the year ended 30 June 2023

Key questions	Our approach	Further information
Short-Term Incentives (STIs)
15. What are the STI	The FY23 performance measures are:	Sections 3.1
performance	• AFFO per security – 40%;	and 3.3
measures that	• Comparable NOI growth – 30%;
determine if the STI	• Carbon emissions reduction – 10%; and
vests?	• Personal – 20%.
	These performance measures were chosen as they are directly linked to RGN’s
	strategic objectives.
16. Are any STI	Yes, 50% of STIs for Executives are in the form of deferred rights, with a one-	Section 3.1
payments	year deferral period.
deferred?	The number of deferred rights granted to Executives is calculated by dividing
	the intended grant value by the volume weighted average price of RGN
	securities for the five trading days following the release of RGN’s 2023 full year
	results.
17. Are STI payments	Yes, the total maximum STI opportunity as a percentage of TFR is as follows:	Section 3.1
capped?	• CEO – 110% of TFR;
	• COO – 90% of TFR; and
	• CFO – 70% of TFR.
	Only 50% is paid in cash.
18. Are distributions paid	No distributions are paid on unvested STI awards.	Section 3.1
on unvested STI	On vesting, each deferred STI right awarded entitles the relevant Executive to
awards?	receive one stapled security in RGN plus an additional number of stapled
	securities calculated on the basis of the distributions that would have been
	paid in respect of those stapled securities over the one-year STI deferral
	period.
19. Have any	No adjustments were made to the FY23 STI payments.	Section 3.3
adjustments, positive
or negative, been
made to the STI
payments?

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Region Group Remuneration Report For the year ended 30 June 2023

Long-Term Incentives (LTIs)

20. What are the

What are the FY23 LTI rights will be tested against two performance hurdles over a threeSections 3.1 performance year performance period followed by a one-year deferral (total vesting period and 3.5 measures that is four years). The performance hurdles are weighted as follows: determine if the

• Relative TSR against the ASX 200 A-REIT Accumulation Index (60% of

• LTI awards vest? grant); and

• • AFFOPS growth for the year to 30 June 2025 (40% of grant). These performance conditions were chosen as they are directly linked to RGN’s strategic objectives.

• Does the LTI have reNo, there is no re-testing. testing?

• Are distributions paid No distributions are paid on unvested LTI awards throughout the performance Section 3.1 on unvested LTI period. awards?

On vesting and exercise, however, each LTI right awarded entitles the relevant Executive to receive one stapled security in RGN plus an additional number of stapled securities calculated on the basis of the distributions that would have been paid in respect of those stapled securities since the grant date.

1. Is LTI grant quantum In the year of issue, LTI grant quantum is determined based on the face value based on “fair value” of RGN securities, calculated by dividing the intended LTI grant value by the or “face value”? volume-weighted average price of RGN securities for the five trading days following the release of the prior period’s full year results.

2. Does RGN buy RGN has issued new securities to satisfy security-based awards to date; securities or issue however, RGN may elect to buy securities in certain circumstances. new securities to satisfy securitybased awards?

Executive Agreements

1. What is the Termination payments will be managed differently in various termination Section 3.7 maximum an scenarios, depending upon whether the Executive ceases employment with or Executive can without cause. receive on termination?

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Region Group Remuneration Report For the year ended 30 June 2023

1.2 RGN’s Key Management Personnel

Key Management Personnel (KMP), as defined by AASB 124, refers to those people having authority and responsibility for planning, directing and controlling the activities of the consolidated entity, directly or indirectly, including any Director of an entity (whether Executive or otherwise) of the consolidated entity. KMP includes Directors of Region RE Limited and may include other Executives of RGN.

Name Position as at 30 June 2023	Name Position as at 30 June 2023	Board appointment date
Non-Executive Directors(NEDs)
Steven Crane Belinda Robson Beth Laughton Angus James Michael Herring Antoinette Milis	Chair – Board Chair – Nomination Committee Chair – Investment Committee Member – Remuneration Committee Member – Nomination Committee Chair – Audit, Risk Management and Compliance Committee Member – Remuneration Committee Member – Nomination Committee Chair – Remuneration Committee** Member – Investment Committee Member – Nomination Committee Member – Audit, Risk Management and Compliance Committee Member – Investment Committee Member – Nomination Committee Member – Audit, Risk Management and Compliance Committee Member – Investment Committee Member – Nomination Committee	13 December 2018 27 September 2012 13 December 2018 9 December 2021 18 August 2022 8 December 2022
Executive Directors
Anthony Mellowes Mark Fleming	Chief Executive Officer Member – Investment Committee Chief Operating Officer****	Appointed as Director from 2 October 2012 Appointed as Chief Executive Officer from 1 July 2013 Appointed as Director from 26 May 2015 Appointed as Chief Operating Officer from 1 September 2022
Other Executives
Evan Walsh	Chief Financial Officer Member – Investment Committee	Appointed as Chief Financial Officer from 12 December 2022

Philip Marcus Clark AO retired on 30 November 2022

• *Steven Crane became Chair of the Board effective 1 December 2022, replacing Philip Marcus Clark AO

• **Steven Crane became Chair of the Nomination Committee effective 18 August 2022, replacing Belinda Robson following her appointment from 1 July 2022

• *** Angus James became Chair of the Remuneration Committee effective 18 August 2022, replacing Steven Crane

• **** Mark Fleming was the Chief Financial Officer from 20 August 2013 to 1 September 2022

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Region Group Remuneration Report For the year ended 30 June 2023

1.3 Actual remuneration earned in respect of FY23

The table below sets out the actual value of remuneration earned by each Executive during FY23. The reason the figures in this table are different to those shown in the statutory remuneration table in Section 3.6 is because the latter table includes an apportioned accounting value for all STI and LTI equity grants (some of which remain subject to satisfaction of performance and service conditions and so may not ultimately vest).

The table below represents:

• Fixed remuneration including superannuation;

• Cash STI – the non-deferred portion of STI to be paid in September 2023 in recognition of performance during FY23; and

• Equity that vested during the year which relates to prior years’ awards. The value ascribed to this equity is based on the closing value on the day the equity vested. This value is not the same as the value used for financial reporting. The remaining 50% of the STI awarded for FY23 is not included in the table below, but will be issued as deferred rights in accordance with Section 3.1, subject to security holder approval at the AGM to be held in October 2023.

1.3.1 Actual Remuneration Earned in FY23

		Fixed
		remuneration		Deferred STI	Deferred STI	LTI vested
		including		equity	vested	equity	LTI vested	Other	Total
Executive	Financial	superannuation		number	equity value	number	equity	remuneration	remuneration
KMP	year	$1	Cash STI $2	securities3	$4	securities5	value $6	$	$7
Anthony	2023	1,078,738	406,407	186,843	502,608	40,234	108,229	-	2,095,982
Mellowes	2022	1,032,500	559,941	140,122	364,317	26,454	68,780	-	2,025,538
Mark	2023	754,250	232,560	89,727	241,366	18,418	49,544	-	1,277,720
Fleming	2022	709,750	280,043	67,931	176,621	12,109	31,483	-	1,197,897
Evan	2023	299,217	72,443	-	-	-	-	-	371,660
Walsh8	2022	-	-	-	-	-	-	-	-
Total	2023	2,132,205	711,410	276,570	743,974	58,652	157,773	-	3,745,362
	2022	1,742,250	839,984	208,053	540,938	38,563	100,263	-	3,223,435

1. Fixed remuneration comprises fixed remuneration including superannuation contributions.

2. Cash STI payments are paid in September after the end of the financial year to which they are attributed.

3. Deferred STI vested equity securities were issued on 24 August 2022 in respect of the financial year ending two years previously.

4. Value of STI is calculated by reference to the $2.69 closing price on the day of issue, which was 24 August 2022. For FY22 the closing price was $2.60 on the day of issue, which was 26 August 2021. This price does not represent the value for financial reporting.

5. LTI vested securities were issued on 24 August 2022 in respect of the plans issued in FY19. For the prior period, LTI vested securities were issued on 26 August 2021 in respect of plans issued in FY18.

6. The LTI vested value is calculated by reference to the $2.69 closing price on the day of issue, which was 24 August 2022. For FY22 the closing price was $2.60 on the day of issue, which was 26 August 2021. This price does not represent the value for financial reporting.

7. Total remuneration is made up of fixed remuneration including Superannuation plus cash STI, Deferred STI vested equity value and LTI vested equity value.

8. Mr Walsh’s actual remuneration earned in FY23 is pro-rated for the period on and from his commencement as CFO on 12 December 2022.

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Region Group Remuneration Report For the year ended 30 June 2023

2. Remuneration Approach

2.1 RGN’s remuneration framework

The Board believes that RGN’s remuneration framework should, through the alignment of security holder interests with those of a motivated and talented Executive, provide security holders with optimal value.

That remuneration framework is based on two key principles:

Fairly reward and motivate Executives having regard to the external market, individual contributions to RGN and overall performance of RGN.

• Total Remuneration Opportunity (TRO) (including fixed component) is regularly independently benchmarked against a peer group of comparable entities (reflecting size, complexity and structure) to ensure that Executive remuneration is aligned over time to market levels.

• The quantum and mix of each Executive’s TRO takes into account a range of factors including that Executive’s position and responsibilities, ability to impact achievement of RGN’s strategic objectives, RGN’s overall performance, and the desire to secure tenure of Executive talent.

• Fixed remuneration rewards Executives for performing their key responsibilities that are aligned to the Board - endorsed strategy to a high standard. This high standard includes stretch above target business performance.

Appropriately align the interests of Executives and Security holders.

• A meaningful portion of an Executive’s TRO is at-risk through performance-contingent incentive awards.

• The structure and metrics of incentive awards are tied directly to the achievement of an appropriate balance of short and long-term goals and objectives agreed in advance that provide Executives with appropriate stretch. Actual performance drives what Executives are paid.

• The Target and Maximum hurdles within each key performance indicator (KPI) are set each financial year and are designed to encourage strong to exceptional performance within RGN’s stated risk parameters.

• For the CEO, COO and the CFO, the majority of their at-risk pay is delivered through conditional and deferred rights to RGN securities.

• To encourage Executives to secure the long-term future of RGN, unvested incentive opportunities are retained by the Executive upon resignation or retirement unless the Board determines they should be forfeited.

• Performance-based remuneration opportunities are designed to ensure they do not encourage excessive risk taking or breaches of workplace health and safety, environmental or other regulations that may compromise RGN’s value and/or reputation. RGN considers key risk parameters to include maintaining levels of gearing within the preferred range, and remaining focused on owning and operating convenience-based shopping centres predominantly tenanted by non-discretionary retail.

• All incentives contain “malus” provisions permitting the Board to exercise its discretion to forfeit some or all of an Executive’s unvested rights in certain circumstances.

This framework is the same as prior years. The Committee and Board continue to benefit from discussions with key stakeholders and where appropriate will take these views into consideration when reviewing RGN’s remuneration strategy.

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Region Group Remuneration Report For the year ended 30 June 2023

2.2 Remuneration governance

Role of the Remuneration Committee

The Board of RGN (Board) has a Board Charter which sets out the objectives, responsibilities and framework for the - - operation of the Board. A copy of the Board Charter is available at https://regiongroup.au/about us/corporate governance/

The Board is accountable to security holders for RGN’s performance and for the proper management of RGN’s business and affairs.

To assist the Board in complying with its legal and regulatory compliance in connection with human resources and remuneration matters, the Board established a committee of non-executive directors, the Remuneration Committee, to oversee management activities in:

• Undertaking the appropriate performance management, succession planning and development activities and programs;

• Providing effective remuneration policies having regard to the creation of value for security holders and the external remuneration market;

• Complying with relevant legal and regulatory requirements and principles of good governance; and

• Reporting to security holders in line with required standards.

The Charter for the Remuneration Committee is reviewed by the Board annually and can be found at

• • https://regiongroup.au/about us/corporate governance/.

How remuneration decisions are made

Remuneration of all KMP is determined by the Board, acting on recommendations made by the Remuneration Committee.

The Board and the Remuneration Committee have absolute discretion when considering the awarding and vesting of STI and LTI opportunities to Executives. This discretion is to allow the Board to ensure remuneration amounts and structure are at all times appropriate and to prevent any unintended vesting of awards that would arise from a purely formulaic application of the metrics included as part of the STI and LTI opportunities. Also, where a formulaic application of the metrics is likely to produce a material and perverse remuneration outcome, or where it is in the best interests of security holders for the Board to do so, the Board may exercise its discretion in determining awards. The Board, Remuneration Committee and Executives progressively monitor RGN’s activities throughout the year that may produce a material and perverse remuneration outcome.

When assessing awards for Executives, the Committee seeks to reward material performance improvement in the period it was achieved where the Committee believes that Executives’ interests are aligned with security holders. The Committee will make appropriate adjustments to hurdles set for subsequent periods to reflect the award given, to ensure the same performance is not rewarded twice. Individual Executives do not participate in meetings where their own remuneration is being discussed by the Committee or Board. The CEO provides the Committee with his perspectives on fixed remuneration and STI and LTI performance outcomes for his direct and functional reports.

External advisers and independence

The Committee may seek external professional advice on any matter within its terms of reference.

During the year, the Committee engaged the services of Guerdon Associates and BDO to advise on various aspects of remuneration including:

• Remuneration benchmarking;

• Market trends;

• Compliance and disclosure;

• Stakeholder engagement; and

• Development of Minimum Security Holding Requirements Policy.

Guerdon Associates and BDO did not make any ‘remuneration recommendations’ (as defined in the Corporations Act 2001) in relation to any KMP during FY23.

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Region Group Remuneration Report For the year ended 30 June 2023

3. Executive Remuneration

3.1 How remuneration was structured in FY23

The RGN Executive remuneration structure comprised a combination of fixed remuneration plus performance or “at-risk” remuneration.

TFR – how does it work?

TFR provides a fixed level of income to recognise Executives for their level of responsibility, relative expertise and experience. It includes salary, superannuation, and other short-term benefits including Fringe Benefits Tax (FBT). The TFR package is paid in cash, superannuation contributions and other employee benefits provided on salary sacrifice.

The opportunity value for the at-risk components of remuneration is determined by reference to TFR, so RGN is conscious that any adjustments to TFR have flow-on impacts on potential STI and LTI awards. TFR is reviewed annually on 1 October, with no obligation to adjust.

Increases of 3.0% and 4.8% were made to TFR during the period for the CEO and COO, respectively. The new CFO was promoted into this role on 11 December 2022 at a higher TFR than his previous non-KMP role. The COO and new CFO’s remuneration was set following an external benchmarking exercise.

The Board believes that the FY23 remuneration structure is aligned with business strategy and security holder interests, and is appropriate to ensure Executive retention.

STIs – how does it work?

STIs – how does it work?
Purpose	The STI is designed to motivate and reward Executives for achieving or exceeding annual strategic
	objectives set for RGN over the short term and is aligned with value creation. STI recognises individual
	contributions to RGN’s performance.
Eligibility	All Executives are eligible to participate in FY23.
Instrument	50% of the actual STI award is delivered in cash, and 50% in the form of deferred rights to securities in RGN.
	The number of deferred rights granted to Executives is calculated by dividing the intended grant value by
	the volume weighted average price of RGN securities for the five trading days following the release of
	RGN’s FY23 full year results.
	On vesting, each deferred STI right entitles the relevant Executive to receive one stapled security in RGN
	plus an additional number of stapled securities calculated on the basis of the distributions that would have
	been paid in respect of those stapled securities had they been on issue over the period to exercise. The
	additional securities are calculated as the number of securities that would have been acquired if
	distributions as announced to the Australian Securities Exchange (ASX) during the exercise period had been
	paid and reinvested in securities, applying the formula set out in clause 3.3 of RGN’s Distribution
	Reinvestment Plan (DRP) (whether or not that plan is operative at the relevant time) assuming no discount.
	Fractions of stapled securities will be rounded down to the nearest whole number and no residual positive
	balance carried forward. No distributions accrue in respect of STI rights that lapse.
Awards	Specific quantifiable performance measures have been determined by the Board, based upon
	recommendations made by the Remuneration Committee. These performance criteria, and their
	weighting, reflect the FY23 strategic priorities for RGN as detailed in this Report.
	Award payout levels have been calibrated between Threshold (minimum expected performance), Target
	and Maximum (exceptional performance, which is significantly above agreed targets and guidance).
	Target is set at 75% of Maximum for the AFFOPS performance condition.
	Maximum STI opportunities for each Executive are as follows:
	 CEO – 110% of TFR;
	 COO – 90% of TFR; and
	 CFO – 70% of TFR.
	Awards can range from zero up to the maximum percentage stated above, based upon the level of
	performance against STI performance measures.

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Region Group Remuneration Report For the year ended 30 June 2023

Performance measures	Awards reflect the level of performance achieved	Awards reflect the level of performance achieved	Awards reflect the level of performance achieved	during the relevant financial year.	during the relevant financial year.	during the relevant financial year.	during the relevant financial year.
	Category	Measure		Weighting of total STI award		Rationale for usingmeasure
	Numeric	AFFOPS		40%		Focuses Executives on delivering AFFOPS, as well as active operational and capital management in the context of RGN’s adopted risk profile
	Numeric	Comparable NOI growth		30%		Focuses Executives on improving occupancy levels, maximising rental receipts, maximising leasing spreads and managing expenses
	Numeric	Carbon emissions reduction		10%		Focuses Executives on building longer term business resilience in managing our climate-related risks to support RGN’s commitment to achieve net zero carbon (scope 1 and 2 emissions) in our operations by FY30
	Strategic	Personal (factors include people management, structure and tools)		20%		Executives are assessed on factors judged as important for security holder value
Performance schedule – AFFOPS (All Executives)	% of relevant STI award that vests						Maximum 100%
	Threshold		50% of max		Target
	0%		50%		75%
	Zero payout until 50% of		Maximum reached
Performance schedule – Comparable NOI growth (All Executives)	% of relevant STI award that vests
	Threshold		Maximum
	0%		Vests on a straight-line basis between 0% at Threshold, and 100% at Maximum
Performance schedule – Carbon emissions reduction (All Executives)	% of relevant STI award that vests
	Threshold		Maximum
	0%		Vests on a straight-line basis between 0% at Threshold, and 100% at Maximum
Discretion	Where a formulaic application of the metrics is likely to produce a material and perverse remuneration outcome, or where it is in the best interests of security holders for the Board to do so, the Board may exercise its discretion in determining awards. The purpose of preserving this discretion is to allow the Board to ensure remuneration amounts and structure are at all times appropriate and to prevent any unintended vesting of awards that would arise from a purely formulaic application of the STI metrics. The Board chose not to exercise discretion to vary the FY23 STI payments.
Deferral	STI rights are subject to a one-year deferral. Refer to Section 1.1 for further information on the one-year deferral.
Termination/Forfeiture	If an Executive ceases employment by way of termination by RGN without cause, redundancy, diminution of responsibility, retirement, death or disability or other circumstances approved by the Board, the Executive retains unvested incentive opportunities to encourage the Executive to secure the long-term future of RGN. In the event of the Executive’s termination by RGN for cause prior to the end of the performance period, all STI unpaid and unvested incentive opportunities are forfeited.
Clawback	Consistent with good governance and to reinforce the importance of integrity and risk management in RGN’s Remuneration Framework, RGN’s incentive plan contains broadly framed malus provisions that allow the Board in its sole discretion to determine that all, or part, of any unvested incentive awards be forfeited in certain circumstances. These circumstances include, but are not limited to:  A material misstatement or omission in the Financial Statements of RGN;

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Region Group Remuneration Report For the year ended 30 June 2023

• If actions or inactions seriously damage RGN’s reputation or put RGN at significant risk;

• If AFFO is not maintained in the deferral period; and/or

• A material abnormal occurrence results in an unintended increase in the award.

