Cedar Woods Properties Limited
2017 Annual Report
ABN 47 009 259 081
About Cedar Woods
Cedar Woods Properties Limited is an Australian property development company. This year
marks 30 years since the company was established in 1987, was listed on the Australian
Securities Exchange in 1994 and was admitted to the ASX 300 in 2013. The company’s shares
trade under the security code ‘CWP’.
The company’s principal interests are in urban land subdivision and built form development for residential, commercial and
retail purposes. Its portfolio of assets is located in Western Australia, Victoria, Queensland and South Australia. The board
and management of Cedar Woods have extensive experience in the property industry, with particular expertise in adding
value to land holdings through the achievement of government and local authority approvals and the planning, design and
delivery process.
Cedar Woods has consistently generated profits and dividends for shareholders, whilst achieving excellence in product
delivery, as recognised by several national awards and many state awards, including the categories “Best Residential
Estate” and “Environmental Excellence” and most recently, “Best High Density Development”. In the investor relations
arena, the company is a past winner of three ARA silver awards for its Annual Report.
Cedar Woods’ projects are sensitively developed with consideration for environmental and community interests and built
to a high quality that is renowned in the marketplace. Through the rapid expansion of its built form development portfolio,
Cedar Woods has earned a reputation of delivering high quality apartments and townhouses for both the owner-occupier
and investor market.
The company has a strong focus on shareholder value and its record in delivering quality developments to the market has
produced a strong earnings stream, providing consistently high returns to shareholders.
Downloadable content
Cedar Woods Properties has taken the opportunity to publish the Corporate Governance statement on its website rather
than include in the annual report. A copy of the Corporate Governance statement can be downloaded from the investor
relations section of the website. www.cedarwoods.com.au
Other information that is available in the investor relations section is listed below.
• Board Committee Charters
• Risk Management Policy and Internal Compliance and Control System
•
Investor Communications Policy
• Continuous Disclosure Policy
• Performance Evaluation Policy
• Privacy Policy
• Primary Objectives and Company Code of Conduct
• Securities Trading Policy
• Diversity Policy
Sustainability Reports are available on our website in the Shareholder Reports section.
Cover - Botanica Apartments, Banbury Village, Victoria
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Table of Contents
Cedar Woods’ Charter ....................................................................................................................................................... 5
Our Strategy and Business Model ..................................................................................................................................... 7
Financial and Operating Review ......................................................................................................................................... 8
Project Pipeline Chart as at 30 June 2017 ....................................................................................................................... 16
Environmental and Social Governance ............................................................................................................................. 18
Directors’ Report ............................................................................................................................................................. 23
Directors’ Report - Letter to Shareholders ....................................................................................................................... 28
Directors’ Report - Remuneration Report ......................................................................................................................... 30
Auditor’s Independence Declaration .................................................................................................................................. 48
Financial Statements .................................................................................................................................................... 49
Consolidated Statement of Profit or Loss and Other Comprehensive Income ................................................................... 50
Consolidated Balance Sheet ............................................................................................................................................ 51
Consolidated Statement of Changes in Equity ................................................................................................................. 52
Consolidated Cash Flow Statement ................................................................................................................................. 53
Notes to the Financial Statements ............................................................................................................................. 54
Section A: Key Numbers .............................................................................................................................................. 55
Profit or Loss Information ................................................................................................................................................. 56
Balance Sheet Information ............................................................................................................................................... 58
Cash Flow Information ..................................................................................................................................................... 69
Section B: Financial Risks ........................................................................................................................................... 70
Section C: Group Structure ......................................................................................................................................... 78
Section D: Unrecognised Items .................................................................................................................................. 83
Section E: Other Information ....................................................................................................................................... 87
Section F: Declaration and Independent Auditor’s Report ..................................................................................... 102
Section G: Shareholders’ Information ...................................................................................................................... 110
Corporate Directory ....................................................................................................................................................... 115
2017 ANNUAL REPORT
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Newton Apartments, Williams Landing, Victoria
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Cedar Woods’ Charter
We are Cedar Woods Properties, an ASX 300 company with a proud history of creating
communities across Australia through high-quality property development.
