Westfield Group Westfield Group ANNUAL REPORT 2010
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WESTFIELD GROUP WESTFIELD ANNUAL REPORT 2010 REPORT ANNUAL WESTFIELD GROUP ANNUAL REPORT 2010 WESTFIELD SYDNEY: Stage one of the $3.26 billion flagship project in the heart of Sydney’s central business district opened in October 2010 six months ahead of schedule, with 130 fashion and food retailers and a 30,000 square metre office building. Westfield Sydney, which will become home to the Group’s corporate headquarters, is due for completion in early 2012 with the opening of a 25-storey office tower. CONTENTS Westfield Stratford City IFC Portfolio Overview 02 Chairman’s Review 04 Group Managing Directors’ Review 08 Sustainability 16 Human Resources 18 Property Portfolio 20 Board of Directors 24 Financial Report 26 Investor Relations 137 cover and this page: Westfield Sydney, AUS Corporate Directory 140 WESTFIELD STRATFORD CITY: The completed £1.743 billion landmark centre will be the gateway to the London 2012 Olympic Games, and is due to open in September 2011. As Europe’s largest shopping centre with 1.9 million square feet of retail, a new town centre with residential, commercial and leisure space including two hotels, and international transport connectivity, Westfield Stratford City is set to transform the east side of London. London Olympic Games Queen Elizabeth Park THE WESTFIELD GROUP The Westfield Group has interests in and operates one UMMARY S of the world’s largest shopping O I OL F centre portfolios. This high PORT quality portfolio of 119 regional shopping centres in Australia, New Zealand, the United States and the United Kingdom is valued in excess of $58 billion, and has almost 24,000 retailers in more than 10.5 million square metres of retail space. 55 UNITED STATES A GLOBAL PRESENCE NUMBER OF CENTRES BY REGION Westfield Holdings Limited ABN 66 001 671 496 All amounts in Australian dollars unless otherwise specified This report contains forward-looking statements, including statements regarding GROUP ANNUAL REPORT 2010 REPORT GROUP ANNUAL future earnings and distributions. These forward-looking statements are not D guarantees or predictions of future performance, and involve known and unknown EL risks, uncertainties and other factors, many of which are beyond our control, and FI T which may cause actual results to differ materially from those expressed in the S statements contained in this release. You should not place undue reliance on these WE forward-looking statements. These forward-looking statements are based on information available to us as of the date of this report. Except as required by law or regulation (including the ASX Listing Rules) we undertake no obligation to update 2 these forward-looking statements. portFOLIO Summary New United United Australia Zealand States Kingdom Total Centres 44 12 55 8 119 Retail Outlets 11,920 1,724 8,989 1,281 23,914 Gross Lettable Area (million sqm) 3.6 0.4 5.9 0.6 10.5 WDC Asset Value (billion)1 $12.0 NZ$1.5 US$15.6 £3.3 $33.5 Asset Value – JV partner interests (billion) $18.6 NZ$1.5 US$2.1 £1.9 $24.7 Assets Under Management (billion)2 $30.6 NZ$3.0 US$17.7 £5.2 $58.2 Assets Under Management Gross Lettable Area United Kingdom 14% New Zealand 4% United Kingdom 6% New Zealand 4% 1 WDC share of shopping centre assets including work in progress and assets held for redevelopment. 2 WDC and joint venture share of shopping centre assets including work in progess and assets held for development. United States 30% Australia 52% United States 56% Australia 34% 44 AUSTRALIA A GLOBAL PRESENCE NUMBER OF CENTRES BY REGION 8 12 UK NEW ZEALAND 3 CHAIRMAN’S REPORT REPORT S RMAN’ I A H C Frank Lowy, AC This is my final review for Westfield as an executive. After 50 years in the leading executive role with the company, from May 2011 I will assume the position of non-executive chairman. I will, however, remain an active and involved chairman, staying close to the business and contributing to strategy and all major decision-making for the Group. I am proud to be taking this step now, at a time when the Group is strong, stable and with exciting opportunities ahead of it. Our latest financial results and a look at the period ahead reinforce this fact. For 2010 the Group recorded a net profit of $2.306 billion (before one-off accounting adjustments and charges relating to the establishment of the Westfield Retail Trust), growth is forecast in every market in which we operate, we have completed a major capital restructure which will improve the long-term growth profile of the Group, we are close to completion of two major projects at Westfield Sydney and at Westfield Stratford City in London and we are reviewing opportunities for further development and international expansion. GROUP ANNUAL REPORT 