• Hedging Participants are prohibited from hedging their unvested deferred rights.

LTIs – how does it work?

LTIs – how does it work?
Purpose	The LTI is aimed at aligning Executive and Security holder value while also providing a retention tool, as the LTI is intended to vest over time.
Eligibility	All Executives are eligible to participate in FY23.
Instrument	Each vested LTI right entitles the relevant Executive (or participant) to receive one stapled security in RGN plus an additional number of stapled securities calculated on the basis of the distributions that would have been paid in respect of those stapled securities over the period to exercise. The additional securities are calculated as the number of securities that would have been acquired if distributions as announced to the ASX during the exercise period had been paid and reinvested in securities, applying the formula set out in clause 3.3 of RGN’s DRP (whether or not that plan is operative at the relevant time) assuming no discount. Fractions of stapled securities will be rounded down to the nearest whole number and no residual positive balance carried forward. No distributions accrue in respect of LTI rights that lapse.
LTI performance rights granted in FY23	The number of performance rights granted to Executives in FY23 is as follows:  Anthony Mellowes – 462,683 LTI rights;  Mark Fleming – 269,666 LTI rights; and  Evan Walsh – 35,128 LTI rights. Note that due to Mr Walsh’s appointment part way through the period, his LTI opportunity is a percentage of his TFR in the role of the Head of Finance and Technology, and this number reflects the full FY23 LTI opportunity.
Grant price	The grant price has been calculated by dividing the relevant award opportunity by the volume-weighted average price of RGN securities on the ASX for the five trading days following the release of RGN’s 2022 full year results, being $2.8183.
Performance hurdles	Relative TSR(Tranche 1 – 60%)	AFFOPS(Tranche 2 – 40%)
	Measures RGN’s TSR performance over the Tranche 1 performance period (being from 1 October 2022 to 30 September 2025) relative to the TSR for the constituents of the ASX 200 A-REIT Accumulation Index over that same period.	This condition requires RGN’s AFFOPS growth for the year to 30 June 2025 to exceed a certain level as detailed below.

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Region Group Remuneration Report For the year ended 30 June 2023

Vesting schedule – Relative TSR		Position of RGN relative to ASX 200 A-REIT Accumulation Index	% of Tranche 1 LTI rights that vest
	At or below Threshold	Less than or equal to 50thpercentile	0%
	Between Threshold and Maximum	Between 50.1th percentile and 75th percentile	Vest on a straight-line basis between 50% at Threshold and 100% at Maximum
	Maximum	At or above 75th percentile	100%
Vesting Schedule – AFFOPS		AFFOPS growth for the year to 30 June 2025	% of Tranche 2 LTI rights that vest
	At or below Threshold	Less than or equal to 2.0% p.a.	0%
	Between Threshold and Maximum	Between 2.0% and 4.0% p.a.	Vest on a straight-line basis between 0% at Threshold and 100% at Maximum
	Maximum	At or above 4.0% p.a.	100%
Vesting/delivery	The performance rights can only be exercised if and when the performance conditions are achieved and vesting has occurred. The performance period is a three-year period, ending on the dates specified above. Any rights awarded then vest at the end of a further one-year deferral period ending on 30 June 2026, unless the Board exercises its discretion to forfeit the awarded rights under the malus provisions of the RGN Executive Incentive Plan Rules. Any rights that do not vest following testing of the performance conditions are forfeited.
Discretion	Where a formulaic application of the metrics is likely to produce a material and perverse remuneration outcome, or where it is in the best interests of security holders for the Board to do so, the Board may exercise its discretion in determining awards. The purpose of preserving this discretion is to allow the Board to ensure remuneration amounts and structure are appropriate and to prevent any unintended vesting of awards that would arise from a purely formulaic application of the LTI metrics.
Termination/forfeiture	If an Executive ceases employment by way of termination by RGN without cause, redundancy, diminution of responsibility, retirement, death or disability or other circumstances approved by the Board, the Executive retains unvested incentive opportunities to encourage Executives to secure the long-term future of RGN. All unvested LTI rights will lapse if the Executive is terminated by RGN for cause.
Clawback	Consistent with good governance and to reinforce the importance of integrity and risk management in RGN’s reward framework, each of RGN’s incentive plans contains broadly framed malus provisions that allow the Board in its sole discretion to determine that all, or part, of any unvested incentive awards be forfeited in certain circumstances. These circumstances include, but are not limited to:  A material misstatement or omission in the Financial Statements of RGN;  If actions or inactions seriously damage RGN’s reputation or put RGN at significant risk;  If AFFO is not maintained; and/or  A material abnormal occurrence results in an unintended increase in the award.
Hedging	Participants are prohibited from hedging their unvested performance rights.

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Region Group Remuneration Report For the year ended 30 June 2023

3.2 Executive remuneration at RGN

The Board believes that RGN’s remuneration structure, design and mix should align and motivate a talented Executive team with security holder interests.

RGN’s Executive remuneration is performance-based, equity-based and multi-year focused. The graph below sets out the FY23 remuneration structure and mix for each Executive at Maximum.

==> picture [488 x 226] intentionally omitted <==

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

9.6%
36.5% 34.5% 18.8%
18.8%
15.6%
16.7%
15.6%
16.7%
52.8%
30.1% 34.3%
CEO COO CFO1
Fixed Remuneration STI - Cash STI - Deferred equity LTI
- Equity- based
based
Performance-based Equity-based Performance-based Equity-based Performance
----- End of picture text -----

1. Note that Mr Walsh was appointed as CFO from 12 December 2022 and his LTI opportunity is a percentage of his TFR in the role of the Head of Finance and Technology.

3.3 FY23 STI outcomes

RGN’s financial performance directly affects STI award outcomes, as 80% of the Maximum STI opportunity for each Executive is based on the achievement of numerical performance conditions: AFFOPS, comparable NOI growth and carbon emissions reduction.

STI is awarded annually based on the achievement of the relevant performance conditions. The weighting of these performance conditions reflects RGN’s FY23 strategic drivers of reducing our carbon emissions, maximising AFFOPS and comparable NOI in an environment where retail was recovering following the heavy impacts of the COVID 19 pandemic in FY20 and FY21, and to a lesser extent in FY22. Each performance condition comprised stretch for Executives to ensure that “at-risk” reward is genuinely “at-risk”. The degree of stretch is carefully balanced with RGN’s risk appetite.

As noted in Section 1.1, the hurdles for the FY23 STI were modified from those used in FY22 to align with RGN’s FY23 strategic objectives and support the FY30 net zero (scope 1 and 2) target commitment. Details are set out in the table below:

FY22performance conditions			FY23performance conditions
AFFOPS Rent collection Acquisitions Leasing spreads Strategic (personal component)	50% 10% 10% 10% 20%		AFFOPS Comparable NOI growth Carbon emissions reduction Strategic (personal component)	40% 30% 10% 20%

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Region Group Remuneration Report For the year ended 30 June 2023

The Remuneration Committee assessed performance against each performance condition to determine STI vesting outcomes for FY23. The following table sets out RGN’s performance highlights, and the resulting STI outcomes:

Weighting	Measure	FY23 performance highlights
of total
STI award
40%	AFFOPS
	This condition rewards performance where AFFOPS as shown in RGN’s FY23	AFFOPS was 15.3 cents, representing no
	results released to the ASX exceeds specified levels.	change on FY22.
	The KPI was selected to continue to focus Executives on delivering AFFOPS	Performance was assessed at above
	following the historical impacts of COVID-19 on RGN, as well as active and	Threshold but below Target (as detailed in
	operational management in the context of RGN’s adopted risk profile. In	Section 3.1).
	setting the hurdles and metrics for this performance measure, the Board took
	into account the outlook for the rapidly changing macroeconomic
	environment and the potential adverse impact on RGN’s distributions
	This is a proxy for operating cash flow and drives distributions per security.
30%	Comparable NOI growth	Comparable NOI growth was assessed at
	This condition rewards performance where the growth (as a percentage) in	4.3%, which was above Threshold but
	property portfolio cash net operating income exceeds specific levels. In	below Maximum.
	setting the hurdles and metrics for this performance measure, the Board took
	into account the outlook for the rapidly changing macroeconomic
	environment and the potential adverse impact on RGN’s distributions.
10%	Carbon emissions reduction	Emissions reduction was assessed at 2,846
	This condition rewards performance where the CO2 reduction in scope 1 and 2	tonnes versus the FY20 baseline (on a like
	emissions exceed specified levels.	for like basis) which is above the
		Maximum.
	This KPI was selected to support RGN’s commitment to achieve net zero
	carbon (Scope 1 and 2 emissions) in our operations by FY30.
20%	Personal component
	The personal performance component assesses individual contributions	Performance was assessed at 15% on
	based on factors judged as important for adding value for each individual	account of achievements against targets
	Executive. While the factors assessed are common to Executives, the	set by the Board.
	expectations of each person will vary depending on the focus and
	accountabilities of their position. Therefore, the weighting of these factors may vary for each Executive. These factors include:	Six-monthly reviews are held with each Executive to evaluate and monitor performance against personal objectives.
	 (People) Maintaining an engaged workforce with a focus on embedding
	values across the business. Building a culture of recognition and
	promoting the development of RGN’s staff with succession paths in
	place for key roles.
	 (Structure) Implementing a new business model with an outsourced
	provider and having a senior leadership structure set up to support the
	ongoing partnership.
	 (Tools) Successful implementation of a new internal technology system
	to deliver on program and to budget

The following table shows the actual STI outcomes for each of the Executive KMP for FY23 which is expected to be paid in September 2023.

STI Outcomes(as at 30 June 2023)	STI Outcomes(as at 30 June 2023)	STI Outcomes(as at 30 June 2023)
STI max (% of Fixed Remuneration)	Actual STI (% max)	STI forfeited (% max)	Actual STI Cash (total) ($)
Anthony Mellowes 110.0%	68.0%	32.0%	406,407
Mark Fleming 90.0%	68.0%	32.0%	232,560
Evan Walsh 70.0%	68.0%	32.0%	72,443

Actual STI Cash represents 50% of the Actual STI awarded for FY23. The remaining 50% of the Actual STI awarded for FY23 will be issued as deferred rights in accordance with Section 3.1, subject to security holder approval at the 2023 AGM.

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Region Group Remuneration Report For the year ended 30 June 2023

3.4 Past financial performance

The following tables set out summary information about the Group’s earnings and net tangible assets per stapled security and ASX price for the last five complete financial years.

3.4.1 Past Financial performance

	FY23	FY22	FY21	FY20	FY19
	Results	Results	Results	Results	Results
Statutory profit/(loss) (after tax)	($123.6m)	$487.1m	$462.9m	$85.5m	$109.6m
Statutory profit/(loss) (after tax) cents per security	(10.9)	44.0	43.0	8.9	12.6
FFO	$192.5m	$192.7m	$159.0m	$140.8m	$141.8m
FFO cents per security	16.94	17.40	14.76	14.65	16.33
AFFO	$173.9m	$169.5m	$135.8m	$124.3m	$127.4m
AFFO cents per security	15.30	15.30	12.61	12.94	14.67
Distributions paid and payable (cents per security)	15.20	15.20	12.40	12.50	14.70
Net tangible assets per security	$2.55	$2.81	$2.52	$2.22	$2.27
Security price (as at 30 June)	$2.27	$2.75	$2.52	$2.18	$2.39
Management Expense Ratio (MER) %	0.38%	0.38%	0.41%	0.38%	0.37%

3.5 LTI grants in FY23

The following table presents the LTI grants to Executives made during FY23 that are due to vest on 1 July 2026, subject to performance conditions. The maximum total value of the LTI grants is based on the estimated fair value calculated at the time of the grant and amortised in accordance with the accounting standard requirements.

3.5.1 LTI Grants in FY23

2023	LTI max as % of fixed remuneration Performance measure	Number of performance rightsgranted1	Fair value per performance right($)3 Maximum total value of grant ($)
Anthony Mellowes	120% Relative TSR AFFOPS	277,610 185,073	1.17 324,804 2.34 433,071
Total		462,683	757,875
Mark Fleming	100% Relative TSR AFFOPS	161,800 107,866	1.17 189,306 2.34 252,406
Total		269,666	441,712
Evan Walsh2	30% Relative TSR AFFOPS	21,077 14,051	1.27 26,768 2.53 35,549
Total		35,128	62,317

1. The LTI maximum incentive was $1,303,980 for Mr Mellowes (120% of his TFR), $760,000 for Mr Fleming (100% of his TFR) and $99,000 for Mr Walsh (30% of his TFR in his previous role as Head of Finance and Technology). The number of performance rights granted has been calculated by dividing the LTI maximum incentive by the volume-weighted average price of RGN securities on the ASX for the five trading days following the release of RGN’s 2022 full year results, being $2.8183.

1. Due to Mr Walsh’s appointment part way through the year, his LTI opportunity is a percentage of his TFR in the role of the Head of Finance and Technology, and these numbers reflect the full FY23 LTI opportunity.

2. Mr Walsh’s fair value per performance right varies as his performance rights were issued on a different date.

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Region Group Remuneration Report For the year ended 30 June 2023

3.5.2 Performance right movements during the year

Type and eligibility	Vesting conditions1 Security price at grant date3	Grant date	Testing date	Vesting date	Maximum number of stapled securities or maximum value of securities to be issued4	Fair value at grant date3
STI (FY23) (Mr Mellowes)	Non-market $2.34	Sep-22	Jul-23	Jul-24	$597,658	$0.96 per $1.00
STI (FY23) (Mr Fleming)	Non-market $2.34	Sep-22	Jul-23	Jul-24	$342,000	$0.96 per $1.00
STI (FY23) (Mr Walsh)	Non-market $2.59	Dec-22	Jul-23	Jul-24	$106,534	$0.96 per $1.00
LTI (FY23 - FY25) (Tranche 1) (Mr Mellowes)	Relative TSR2 $2.34	Sep-22	Sep-25	Jul-26	277,610	$1.17 per security
LTI (FY23 - FY25) (Tranche 2) (Mr Mellowes)	Non-market $2.34	Sep-22	Jun-25	Jul-26	185,073	$2.34 per security
LTI (FY23 - FY25) (Tranche 1) (Mr Fleming)	Relative TSR2 $2.34	Sep-22	Sep-25	Jul-26	161,800	$1.17 per security
LTI (FY23 - FY25) (Tranche 2) (Mr Fleming)	Non-market $2.34	Sep-22	Jun-25	Jul-26	107,866	$2.34 per security
LTI (FY23 - FY25) (Tranche 1) (Mr Walsh)	Relative TSR2 $2.53	Sep-22	Sep-25	Jul-26	21,077	$1.27 per security
LTI (FY23 - FY25) (Tranche 2) (Mr Walsh)	Non-market $2.53	Sep-22	Jun-25	Jul-26	14,051	$2.53 per security

1. Service and non-market conditions include numeric and strategic targets along with a deferred vesting period.

2. Relative TSR is Relative Total Security Holder Return measured against the ASX 200 A-REIT Accumulation Index.

3. Mr. Walsh’s security price at grant date and fair value at grant date vary as his performance rights were issued on a different date.

4. Refer to 3.5.1 LTI Grants in FY23 Note 1 for the calculation of maximum number of stapled securities to be issued for LTIs.

The Group recognises the fair value at the grant date of equity-settled securities above as an employee benefit expense proportionally over the vesting period with a corresponding increase in equity. Fair value is measured at grant date using Monte-Carlo simulation and Binomial option pricing models where applicable, performed by an independent valuer, and models the future security price of the Group’s stapled securities.

Non-market vesting conditions are determined with reference to the underlying numeric or strategic performance measures to which they relate.

Key inputs to the pricing models include:

Volatility	26.0%
Distribution yield	6.5%1
Risk-free interest rate	3.8%

1. The distribution yield for Mr Walsh is 6.8% as his performance rights were issued on a different date.

32 |

Region Group Remuneration Report For the year ended 30 June 2023

3.6 Total remuneration earned in FY23

3.6.1 Potential remuneration granted at 30 June 2023

	Maximumpotential cash STI	Maximumpotential equity STI	Maximumpotential equity LTI
Executive	% of TFR2 $1 % of total potential rem	% of TFR $1 % of total potential rem	% of TFR $4 % of total potential rem
Anthony Mellowes, CEO	55% 597,658 20%	55%2 573,752 19%	120% 757,875 25%
Mark Fleming, COO	45% 342,000 18%	45%2 328,320 18%	100% 441,712 24%
Evan Walsh, CFO	35% 106,534 19%	35%2 102,273 18%	30%3 62,317 11%

1. STI incentives for the Executives are payable 50% in cash and 50% in equity. The difference between the cash and equity components is due to the fair valuation of the equity granted under AASB 2 Share based payments (AASB2).

2. In FY23, Mr Mellowes’ STI opportunity was 110% of his TFR, Mr Fleming’s STI opportunity was 90% of his TFR and Mr Walsh’s STI opportunity was 70% of his TFR. STI incentives for the Executives are payable 50% in cash and 50% in equity and the percentage maximum has been equally allocated between cash and equity.

3. Due to Mr Walsh’s appointment part way through the year, his LTI opportunity is a percentage of his TFR in the role of the Head of Finance and Technology.