Our purpose is to create long-term value for our shareholders through the disciplined acquisition, development and
marketing of properties that meet the needs of our customers.
A significant part of our business involves creating vibrant residential communities, typically in capital cities, with supporting
retail and commercial developments. We are also active in the redevelopment of major infill sites where we deliver medium
and high density residential dwellings.
We are guided by four key values. They act as critical drivers of Cedar Woods’ culture.
Integrity
• Do what is right and do what we say we will do.
• Uphold honesty, truthfulness and sincerity whilst remaining fair and ethical with all stakeholders.
Performance
• Meet or exceed the expectations of stakeholders, communities, customers and suppliers.
• Maintain a strong financial position to allow us to be competitive and engage in opportunities when they arise.
Innovation
• Strive to create and deliver new products to develop and grow as a business.
• Foster a culture that encourages learning, new ideas and rewards creativity.
People and Environment
• Make positive contributions to communities in which we operate.
• Attract, develop and retain the best talent for our business, challenging our people, demonstrating a can do attitude
and fostering a collaborative and mutually supportive environment.
Our customers are influenced by interest rates, the economic outlook and Government policies. Demand in the metropolitan
and regional markets in which we operate is uneven and fluctuates in response to these factors.
Against this backdrop, we manage our portfolio with the aim of delivering consistent annual growth in profits and dividends.
2017 ANNUAL REPORT
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The Rivergums, Western Australia
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Our Strategy and Business Model
Our Strategy
“To grow and develop our national project portfolio, diversified by:
•
•
•
geography
product type
price point
so that it continues to hold broad customer appeal and performs well in a range of market conditions.”
Delivering on strategy in FY2017
We completed the acquisitions of the Wooloowin land in Brisbane, the Glenside land in Adelaide and Anstey Road land in
Forrestdale, with the settlements of each property during the second half. We completed the acquisition of land at Bonnie
Brook in Victoria with settlement in July 2017. The acquisition of land at Port Adelaide was progressed with settlement
anticipated within the next 12 months.
We built our first apartment project at the Williams Landing Town Centre and have already launched the second stage of
apartments. We concluded negotiations with Target Australia for the relocation of the Target HQ to a new office that we will
develop at Williams Landing, and the sale of the building, once completed in FY2019.
Our new residential estates at Ellendale in Brisbane and Bushmead in Perth were received well by homebuyers, with strong
sales and first settlements achieved in FY2017.
The first home buyer, upgrader and investor segments are all well catered for in our product range and the Brisbane, Perth
and Adelaide markets continue to offer excellent affordability.
Our Business Model
Property Acquisitions
Development
Marketing & Sales
Disciplined approach
to acquisitions
Research, design,
planning and delivery
Positioning projects
to meet demand
Identify projects that meet
closely defined criteria
Assess prospects in line
with corporate strategy and
financial targets
Structure contracts to
minimise risks and optimise
exposure (including Joint
Ventures)
Designs to meet agreed
project vision
Achieve required approvals
Ongoing market research
and assessment of designs
to meet financial and non-
financial objectives
Manage construction within
annual budget, cost and
timeframe
Generate pre-sales to
underwrite stages of
projects
Ongoing monitoring of
sales conditions and buyer
groups
Efficient settlement
management
2017 ANNUAL REPORT
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Financial and Operating Review
On behalf of the Board, we are pleased to present the financial and operating review of Cedar
Woods Properties Limited to shareholders.
The following summarises the results of operations during the year and the financial position of the consolidated entity at
30 June 2017:
a) 2017 Financial Highlights
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•
•
•
record net profit of $45,445,000, up 4.2 per cent;
record full year dividends of 30.0 cents per share, up 5.3 per cent;
record earnings per share of 57.6 cents, up 4.2 per cent;
low level of bank debt;
• strong interest cover;
•
total shareholder return of 29.7% on company shares.
b) Growth in Net Profit After Tax (NPAT) and Dividends Paid
Cedar Woods has a track record of growth over the past seven years with Net Profit after Tax growing from $36.3m in
FY13 to $45.4m in FY2017 and dividends declared growing from 26 cents to 30 cents per share.
