CREATING LIFESTYLE DESTINATIONS Annual Report 2017 Inside
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CREATING LIFESTYLE DESTINATIONS Annual Report 2017 Inside 02 ur erating odel 04 Chairman’s Review 06 and anaging iretors eview 08 ur erating and Finanial eview 22 ur Portfolio 30 ur Peole 32 igital 34 ur Board 37 ur xeutive ommittee 40 Tax Transareny 43 Sustainability Assurane Statement 44 Financial Report 45 iretors eort 49 Remuneration Report 67 Finanial Statements 107 ndeendent Auditors eort 113 ororate iretory About this report This annual report is a summary of Vicinity Centres’ operations, ativities and finanial osition as at une 17 n this report references to ‘Vicinity’, ‘Group’, ‘we’, ‘us’ and ‘our’ refer to iinity entres unless otherwise stated eferenes in this reort to a year and FY17 refer to the finanial year ended une 17 unless otherwise stated All dollar figures are exressed in Australian dollars (A) unless otherwise stated This annual reort disloses iinitys finanial and nonfinanial erformane for FY17 and has been reared using elements of the ntegrated eorting framewor ore information particularly latest company announcements and detailed sustainability reorting an be found on iinitys website iinity is ommitted to reduing the environmental footrint associated with the production of the annual report and printed copies are only posted to securityholders who have eleted to reeive a rinted oy This reort is rinted on environmentally resonsible aer manufatured under S11 environmental standards The following symbols are used in this reort to rossrefer to more information on a topic: References additional materials within this report References additional materials on Vicinity’s website Disclaimer This reort ontains forwardlooing statements inluding statements indiations and guidane regarding future earnings distributions and erformane The forwardlooing statements are based on information available to iinity entres as at the date of this reort (16 August 17) These forwardlooing statements are not guarantees or reditions of future results or erformane exressed or imlied by the forwardlooing statements and involve nown and unnown riss unertainties assumtions and other fators many of whih are beyond the ontrol of iinity entres The atual results of Vicinity Centres may differ materially from those exressed or imlied by these forwardlooing statements and you should not lae undue reliane on suh forward looing statements xet as reuired by law or regulation (inluding the AS isting ules) we undertae no obligation to udate these forwardlooing statements Chadstone, VIC From local shopping centres to premium retail destinations that compete on an international stage, we aim to enrich our communities by providing unique centres with the shops, services and amenities that they need. Performance Highlights Statutory net profit after tax $1,583.6m FY16: $960.9m Distribution per security 17.3 FY16: 17.7¢ Total return1 15.5% FY16: 12.8% Employee engagement score 71% FY16: 66% Green Star Performance portfolio rating 3 Stars FY16: 2 Stars Occupancy rate 99.5% June 2016: 99.4% 1. Calculated as: (Change in net tangible assets per security (NTA) during the period + distributions declared)/opening NTA. Vicinity Centres Annual Report 2017 01 Our Operating Model Enriching community experiences Our resources Our value add We evolve and optimise our Our strategy is to create unique and relevant resources to complement and enhane our oerating model consumer experiences, deliver compelling value for our retail partners and strive for Capital excellence in everything we do. aital from our euity and debt investors and strategi artners People A highly engaged and aable worfore Real estate A resilient and sustainable roerty ortfolio Data and systems Networ aability data roesses and our insights Deliver the best retail and intelletual roerty mix and engaging Brand experiences to attract Brand and reutation underinned consumers and support by strong staeholder relationshis our retail partners. External inences e embrae oortunities and manage material riss resented by our external inuenes Financial and property markets Fators that imat the aessibility riing and liuidity of our aital and real estate assets Enhance our portfolio Consumer and retail trends quality through hanging lifestyles needs and select developments, behaviours of onsumers and maret divestments and fores that affet our retailers acquisitions. Local community emograhi ultural soial and economic characteristics where we oerate Environment Aessibility and ost of resoures and the imats of limate variability 02 Vicinity Centres Annual Report 2017 Our outcomes e reate shared value by enrihing ommunity exerienes Solid investor returns 4.6% omarable underlying PS growth 15.5% total return (FY16 1) Successful retailers and