4. Refer to Maximum total value of grant ($) at 3.5.1 LTI Grants. All of the LTI awarded in equity and the dollar values shown here represent the fair value under AASB 2 of equity instruments granted.

The following is the actual remuneration paid or accrued during the financial year to 30 June 2023 noting that share-based payments are accrued at fair value in line with AASB 2. Refer to Note 2 below.

3.6.2 Table of Executive remuneration paid or accrued

						Long
			Cash			service	Share-based
		Salary & fees1	bonus2	Total	Super	leave	payments3	Total
Executive		$	$	$	$	$	$	$
Anthony Mellowes, CEO	2023	1,051,238	406,407	1,457,645	27,500	22,404	915,235	2,422,784
	2022	1,005,000	559,941	1,564,941	27,500	28,795	850,742	2,471,978
Mark Fleming, COO	2023	727,216	232,560	959,776	27,034	17,288	474,502	1,478,600
	2022	682,250	280,043	962,293	27,500	19,531	416,920	1,426,244
Evan Walsh, CFO4	2023	286,571	72,443	359,014	12,646	11,584	56,375	439,619
	2022	-	-	-	-	-	-	-
Total	2023	2,065,025	711,410	2,776,435	67,180	51,276	1,446,112	4,341,003
	2022	1,687,250	839,984	2,527,234	55,000	48,326	1,267,662	3,898,222

1. Salary reviews take effect from 1 October.

2. The amount shown under “Cash bonus” refers to the amount that will be paid to Executives in September 2023 under the STI Plan for performance over the 2023 financial year.

3. The values for equity-based remuneration have been determined in accordance with AASB 2 and represent the current year amortisation of the fair value of rights over the vesting period adjusted for services and non-market vesting conditions. The share-based payments are made up of STI equity and LTI equity. Please refer to the following table for additional details of the share-based payments.

4. Mr Walsh’s remuneration paid or accrued is pro-rated for the period on and from his commencement as CFO on 12 December 2022.

The break-up of the amounts recognised for performance-based compensation relevant for the financial year ended

30 June 2023, including details of the share-based payments accrued in respect of the current year and prior-year plans using the valuation of equity in accordance with AASB 2, are presented below:

33 |

Region Group Remuneration Report For the year ended 30 June 2023

3.6.3 Performance-based component of actual remuneration in FY23

	Actual	cash STI	Actual equity STI	Actual equity LTI	Total equity STI and LTI
Executives	$	% of total rem	$ % of total rem	$ % of total rem	$
Anthony Mellowes, CEO Mark Fleming, COO Evan Walsh, CFO	406,407 232,560 72,443	19% 18% 19%	467,935 22% 249,973 20% 44,534 12%	447,300 21% 224,529 18% 11,841 3%	915,235 474,502 56,375

3.6.4 Equity holdings of Executives

Executives	Held at 1 July 2022 Vested during year	Changes during the period	Held at 30 June 2023	Number of unvested rights as at 30 June 2023	Total interest in RGN securities
Anthony Mellowes, CEO	1,000,000 227,077	2,333	1,229,410	1,957,394	3,186,804
Mark Fleming, COO	338,779 108,145	(56,924)	390,000	1,008,569	1,398,569
Evan Walsh, CFO	- -	-	-	70,003	70,003

3.7 Service agreements for Executive KMP

There were no changes to the service agreements for Executives in FY23. Mr Walsh’s service agreement was varied in December 2022 to reflect his new role and change in duties.

Each Executive has a formal contract, known as a “service agreement”. These agreements are of a continuing nature and have no set term of service (subject to the termination provisions).

The key terms of the service agreements for the Executives are summarised as follows:

Executive Director, Chief Executive Officer: Anthony Mellowes

Contract duration	Commenced 1 July 2013, open ended
TFR as at 30 June 2023	$1,086,650. Includes salary, superannuation and other salary sacrifice employee benefits.
Review of TFR	Reviewed annually, effective from 1 October with no obligation to adjust.
Variable remuneration eligibility	The CEO is eligible to participate in RGNs plans for performance-based remuneration, and in FY23
	that included:
	 FY23 STI: Maximum opportunity:
	110% of TFR
	 FY23 LTI: Maximum opportunity:
	120% of TFR
Non-competeperiod	Up to 12 months
Non-solicitationperiod	Up to 12 months
Notice byRGN	9 months
Notice byExecutive	9 months
Termination payments to	Maximum benefit from termination payment and payment in lieu of notice is 12 months based on
compensate for non-	prior-year fixed and variable remuneration.
solicitation/non-compete clause in
certain circumstances

34 |

Region Group Remuneration Report For the year ended 30 June 2023

Executive Director, Chief Operating Officer and Head of Funds Management and Strategy: Mark Fleming

Contract duration	Commenced 20 August 2013, open ended
TFR as at 30 June 2023	$760,000. Includes salary, superannuation and other salary sacrifice employee benefits and other
	short-term benefits.
Review of TFR	Reviewed annually, effective from 1 October with no obligation to adjust.
Variable remuneration eligibility	The COO is eligible to participate in RGN’s plans for performance-based remuneration, and in FY23
	that included:
	 FY23 STI: Maximum opportunity:
	90% of TFR
	 FY23 LTI: Maximum opportunity:
	100% of TFR
Non-competeperiod	6 months
Non-solicitationperiod	6 months
Notice byRGN	6 months
Notice byExecutive	3 months
Termination payments to	Maximum benefit from termination payment and payment in lieu of notice is 6 months based on
compensate for non-	prior-year fixed and variable remuneration.
solicitation/non-compete clause in
certain circumstances

Chief Financial Officer: Evan Walsh

Contract duration	Commenced 11 December 2022, open ended
TFR as at 30 June 2023	$550,000. Includes salary, superannuation and other salary sacrifice employee benefits.
Review of TFR	Reviewed annually, effective from 1 October with no obligation to adjust.
Variable remuneration eligibility	The CFO is eligible to participate in RGN’s plans for performance-based remuneration, and in FY23
	that included:
	 FY23 STI: Maximum opportunity:
	70% of TFR
	 FY23 LTI: Maximum opportunity:
	30% of TFR*
Non-competeperiod	4 months
Non-solicitationperiod	4 months
Notice byRGN	6 months
Notice byExecutive	6 months
Termination payments to	Maximum benefit from termination payment and payment in lieu of notice is 6 months based on
compensate for non-	prior-year fixed and variable remuneration.
solicitation/non-compete clause in
certain circumstances

*Note that due to Mr Walsh’s appointment part way through the period, his LTI opportunity is a percentage of his TFR in the role of the Head of Finance and Technology. His FY24 LTI opportunity will be a percentage of his TFR in the role of CFO (and subject to any TFR review effective on 1 October 2023).

35 |

Region Group Remuneration Report For the year ended 30 June 2023

Termination provisions

The following illustrates how termination payments will be managed in various termination scenarios.

Notice period, non-compete/ non-solicitation	RGN can elect to make a payment of TFR in lieu of the notice period by RGN or the Executive, as applicable. At the Board’s discretion, an additional termination benefit may be made to acknowledge any post- termination non-compete/non-solicitation agreements made with the Executive. The combined total cash benefit arising from these termination payments (excluding statutory entitlements) is capped at 12 months based on prior-year fixed and variable remuneration, subject to the provisions of sections 200B–200E of the Corporations Act 2001 (Cth) to the extent those provisions apply in the relevant circumstances.
STI and LTI awards	If an Executive ceases employment by way of termination by RGN without cause, redundancy, diminution of responsibility, retirement, death or disability or other circumstances approved by the Board, the Executive retains unvested or unpaid incentive opportunities to encourage Management to secure the long-term future of RGN. All unvested or unpaid incentive opportunities will lapse if the Executive is terminated by RGN for cause.
Board discretion	The Board has full discretion to amend any of the above termination arrangements to acknowledge exceptional circumstances and determine appropriate alternative vesting outcomes that are consistent, fair and reasonable, and balance multiple stakeholder interests. The Board acknowledges that, consistent with its approach to voluntarily adopt certain corporate governance obligations not otherwise applicable to RGN given its structure, security holder approval will be sought where termination payments exceed the limits prescribed by the Corporations Act.
Change of control	In the event of a change of control in RGN before the vesting date of any equity, the Board reserves the right to exercise its discretion for early vesting of the equity. In exercising its discretion, the Board may take account of the extent to which performance conditions have or have not been met and the portion of the vesting period that has elapsed at the relevant date.

4. Non-Executive Director Remuneration

4.1 Board remuneration strategy

RGN aims to attract and retain a high calibre of Non-Executive Directors (NEDs) who are equipped with diverse skills to govern the organisation and oversee Management so as to achieve value for RGN security holders. RGN aims to fairly remunerate Directors for their responsibilities relative to organisations of similar size and complexity.

The maximum aggregate fee pool available to NEDs was increased to $1,600,000 p.a. following security holder approval at the 2022 AGM. This is the first time it has been increased from the level set when RGN listed in 2012, being $1,300,000 p.a.

NED base and committee fees were increased by 2.5% from 1 January 2023.

Total NED remuneration payable in FY23 was $1,199,770, up from $998,128 in FY22 due to the timing of Philip Clark’s retirement in November 2022, and the appointment of Michael Herring in August 2022 and Antoinette Milis in December 2022.

The schedule of fees for NEDs for financial years is set out in the table below.

36 |

Region Group Remuneration Report For the year ended 30 June 2023

4.2 Total remuneration for Non-Executive Directors

Non-Executive Director Board and Committee Fees

Board	ARMCC	Remuneration	Investment	Nomination1
2022 2023	2022 2023	2022 2023	2022 2023	2022 2023
Chair $346,478 $355,140 Member $133,456 $136,793	$25,313 $25,945 $15,188 $15,567	$25,313 $25,945 $15,188 $15,567	$25,313 $25,945 $15,188 $15,567	$15,188 - - -

1. The Nomination Committee no longer attracts fees.

Total remuneration for Non-Executive Directors

Non-Executive Director	Financial year Director fees $ Superannuation $ Committee fees $ Total $
Philip Clark AO	2023 134,270 11,878 - 146,148
	2022 322,910 23,568 - 346,478
Steven Crane	2023 244,512 21,292 4,948 270,752
	2022 117,642 15,814 40,500 173,956
Dr Kirstin Ferguson	2023 - - - -
	2022 14,987 2,081 5,827 22,895
Michael Herring	2023 108,119 13,936 24,608 146,663
	2022 - - - -
Angus James	2023 123,794 18,110 48,683 190,587
	2022 67,669 8,501 17,337 93,507
Beth Laughton	2023 123,794 16,943 37,568 178,305
	2022 117,642 15,814 40,500 173,956
Antoinette Milis	2023 70,656 8,263 8,041 86,960
	2022 - - - -
Belinda Robson	2023 123,794 17,138 39,423 180,355
	2022 116,425 17,031 53,880 187,336
Total	2023 928,939 107,560 163,271 1,199,770
	2022 757,275 82,809 158,044 998,128

4.3 Non-Executive Director security holdings

Non-Executive Director Held as at 30 June 2022	Changes during theyear	Held as at 30 June 2023
Philip Clark AO1 180,000	(180,000)	-
Steven Crane 200,000	50,000	250,000
Michael Herring -	70,000	70,000
Angus James 61,500	34,436	95,936
Beth Laughton 31,937	24,058	55,995
Antoinette Milis -	27,837	27,837
Belinda Robson 62,495	-	62,495

1. Phillip Clarke retired and ceased to be a Director on 30 November 2022 and therefore the number of stapled securities are shown as nil.

37 |

Region Group Remuneration Report For the year ended 30 June 2023

5. Additional Information

5.1 FY24 Strategy

FY24 STI

The Board has reviewed the STI metrics in line with the current economic environment as it relates to RGN’s portfolio. Consistent with RGN’s FY24 strategic objectives, the FY24 STI performance conditions are as follows:

• AFFOPS – 40%;

• Comparable NOI growth – 30%;

• Carbon emissions reduction – 10%; and

• Personal – 20%.

As Directors of Region RE Limited, securities may only be acquired under the incentive plan by Mr Mellowes and Mr Fleming (instead of their equivalent cash value at the time of vesting) if Security holders approve the issue. Any securities granted to Mr Mellowes, Mr Fleming and Mr Walsh will be deferred for one year consistent with FY23.

FY24 LTI

The ranges below are designed as stretch targets for strong to exceptional performance. They do not represent the Executives’ or the Board’s forecasts, and nor should they be taken as guidance as to likely or potential future outcomes.

The LTI rights are subject to a four-year vesting period comprising a three-year forward-looking performance period and a one-year deferral period (together the “vesting period”). Any rights that do not vest following testing of the performance conditions are forfeited.

The LTI rights that meet the performance hurdles will vest in one instalment on or about 1 July 2027, being four years from the commencement of the performance period.

The performance conditions for the FY24 LTI are as follows:

Relative TSR performance condition – weighting 60% (Relative TSR Tranche)

Subject to satisfaction of the performance conditions, the Relative TSR Tranche will vest on the following basis:

	Position of RGN relative to ASX	% of Tranche 1	% of total
	200 A-REIT Accumulation Index	LTI rights that vest	LTI rights that vest
At or below Threshold	Less than or equal to 50th	0%	0%
	percentile
Between Threshold	Between 50.1th percentile and	Vest on a straight-line basis	Vest on a straight-line basis
and Maximum	75th percentile	between 50% at Threshold and	between 0% at Threshold and
		100% at Maximum	60% at Maximum
Maximum	At or above 75th percentile	100%	60%

AFFOPS performance condition – weighting 40% (AFFOPS Tranche)

The FY24 “base point” for measuring the rate of AFFOPS growth is 13.7 cents per security. The Board may at its absolute discretion adjust the AFFOPS achieved (for the purpose of measurement) to remove abnormal items not affected by Management. Subject to satisfaction of the performance conditions, the AFFOPS Tranche will vest on the following basis:

	AFFOPS growth for the	% of Tranche 2	% of total
	year to 30 June 2026	LTI rights that vest	LTI rights that vest
At or below Threshold	Less than or equal to	0%	0%
	3.0% p.a.
Between Threshold	Between 3.0% and	Vest on a straight-line basis	Vest on a straight-line basis
and Maximum	5.0% p.a.	between 0% at Threshold and	between 0% at Threshold and 40%
		100% at Maximum	at Maximum
Maximum	At or above 5.0% p.a.	100%	40%

38 |

Region Group Remuneration Report For the year ended 30 June 2023

Signed pursuant to a resolution of Directors.

==> picture [66 x 30] intentionally omitted <==

Steven Crane Chair, Region Group

5.2 Rounding of amounts

The amounts in the Remuneration Report have been rounded to the nearest dollar, unless otherwise indicated.

5.3 Definitions

AFFOmeans Adjusted Funds from Operations as set out on page 7 of the Directors’ Report.	KPImeans key performance indicator
AFFOPSmeans Adjusted Funds from Operations Per Security	LTImeans Long-Term Incentive
ARMCCmeans Audit, Risk Management and Compliance Committee	MERmeans Management Expense Ratio
Cash NOImeans cash property net operating income	MSRPmeans Minimum Security Holding Requirements Policy
CEOmeans Chief Executive Officer	NEDsmeans Non-Executive Directors
CFOmeans Chief Financial Officer	NOImeans net operating income
CPSmeans centsper security	NTAmeans net tangible assets
DRPmeans Distribution Reinvestment Plan	STImeans Short-Term Incentive
FBTmeans Fringe Benefits Tax	TFRmeans total fixed remuneration
FFOmeans Funds from Operations	TROmeans total remuneration opportunity
FFOPSmeans Funds from Operationsper Security	TSRmeans total securityholder return
KMPmeans Key Management Personnel

39 |

Deloitte Touche Tohmatsu A.B.N. 74 490 121 060

Quay Quarter Tower 50 Bridge Street Sydney NSW 2000

==> picture [132 x 25] intentionally omitted <==

Tel: +61 (0) 2 9322 7000 www.deloitte.com.au

The Board of Directors Region RE Limited as Responsible Entity for Region Management Trust and Region Retail Trust Level 5, 50 Pitt Street, Sydney NSW 2000

14 August 2023

Dear Directors,

Region Management Trust and Region Retail Trust

In accordance with section 307C of the Corporations Act 2001 , I am pleased to provide the following declaration of independence to the directors of Region RE Limited as Responsible Entity for Region Management Trust and Region Retail Trust.

As lead audit partner for the audit of the financial statements of Region Management Trust and Region Retail Trust for the year ended 30 June 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• (ii) any applicable code of professional conduct in relation to the audit.

Yours faithfully

==> picture [176 x 36] intentionally omitted <==

DELOITTE TOUCHE TOHMATSU

Yvonne Van Wijk

Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Asia Pacific Limited and the Deloitte organisation.