NPAT and Dividends declared for the past 5 years
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FY13
FY14
FY15
FY16
FY17
Net Profit After Tax
Dividends Declared
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c) 2017 Financial Results Summary
Year ended 30 June
Revenue
Net profit after tax
Total assets
Net bank debt
Shareholders’ equity
d) Key Performance Indicators
Year ended 30 June
Basic earnings per share
Diluted earnings per share
Dividends per share – fully franked
Return on equity
Return on capital
Total shareholder return (1 year)
Net bank debt to equity – 30 June
Interest cover
Net asset backing per share – historical cost
Shares on issue – end of year
Stock market capitalisation at 30 June
Share price at 30 June
e) Financial Year Overview
2017
$’000
2016
$’000
% Change
222,269
175,159
45,445
43,602
505,624
452,729
78,940
50,344
330,234
307,188
26.9%
4.2%
11.7%
56.8%
7.5%
2017
2016
% Change
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7.7
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19.8
19.8
During FY2017, buoyant conditions continued in Eastern States property markets, while in Western Australia the market
stabilised and is now showing signs of a modest recovery. The company completed the acquisitions at Wooloowin in
Brisbane and the Glenside project in Adelaide and made further acquisitions of smaller land parcels at Bonnie Brook in
Victoria and Forrestdale in Western Australia, details of which are provided below.
During the year, significant progress was made with stages developed across the company’s property portfolio of active
projects. In particular, at the company’s Ellendale development in Upper Kedron, Brisbane, the first stage of 142 lots
stage was successfully developed and the majority sold and settled in FY2017, with the planning process advanced
for the balance of the 228ha site. In Western Australia the Bushmead project was successfully launched, with stage 1
sales progressing well and the estate officially opened in June 2017. In addition, plans and approvals were progressed
for a number of developments anticipated to commence in future years, with important planning milestones achieved
at Millars Landing and Karmara (Piara) in Western Australia. In Williams Landing, Victoria, the company is building
the Target head office. Construction has commenced and the building has been pre-sold with settlement due after
completion in FY2019. Further details of achievements in the property portfolio follow in the next section.
The year closed with a record full year net profit of $45.4m, being the seventh consecutive year of record profit and
earnings, allowing the Board to declare a record full year dividend of 30.0 cents per share, up 5.3%.
As a result, basic earnings per share for FY2017 was 57.6 cents, an increase of 4.2 per cent on the previous year.
Return on equity of 13.8 per cent and return on capital of 16.5 per cent were well above the company’s benchmarks of
10 per cent and 12 per cent respectively.
The 1 year total shareholder return was 29.7%, with the company’s share price benefitting from improved market
sentiment towards WA exposed companies and reflecting the strong share price performance of most companies
within the residential property sector.
2017 ANNUAL REPORT
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f) Operational Review of Developments
Nationally the housing sector experienced strong levels of activity in FY2017 with the number of housing starts only
marginally lower than the record level set in FY2016. Building approvals continued at high levels through most of the
year in all states in which the company operates, except Western Australia where FY2017 is expected to be the lowest
year in the current cycle. The Housing Industry Association (HIA) is forecasting national dwelling starts to moderate
further in FY2018, with the largest drop in NSW, and a more modest easing in activity in Victoria and Queensland.
In Victoria, the State government forecasts strong population growth, a steadily growing economy and increasing
employment in FY2018 and these factors are expected to continue to support the housing sector. Prices have
continued to grow in the Melbourne market over the past 12 months, although they are expected to ease over the
next year.
In Western Australia, forward indicators on population growth, economic growth and employment indicate that the
State economy has begun a modest recovery. The Housing Industry Forecasting Group anticipates an 11 per cent
increase in Western Australian dwelling commencements in FY2018.
In Queensland, State Treasury is forecasting 3.5 per cent growth in the economy in FY2018, which continues to be
faster than every other state in Australia, driven by strong export activity. Employment growth is expected to accelerate
and dwelling investment is forecast to continue to grow at a steady rate. Dwelling prices in Sydney and Melbourne are
now considerably higher than in Brisbane and this is expected to lead to a greater demand for property in Queensland
as investors chase higher returns and owner-occupiers seek greater affordability.
