Financial Report 2013 Financial Report 2013
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Financial Report 2013 Financial Report 2013 Stockland was founded in 1952 to “not merely achieve growth and profi ts but to make a Contents worthwhile contribution to the development Chairman’s Letter 01 Managing Director’s Letter 03 of our cities and great country.” Directors’ Report 05 Lead Auditor’s Independence Declaration 50 Financial Statements When Stockland was founded in 1952, With the benefi t of our diverse property skills, Consolidated Statements Ervin Graf had a vision “to not merely achieve we connect different types of properties in of Profi t or Loss and Other growth and profi ts but to make a worthwhile shared locations, to create places that inspire Comprehensive Income 51 contribution to the development of our cities people to gather, to share and to live life. Consolidated Balance Sheets 52 and great country”. We recognise our responsibilities to the environment and are a leader in sustainable Consolidated Statements Pursuing that vision has seen Stockland of Changes in Equity 54 business practices. grow to become one of Australia’s leading Consolidated Cash Flow Statements 56 diversifi ed property groups – owning, For over 60 years, we have worked hard developing and managing a large portfolio to grow our portfolio of assets and projects. Notes to the Consolidated of shopping centres, offi ce and industrial We have a long and proud history of Financial Statements 57 assets, residential communities and creating places that meet the needs of Directors’ Declaration 150 retirement living villages. our customers and communities. Independent Auditor’s Report 151 Securityholders 153 Ervin Graf Securityholder Information 154 Directory 155 Responding to Letter from the Managing This year we Developing and challenges and Director and CEO. maintained our managing sustainable opportunities. Review on page 6 strategy of moving and effi cient assets Annual Review 2013 Read more on page 2 towards smaller lot creates value for and home sizes to our customers. maximise affordability Find out more for our customers. on page 7 Review on page 6 Shareholder Review 2013 Further information Willowdale, NSW Site of our future Willowdale community in Sydney’s south west. More on page XX. For more information on Stockland including the latest fi nancial information, Shareholder Review Annual Review Property Portfolio Sustainability Reporting announcements, property news and Snapshot of our year Our integrated fi nancial, social Details of assets Our online detailed corporate governance information visit and environmental review in our portfolio sustainability performance our website at www.stockland.com.au Financial Report 2013 From the Chairman For Stockland, the past year was one of transition. In January, we appointed our new Managing The Board is confi dent Director and CEO, Mark Steinert, following the retirement of our long-serving Managing Director, that we have in place Matthew Quinn. We have refreshed our senior executive team with new appointments from the right plan to both within and outside the Company. We improve returns for reviewed and redirected our strategy for future growth to better build on our key strengths, but securityholders as also to retain the ability to respond to market opportunities with greater agility and discipline. the property market We rebased our Residential business by adopting more conservative project valuations recovers, and the and revised our approach to capitalised interest to make our projects more fi nancially robust. right leadership team We raised $400 million in equity capital to help fund our accretive development pipeline and to achieve that plan. build our industrial asset portfolio while maintaining low gearing to reduce the volatility of future earnings. The Board is confi dent that we have in place the Graham Bradley right plan to improve returns for securityholders Chairman as the property market recovers, and the right leadership team to achieve that plan. Stockland Financial Report 2013 01 Letter from the Chairman Our FY13 results We maintained our prudent balance sheet Total annual bonuses paid across the Group management in FY13, retained our A-/stable were signifi cantly down on prior years, As previously reported, our results in FY13 were credit rating and reduced our gearing to demonstrating a clear alignment between disappointing, largely refl ecting the prolonged 22.7 percent as at 30 June 2013. While the performance and reward. In line with our downturn in the Australian residential land Group’s overall fi nancial position is strong, the new policies, a third of annual bonuses for market and related impairments. While earnings recent Residential impairment provisions make senior executives was awarded in Stockland in our Residential business were hit hard, our it sensible to move up to $510 million of capital securities with deferred vesting. No senior Stockland has Commercial Property and Retirement Living from the Stockland Trust to the Corporation to executives