40

Region Group Consolidated Statements of Comprehensive Income For the year ended 30 June 2023

		Region Group	Region Group	Retail Trust
		30 Jun 2023	30 Jun 2022	30 Jun 2023 $m 30 Jun 2022 $m
	Notes	$m	$m
Income Rental income Recoveries and recharge income Funds management income Distribution income Insurance income Expenses Property expenses Corporate expenses Technology project expenses Other expenses Interest income Finance expenses Unrealised gain/(loss) including change in fair value through proft or loss - Investment properties - Derivatives - Foreign exchange - Share from associates Net proft/(loss) before tax Tax Net proft/(loss) after tax Other comprehensive income/(loss) Items that will not be reclassified subsequently to profit or loss Movement on revaluation of investment - fair value through other comprehensive income/(loss) Total comprehensive income/(loss) Net proft/(loss) after tax attributable to security holders of: Region Management Trust Region Retail Trust (non-controlling interest) Net proft/(loss) after tax Total comprehensive income/(loss) attributable to security holders of: Region Management Trust Region Retail Trust (non-controlling interest) Total comprehensive income/(loss) Distributions per security (cents) Weighted average number of securities used as the denominator in calculating basic earnings per security below Basic earnings/(loss) per security (cents) Weighted average number of securities used as the denominator in calculating diluted earnings per security below Diluted earnings/(loss) per security (cents) Basic earnings per security (cents) Region Management Trust Diluted earnings per security (cents) Region Management Trust	A1 A1 C3 B1 C2 B2 D1 A2 A3 A3 A3 A3	316.7 45.9 2.6 0.9 11.0	304.4 40.8 1.2 1.7 2.2 350.3 (117.4) (18.7) (1.1) 213.1 (7.0) - (35.9) 354.0 0.5 (36.3) (0.9) 487.5 (0.4) 487.1 (0.2) 486.9 0.1 487.0 487.1 0.1 486.8 486.9 15.20 1,107.7 44.00 1,112.9 43.80 - -	316.7 304.4 45.9 40.8 - - 0.9 1.7 11.0 2.2
		377.1 (124.6) (18.8) (3.4)		374.5 349.1 (124.6) (117.4) (18.0) (18.0) (3.4) (1.1)
		230.3 (1.4) 0.5 (49.1) (264.1) (23.2) (13.7) (2.4)		228.5 212.6 (1.4) (7.0) 0.5 - (49.1) (35.9) (264.1) 354.0 (23.2) 0.5 (13.7) (36.3) (2.4) (0.9)
		(123.1) (0.5)		(124.9) 487.0 - -
		(123.6)		(124.9) 487.0
		1.2		1.2 (0.2)
		(122.4)		(123.7) 486.8
		1.3 (124.9)		15.20 15.20 1,136.6 1,107.1 (10.99) 44.00 1,136.6 1,112.9 (10.99) 43.80
		(123.6)
		1.3 (123.7)
		(122.4)
		15.20 1,136.6 (10.87) 1,136.6 (10.87) 0.12 0.12

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

41 |

Region Group Consolidated Balance Sheets

For the year ended 30 June 2023

	Region Group	Retail Trust
Notes	30 Jun 2023 30 Jun 2022	30 Jun 2023 30 Jun 2022
	$m $m	$m $m
Current assets Cash and cash equivalents Receivables D1 Derivative fnancial instruments C4 Investment in CQR B3 Other assets D1 Total current assets Non-current assets Investment properties B1 Derivative fnancial instruments C4 Investment in associates B2 Other assets D1 Total non-current assets Total assets Current liabilities Interest bearing liabilities C2 Trade and other payables D1 Distribution payable A2 Derivative fnancial instruments C4 Provisions Total current liabilities Non-current liabilities Interest bearing liabilities C2 Provisions Other liabilities D1 Total non-current liabilities Total liabilities Net assets	23.8 8.7 46.4 43.3 8.1 9.1 - 25.6 8.1 14.0 86.4 100.7 4,411.6 4,460.9 84.7 102.3 28.5 24.6 10.8 6.5 4,535.6 4,594.3 4,622.0 4,695.0 225.0 - 57.6 78.9 88.5 89.3 7.8 3.2 5.0 5.4 383.9 176.8 1,298.4 1,376.4 0.1 0.7 11.6 7.2 1,310.1 1,384.3 1,694.0 1,561.1 2,928.0 3,133.9	22.6 6.7 45.9 39.2 8.1 9.1 - 25.6 7.2 13.2
		83.8 93.8
		4,411.6 4,460.9 84.7 102.3 28.5 24.6 5.7 5.7
		4,530.5 4,593.5
		4,614.3 4,687.3
		225.0 - 73.5 89.1 88.5 89.3 7.8 3.2 - 0.5
		394.8 182.1
		1,298.4 1,376.4 - - 6.6 6.5
		1,305.0 1,382.9
		1,699.8 1,565.0
		2,914.5 3,122.3
Equity Contributed equity C5 Reserves C5 Accumulated proft C5 Non-controlling interest Total equity	10.8 10.2 - - 2.7 1.4 2,914.5 3,122.3 2,928.0 3,133.9	2,156.3 2,070.1 11.9 8.4 746.3 1,043.8 - -
		2,914.5 3,122.3

The above Consolidated Balance Sheets should be read in conjunction with the accompanying notes.

42 |

Region Group Consolidated Statements of Changes in Equity For the year ended 30 June 2023

		Region Group
		Contributed equity $m Accumulated proft/(loss) $m Attributable to owners of parent $m Non- controlling interests $m Total equity $m
	Notes
Balance at 1 July 2022 Net proft/(loss) after tax for the period Other comprehensive income for the period, net of tax Total comprehensive income/(loss) for the period Transactions with security holders in their capacity as equity holders: Equity issued Costs associated with equity raising Employee share based payments Distributions paid and payable Balance at 30 June 2023	C5 C5 C5 C5 A2	10.2 1.4 11.6 3,122.3 3,133.9
		- 1.3 1.3 (124.9) (123.6) - - - 1.2 1.2
		- 1.3 1.3 (123.7) (122.4)
		0.7 - 0.7 86.2 86.9 (0.1) - (0.1) - (0.1) - - - 3.1 3.1 - - - (173.4) (173.4)
		0.6 - 0.6 (84.1) (83.5)
		10.8 2.7 13.5 2,914.5 2,928.0
Balance at 1 July 2021 Net proft after tax for the period Other comprehensive income for the period, net of tax Total comprehensive income for the period Transactions with security holders in their capacity as equity holders: Equity issued Costs associated with equity raising Employee share based payments Distributions paid and payable Balance at 30 June 2022	C5 C5 C5 C5 A2
		10.2 1.3 11.5 2,713.3 2,724.8
		- 0.1 0.1 487.0 487.1 - - - (0.2) (0.2)
		- 0.1 0.1 486.8 486.9
		- - - 89.9 89.9 - - - (0.1) (0.1) - - - 1.6 1.6 - - - (169.2) (169.2)
		- - - (77.8) (77.8)
		10.2 1.4 11.6 3,122.3 3,133.9

43 |

Region Group Consolidated Statements of Changes in Equity For the year ended 30 June 2023

		Retail Trust	Retail Trust
		Reserves
Note	Contributed equity $m	Investment in CQR $m	Share	Accumulated proft/(loss) $m	Total equity $m
			based
			payments
			$m
Balance at 1 July 2022 Net loss after tax for the period Other comprehensive income for the period, net of tax C5 Total comprehensive income/(loss) for the period Transactions with security holders in their capacity as equity holders: Equity issued C5 Costs associated with equity raising C5 Employee share based payments C5 Other Distributions paid and payable A2 Balance at 30 June 2023	2,070.1	(0.4)	8.8	1,043.8	3,122.3
	- -	- 1.2	- -	(124.9) -	(124.9) 1.2
	-	1.2	-	(124.9)	(123.7)
	86.2 - - - -	- - - (0.8) -	- - 3.1 -	- - - 0.8 (173.4)	86.2 - 3.1 - (173.4)
	86.2	-	3.1	(172.6)	(84.1)
	2,156.3	-	11.9	746.3	2,914.5
Balance at 1 July 2021 Net proft after tax for the period Other comprehensive income for the period, net of tax Total comprehensive income for the period Transactions with security holders in their capacity as equity holders: Equity issued C5 Costs associated with equity raising C5 Employee share based payments C5 Distributions paid and payable A2 Balance at 30 June 2022
	1,980.3	(0.2)	7.2	726.0	2,713.3
	- -	- (0.2)	- -	487.0 -	487.0 (0.2)
	-	(0.2)	-	487.0	486.8
	89.9 (0.1) - -	- - - -	- - 1.6 -	- - - (169.2)	89.9 (0.1) 1.6 (169.2)
	89.8	-	1.6	(169.2)	(77.8)
	2,070.1	(0.4)	8.8	1,043.8	3,122.3

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

44 |

Region Group Consolidated Statements of Cash Flows

For the year ended 30 June 2023

		Region Group	Region Group		Retail Trust
		30 Jun 2023	30 Jun 2022		30 Jun 2023 $m 30 Jun 2022 $m
	Notes	$m	$m
Cash fows from operating activities Property and other income received Insurance proceeds Property expenses paid Distribution received from associates Distribution received from investment in CQR Corporate expenses paid Interest received Finance expenses paid Other expenses paid Taxes and GST paid Net cash fow from operating activities Cash fows from investing activities Payments for investment properties purchased and capital expenditure Proceeds from investment properties sold Proceeds from investment in CQR sold Investment in associates Return of capital from investment in associates Net cash fow from investing activities Cash fow from fnancing activities Proceeds from equity raising Costs associated with equity raising Proceeds from borrowings Repayment of borrowings Distributions paid Net cash fow from fnancing activities Net change in cash held Cash at the beginning of the year Cash at the end of the year	B2 D2 B1 B1 B3 B2 B2 C5 C5 C2 C2 A2	411.7 11.0 (151.8) - 1.7 (20.8) 0.5 (48.5) (3.2) (23.8)	385.4 2.2 (131.9) 0.4 1.7 (15.2) - (35.0) (2.8) (25.4)		409.3 384.6 11.0 2.2 (151.8) (131.9) - 0.4 1.7 1.7 (18.5) (13.5) 0.5 - (48.5) (35.0) (3.2) (2.8) (22.3) (27.0)
		176.8	179.4		178.2 178.7
		(250.7) 23.1 26.7 (6.3) -	(421.8) 307.6 - (26.2) 10.6		(250.7) (421.8) 23.1 307.6 26.7 - (6.3) (26.2) - 10.6
		(207.2)	(129.8)		(207.2) (129.8)
		86.9 (0.1) 311.0 (178.0) (174.3)	89.9 (0.1) 654.0 (644.0) (152.3)		86.2 89.9 - (0.1) 311.0 654.0 (178.0) (644.0) (174.3) (152.3)
		45.5	(52.5)		44.9 (52.5)
		15.1 8.7	(2.9) 11.6		15.9 (3.6) 6.7 10.3
		23.8	8.7		22.6 6.7

The above Consolidated Statements of Cash Flows should be read in conjunction with the accompanying note

45 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

About this report

The Financial Statements of Region Group (the Group) comprise the Consolidated Financial Statements of the Region Management Trust (Management Trust) (ARSN 160 612 626) and its controlled entities including the Region Retail Trust (Retail Trust) (ARSN 160 612 788) (collectively the Trusts). The Financial Statements of the Retail Trust comprise solely of the Financial Statements of the Retail Trust as it has no controlled entities.

The notes to these Consolidated Financial Statements include additional information which is required to understand the operations, performance and financial position of the Group. They are organised in four key sections:

• Group performance — provides key metrics used to define financial performance

• Investment assets — explains the structure of the investment asset portfolio

• Capital structure — outlines how the Group manages its capital structure and various financial risks

• Other disclosure items — provides other information that is relevant in understanding the financial statements and that must be disclosed to comply with Australian Accounting Standards and other regulatory pronouncements

Group performance		Investment assets
A1 Income A2 Distributions paid and payable A3 Earnings per security		B1 Investment properties B2 Investment in associates B3 Investment in CQR
Capital structure		Other disclosure items
C1 Capital management C2 Interest bearing liabilities and liquidity C3 Finance expenses C4 Derivatives and other financial instruments C5 Contributed equity and reserves		D1 Working capital and other D2 Operating cash flow information D3 Related party information D4 Parent entity D5 Subsidiaries D6 Auditor’s remuneration D7 Contingent assets D8 Subsequent events D9 Corporate information D10 Other significant accounting policies

Critical accounting estimates

The preparation of the Consolidated Financial Statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. Management may also be required to make judgements, estimates and assumptions that affect the application of accounting policies and the reported assets, liabilities, income and expenses. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

The significant judgements and estimates used in the preparation of these Consolidated Financial Statements are:

• Fair value estimation — note B1 valuation of investment properties and note C4 valuation of financial instruments

46 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

Group performance

This section provides additional information on the key financial metrics used to define the results and performance of the Group including income, distributions paid and payable and earnings per security.

A1 Income

Rental income

Rental income with fixed annual rent increases is accounted for on a straight-line basis over the lease term. If not received at the balance sheet date, income is reflected in the balance sheet as a receivable.

Lease incentives provided by the Group are included in the measurement of fair value of investment property and are amortised against property income on a straight-line basis.

Undiscounted minimum lease payments to be received includes future amounts on non-cancellable operating leases are not recognised in the Consolidated Financial Statements at balance sheet date. This will be accounted for as property rental income as it is earned.

	Region Group & Retail Trust
	30 Jun 2023 $m 30 Jun 2022 $m
Within one year 1 - 2 years 2 – 3 years 3 – 4 years 4 – 5 years After five years Total undiscounted lease payments receivable	281.8 279.6 251.1 251.8 221.9 223.2 192.0 197.4 159.5 167.5 574.4 669.7
	1,680.7 1,789.2

Recoveries, recharge income and other income

The Group and Retail Trust recover costs associated with general building and tenancy operation from lessees in accordance with lease agreements as well as for any additional specific services requested by the lessee. Recoveries and recharges from tenants are recognised as income in the year the applicable costs are accrued as the customer simultaneously receives and consumes the benefit. These are invoiced periodically (typically monthly) based on an annual estimate and subsequently trued-up annually. Payment is due shortly after invoice date (typically 30 days).

All other income is recognised when control of the underlying goods or services are transferred to the customer over time or at a point in time. Income is recognised over time if:

• The customer simultaneously receives and consumes the benefits

• The customer controls the assets as the entity creates or enhances it, or

• The Group’s performance does not create an asset for which the Group has an alternative use and there is a right to payment for performance to date

Where the above criteria are not met, income is recognised at a point in time.

Funds management income

The Group provides funds management services to the SCA Metro Convenience Shopping Centre Fund (Metro Fund) in accordance with the Investment Management Agreement. These services are provided on an ongoing basis and income is calculated and billed periodically over time.

47 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

The Metro Fund is a wholesale fund that invests in retail properties. The Retail Trust has a 20.0% interest in the Metro Fund and a subsidiary of the Management Trust is the Manager of the Metro Fund. SCA Unlisted Retail Fund 3 (SURF 3) was wound up in the year ended 30 June 2022. Income earned on funds managed during the year is as follows.

	Region Group	Region Group
	30 Jun 2023 $m	30 Jun 2022 $m
SURF 3 Metro Fund	- 2.6	1.0 0.2
	2.6	1.2

Segment reporting

Segment information is presented on the same basis as that used for internal reporting purposes with the Group and Retail Trust operating within one segment being convenience-based retail centres located in Australia.

For the purposes of segment reporting, $99.9 million in rental income (30 June 2022: $104.7 million) was from Woolworths Limited and its affiliates. Further, $39.4 million in rental income (30 June 2022: $37.6 million) was from Coles Limited and its affiliates.

Insurance income

During the year $11.0 million has been received from insurers in relation to adverse weather events in the prior year, particularly flooding on the east coast of Australia, with Lismore Central Shopping Centre the most heavily impacted.

A2 Distributions paid and payable

Distributions are recognised in the reporting period in which they are declared, determined or publicly recommended by the Directors. Where such distributions have not been paid at reporting date they are recognised as a distribution payable.

	Cents per security	Total amount $m	Date of payment or expected date ofpayment
2023 Region Group& Retail Trust
Interim distribution Final distribution	7.50 7.70	84.9 88.5	31 January 2023 31 August 2023
	15.20	173.4
2022 Region Group& Retail Trust
Interim distribution Final distribution	7.20 8.00	79.9 89.3	31 January 2022 31 August 2022
	15.20	169.2

A3 Earnings per security

Basic earnings per security is calculated as profit after tax attributable to security holders divided by the weighted average number of ordinary securities issued.

Diluted earnings per security is calculated as profit after tax attributable to security holders divided by the weighted average number of ordinary securities and potential dilutive ordinary securities except in periods in which there is a loss because the inclusion of the potential ordinary securities would have an anti-dilutive effect.

48 |

Region Group Notes to the Consolidated Financial Statements

For the year ended 30 June 2023

	Region Group	Region Group	Retail Trust	Retail Trust	Management Trust	Management Trust
	30 Jun 2023	30 Jun 2022	30 Jun 2023	30 Jun 2022	30 Jun 2023	30 Jun 2022
Per stapled security Net profit/(loss) after tax for the period ($ million) Weighted average number of securities used as the denominator in calculating basic earnings per security below Basic earnings per security for net profit/(loss) after tax (cents) Weighted average number of securities used as the denominator in calculating diluted earnings per security below Diluted earnings per security for net profit/(loss) after tax (cents)	(123.6) 1,136,623,409 (10.9) 1,136,623,409 (10.9)	487.1 1,107,676,733 44.0 1,112,850,512 43.8	(124.9) 1,136,623,409 (11.0) 1,136,623,409 (11.0)	487.0 1,107,676,733 44.0 1,112,850,512 43.8	1.3 1,136,623,409 0.1 1,136,623,409 0.1	0.1 1,107,676,733 - 1,112,850,512 -

Investment assets

B1 Investment properties

Investment properties comprise interests in land and buildings held for long term rental yields and includes properties that are under development for future use as investment properties. At each reporting date, the carrying values of the investment properties are assessed by the Directors and the fair value is adjusted as appropriate.

Investment properties under development are classified as investment property and stated at fair value at each reporting date. Fair value is assessed with reference to reliable estimates of future cash flows, status of the development and the associated risk profile.