In South Australia the economy is expected to grow by 2.25 per cent in FY2018 as low interest rates, government
infrastructure spending and shipbuilding stimulate that market.
The Reserve Bank’s monetary policy continues to stimulate the housing market, with the cash rate continuing at a
low 1.5 per cent during the financial year. Affordability of housing and economic conditions remain supportive for the
residential property sector in the states in which the company operates.
i. Victoria
The projects in Victoria again performed well during the year, with strong sales and settlement results and good
margins achieved.
The medium density housing developments, St A. in St Albans and Jackson Green in Clayton South, have
progressed well with housing construction now underway at both projects. Demand for housing at both projects
has been very strong with significant price growth starting to be achieved, especially for townhouse product.
Jackson Green’s first apartment building comprising 60 one and two bedroom apartments is fully sold and under
construction with settlements due around the end of FY2018.
The Banbury Village development in Footscray is now 100 per cent complete and settled. Banbury Village and
Williams Landing were finalists in the 2017 Property Council of Australia national awards.
Several new projects and stages within Williams Landing achieved significant milestones during FY2017:
• Residential Land – good presales and price growth achieved for stages to be delivered in FY2018.
• Apartments – 50 settlements were achieved in FY2017. Several other projects are being designed or delivered
with very strong presales which are expected to settle in FY2018 and FY2019. A 10 year pipeline of apartment
projects exists at Williams Landing.
• Target head office – during FY2017 the company secured an agreement for lease with Target Australia for a
new 12,700m2 eight level office building. Construction has commenced and the building has been pre-sold with
settlement due after completion in FY2019. The sale is subject to building completion and rental commencement.
• Strata office – 111 Overton Road, offering a ground floor medical centre and 40 office suites launched in June
2017 and is approximately 50 per cent sold and leased. Construction is anticipated to commence in FY2018, with
completion in FY2019, subject to satisfactory completion of the sale and leasing campaign.
• Shopping Centre – the centre is performing well with low vacancy rates and increasing visitation. An extension to
the shopping centre was completed adding a childcare centre, gym, restaurants and other specialty tenancies.
The 100 Overton Road office building adjacent to the shopping centre is now 100 per cent leased.
• Balance land – numerous other projects are being planned and marketed, which will supplement earnings over
the next 10 years.
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Just prior to the end of the financial year the company acquired an 11 hectare development site in Bonnie Brook for
$4.2 million plus GST, which settled on 2 July 2017. Located 30 kilometres west of the Melbourne CBD, the project
is anticipated to realise 135 residential lots, with development commencing around 2020. Bonnie Brook is a new
residential suburb located between Plumpton and Rockbank in Melbourne’s quickly developing western growth
corridor. The region is currently experiencing strong demand and price growth.
The company has recently acquired an infill development site of approximately 1390m2 in North Melbourne for
$9.8m, GST incl. Located 2 kilometres north of the Melbourne CBD, it is anticipated that this medium density
project will comprise premium 3 and 4 bedroom townhouses, with construction anticipated to commence shortly
after settlement in June 2018. North Melbourne is a vibrant inner city location with the site enjoying close proximity
to Flagstaff Gardens, Queen Victoria Market, University High School, University of Melbourne, The Royal Melbourne
Hospital, Royal Park and The Melbourne Zoo.
ii. Western Australia
Market conditions stabilised in Western Australia during FY2017 with strong sales recorded in several estates,
particularly in the second half.
Bushmead, launched in July 2016 and which was met with strong initial demand, has continued this momentum
over FY2017 with stage one comprising 87 single residential lots now more than 85 per cent sold and presales
of stage 2 having commenced. Located 15 kilometres east of the Perth CBD, Bushmead comprises a project
of unique natural attributes and beauty within an urban infill location. The recognition by the Western Australian
Government of the suburb of Bushmead in February 2017 has provided the project its own unique identity. The
project site covers 273 hectares and will be developed in stages to deliver approximately 1054 lots over the next
6-8 years.