earned any long-term incentive businesses performed well in diffi cult market better position our development businesses for vesting in FY13 as the relevant performance embedded conditions. In FY13 we substantially completed future growth. We will seek securityholder hurdles were not met. three major shopping centre projects – approval for this at the October AGM. sustainability in Merrylands, Shellharbour and Townsville – in which we have invested some $900 million Our commitment to all aspects of our over the past two to three years. Our new team sustainability business over many Our Underlying Profi t in FY13 was $494.8 million, Our new CEO, Mark Steinert, commenced in Stockland has embedded sustainability in all down from $676 million in FY12. Underlying January 2013. Mark has 25 years of experience aspects of our business over many years. Both years. Both our earnings per share was 22.4 cents, 24 per cent in property and fi nancial services, and came with our employees and the Board take great pride lower than in FY12. a strong reputation for his analytical and strategic in working for a group with a deep commitment employees and the approach, together with his experience in fostering to being a diverse, socially concerned and Our statutory profi t in FY13 fell by $382 million an engaging work environment for employees. environmentally responsible organisation. from FY12 to $104.6 million, largely due to Board take great impairment in the value of a number of residential We have made a number of further changes to In FY13, Stockland again achieved international land holdings of $355 million. The majority of the our senior management team to give us the right recognition for its leadership in sustainable pride in working impaired projects were acquired prior to the mix of skills and experience to lead the business management with our continued listing on Global Financial Crisis, and many were “lifestyle in the years to come. Pleasingly, two of these several global indexes, including being ranked for a group with a projects” for which the market has declined senior appointments were made from within the second globally for real estate companies on steeply in recent years. We plan to work out or Group (Andrew Whitson – Residential, and the RobecoSAM Index (formerly DJSI). deep commitment sell these impaired projects as soon as market Stephen Bull – Retirement Living) refl ecting the conditions permit to return cash to reinvest for success of our talent development and In conclusion to being a diverse, stronger returns in other areas. succession planning. Simon Shakesheff – Strategy and Stakeholder Relations, and Tiernan I conclude by thanking my board colleagues, socially concerned O’Rourke – Chief Financial Offi cer, bring to us especially the chairs of our committees, for Distributions valuable expertise from other organisations. their dedication and hard work during a year and environmentally Despite reduced earnings in FY13, our strong which presented many challenges. On behalf balance sheet enabled us to deliver on our Responsible remuneration of all securityholders, I would also like to thank responsible commitment to maintain full-year distributions our dedicated employees for their steadfast at the FY12 level of 24 cents per security even We continued our policy of recent years of commitment during a year of change, challenge organisation. though this payout ratio was above our target executive remuneration restraint, and for the and achievement. range. It is our intention to again hold our second successive year senior executive pay was unchanged in FY13. We have also awarded I look forward to reporting Stockland’s progress distribution at 24 cents in FY14, in the absence to you at the AGM in October. of a major market downturn, and this is a mark no pay rises in FY14 except where there has of the Board’s confi dence that our earnings been a change of responsibilities. should improve steadily. 02 Stockland Financial Report 2013 Financial Report 2013 From the Managing Director and CEO It was a great privilege to be invited by the Board last December to lead the management team I have seen what sets at Stockland, a company I have respected and our business apart – followed closely for over 20 years. Since joining Stockland in January 2013 I have quality assets, visited dozens of our assets and the people who operate them. I have not been disappointed: I a strong and ethical have seen what sets our business apart – quality assets, a strong and ethical corporate culture corporate culture, and people with a passion for creating great and people with places to live, shop and work. Clearly the business has faced performance a passion for creating headwinds in recent years. I am, however, confi dent that we have re-established strong great places to live, foundations from which to deliver growing and shop and work. predictable returns for our securityholders. Clear direction A key task in my fi rst six months was to conduct a detailed strategic review and to put our revised Mark Steinert plan quickly into action.