Incentives such as cash, rent-free periods, lessee or lessor owned fit outs may be provided to lessees to enter into an operating lease. Leasing fees may also be paid for the negotiation of leases. These incentives and leasing fees are capitalised to the investment property and are amortised on a straight-line basis over the lesser of the term of the lease and the useful life of the fit out, as a reduction of rental income. The carrying amounts of the lease incentives and leasing fees are reflected in the fair value of investment properties.

a) Reconciliation of carrying amount of the investment properties

	Region Group & Retail Trust	Region Group & Retail Trust
	30 Jun 2023 $m	30 Jun 2022 $m
Movement in total investment properties Opening balance Acquisitions at cost (including transaction expenses) Disposals Capital expenditure, rental straight-lining and amortisation Unrealised fair value movement recognised in total comprehensive income Closing balance	4,460.9 187.0 (23.5) 51.3 (264.1) 4,411.6	4,000.0 364.8 (307.6) 49.7 354.0
		4,460.9

49 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

Investment properties

Property State	Market Capitalisation rate1 Fair value
	30 Jun 23 30 Jun 22 30 Jun 23 30 Jun 22
	$m $m
Sub-Regional retail properties
Lavington Square NSW Marketown Shopping Centre - East NSW Marketplace Raymond Terrace NSW Sturt Mall NSW West End Plaza NSW Delacombe Town Centre VIC Lilydale Marketplace VIC Pakenham Central Marketplace VIC Central Highlands Marketplace QLD Mt Gambier Marketplace SA Murray Bridge Marketplace SA Kwinana Marketplace WA Warnbro Centre WA	6.50% 6.00% 71.3 78.7 6.13% 5.50% 76.5 85.3 6.00% 5.75% 87.2 87.5 6.25% 5.75% 83.3 85.0 6.25% 5.75% 80.6 84.4 5.50% 5.13% 106.8 112.2 6.25% 5.75% 114.9 119.9 6.25% 5.75% 92.0 98.3 7.00% 6.50% 69.5 71.5 6.27% 5.76% 77.7 81.1 6.75% 6.25% 64.8 69.0 6.75% 6.25% 146.2 154.5 6.75% 6.22% 104.0 110.0
Total sub-regional retail properties	6.35% 5.87% 1,174.8 1,237.4
Neighbourhood retail properties
Auburn Central NSW Belmont Central Shopping Centre NSW Cabarita Beach Shopping Centre NSW Cardiff Shopping Centre NSW Delroy Park Shopping Centre NSW Goonellabah Shopping Centre NSW Greystanes Shopping Centre NSW Griffin Plaza NSW Katoomba Marketplace NSW Lane Cove Market Square3 NSW Leura Shopping Centre NSW Lismore Central Shopping Centre NSW Macksville Shopping Centre NSW Marketown Shopping Centre - West NSW Moama Marketplace NSW Morisset Shopping Centre NSW Muswellbrook Fair NSW Northgate Tamworth Shopping Centre NSW North Orange Shopping Centre NSW The Waterfront Town Centre NSW Tura Beach Shopping Centre NSW Ulladulla Shopping Centre NSW Bentons Square VIC Drouin Central VIC East Warrnambool Shopping Centre VIC Langwarrin Plaza VIC Ocean Grove Marketplace VIC The Gateway Shopping Centre VIC Warrnambool Shopping Centre VIC White Box Rise VIC Wonthaggi Plaza VIC Annandale Central QLD Brassall Shopping Centre2 QLD Brookwater Village Shopping Centre QLD Burdekin Plaza QLD Bushland Beach Plaza QLD Carrara Shopping Centre4 QLD Chancellor Park Marketplace QLD Collingwood Park Shopping Centre QLD	5.75% 5.25% 125.5 137.5 6.00% 5.75% 28.9 29.3 5.50% 5.00% 26.7 28.0 5.25% 5.00% 30.2 32.5 5.50% 5.25% 22.9 23.0 5.50% 5.25% 26.1 24.0 5.25% 4.75% 74.2 79.5 6.00% 5.50% 31.8 34.6 5.00% 4.63% 60.2 65.0 5.25% 4.75% 59.7 66.5 5.00% 4.75% 23.1 23.5 6.50% 5.50% 29.8 29.8 5.00% 4.50% 20.7 20.7 5.25% 5.00% 72.0 71.7 5.25% 5.00% 21.8 22.7 5.50% 5.25% 23.8 24.1 5.50% 5.25% 43.7 41.2 5.75% 5.50% 21.2 21.1 4.75% 4.25% 51.5 56.0 4.75% 4.00% 55.9 65.0 5.25% 5.00% 24.7 24.6 5.00% 4.50% 36.0 36.8 5.25% 4.75% 113.4 118.0 5.00% 4.50% 21.9 23.7 5.00% 4.75% 20.6 20.8 5.25% 4.75% 29.5 31.0 5.75% 5.25% 42.3 44.0 5.50% 5.25% 70.7 69.5 7.50% 9.00% 16.0 12.8 5.25% 5.00% 29.4 29.4 5.50% 5.00% 57.0 60.7 6.25% 6.00% 30.6 32.0 5.75% - 46.3 - 6.25% 5.25% 36.0 42.0 6.00% 5.75% 25.1 25.4 6.00% 5.50% 26.0 26.5 - 4.75% - 23.0 5.25% 4.75% 57.1 57.5 5.25% 4.75% 15.3 15.9

50 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

Property State	Market Capitalisation rate1 Fair value
	30 Jun 23 30 Jun 22 30 Jun 23 30 Jun 22
	$m $m
Cooloola Cove Shopping Centre QLD Drayton Central Shopping Centre QLD Greenbank Shopping Centre QLD Jimboomba Junction Shopping Centre QLD Kirkwood Shopping Centre QLD Lillybrook Shopping Village QLD Marian Town Centre QLD Marketplace Warner QLD Miami One Shopping Centre QLD Mission Beach Marketplace QLD Moggill Village QLD Mt Isa Village QLD Mt Warren Park Shopping Centre QLD Mudgeeraba Market Shopping Centre QLD North Shore Village Shopping Centre QLD Ooralea Shopping Centre QLD Oxenford Village QLD Port Village Shopping Centre2 QLD Soda Factory West End QLD Sugarworld Shopping Centre QLD Whitsunday Shopping Centre QLD Woodford Shopping Centre QLD Worongary Town Centre QLD Blakes Crossing Shopping Centre SA Dernancourt Shopping Centre2 SA Fairview Green Shopping Centre2 SA Busselton Shopping Centre WA Currambine Central3 WA Kalamunda Central WA Stirlings Central WA Treendale Shopping Centre WA Tyne Square2 WA Burnie Plaza TAS Claremont Plaza TAS Glenorchy Central TAS Greenpoint Plaza TAS Kingston Plaza TAS Meadow Mews Plaza TAS New Town Plaza TAS Prospect Vale Marketplace TAS Riverside Plaza TAS Shoreline Plaza TAS Sorell Plaza TAS Bakewell Shopping Centre NT	5.50% 5.25% 17.8 18.5 5.75% 5.50% 30.2 32.9 5.50% 5.25% 35.3 36.8 6.00% 5.75% 30.9 32.7 6.00% 5.75% 27.0 29.0 6.00% 5.75% 29.2 30.6 6.25% 5.75% 42.2 44.0 5.48% 5.00% 84.9 90.6 6.00% 5.50% 31.8 34.2 5.75% 5.50% 13.8 15.1 5.25% 5.00% 51.0 53.4 7.00% 6.75% 48.4 47.4 5.75% 5.50% 18.0 20.4 5.50% 5.00% 44.1 46.0 5.25% 5.00% 34.2 35.5 6.00% 5.50% 29.5 31.2 5.25% 4.75% 46.0 48.5 6.25% - 35.7 - 6.00% 5.50% 44.0 47.0 6.25% 5.75% 27.2 27.3 6.75% 6.25% 38.6 41.0 5.38% 5.00% 17.4 17.9 5.50% 5.25% 55.8 55.8 5.50% 5.00% 30.0 32.4 5.50% - 41.6 - 6.25% - 33.1 - 5.50% 5.00% 30.4 31.9 6.50% 6.25% 88.0 106.2 5.75% 5.25% 52.1 52.8 6.50% 6.00% 44.0 47.0 5.75% 5.25% 36.5 38.7 5.75% - 12.3 - 6.25% 6.00% 30.6 30.0 5.75% 5.50% 51.5 51.5 6.00% 5.75% 29.3 30.9 6.00% 5.75% 22.5 24.0 5.75% 5.50% 35.8 35.0 5.75% 5.50% 77.5 78.5 5.75% 5.50% 56.7 55.3 6.00% 5.75% 38.3 36.0 5.25% 5.00% 14.6 13.7 5.75% 5.50% 43.7 46.5 5.75% 5.50% 35.7 37.2 6.00% 5.75% 52.0 50.8
Total neighbourhood retail properties	5.67% 5.27% 3,236.8 3,223.5
Total investment properties	5.85% 5.43% 4,411.6 4,460.9

1 Market capitalisation rate (Cap rate): the approximate return represented by income produced by an investment property, expressed as a percentage.

2 Properties acquired during the year.

3 The titles to Lane Cove Market Square and Currambine Central are leasehold. The expiries of the respective leaseholds are in 2059 (with a 49-year option) and in 2094.

4Property disposed during the year.

51 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

b) Valuation process

In accordance with the Group’s Valuation Policy, all properties are internally valued every June and December with a number being selected for external independent valuation (ensuring a representative sample) at each balance sheet date. Under the Policy, each property is externally valued at least every three years by a new, independent valuer. The properties selected for external valuation are chosen with consideration to a:

• Significant variation between the last carrying amount and internal valuation

• Major development project

• Significant market movement

• Significant change in circumstances at the property including a significant change in trading

The internal valuations are performed on a basis consistent with the methodology of the most recent external valuations. This includes using appropriate capitalisation rates, discount rates including terminal yields, comparable market evidence and recent external valuation parameters to produce a capitalisation based valuation and a discounted cash flow (DCF) valuation. The internal valuations are reviewed by management who recommends each property’s valuation to the Audit, Risk Management and Compliance Committee and the Board in accordance with the Group’s Valuation Policy.

Estimate – Valuation of investment properties

Critical judgements are made in respect of the fair value of investment properties, including properties under development. The fair value of these investments is reviewed regularly with reference to independent property valuations, recent transactions and market conditions existing at the reporting date, using generally accepted market practices.

The major critical assumptions underlying estimates of fair values are those relating to the market capitalisation rate and discount rate. Other assumptions that are typically of lesser importance include consideration of the property type, location and tenancy profile together with tenant sales and other matters such as market rents, current rents including possible rent reversion, lease expiry profile including vacancy, type of tenants, capital expenditure, sales growth of the centre and potential climate-related risk factors. If there is any change in these assumptions or economic conditions, the fair value of the investment properties may differ.

During the course of the year, there has been reduced transaction activity and the sentiment of buyers and sellers across some markets has been impacted. These factors have contributed to softer property valuations across all sectors. There may be further impact on valuations with a risk of continued market volatility and potential elevated debt costs.

c) Fair value measurement, valuation techniques and inputs

The key terms used in fair value measurement, valuation techniques and inputs have been defined here.

Term	Definition
Income capitalisation	A valuation approach that provides an indication of value by converting future cash
method	flows to a single current capital value
DCF method	A method in which a discount rate is applied to future expected income streams to
	estimate the present value
Market capitalisation rate or cap	The approximate return represented by income produced by an investment property, expressed
rate	as a percentage
Discount rate	A rate of return used to convert a future monetary sum or cash flow into present value
Net operating income	Rental income from contractual cash flows net of property operating expenses

52 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

The key inputs used to measure fair values of investment properties are disclosed below.

	Fair value hierarchy	Carrying value 30 Jun $m	Valuation method	Key inputs used to measure fair value Range of unobservable key inputs
2023	Level 3	4,411.6	Income capitalisation and DCF	Cap rate Discount rate 4.75% - 7.50% 5.25% - 8.00%
2022	Level 3	4,460.9	Income capitalisation and DCF	Cap rate Discount rate 4.00% - 9.00% 5.00% - 8.00%

All property investments are categorised as level 3 in the fair value hierarchy (refer note C4 for additional information in relation to the fair value hierarchy). There were no transfers between hierarchies.

Sensitivity information

A sensitivity analysis of the impact on the investment property valuations based on movements in the cap rate is disclosed below. While other factors do also impact a valuation, at the current time, the Group considers that the valuations are most sensitive to movements in the cap rate and net operating income.

Input	Fair value measurement sensitivity to significant increase in input	Fair value measurement sensitivity to significant decrease in input
Caprate	Decrease	Increase
Net operatingincome	Increase	Decrease

The following sensitivity analysis shows the effect on profit/loss after tax and on equity, at balance sheet date, of a 50 basis points (bps) increase/decrease in cap rates and a 5% increase/decrease in property net operating income respectively with all other variables held constant.

Sensitivity analysis – Valuation cap rate

30 June 2023	Profit/(loss) after tax and equity
Region Group& Retail Trust	50 bps increase 50 bps decrease
Investment properties ($m)	(347.4) 412.3

Sensitivity analysis – Valuation net operating income

30 June 2023	Profit/(loss) after tax and Equity
Region Group & Retail Trust	5% increase 5% decrease
Investment properties ($m)	220.6 (220.6)

B2 Investment in associates

Associates are entities over which the Group has significant influence but not control. Investments in associates are accounted for in the Consolidated Balance Sheet by using the equity method of accounting after initially being recognised at cost. Under the equity accounting method, the Group’s share of the associates’ post acquisition net profit after income tax expense is recognised in the Consolidated Statements of Comprehensive Income. Distributions received or receivable from associates are recognised as a reduction of the carrying amount of the investment.

Classification and carrying value of investments

Judgements are made in assessing whether an investee entity is controlled or subject to significant influence or joint control. These judgements include an assessment of the nature, extent and financial effects of the Group’s interest in joint arrangements and associates, including the nature and effects of its contractual relationship with the entity or with other investors. Associates are entities over which the Group has significant influence but not control.

53 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

The Group’s investment in associates at 30 June 2023 and 30 June 2022 relates to a 20.0% interest in the Metro Fund. The Group had an investment in the SCA Unlisted Retail Fund 3 (SURF 3) which was wound up in the year ended 30 June 2022.

	Region Group & Retail Trust
	30 Jun 2023 $m 30 Jun 2022 $m
Movement in investment in associates Opening balance Contribution to equity accounted investment Share of profit/(loss) after income tax Return of capital Distributions received or receivable Closing balance	24.6 10.1 6.3 26.2 (2.4) (0.9) - (10.6) - (0.2)
	28.5 24.6

B3 Investment in CQR

Investment in CQR relates to the Group and the Retail Trust’s interest in Charter Hall Retail Trust (ASX: CQR). During the year, the Group sold this investment for an average price of $3.94 each realising net proceeds of $26.7 million.

	Region Group & Retail Trust	Region Group & Retail Trust
	30 Jun 2023 $m	30 Jun 2022 $m
Number of securities held (million) ASX closing price on last trading day ($) Investment in CQR ($m)	- -	6.8 3.77
	-	25.6

The investment in CQR was classified as a level 1 fair value measurement financial asset being derived from inputs based on quoted prices that are observable. Unrealised gains and losses arising from changes in fair value are recognised in other comprehensive income. Refer also to the fair value hierarchy at note C4.

Capital structure

The Group’s activities expose it to numerous financial risks such as market risk, credit risk and liquidity risk. This section explains how the Group utilises its Risk Management Framework to reduce volatility from these external factors.

C1 Capital management

The Group’s objective when managing capital is to safeguard the ability to continue as a going concern, while providing returns for security holders and benefits for other stakeholders and maintaining a capital structure that will support a competitive overall cost of capital. The capital structure of the Group consists of cash and cash equivalents, interest bearing liabilities and equity (comprising contributed equity, reserves and accumulated profit/loss). The Group assesses the adequacy of its capital requirements, cost of capital and gearing (i.e. debt/equity mix) as part of a periodic review and regularly reviews its capital structure to ensure:

• Sufficient funds and financing facilities are available to support the Group’s property investment and funds management business on a cost-effective basis

• Sufficient liquidity buffer is maintained

• Sufficient capital is available to enable distributions to security holders

The Group can alter its capital structure by issuing new securities, adjusting the amount of distributions paid to security holders, returning capital to security holders, buying back securities, selling assets to reduce debt, adjusting the timing of capital expenditure and through the operation of a distribution reinvestment plan. Additionally, the Group can use its

54 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

existing debt facilities including drawing down or repaying debt, entering into or using new debt facilities and entering into derivative financial instruments.

The Group’s debt financial covenants are at note C2.

C2 Interest bearing liabilities and liquidity

Borrowings are initially recognised at fair value, net of transaction costs incurred, and subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit and loss over the period of the borrowing using the effective interest method. Upfront borrowing fees paid on the establishment of loan facilities are capitalised and expensed over the period of the borrowing.

	Region Group & Retail Trust
	30 Jun 2023 $m 30 Jun 2022 $m
Bank and syndicated facilities - unsecured - AU$ denominated AU$ Medium Term Note (AU$ MTN) - unsecured - AU$ denominated US Notes – unsecured - US$ denominated (converted to AU$) - AU$ denominated Total unsecured debt outstanding - Less: unamortised establishment fees, MTN discount and premium Interest bearing liabilities	503.0 370.0 525.0 525.0 450.0 436.3 50.0 50.0
	1,528.0 1,381.3 (4.6) (4.9)
	1,523.4 1,376.4

Bank and syndicated facilities – unsecured

To reduce liquidity risk, the Group has in place debt facilities from banks and a syndicated facility. The debt facilities include revolving facilities. All debt facilities are unsecured and are available for general corporate and working capital purposes. The next bilateral facility expiry is December 2025 with the remainder expiring after December 2025.

At 30 June 2023, in addition to the unsecured bank facilities drawn above, $10.1 million of a bilateral bank facility available was used to support bank guarantees (30 June 2022: $11.0 million). $10.0 million of the bank guarantees assist with the Group’s obligations under the Australian Financial Services Licence granted to the Group.

The financing capacity available to the Group under the bank and syndicated financing facilities, including cash and cash equivalents, is in the following table.

	Region Group	Region Group
	30 Jun 2023 $m	30 Jun 2022 $m
Bank and syndicated debt facilities Committed debt facilities available Less: amounts drawn Less: amounts utilised for bank guarantee Net financing facilities available Add: cash and cash equivalents Financing capacity available	875.0 (503.0) (10.1)	825.0 (370.0) (11.0)
	361.9	444.0
	23.8	8.7
	385.7	452.7

55 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

AU$ Medium Term Notes (AU$ MTN) – unsecured

The Group has issued unsecured AU$ MTN with a face value of $525.0 million. Details of these notes are below.

AU$ MTN	Tranche Issue date	Maturity	Tenor at issue (years) Coupon	Face value $m	Issue consideration $m	Discount / (premium) on issue $m
Series 2 Series 3 Series 4 Series 5	Tranche 1 Jun-17 Tranche 2 Apr-19 Tranche 1 Sep-20 Tranche 1 Sep-20 Tranche 1 Sept 21	Jun-24 Jun-24 Sep-30 Sep-35 Sep 29	7.0 3.90% 5.2 3.90% 10.0 3.25% 15.0 3.50% 8.0 2.45%	175.0 50.0 30.0 20.0 250.0	174.5 51.3 29.8 19.8 249.2	0.5 (1.3) 0.2 0.2 0.8
				525.0		0.4

The discount or premium with respect to each tranche is amortised from the issue date to the maturity.

The Group’s only debt expiry in FY24 is a $225.0 million AU$ Medium Term Note with a coupon of 3.9% which expires in June 2024. The Group has no debt expiries in FY25. The cash and undrawn debt at 30 June 2023 of $385.7 million is in excess of the $225.0 million debt expiry in FY24 and therefore it is expected this expiry will be repaid from the cash and undrawn debt.

US Notes – unsecured

The Group has issued unsecured US Notes with a face value of US$300.0 million and AU$50.0 million. The principal and coupon obligations of the US dollar denominated notes have been fully economically swapped back to Australian dollars such that the Group has no exposure to any currency risk. Details of these notes and their economically swapped values at 30 June 2023 are below.