Strong sales activity continued in FY2017 at Ariella Estate in Brabham, which is located 17 kilometres north-east of
Perth’s CBD. Over three hundred lots remain at the estate with several stages being progressed and contributions
expected in FY2018 and beyond.
Harrisdale Green, Cedar Woods’ development project with the West Australian Housing Authority, has recorded
strong sales with substantially all of stage 5, comprising 40 lots having sold during FY2017. Planning is now
underway in the redesign of the balance of this project which is expected to yield 300 dwellings.
Early works have commenced in FY2017 on two new projects named Millars Landing and Karmara. Millars
Landing, located in North Baldivis immediately adjacent the Kwinana Freeway, comprises a total of 119 hectares
and is expected to yield a total of 1580 lots over the next 10-15 years. Construction works have commenced on
site. Karmara, located within the inner south eastern suburb of Piara, comprises a total of 130 lots. Construction is
expected to commence in September 2017. First settlements for both Millars Landing and Karmara are expected
to be achieved in H2 FY2018.
Planning delays have been experienced in rezoning of the Mangles Bay marina-based tourist precinct, 39
kilometres south of the Perth CBD. It is now expected that completion of statutory planning will be achieved in mid
FY2018 with first construction to occur in mid FY2019. This mixed use project will provide much needed boating
and tourism facilities, together with a range of housing options for the Rockingham region, as well as improved
public access to the Mangles Bay beach front.
Slower sales activity has been recorded at The Rivergums, located within the highly competitive south Baldivis
region where price discounting has reduced margins. Current sales activity involves the sale of remaining lots within
stages 10A and 10B, beyond which 270 lots remain lots remain within this flagship estate.
The Brook and The Scarp, located within the south eastern suburb of Byford and offering first and second home
buyer product, have recorded lower than expected sales activity. Increased builder packaging and refocused
marketing initiatives are expected to result in improved performance from these estates in FY2018.
The company’s landholding at Anstey Road, Forrestdale was successfully rezoned from rural to urban in September
2016. It has been supplemented by the acquisition of an adjoining 4.89ha land parcel located immediately to
the south of the existing holding for $3.8 million. This new acquisition is expected to yield 71 lots, increasing the
Forrestdale holding to a total of 330 lots. First development is expected to commence in FY2018, being the start of
an anticipated six year project.
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iii. Queensland
Sales at the company’s first Queensland project, Ellendale in Upper Kedron, progressed well in FY2017 with
settlements achieved in line with expectations. Construction on stage 2 commenced in 2016 and is well advanced.
The planning process for the balance of the site is progressing and is expected to conclude in mid FY2018.
Planning is progressing for the company’s project in the inner ring suburb of Wooloowin and the planning permit
is expected to be in place by mid FY2018 with civil and housing construction on the first stage anticipated to
commence in FY2019. The project plans include 279 medium-density residential dwellings in a sought after location
near train stations, shopping centres, schools and parks.
iv. South Australia
Initial site preparation works have commenced at Glenside, the company’s first development in South Australia. The
16-hectare site is well located, three kilometres south east of the Adelaide CBD, and is expected to deliver around
1,000 apartments and townhouses. Planning approvals are underway and the first sales release is expected in H2
FY2018.
The company’s offer to purchase a 12.6 hectare site at Port Adelaide has been accepted by the State Government.
The site is 14 kilometres north-west of the Adelaide CBD, 7 kilometres south of Adelaide’s new submarine and
frigate building precinct and only 1.5 kilometres from Semaphore Beach. The site is expected to yield around 500
dwellings with the majority being two and three storey townhouses. The contract of sale is being finalised and
planning approvals for the initial stages of work are expected in FY2018.
g) Corporate Objectives, Strategy and Risks
Cedar Woods’ Corporate Plan guides management’s activities and provides a five year outlook for the company,
projecting earnings and other key performance indicators.
Cedar Woods’ primary objective is to create value for shareholders as it aims to deliver consistent year on year growth
in net profit and earnings per share and put the company in the top half of all listed industrial companies based on
financial performance. This year, the company reported full year net profit growth of 4.2 per cent and dividend growth of
5.3 per cent.