satisfie cstomers $9,429 per sqm seialty store AT (u 6 on FY16) Highly engaged people 71% engagement sore (FY16 66) Better communities $1.8 million community investment Intensively (FY16 1 million) managing our 8% centres to drive redution of arbon intensity on FY16 income growth (down to 71g 2esm) and operational efficiencies. Find out more about our strategy and how we create shared value for our stakeholders in the following pages. Vicinity Centres Annual Report 2017 03 Chairman’s Review Dear Securityholders I am pleased to present to you Vicinity Centres’ (Vicinity’s) 2017 Annual Report. uring the 17 finanial year we have The imrovement of many of our ey foused on reinforing iinitys strong ortfolio metris during the year reets latform for future growth Portfolio uality this fous has been imroved our aital osition has been strengthened we have invested e have also integrated broader in networs systems and aability to sustainability obetives into our strategy oerate more effetively and gain deeer to reate a lowarbon highlyeffiient Peter Hay – Chairman insights into our onsumers behaviours portfolio, enhance our climate resilience and all outstanding ey merger and and shae better ommunities where we integration ativities have now been oerate As one of the largest owners and being initiated at some of our entres omleted e have also ontinued to managers of shoing entres in Australia aross the ueensland oast am leased sharpen our emphasis on our consumers we touh a great number of lives our to reort that there were no serious inuries and our retailers, as we position Vicinity people, our retailers and service providers, to our eole and no maor damage to for further suess in the evolving retail together with our onsumers and loal our assets would lie to anowledge landsae ommunities As an emloyer we have the dedication and professionalism of foused on a number of internal initiatives our team in how they dealt with these Statutory net rofit after tax for the this year inluding a fous on ulture unforeseen events 1 months to une 17 was and engagement This year am leased 16 million underinned by strong to report that our people initiatives have At the 16 Annual General eeting net roerty valuation gains Net tangible heled to inrease our overall engagement (AG) announed our intention to assets er seurity (NTA) was u to sore to 71 u erentage oints on redue the total number of Board suorting a total return1 of 1 the rior years grouwide engagement members and also to introdue new for the eriod nderlying earnings of survey outome sills to our Board artiularly in the 71 million or 17 ents er seurity areas of digital and tehnology am were delivered This result was in line with e have also been strategially investing in delighted to be weloming s anette guidane and down 1 omared to the our ommunities ontributing 1 million endall to the Board as an ndeendent rior year largely as a result of nonore this year through both ororate and entre Nonexeutive iretor effetive from assets divested to imrove the uality level ommunity initiatives e entered 1 eember 17 uring the year and growth of the ortfolio Adusting for a threeyear artnershi with Beaon r ihard addo A retired from auisitions and divestments omarable Foundation to deliver our community the Board and at iinitys 17 AG underlying earnings were u 6 on the investment rogram fousing on assisting later this year r harles ae and rior year a strong ahievement in unemloyed and disengaged youth in our s ebra Stirling will also be retiring a soft retail environment This solid result ommunities e have also artnered with from the Board n behalf of the Board reets the benefit of ongoing ortfolio a number of soial enterrises suorting than ihard harles and ebra enhancement, the realisation of further the emloyment of aroximately for their commitment to Vicinity’s merger synergies and effiienies and disadvantaged individuals from our loal seurityholders and their signifiant the sound underlying erformane of ommunities e believe these initiatives ontribution to the Board our assets The fullyear distribution er reate shared value by strengthening our seurity was 17 ents omared to communities and the connection they ur and anaging iretor r Angus 177 ents in the rior year mainly due have with our entres Naughton announed his retirement to the divestment of nonore assets as of 1 eember 17 having A number of unfortunate events ourred been involved with the business for To deliver on our strategy to reate during the year n February 17 a light nearly 1 years inluding his time with uniue and relevant onsumer airraft rashed into the omemaer Novion Proerty Grou (Novion) and its exerienes deliver omelling value for entre at F ssendon Sadly those redeessor FS etail Proerty Trust our retail artners and strive for exellene on board the lane did not survive n Grou