Issue date Maturity	US$ value	Economic hedged FX rate	AU$ economically hedged value	30 Jun 2023 FX rate	30 Jun 2023 Book value
US$ denominated notes Aug-14 Aug-27 Sep-18 Sep-28 Aug-14 Aug-29 Sep-18 Sep-31 Sep-18 Sep-33 Total US$ denominated notes AU$ denominated notes Aug-14 Aug-29 Total AU$ denominated notes Total US Notes	100.0 30.0 50.0 70.0 50.0	0.9387 0.7604 0.9387 0.7604 0.7604	106.5 39.4 53.3 92.1 65.8	0.6667 0.6667 0.6667 0.6667 0.6667	150.0 45.0 75.0 105.0 75.0
	300.0		357.1		450.0
			50.0		50.0
			50.0		50.0
			407.1		500.0

56 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

Net debt reconciliation

Reconciliation of net debt movements for the Group during the financial years is below.

	Region Group
	Movement in cash $m Movement in interest bearing liabilities $m Total $m
Net debt at 30 June 2022 Net proceeds from borrowings Repayment of borrowings Foreign exchange adjustments - USPP Net debt at 30 June 2023	8.7 (1,381.3) (1,372.6) 15.1 (311.0) (295.9) - 178.0 178.0 - (13.7) (13.7)
	23.8 (1,528.0) (1,504.2)

		Region Group
	Movement in Cash $m	Movement in interest bearing liabilities $m	Total $m
Net debt at 30 June 2021 Net proceeds from borrowings Repayment of borrowings Foreign exchange adjustments - USPP Net debt at 30 June 2022	11.6 - (2.9) -	(1,335.0) (654.0) 644.0 (36.3)	(1,323.4) (654.0) 641.1 (36.3)
	8.7	(1,381.3)	(1,372.6)

The reconciliation of net debt movements during the financial year is identical for the Retail Trust with the exception of cash at bank which is $22.6 million (30 June 2022: $6.7 million) resulting in net debt of $1,505.4 million (30 June 2022: $1,374.6 million).

Debt covenants

The Group is required to comply with certain financial covenants or obligations in respect of the interest bearing liabilities. The major financial covenants or obligations that are common across the interest bearing liabilities are summarised as follows:

• Interest cover ratio (EBITDA (with adjustments) to net interest expense) is more than 2.00 times

• Gearing ratio (interest bearing liabilities net of cash and cash equivalents and cross currency interest rate swaps divided by total tangible assets net of cash and cash equivalents and derivatives) does not exceed 50%

• Priority indebtedness ratio (priority debt to total tangible assets) does not exceed 10%

• Aggregate of the total tangible assets held by the Obligors (Retail Trust) represents not less than 90% of the total tangible assets of the Group

The Group was in compliance with all of the financial covenants and obligations during the year ended 30 June 2023.

C3 Finance expenses

Finance expenses include interest payable on bank overdrafts and short-term and long-term borrowings, payments on derivatives and amortisation of ancillary costs incurred in connection with borrowing arrangements. Finance expenses are expensed as incurred except to the extent that they are directly attributable to the acquisition, construction or production of a qualifying asset.

In these circumstances, borrowing costs are capitalised to the cost of the assets until the assets are ready for their intended use or sale. Total interest capitalised within the Group must not exceed the net interest expense of the Group in any year,

57 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

and project values, including all capitalised interest attributable to projects, must continue to be recoverable. In the event that a development is suspended for an extended period of time, the capitalisation of borrowing costs is also suspended.

	Region Group & Retail Trust
	30 Jun 2023 $m 30 Jun 2022 $m
Interest expense – borrowings (including amortisation of borrowing costs) Interest expense – derivatives (including cross currency interest rate swaps)	43.2 27.4 5.9 8.5
	49.1 35.9

C4 Derivative and other financial instruments

The Group holds derivative financial instruments to hedge foreign currency and interest rate risk exposures arising from operational, financing and investing activities.

The Group has a hedging program to manage interest and exchange rate risk. Derivative financial instruments are transacted to achieve the economic outcomes in line with the Group’s policy as approved by the Board. Derivative instruments are not transacted for speculative purposes. Derivative financial instruments are recognised initially at cost and remeasured at fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. The Group does not designate any derivative financial instrument as hedging instruments.

Where applicable, the fair value of currency and interest rate options and cross currency interest rate swaps are calculated by reference to relevant market rates for contracts with similar maturity profiles. The current and non current fair values are based on the timing of cashflows. The fair value of interest rate swaps is determined by reference to applicable market yield curves and includes counterparty risk.

Changes in fair value of derivatives is recognised in profit or loss.

(a) Financial risk management

The Group’s activities expose it to a variety of financial risks included in the table below.

Risk	Definition	Exposure	Exposure management
Credit risk	The risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has exposure to credit risk on its financial assets included in its Consolidated Balance Sheets. This includes cash and cash equivalents, derivative financial instruments (hedging) as well as credit receivables due from tenants and managing agents.	All financial assets including cash and cash equivalents, receivables, and derivative financial instruments	The Group manages credit risk by regularly reviewing the banks at which cash and cash equivalents are deposited with, diversifying receivables from tenants and investing and transacting derivatives with multiple counterparties to minimise the Group’s exposure to any one counterparty. Wherever possible, for financial investments and economic hedging, the Group only deals with investment-grade counterparties.
Liquidity risk	The risk that the Group will not be able to meet its financial obligations as they fall due	Payables, borrowings and other liabilities	The Group manages liquidity risk by having flexibility in funding including by keeping sufficient cash and/or committed credit lines available while maintaining a low cost of holding these facilities. Management also:  prepares and monitors rolling forecasts of liquidity requirements on the basis of expected cash flow, including the maturity of its debt portfolio  maintains a liquidity buffer of cash and undrawn debt facilities  refinances borrowings in advance of the maturity of the borrowing and by securing longer term facilities

58 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

Market risk –	The risk that changes in market prices,	US$	The Group has foreign exchange risk as a result of issuing
foreign	such as foreign exchange rates and	denominated	the US$ denominated debt the Group has entered into
exchange risk	interest rates will affect the Group’s financial performance or the value of	debt from US Notes	cross currency interest rate swaps which have fully economically hedged the US$ principal and interest to a
	its holdings of financial instruments		fixed amount of AU$ and floating AU$ interest
			respectively.
Market risk –	The risk that the fair value or cash	Cash and	The Group manages interest rate risk by maintaining an
interest rate	flows of financial instruments will	borrowings as	appropriate mix of fixed and floating rate borrowings
risk	fluctuate due to changes in market	fixed and	and through the use of interest rate swap contracts.
	interest rates	floating rates.

Further details on these matters are below.

(b) Financial risk management – credit risk

The Group and Retail Trust’s exposure to credit risk is in the table below.

	Region Group			Retail Trust	Retail Trust
	30 Jun 2023 30 Jun 2022			30 Jun 2023	30 Jun 2022
	$m $m			$m	$m
Cash and cash equivalents Receivables Derivative financial instruments	23.8 8.7 46.4 43.3 92.8 111.4			22.6 45.9 92.8	6.7 39.2 111.4
	163.0 163.4			161.3	157.3

The maximum exposure of the Group at 30 June 2023 is the carrying amount of the financial assets in the Consolidated Balance Sheets.

A significant share of the Group’s income for the current and prior year is from Woolworths Limited and Coles Limited (and their affiliates) which have a credit rating of BBB or above by Standard and Poor’s. The Group reviews the aggregate exposure of tenancies across its portfolio on a regular basis.

Receivables are reviewed regularly throughout the year. An expected credit losses (ECL) allowance is applied using a provision matrix determined using observable data to estimate future loss at an amount equal to the lifetime ECL. Part of the Group’s policy is to hold collateral as security for tenants via bank guarantees or other collateral such as security deposits and personal guarantees. The security collateral from tenants is negotiated individually and is typically the equivalent of three to six months rent.

(c) Financial risk management – liquidity risk

Non-derivative financial instruments

The contractual maturities of the Group’s and Retail Trust’s non-derivative financial liabilities at reporting date are reflected in the following table. It shows the undiscounted contractual cash flows required to discharge the liabilities including principal, interest, margin, and line fees at the reporting date. Foreign denominated liabilities have been converted at the applicable exchange rates at the reporting date.

	1 year or less $m	2 - 3 years $m	4 - 5 years $m More than 5 years $m	Total $m
30 June 2023 Region Group Trade and other payables Distribution payable Interest bearing liabilities	57.6 88.5 295.0	- - 123.6	- - - - 578.6 860.4	57.6 88.5 1,857.6
	441.1	123.6	578.6 860.4	2,003.7

59 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

The Retail Trust is identical to the Group with the exception of trade and other payables which are $73.5 million and have a maturity of 1 year or less.

	1 year or less $m 2 - 3 years $m	4 - 5 years $m	More than 5 years $m Total $m
30 June 2022 Region Group Trade and other payables Distribution payable Interest bearing liabilities	78.9 - 89.3 - 52.9 419.4	- - 196.5	- 78.9 - 89.3 1,024.2 1,693.0
	221.1 419.4	196.5	1,024.2 1,861.2

The Retail Trust is identical to the Group with the exception of trade and other payables which are $89.1 million and have a maturity of 1 year or less.

Derivative financial instruments

The following tables show the undiscounted cash flows required to discharge the Group’s and Retail Trust’s derivative financial instruments in place at 30 June 2023 at the rates at the reporting date. Foreign denominated instruments have been converted at the applicable exchange rates at the reporting date.

	1 year or less $m 2 - 3 years $m 4 - 5 years $m More than 5 years $m Total $m
30 June 2023 Region Group & Retail Trust Interest rate swaps – net Cross currency interest rate swaps – net	10.1 6.6 0.7 0.8 18.2 (2.9) (3.7) 42.6 45.1 81.1
	7.2 2.9 43.3 45.9 99.3
30 June 2022 Region Group & Retail Trust Interest rate swaps – net Cross currency interest rate swaps – net	10.4 4.6 4.0 12.4 31.4 2.4 (2.7) (2.3) 72.6 70.0
	12.8 1.9 1.7 85.0 101.4

60 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

(d) Financial risk management - Foreign exchange risk

Cross currency interest rate swap contracts

As a result of issuing the US$ denominated debt the Group has entered into cross currency interest rate swaps that have fully economically hedged the US$ principal and interest to a fixed amount of AU$ and floating AU$ interest respectively. The following table details the principal and interest payments over various durations at balance sheet date.

		Region Group & Retail Trust	Region Group & Retail Trust	Region Group & Retail Trust
	1 year or less $m	2 – 3 years $m	4 – 5 years $m	More than 5 years $m	Total $m
30 June 2023 Buy US dollar – interest Amount (AU$) Exchange rate Amount (US$) Buy US dollar – principal Amount (AU$) Exchange rate Amount (US$)	15.8 0.8354 13.2	31.5 0.8381 26.4	27.7 0.8195 22.7	32.6 0.7761 25.3	107.6 0.8141 87.6
	- - -	- - -	106.5 0.9387 100.0	250.6 0.7981 200.0	357.1 0.8401 300.0
30 June 2022 Buy US dollar – interest Amount (AU$) Exchange rate Amount (US$) Buy US dollar – principal Amount (AU$) Exchange rate Amount (US$)	15.8 0.8354 13.2	31.5 0.8381 26.4	31.5 0.8381 26.4	44.5 0.7820 34.8	123.3 0.8175 100.8
	- - -	- - -	- - -	357.1 0.8401 300.0	357.1 0.8401 300.0

Sensitivity analysis – foreign exchange risk

The following sensitivity analysis shows the effect on profit/(loss) after tax and equity if the Australian dollar had increased (strengthened) by 10% or decreased (weakened) by 10% at the balance sheet date with all other variables held constant.

	Profit/(loss) after tax and equity	Profit/(loss) after tax and equity
	Effect of 10% strengthening in AU$ exchange rate $m	Effect of 10% weakening in AU$ exchange rate $m
30 June 2023 Region Group & Retail Trust AU$ equivalent of foreign exchange balances denominated in US$	(1.4)	1.8
30 June 2022 Region Group & Retail Trust AU$ equivalent of foreign exchange balances denominated in US$	(4.2)	5.1

61 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

(e) Financial risk management - Interest rate risk

Interest rate swap contracts

The Group’s bank and syndicated borrowings are generally at floating rates exposing the Group to cash flow interest rate risk. The Group’s preference is to be protected from interest rate movements through appropriate risk management techniques. These techniques include using floating to fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates.

Additionally the Group has fixed rate borrowings in the form of AU$ and US$ US Notes and the AU$ MTN.

The requirements under Australian Accounting Standards in respect of documentation, designation and effectiveness for hedge accounting cannot be met in all circumstances. As a result the Group does not apply hedge accounting for any derivatives at 30 June 2023 (30 June 2022: not applied).

The fair value of interest rate swaps at the reporting date is determined by discounting the future cash flows using the forward market interest rate curve at the reporting date.

The Group’s exposure to interest rate risk and the effective interest rates on financial assets and liabilities at reporting date follow. Total financial assets exposed to interest rate risk, being cash at bank, for Region Group was $23.8 million and for Retail Trust $22.6 million at 30 June 2023.

			Region Group	Region Group
	Interest rate (%p.a.)	Floating interest rate $m	Fixed interest rate		Total $m
			Less than 1 year $m	1 - 5 years $m More than 5 years $m
30 June 2023 Financial liabilities Interest bearing liabilities Denominated in AU$ - floating Denominated in AU$ - fixed (MTN) Denominated in AU$ - fixed (US Notes) Denominated in US$ - fixed (US Notes) Total financial liabilities	5.3% 3.2% 6.0% 4.4%	(503.0) - - -	- (225.0) - -	- - - (300.0) - (50.0) (150.0) (300.0)	(503.0) (525.0) (50.0) (450.0)
		(503.0)	(225.0)	(150.0) (650.0)	(1,528.0)

The maturity profile and the weighted average interest rate of the fixed and floating derivatives (notional principal) held at reporting date by both the Group and the Retail Trust are summarised below.

	Jun 2023 $m Jun 2024 $m	Jun 2025 $m Jun 2026 $m	Jun 2027 $m
Denominated in AU$ Interest rate swaps (fixed) Average fixed rate Interest rate swaps (floating)	600.0 450.0 0.72% 2.50% 50.0 50.0	500.0 300.0 3.54% 3.36% 50.0 50.0	0.0 0.00% 50.0

The Group’s exposure to interest rate risk and the effective interest rates on financial assets and liabilities at 30 June 2022 follow. Total financial assets exposed to interest rate risk, being cash at bank, for Region Group was $8.7 million and for Retail Trust $6.7 million at 30 June 2022.

62 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

			Region Group
	Interest rate (%p.a.)	Floating interest rate $m	Fixed interest rate Total $m Less than 1 year $m 1 - 5 years $m More than 5 years $m
30 June 2022 Financial liabilities Interest bearing liabilities Denominated in AU$ - floating Denominated in AU$ - fixed (MTN) Denominated in AU$ - fixed (US Notes) Denominated in US$ - fixed (US Notes) Total financial liabilities	2.6% 3.2% 6.0% 4.4%	(370.0) - - -	- - - (370.0) - (225.0) (300.0) (525.0) - - (50.0) (50.0) - - (436.3) (436.3)
		(370.0)	- (225.0) (786.3) (1,381.3)

The maturity profile and the weighted average interest rate of the fixed and floating derivatives (notional principal) held at 30 June 2022 by both the Group and the Retail Trust are summarised below.

	Jun 2022	Jun 2023	Jun 2024	Jun 2025	Jun 2026
	$m	$m	$m	$m	$m
Denominated in AU$
Interest rate swaps (fixed)	375.0	350.0	150.0	150.0	150.0
Weighted average fixed rate	0.20%	0.20%	2.61%	2.61%	2.61%
Interest rate swaps (floating)	50.0	50.0	50.0	50.0	50.0

Sensitivity analysis – interest rate risk

The following sensitivity analysis shows the effect on profit/(loss) after tax and equity if market interest rates at balance sheet date had been 100 basis points (bps) higher/lower with all other variables held constant.

	Profit/loss after tax1 and equity	Profit/loss after tax1 and equity
	100bps higher $m	100bps lower $m
30 June 2023 Region Group & Retail Trust Effect of market interest rate movement	(9.5)	9.6
30 June 2022 Region Group & Retail Trust Effect of market interest rate movement	(14.5)	14.6

1 The aim of the Group’s interest rate hedging strategy is to reduce the impact on Adjusted Funds from Operations of movements in interest rates. Changes to the non-cash mark-to-market valuations of the swaps which flow through the Group’s Consolidated Statements of Comprehensive Income are excluded from Adjusted Funds from Operations.

(f) Accounting classifications and fair values

The fair value of interest rate derivatives is determined using a generally accepted pricing model based on a DCF analysis using assumptions supported by observing market rates.

Except as disclosed below, the carrying amounts of other financial assets and financial liabilities, which are recognised at amortised cost in the Consolidated Balance Sheets, approximate their fair values.

The fair value of the US Notes and AU$ MTN can be different to the carrying value.

63 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

The fair value, additionally, takes into account movements in the underlying base interest rates and credit spreads for similar financial instruments, including extrapolated yield curves over the tenor of the notes.

Estimate – Valuation of derivative financial instruments

The fair value of derivatives assets and liabilities is based on assumptions of future events and involves significant estimates. Values may differ in future reporting periods due to the passing of time, market volatility and / or changes in market rates including interest rates and foreign exchange rates.

	Region Group
	30 Jun 2023 $m 30 Jun 2022 $m
Amortised cost US Notes AU$ MTN Fair Value US Notes AU$ MTN	500.0 486.3 525.0 525.0
	444.2 465.5 444.8 438.1

The foreign currency principal and interest amounts payable on the US$ denominated US Notes have been fully hedged economically to floating Australian interest rates by the use of cross currency interest rate swaps.

Fair value hierarchy

The table below categorises the financial instruments carried at fair value by valuation method level. The different levels have been defined as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

There were no transfers between levels during the year.

		Region Group & Retail Trust	Region Group & Retail Trust
	Level 1 $m	Level 2 $m	Level 3 $m	Total $m
30 June 2023 Financial assets carried at fair value Investment in CQR Interest rate swaps Cross currency interest rate swaps Financial liabilities carried at fair value Interest rate swaps	- - -	- 15.6 77.2	- - -	- 15.6 77.2
	-	92.8	-	92.8
	-	7.8	-	7.8
30 June 2022 Financial assets carried at fair value Investment in CQR Interest rate swaps Cross currency interest rate swaps Financial liabilities carried at fair value Interest rate swaps	25.6 - -	- 26.0 85.4	- - -	25.6 26.0 85.4
	25.6	111.4	-	137.0
	-	3.2	-	3.2

64 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

For financial instruments not quoted in active markets, the Group uses valuation techniques such as present value, comparison to similar instruments for which market observable prices exist and other relevant models used by market participants. These valuation techniques use both observable and unobservable market inputs.