2010 REPORT GROUP ANNUAL D EL FI T S WE 4 The change in my role is This is true at management level It was also a time for me to accompanied by a number too with the most recent changes reflect personally on my role in of other important changes, being the latest step in a carefully the company, back to the days including the appointment of managed succession plan which when my founding partner, the late current Group Managing Directors has evolved over the past decade John Saunders, and I personally Peter and Steven Lowy as joint or more as greater responsibility managed every aspect of the Chief Executive Officers for the for the leadership of the Group has business. We scouted for land, Group and a further renewal of been shared with an ever wider we worked on building plans, the board with the appointment group of senior executives. we oversaw construction, leased of Mr Brian Schwartz as Deputy The aim of this long-term shops and paid contractors and Chairman, Chief Financial Officer succession plan has been to staff with cheques we signed at Peter Allen as Finance Director ensure that the Group is always our shared desk. and the departure of current able to draw upon the very best All of that is a long way from Deputy Chairman David Lowy board and executive talent, not where we are today, and while the and another long-serving director, just in the short-term but well principles of our business model Mr David Gonski. into the future. haven’t really changed over the The changes at board level The changes in roles and years the Westfield Group today continue the process of renewal responsibilities at board and senior is a vastly larger and more that has been evident over the past management level cap a year of complex company. three years with the appointment celebration and achievement for This was highlighted by one of of Mr John McFarlane, Professor Westfield Group. the major events of 2010 – the Judith Sloan, and Lord Peter During the year we marked our restructuring of the Group to Goldsmith in 2008, Mr Brian 50th anniversary as a public create the new Westfield Retail Schwartz in 2009 and Mr Mark company and this provided many Trust which is now a joint venture Johnson in 2010. opportunities to reflect on our partner in 54 Westfield centres in I am proud that we can make these achievements and to think about Australia and New Zealand. This changes with confidence because, how we can maintain our position was the latest in a series of capital while they are significant, they as a successful, forward-looking restructures which the Group has have not come about suddenly. and innovative company. undertaken over its history to In fact, as I reflect on my role with better position the company for the company since it was created growth and to create greater value in 1960, I can see that they are for securityholders. consistent with the two defining features of the company’s history – the ability to change and move with the times while maintaining continuity and stability. 5 CHAIRMAN’S REPORT CONTINUED The introduction of more joint venture partners is likely to become an emerging trend in the United States in the period ahead. We will also consider, over time, reducing our REPORT S exposure to less productive assets in the United States and United Kingdom. RMAN’ I A The theme of continuity and change was H C evident again during the year at an internal digital business conference organised by Westfield for its most senior executives. The conference was held to review how developments in digital technology were shaping retail formats and shopper behaviour, what Westfield was already doing in response and how best to adapt in future. The conference examined in detail Westfield’s first foray into online retailing with the launch of westfield.com.au during the year, as well as a range of other initiatives to improve the shopper experience and create better and more targeted marketing for our retailers. While digital business and the internet receives great attention there is, however, no better example of Westfield continuing to meet consumer expectations than with the development of icon centres like Westfield Bondi Junction in Sydney, Westfield Century City in Los Angeles and Westfield London. In October 2010, we opened the first stage of the latest of these centres at Westfield Sydney, taking shopping to yet another level of quality and experience for retailers and shoppers alike. The new centre, located in the heart of Sydney’s CBD, has already transformed the area with the introduction of some of the world’s most popular luxury retail brands. The completed centre will open during 2011, to be followed by the opening of yet another icon centre later in the year at Stratford City in London adjacent to the site of the 2012 London Olympics.