Interest rate derivatives are financial instruments that use valuation techniques with only observable market inputs and are included in level 2 above.

C5 Contributed equity and reserves

a) Contributed equity

	Region Group	Region Group	Retail Trust	Retail Trust
	30 Jun 2023 $m	30 Jun 2022	30 Jun 2023	30 Jun 2022 $m
		$m	$m
Contributed equity1 Issue costs Opening balance Equity raised through Distribution Reinvestment Plan – August 2021 Equity raised through Distribution Reinvestment Plan – January 2022 Equity raised through Distribution Reinvestment Plan – August 2022 Equity raised through Distribution Reinvestment Plan – January 2023 Equity raising costs Closing balance Balance at the end of the period is attributable to security holders of: Region Management Trust Region Retail Trust	2,208.1 (41.0)	2,121.2 (40.9)	2,197.1 (40.8)	2,110.9 (40.8)
	2,167.1	2,080.3	2,156.3	2,070.1
	Management Trust		Retail Trust
	30 Jun 2023 $m	30 Jun 2022 $m	30 Jun 2023 $m	30 Jun 2022 $m
	10.2 - - 0.5 0.2 (0.1)	10.2 - - - - -	2,070.1 - - 44.1 42.1 -	1,980.3 72.4 17.5 - - (0.1)
	10.8	10.2	2,156.3	2,070.1
	10.8 2,156.3	10.2 2,070.1
	2,167.1	2,080.3

1 Contributed equity has been aggregated to include both Management Trust and Retail Trust

Securities on issue

	Region Group & Retail Trust
	30 Jun 2023 No. of securities 30 Jun 2022 No. of securities
Opening balance Equity issued for executive security-based compensation arrangements – 26 August 2021 Equity raised through Distribution Reinvestment Plan – 31 August 2021 Equity issued for employee security-based compensation arrangements – 23 December 2021 Equity raised through Distribution Reinvestment Plan – 31 January 2022 Equity issued for executive security-based compensation arrangements – 24 August 2022 Equity raised through Distribution Reinvestment Plan – 31 August 2022 Equity issued for employee security-based compensation arrangements – 19 December 2022 Equity raised through Distribution Reinvestment Plan – 31 January 2023 Closing balance	1,116,286,260 1,080,021,404 - 270,327 - 29,901,419 - 14,696 - 6,078,414 365,355 - 15,946,947 - 22,143 - 16,273,286 -
	1,148,893,991 1,116,286,260

65 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

As long as the Group remains jointly quoted, the number of securities in each of the Trusts is equal and the security holders identical. Holders of stapled securities are entitled to receive distributions as declared from time to time. Region Group holds concurrent meetings of the Retail Trust and Management Trust. Subject to any voting restrictions imposed on a security holder under the Corporations Act 2001 (Cth) and/or the Australian Securities Exchange at a meeting of members, on a show of hands, each member has one vote; and on a poll, each member has one vote for each dollar of the value of the total interest that they have in the relevant underlying Retail Trust or Management Trust respectively.

A total of 365,355 securities were issued during the year in respect of executive compensation plans and 22,143 securities were issued in respect of employee compensation and incentive plans for nil consideration.

Issue of securities from Distribution Reinvestment Plan (DRP)

The Group has a DRP under which security holders may elect to have their distribution entitlements satisfied by the issue of new securities at the time of the distribution payment rather than being paid in cash. The DRP was in place for the distribution declared in June 2022 (paid in August 2022), distribution declared in December 2022 (paid in January 2023) and distribution declared in June 2023 (expected to be paid on or about 31 August 2023).

The distribution declared in June 2022 resulted in $44.6 million being raised by the DRP through the issue of 15.9 million securities at $2.80 per security in August 2022. This included $23.4 million pursuant to an underwriting agreement.

The distribution declared in December 2022 resulted in $42.3 million being raised by the DRP through the issue of 16.3 million securities at $2.61 per security in January 2023. This included $23.1 million pursuant to an underwriting agreement.

The distribution declared in June 2023 will result in $26.8 million being raised by the DRP though the issue of 11.8 million securities at $2.27 per security. This distribution was not underwritten.

b) Reserves (net of income tax)

Share based payment reserve: Refer note D3.

	Retail Trust	Retail Trust
	30 Jun 2023 $m	30 Jun 2022 $m
Share based payment reserve Investment fair value through other comprehensive income (FVTOCI) Movements in reserves Share based payment reserve Balance at the beginning of the year Employee share based payments Closing balance FVTOCI reserve Opening balance Revaluation of investment FVTOCI Reclassification to accumulated loss Closing balance	11.9 -	8.8 (0.4)
	11.9	8.4
	8.8 3.1	7.2 1.6
	11.9	8.8
	(0.4) 1.2 (0.8)	(0.2) (0.2) -
	-	(0.4)

66 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

c) Accumulated profit and loss

	Region Group	Retail Trust	Retail Trust
	30 Jun 2023 $m 30 Jun 2022 $m	30 Jun 2023	30 Jun 2022 $m
		$m
Opening balance Net profit/(loss) for the year Other comprehensive income from disposal of investment in CQR Distributions paid and payable (note A2) Closing balance Balance at the end of the year is attributable to security holders of: Region Management Trust Region Retail Trust	1,045.2 727.3 (123.6) 487.1 0.8 - (173.4) (169.2) 749.0 1,045.2 2.7 1.4 746.3 1,043.8 749.0 1,045.2	1,043.8 (124.9) 0.8 (173.4)	726.0 487.0 - (169.2)
		746.3	1,043.8

Other disclosure items

D1 Working capital and other

a) Receivables

Trade and other receivables are carried at original invoice amount, less ECL, and are usually due within 30 days. Collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts that are determined to be uncollectable are written off when identified.

The Group uses the simplified approach for determining ECL whereby the outstanding receivables balance is analysed, and the provision is determined by applying default percentages adjusted for other current observable data. Under the simplified approach, the loss allowance for trade receivables is measured at an amount equal to lifetime ECL. In some instances, specific loss provisions are raised against individual receivables where additional information has come to the Group’s attention impacting the assessment of recoverability of that debtor. Loss allowances for receivables are deducted from the gross carrying amount of the asset.

The ECL is based on management estimates of probability of the recoverability of rental income invoiced. Should the actual results differ, the credit loss will change and the difference will be included in the following year.

	Region Group		Retail Trust	Retail Trust
	30 Jun 2023 30 Jun 2022		30 Jun 2023	30 Jun 2022
	$m $m		$m	$m
Rental income receivables Other rental income receivables Gross rental income receivables Rental income deferrals1 Rental income receivables and deferrals Allowance for ECL Net rental income receivables and deferrals Accrued rental income receivables2 Other receivables3 Total receivables	4.7 9.5 2.1 1.2 6.8 10.7 2.1 4.8 8.9 15.5 (1.9) (8.0) 7.0 7.5 13.2 7.5 26.2 28.3 46.4 43.3		4.7 1.7	9.5 1.0
			6.4 2.1	10.5 4.8
			8.5 (1.9)	15.3 (8.0)
			6.6	7.3
			13.2 26.1	7.5 24.4
			45.9	39.2

1 Rental income deferrals granted as part of COVID-19 that have not yet been invoiced and have been specifically provided for.

2 Accrued rental income includes turnover rent which has not yet been invoiced. Given the nature of these items and history of collectability, no ECL provision has been provided.

67 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

3The majority of the balance of other receivables relates to rental income received by external property managers prior to being remitted to Region Group and Retail Trust respectively. Given the nature of these items and history of collectability, no ECL has been provided.

Rental income and other receivables past due[1]

		Region Group
		30 Jun 2023	30 Jun 2022
Days from invoice date	ECL %	Carrying amount of receivables $m Allowance for ECL $m ECL %	Carrying amount of receivables $m Allowance for ECL $m
Current 31-60 days 61-90 days 91-120 days >120 days Rental income and other receivables - simplified ECL Rental income deferrals - specific ECL Total	3.4% 25.0% 50.0% 33.3% 28.6% 28.6%	2.9 0.1 26.8% 0.4 0.1 44.0% 0.4 0.2 68.5% 0.3 0.1 65.5% 2.8 0.8 54.4% 6.8 1.3 2.1 0.6 64.6% 8.9 1.9	3.3 0.9 1.2 0.5 0.7 0.5 0.5 0.3 5.0 2.7
			10.7 4.9
			4.8 3.1
			15.5 8.0

1 Rental income and other amounts due are receivable within 30 days of invoicing.

Expected Credit Losses

			Region Group	Region Group
	Collectively assessed $m	Individually	Total –	Collectively	Individually	Total – 30 Jun 2022 $m
		assessed	30 Jun 2023	assessed	assessed
		$m	$m	$m	$m
Opening balance Remeasurement of loss allowance Amounts written off Amounts recovered Closing balance	4.9 1.1 (3.7) (1.0)	3.1 (0.8) (0.2) (1.5)	8.0 0.3 (3.9) (2.5)	3.8 4.1 (0.7) (2.3)	6.0 (1.3) - (1.6)	9.8 2.8 (0.7) (3.9)
	1.3	0.6	1.9	4.9	3.1	8.0

b) Trade and other payables

Trade and current liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Group. The amounts are unsecured and are usually paid within 30 days of recognition.

	Region Group	Region Group		Retail Trust	Retail Trust
	30 Jun 2023	30 Jun 2022		30 Jun 2023	30 Jun 2022
	$m	$m		$m	$m
Current Trade payables and other creditors Income tax payable Payables to related parties (note D3)	57.5 0.1 -	78.8 0.1 - 78.9		55.4 - 18.1	78.9 - 10.2
	57.6			73.5	89.1

Trade payables and other creditors are generally payable within 30 days and relate to trade payables $13.0 million (30 June 2022: $24.7 million), property payables $17.8 million (30 June 2022: $27.2 million), rent received in advance $18.2 million (30 June 2022: $16.4 million), interest payables $6.8 million (30 June 2022: $4.8 million) and other payables $1.7 million (30 June 2022: $5.7 million).

68 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

c) Tax

The Group comprises taxable and non-taxable entities. A liability for current and deferred taxation is only recognised in respect of taxable entities that are subject to income tax and potential capital gains tax as detailed below. The Retail Trust is the property owning trust and is treated as a trust for Australian tax purposes. Under current Australian income tax legislation, the Retail Trust is not subject to Australian income tax, including capital gains tax, provided that members are presently entitled to the income of the Trust as determined in accordance with the Trust’s constitution. Management Trust is treated as a company for Australian tax purposes which means it is subject to income tax. Deferred tax is provided on all temporary differences on the difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

	Region Group			Retail Trust
	30 Jun 2023 30 Jun 2022			30 Jun 2023 30 Jun 2022
	$m $m			$m $m
Profit before income tax Prima facie tax (expense) at 30% Tax effect of income that is not assessable/deductible in determining taxable profit Tax	(123.1) 487.5 36.9 (146.3) (37.4) 145.9			(124.9) 487.0 37.5 (146.1) (37.5) 146.1
	(0.5) (0.4)			- -

d) Capital and lease commitments

Estimated capital expenditure committed at balance sheet date but not provided for:

	Region Group & Retail Trust	Region Group & Retail Trust
	30 Jun 2023 $m	30 Jun 2022 $m
Capital commitments	13.3	171.0

The 30 June 2023 balance relates to a conditional agreement which the Group entered into in June 2023 to acquire land adjacent to the existing Delacombe Town Centre (VIC) investment property for $15.0 million (excluding transaction expenses). This transaction settled in July 2023. $1.7 million which represents a deposit in relation to this acquisition is included in the balance sheet as current other assets.

The 30 June 2022 balance relates to a conditional agreement which the Group entered into in June 2022 to acquire five neighbourhood retail centres. This transaction settled in July 2022.

e) Other assets and liabilities

For leases where the Group is the lessee, a separate right-of-use asset and lease liability is recognised in the Consolidated Balance Sheets. Measurement of the lease liability is the present value of the lease payments that are not paid at the date of transition, discounted using an appropriate discount rate. The right-of-use asset is presented within the Consolidated Balance Sheets within other assets and the lease liability within other liabilities respectively.

The right-of-use asset is amortised over the remaining lease term (including the period covered by the extension option), and the lease liability is measured on an effective interest basis.

During the year, the Group entered into a new lease which has been accounted for in accordance with AASB 16 Leases in the right-of-use asset and lease liability for $4.6 million.

69 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

	Region Group	Region Group			Retail Trust	Retail Trust
	30 Jun 2023	30 Jun 2022			30 Jun 2023	30 Jun 2022
	$m	$m			$m	$m
Current other assets Non-current other assets	8.1 10.8	14.0 6.5			7.2 5.7	13.2 5.7
	18.9	20.5			12.9	18.9

Current other assets relate to prepayments $5.7 million (30 June 2022: $4.0 million), deposits and stamp duty paid for the purchase of investment properties $2.2 million (30 June 2022: $9.0 million) and other assets $0.2 million (30 June 2022: $1.0 million).

Non-current other assets include right-of-use assets for the investment property at Lane Cove $5.7 million (30 June 2022: $5.7 million), lease of office space $4.9 million (30 June 2022: $0.6 million) and other assets $0.2 million (30 June 2022: $0.2 million). The corresponding lease liability of $11.6 million (30 June 2022: $7.2 million) is presented in non-current liabilities.

D2 Operating cash flow information

a) Notes to statements of cash flows

Reconciliation of net profit after tax to net cash flow from operating activities is below.

	Region Group	Region Group		Retail Trust	Retail Trust
	30 Jun 2023	30 Jun		30 Jun	30 Jun
	$m	2022		2023	2022 $m
		$m		$m
Net profit/(loss) after tax Net unrealised (gain)/loss on change in fair value of investment properties Net unrealised (gain)/loss on change in fair value of derivatives Net unrealised (gain)/loss on change in foreign exchange Straight-lining of rental income and amortisation of lease incentives (Decrease)/increase in payables Non-cash and capitalised financing expenses Other non-cash items and movements in other assets (Increase)/decrease in receivables Net cash flow from operating activities	(123.6) 264.1 23.2 13.7 10.7 (12.8) 0.3 1.8 (0.6)	487.1 (354.0) (0.5) 36.3 13.6 0.9 3.7 (0.8) (6.9) 179.4		(124.9) 264.1 23.2 13.7 10.7 (10.9) 0.3 2.4 (0.4)	487.0 (354.0) (0.5) 36.3 13.6 (3.3) 3.7 0.7 (4.8)
	176.8			178.2	178.7

D3 Related party information

a) Key Management Personnel compensation

At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest and adjusts for non-market vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity settled employee benefits reserve.

The aggregate compensation made to the Directors and other Key Management Personnel of the Group is set out below.

	30 Jun 2023 $	30 Jun 2022 $
Short term benefits Post-employment benefits Share-based payment Long term benefits	3,868,645 174,740 1,446,112 51,276 5,540,773	3,442,555 137,809 1,267,662 48,326
		4,896,352

70 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

b) Share based payments

The Group has an Executive Incentive Plan that entitles Key Management Personnel, subject to criteria, to become entitled to acquire securities at nil cost to the employee.

Rights pursuant to the Executive Incentive Plan have been issued for:

• Short-Term Incentive Plan (STIP) Rights

• Long-Term Incentive Plan (LTIP) Rights

Under the Executive Incentive Plan grants of rights have been made to the following Key Management Personnel:

• Mr Mellowes (Director and Chief Executive Officer)

• Mr Fleming (Director and Chief Operating Officer)

• Mr Walsh (Chief Financial Officer)

In addition, certain non-Key Management Personnel were also granted 52,276 rights during the year (30 June 2022: 38,407). The table below summarises the rights issued to key management personnel. These rights have a nil exercise price and awards are subject to meeting performance criteria. Where the performance criteria are met, details of the stapled securities that may be issued are below. Under the Executive Incentive Plan, 227,077 securities (30 June 2022: 166,576) were issued and vested to Mr Mellowes; 108,145 securities (30 June 2022: 80,040) to Mr Fleming and nil securities (30 June 2022: nil) to Mr Walsh.

Type and eligibility	Vesting conditions1	Security price at grant date	Grant date	Testing date	Vesting date	Maximum number of stapled securities or maximum value of securities to be issued	Fair value at grant date
STIP(FY23) (Mr Mellowes)	Non-market	$2.34	Sep-22	Jul-23	Jul-24	$597,658	$0.96per $1.00
STIP (FY23) (Mr Fleming)	Non-market	$2.34	Sep-22	Jul-23	Jul-24	$342,000	$0.96 per $1.00
STIP(FY23) (Mr Walsh)	Non-market	$2.59	Dec-22	Jul-23	Jul-24	$106,534	$0.96per $1.00
LTIP (FY23 - FY25) (Tranche 1) (Messrs Mellowes, Fleming)	Relative TSR2	$2.34	Sep-22	Sep-25	Jul-26	439,410	$1.17 per security
LTIP (FY23 - FY25) (Tranche 2) (Messrs Mellowes, Fleming)	Non-market	$2.34	Sep-22	Jun-25	Jul-26	292,939	$2.34 per security
LTIP (FY23 - FY25) (Tranche 1) (Mr Walsh)	Relative TSR2	$2.53	Sep-22	Jun-25	Jul-26	21,077	$1.27 per security
LTIP (FY23 - FY25) (Tranche 2) (Mr Walsh)	Non-market	$2.53	Sep-22	Jun-25	Jul-26	14,051	$2.53 per security
STIP (FY22) (Mr Mellowes)	Non-market	$2.83	Sep-21	Jul-22	Jul-23	$580,250	$0.97 per $1.00
STIP(FY22) (Mr Fleming)	Non-market	$2.83	Sep-21	Jul-22	Jul-23	$290,200	$0.97per $1.00
LTIP (FY22 - FY24) (Tranche 1) (Messrs Mellowes, Fleming)	Relative TSR2	$2.83	Sep-21	Sep-24	Jul-25	431,758	$1.67 per security
LTIP (FY22 - FY24) (Tranche 2) (Messrs Mellowes, Fleming)	Non-market	$2.83	Sep-21	Jun-24	Jul-25	287,839	$2.83 per security
STIP (FY21) (Mr Mellowes)	Non-market	$2.23	Sep-20	Jan-21 Jul-21	Jul-22	$241,250 $241,250	$0.96 per $1.00
STIP (FY21) (Mr Fleming)	Non-market	$2.23	Sep-20	Jan-21 Jul-21	Jul-22	$115,938 $115,938	$0.96 per $1.00
LTIP (FY21 - FY23) (Tranche 1) (Messrs Mellowes, Fleming, Lamb)	Relative TSR2	$2.23	Sep-20	Sep-23	Jul-24	452,393	$1.18 per security
LTIP (FY21 - FY23) (Tranche 2) (Messrs Mellowes, Fleming, Lamb)	Non-market	$2.23	Sep-20	Jun-23	Jul-24	301,595	$2.23 per security
STIP (FY20) (Mr Mellowes)	Non-market	$2.61	Aug-19	Jul-20	Jul-22	$482,500	$0.96 per $1.00
STIP(FY20) (Mr Fleming)	Non-market	$2.61	Aug-19	Jul-20	Jul-22	$231,875	$0.96per $1.00
LTIP (FY20 - FY22) (Tranche 1) (Messrs Mellowes, Fleming, Lamb)	Relative TSR2	$2.61	Aug-19	Sep-22	Jul-23	213,818	$1.28 per security

71 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

Type and eligibility	Vesting conditions1	Security price at grant date	Grant date	Testing date	Vesting date	Maximum number of stapled securities or maximum value of securities to be issued	Fair value at grant date
LTIP (FY20 - FY22) (Tranche 2) (Messrs Mellowes, Fleming, Lamb)	Non-market	$2.61	Aug-19	Jun-22	Jul-23	213,818	$2.59 per security
LTIP (FY20 - FY22) (Tranche 3) (Messrs Mellowes, Fleming, Lamb)	Non-market	$2.61	Aug-19	Jun-22	Jul-23	213,818	$2.59 per security

1 Service and non-market conditions include numeric and strategic targets along with a deferred vesting period.

2 Relative TSR is Relative total security holder return measured against the ASX 200 A-REIT Accumulation Index.

The Group recognises the fair value at the grant date of equity settled securities below as an employee benefit expense proportionally over the vesting period with a corresponding increase in equity. Fair value is measured at grant date using Monte-Carlo simulation and Black Scholes option pricing models where applicable, performed by an independent valuer, and models the future security price of the Group’s securities.

Non-market vesting conditions are determined with reference to the underlying financial or non-financial performance measures to which they relate.

The total expense recognised during the year in relation to those eligible for equity settled share-based payments was $2.7 million (30 June 2022: $1.6 million). Key inputs to the pricing models are shown in the table below:

30 Jun 2023	30 Jun 2022	30 Jun 2021 30 Jun 2020
Volatility 26.0% Distribution yield 6.5%1 Risk-free interest rate 3.8%	26.0% 5.4% 0.2%	25.0% 16.0% 5.5% 5.8% 0.2% 0.7%

1 The distribution yield for Mr Walsh is 6.8% as his performance rights were issued on a different date.

c) Other related party disclosures

The Retail Trust has a current payable of $18.1 million to the Management Trust (30 June 2022: $10.2 million). This is noninterest bearing and repayable at call. Additionally, Region RE Limited (the Company), the Responsible Entity of the Retail Trust and a wholly owned subsidiary of Management Trust, makes payments on behalf of the Retail Trust from time to time. These payments are incurred by the Company in properly performing or exercising its powers or duties in relation to the Retail Trust. The Company has a right of indemnity from the Retail Trust, for any liability incurred by the Company in properly performing or exercising any of its powers or duties in relation to the Retail Trust. The amount reimbursed or reimbursable during the year under this agreement was $18.0 million (30 June 2022: $18.0 million).

No funds management revenue was received from SURF 3 (30 June 2022: $1.0 million) and no distribution was received by the Retail Trust during the year (30 June 2022: $0.2 million). SURF 3 wound up during the year ended 30 June 2022.

The Management Trust received $2.6 million (30 June 2022: $0.2 million) of funds management revenue from the Metro Fund during the year (note A1).

72 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

D4 Parent entity

Selection of parent entity

In determining the parent entity of the Region Group, the Directors considered various factors including asset ownership, debt obligation, management and day to day responsibilities. The Directors concluded that management activities were more relevant in determining the parent. Region Management Trust has been determined as the parent of the Region Group.

	Management Trust1		Retail	Trust1, 2
	30 Jun 2023 30 Jun 2022		30 Jun 2023	30 Jun 2022
	$m $m		$m	$m
Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Contributed equity Reserves Accumulated profit Total equity Net profit/(loss) after tax Other comprehensive income/(loss) Total comprehensive income/(loss) Commitments for the acquisition of property by the parent	- - 10.8 10.2 10.8 10.2 - - - - - - 10.8 10.2 - - - - 10.8 10.2 - - - - - - - -		83.8 4,530.5	93.8 4,593.5
			4,614.3	4,687.3
			394.8 1,305.0	182.1 1,382.9
			1,699.8	1,565.0
			2,156.3 11.9 746.3	2,070.1 8.4 1,043.8
			2,914.5	3,122.3
			(124.9) 1.2	487.0 (0.2)
			(123.7)	486.8
			13.3	171.0

1Head Trusts only.

2The Retail Trust financial statements have been prepared on a going concern basis. In preparing the Retail Trust financial statements the Directors note that the Retail Trust has a net current asset deficiency position as it is the policy of the Group and Retail Trust to use surplus cash to repay revolving debt. At 30 June 2023 the Group and Retail Trust have the ability to drawdown funds to pay the distribution on or about 31 August 2023, having sufficient excess cash and cash equivalents and undrawn financing facilities (refer note C2).

D5 Subsidiaries

Name of subsidiaries Place of incorporation and operation	Ownership interest	Ownership interest
	30 Jun 2023	30 Jun 2022
Subsidiaries of Region Management Trust
Region Operations Pty Ltd Australia	100.0%	100.0%
Region REIT Holdings Pty Ltd Australia	100.0%	100.0%
Region RE Ltd Australia	100.0%	100.0%
Region Unlisted Retail Fund Pty Ltd Australia	100.0%	100.0%
Shopping Centres Australasia Property Agent Pty Ltd Australia	100.0%	100.0%
Shopping Centres Australasia Property Agent (VIC) Pty Ltd Australia	100.0%	100.0%
SCA Fund Management Ltd Australia	100.0%	100.0%

Additionally, Region Retail Trust is considered for financial reporting purposes a subsidiary of Region Management Trust due to stapling even though there is no ownership or shareholding interest.

73 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

D6 Auditor’s remuneration

	Region Group & Retail Trust	Region Group & Retail Trust
	30 Jun 2023	30 Jun 2022 $’000
	$’000
Audit of the Financial Statements Statutory assurance services required by legislation to be provided by the auditor	374.8 57.2	303.5 53.0
	432.0	356.5

The auditor of the Group is Deloitte Touche Tohmatsu. The auditor’s remuneration includes audit of the Financial Statements, subsidiary Financial Statements, the Group’s Australian Financial Service Licence and the Group’s Compliance Plans.

D7 Contingent assets

In FY22 and FY23, a number of insurance claims were made with respect to damage to investment properties as a result of events such as rain and floods. The Group has been working with tenants and insurers to review options for the restatement of damaged areas. For the year ended 30 June 2023, $11.0 million (30 June 2022: $2.2 million) has been recovered from insurers. Discussions are ongoing regarding claims by the Group for additional amounts.

D8 Subsequent events

In July 2023, the Group acquired land adjacent to the existing Delacombe Town Centre investment property for $15.0 million (excluding transaction expenses). The Group also entered into a conditional Development Management Agreement with an expected development completion cost of $31.5 million which involves the construction of an online sales fulfilment facility supporting the existing supermarket, and large format retail.

In August 2023, the Group entered into two callable interest rate swaps for $250.0 million and $150.0 million, where the Group pays a fixed rate of 3.60% and 3.65% respectively. They have a one year non call period to August 2024, thereafter callable by the banks and expire in August 2026.

Since the end of the year, the Directors of the Responsible Entity are not aware of any other matter or circumstance not otherwise dealt with in this report or the Consolidated Financial Statements which has significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in future financial periods.

D9 Corporate information

Region Group (the Group) comprises the stapling of the securities in two Australian managed investment schemes, Region Management Trust (Management Trust) (ARSN 160 612 626) and Region Retail Trust (Retail Trust) (ARSN 160 612 788) (collectively the Trusts).

The Responsible Entity of both Trusts is Region RE Limited (ABN 47 158 809 851; AFSL 426603) (Responsible Entity). The registered office of Region RE Limited is Level 5, 50 Pitt Street, Sydney, New South Wales.

The Directors of the Responsible Entity have authorised the Financial Statements for issue on 14 August 2023.

74 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

D10 Other significant accounting policies

a) Basis of preparation

In accordance with AASB 3 Business Combinations, the stapling arrangement discussed above is regarded as a business combination and Region Management Trust has been identified as the Parent for preparing Consolidated Financial Statements.

These Consolidated Financial Statements are combined Financial Statements and accompanying Notes of both Region Group and the Region Retail Trust. The Consolidated Financial Statements have been presented in Australian dollars, the Groups’ functional currency, unless otherwise stated.

Historical cost convention

The Consolidation Financial Statements have been prepared on the basis of historical cost, except for certain non-current assets and financial instruments that are measured at fair value.

Current and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Going concern

These Consolidated Financial Statements are prepared on a going concern basis. In reaching this position, it has considered that the Group and Retail Trust are in a net current asset deficiency position of $297.5 million. At 30 June 2023, the Group and Retail Trust have the ability to drawdown sufficient funds to pay the current liabilities and the capital commitments (refer to note D1), having available cash and cash equivalents and undrawn debt facilities of $385.7 million.

b) Statement of compliance

The Financial Statement is a General Purpose Financial Statement that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (the Board or AASB) and the Corporations Act 2001 (Cth).

The Financial Statement complies with Australian Accounting Standards as issued by the AASB and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

For the purposes of preparing the Financial Statements, the Group is a for-profit entity.

c) Application of new and revised Accounting Standards

The Group and the Retail Trust have applied amendments to AASBs issued by the Australian Accounting Standards Board (AASB) which are mandatorily effective for an accounting period that begins on or after 1 July 2022, and therefore relevant for the current year end. The application of these amendments does not have any material impact on the disclosures, or the amounts recognised in the Group’s Financial Statements.

The accounting policies adopted by the Group are consistent with those of the previous financial year.

75 |

Region Group Notes to the Consolidated Financial Statements For the year ended 30 June 2023

d) Basis of consolidation

The Consolidated Financial Statements of the Group incorporate the assets and liabilities of Region Management Trust (the Parent) and all of its subsidiaries, including Region Retail Trust. Region Management Trust has been identified as the parent entity in relation to the stapling. The results and equity of Region Retail Trust (which is not directly owned by Region Management Trust) have been treated and disclosed as a non-controlling interest. While the results and equity of Region Retail Trust are disclosed as a non-controlling interest, the security holders of Region Management Trust are the same as the security holders of Region Retail Trust.

These Financial Statements also include a separate column representing the Financial Statements of Region Retail Trust, incorporating the Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Changes in Equity and Consolidated Statements of Cash Flows of the Group and Region Retail Trust.

Subsidiaries are all entities over which the Group has control. Control is defined as having rights to variable returns from involvement in the investee and having the ability to affect those returns through its power over the investee.

Where an entity began or ceased to be a controlled entity during the reporting year, the assets, liabilities and results are consolidated only from the date control commenced or up to the date control ceased. In preparing the Consolidated Financial Statements, all intra-group transactions and balances, including unrealised profits arising thereon, have been eliminated in full.

e) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST (or equivalent tax in overseas locations) except where the GST incurred on purchases of goods and services is not recoverable from the tax authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable.

Receivables and payables are stated with the amounts of GST included. The net amount of GST receivable from, or payable to, the taxation authority is included as part of receivables or payables.

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

f) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank to meet short term commitments.

g) Sustainability

The financial impact of climate change is reflected in the Group’s investment property valuations. Generally, there are softer capitalisation rates in areas with more severe weather patterns due to climate risk. The Group’s DCF valuations include higher costs associated with climate risk such as higher insurance premiums and higher maintenance capital. DCF valuations have incorporated sustainability capital required to achieve the Group's target of achieving net zero for scope 1 and 2 greenhouse gas emissions by FY30. The major costs associated with reaching the net zero target are solar and embedded networks installations.

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Region Group Directors Declaration For the year ended 30 June 2023

In the opinion of the Directors of Region RE Limited, the Responsible Entity of Region Management Trust and Region Retail Trust (the “Retail Trust”):

• (a) The Financial Statements and Notes, of Region Management Trust and its controlled entities, including Region Retail Trust and its controlled entities, (the “Group”), set out on pages 41 to 76 are in accordance with the Corporations Act 2001, including:

• (i) Giving a true and fair view of the Group’s and the Retail Trust’s financial position at 30 June 2023 and of their performance, for the year ended 30 June 2023; and

• (ii) Complying with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Regulations 2001;

• (b) There are reasonable grounds to believe that both the Group and the Retail Trust will be able to pay their debts as and when they become due and payable.

Note D10 confirms that the Financial Statements comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The Directors have been given the declaration required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the year ended 30 June 2023.

Signed in accordance with a resolution of the Directors.

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Steven Crane Chair Sydney

14 August 2023

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Deloitte Touche Tohmatsu A.B.N. 74 490 121 060

Quay Quarter Tower 50 Bridge Street Sydney NSW 2000 Tel: +61 2 9322 7000 www.deloitte.com.au

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Independent Auditor’s Report to the Stapled Security Holders of the Region Management Trust and Region Property Trust

Report on the Audit of the Financial Reports

Opinion

We have audited the financial reports of:

• Region Management Trust and its subsidiaries (“Management Trust”) which comprises the consolidated balance sheets as at 30 June 2023, the consolidated statement of profit or loss and other comprehensive, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information and other explanatory information, and the directors’ declaration.

• Region Retail Trust and its subsidiaries (“Retail Trust”) which comprises the consolidated balance sheets as at 30 June 2023, the consolidated statement of profit or loss and other comprehensive, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information and other explanatory information , and the directors’ declaration.

In our opinion, the accompanying financial reports of the Management Trust and Retail Trust are in accordance with the Corporations Act 2001 , including:

• Giving a true and fair view of the Management Trust and Retail Trust financial position as at 30 June 2023 and of their financial performance for the year then ended; and

• Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Management Trust and Retail Trust in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial reports in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of Region RE Limited as Responsible Entity for the Management Trust and Retail Trust, would be in the same terms if given to the directors as at the time of this auditor’s report.

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial reports of Management Trust and Retail Trust for the current period. These matters were addressed

Liability limited by a scheme approved under Professional Standards Legislation.

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Member of Deloitte Asia Pacific Limited and the Deloitte organisation.

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in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter

How the scope of our audit responded to the Key Audit Matter

As at 30 June 2023, Management Trust and Retail Trust recognised investment properties valued at $4,411.6m (2022: $4,460.9m) as disclosed in Note B1. The fair value of investment property is determined in accordance with Australian Accounting Standards and the valuation policy and set out in Note B1. Note B1 discloses the significant judgements and estimates made by Management Trust and Retail Trust in estimating the fair values. These include the following assumptions: • Capitalisation rates: are subjective and fluctuate with the prevailing market transactions. • Other assumptions: discount rate, net operating income (“NOI”) growth including percentage rent inclusion are subjective due to the specific nature and characteristics of individual investment properties.

Our procedures included, but were not limited to: • Assessing management’s process for valuing investment property, and the review and approval of the valuations by the directors; • Assessing for indications of management bias in the valuation outcome; • Assessing the independence, competence and objectivity of the external valuers; • Assessing key assumptions used (such as capitalisation rate, discount rate and NOI) and challenging those assumptions where appropriate; • Holding discussions with management and the external valuers to obtain an understanding of portfolio movements and their assessment of the impact of current market trends on property valuations; • Performing further audit procedures, on a sample basis, across externally and internally valued properties, which included: • Assessing the integrity of the information used in the valuation models by agreeing key inputs such as NOI to underlying records and source evidence; • Assessing the capitalisation rates and discount rates with reference to external market trends and transactions and challenging whether those assumptions where appropriate • Assessing the forecasts used in the valuation models with reference to current financial results such as revenues and expenses, capital expenditure requirements, vacancy rates and lease renewals; • Performing a retrospective review of NOI forecasts to evaluate the accuracy of management’s ability to forecast; and • Assessing the mathematical accuracy of the models. • Evaluating available market information through to the date of our audit report to consider whether there is any evidence that contradicts the reported fair value and evaluating the impact on our audit results. We also assessed the adequacy of the disclosures included in Note B1 to the financial statements.

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Other Information

The directors of the Responsible Entity are responsible for the other information. The other information comprises the Directors’ Report and the Sustainability Report, which we obtained prior to the date of this auditor’s report, and also includes the following information which will be included in the Management Trust and Retail Trust’s annual report (but does not include the financial reports and our auditor’s report thereon): Message from Chairman, Message from the CEO, and Security Analysis, which is expected to be made available to us after that date.

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

In connection with our audit of the financial reports, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial reports or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the Message from Chairman, Message from the CEO, and Security Analysis , if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and use our professional judgement to determine the appropriate action.

Responsibilities of the Directors for the Financial Reports

The directors of the Responsible Entity of Management Trust and Retail Trust are responsible for the preparation of the financial reports that give a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial reports that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial reports, the directors are responsible for assessing the ability of the Management Trust and Retail Trust to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Management Trust or Retail Trust or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Reports

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

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial reports, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from

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fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Management Trust or Retail Trust’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Management Trust or Retail Trust’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial reports or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Management Trust or Retail Trust to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial reports, including the disclosures, and whether the financial reports represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Management Trust and Retail Trust to express an opinion on the financial reports. We are responsible for the direction, supervision and performance of the Management Trust and Retail Trust’s audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial reports of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 13 to 39 of the Directors’ Report for the year ended 30 June 2023 .

In our opinion, the Remuneration Report of the Management Trust and Retail Trust, for the year ended 30 June 2023, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors of the Responsible Entity are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

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DELOITTE TOUCHE TOHMATSU

Yvonne van Wijk Partner Chartered Accountants Sydney, 14 August 2023

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