The Corporate Plan sets out a number of key action items and strategies focused on achieving delivery of earnings
growth and addressing key risk factors. These key actions are implemented as performance targets by senior
executives, sales managers and other employees.
In addition, twice each year our Audit and Risk Management Committee assesses risk factors that may affect the
company including specific risks affecting individual projects and more general risks affecting our business sector.
The overarching strategic objective is to grow and develop our national project portfolio, diversified by geography,
product type and price point, so that it continues to hold broad customer appeal and performs well in a range of
market conditions.
The company’s key areas of focus, as set out in the Corporate Plan and shown in our business model on page 7 are:
i. Acquisition of properties
The focus on the project pipeline guides management’s activities by ensuring there is sufficient diversity by
geography and product to meet the company’s ongoing earnings objectives in the years ahead and influences the
company’s acquisition strategy. Consequently, in FY2017 the company continued to evaluate opportunities in the
four states it operates in and with regard to a variety of housing types.
In the last year the company completed its acquisition of two infill development sites that were contracted in the
previous year. The first of these was the 3.8 hectare site in Wooloowin, a sought after suburb 6 kilometres north of
the Brisbane CBD, and the second was the 16 hectare site at Glenside, just three kilometres from the CBD.
The company also acquired a site at Anstey Road, Forrestdale in WA and a greenfield site in Bonnie Brook, Victoria
as discussed in section f) i and ii above.
A summary of the project pipeline may be found at the end of this Financial and Operating Review on page 16.
ii. Development
The company has a strategically located and diverse residential portfolio in urban and regional growth areas in
Western Australia, Victoria, Queensland and South Australia offering a wide spectrum of dwelling product and price
points to consumers. The company’s offerings include small affordable housing lots at its residential estates through
to luxury apartments at boutique waterfront developments.
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Cedar Woods utilises joint ventures and co-development arrangements to diversify the company’s revenue streams
and efficiently manage its capital. This year, the company continued development by Cedar Woods Wellard Limited,
which generates ongoing revenue by way of management and selling fees. In addition, development resumed at
Harrisdale Green, a co-development residential project with the WA Department of Communities.
Cedar Woods will build a number of commercial and retail property assets at Williams Landing and at other estates,
where the development of those buildings is consistent with the estate’s master plan objectives. The long term
ownership of those assets will be balanced against the company’s capital management objectives and acquisition
opportunities. Developments may be sold once they have achieved the amenity objectives and their valuations have
matured, with disposals likely to become a regular component of the company’s future revenue stream. During
the year the company concluded negotiations with Target Australia for the relocation of the Target head office to a
new office that the company will develop at Williams Landing, and the sale of the building, subject to completion,
anticipated in FY2019.
iii. Marketing and sales
The company continually assesses the markets in which it operates in order to ensure it has a wide offering
of product to meet customer demand. Achieving sufficient pre-sales underwrites each development and is an
important performance indicator for management. The company successfully launched and sold the first stages
at Ellendale (Upper Kedron) in Brisbane’s western corridor and at Bushmead in Perth’s eastern corridor during the
year and progressed approvals for a number of other projects across its portfolio that will contribute in future years.
h) Risks
The general risks to company performance include those relevant to the property market, including government policy
in relation to immigration and support for the housing industry generally, the environmental policy framework, monetary
policy set by the Reserve Bank of Australia, the stance of other regulatory bodies such as APRA, the strength of the
labour market and consumer confidence.
The company is also exposed to the property cycles in the markets in which it operates, i.e. Western Australia (regional
and metropolitan), Victoria (metropolitan), Queensland (metropolitan) and South Australia (metropolitan). The fluctuations
in demand in these markets represent a risk to achieving the company’s financial objectives. The company aims to
mitigate this risk by operating in diverse geographical markets and offering a wide range of products and price points to
various consumer segments.
Whilst house and land prices fluctuate, underlying demand will be driven by population growth and changing
demographics. In the past, the company has achieved its profit objective by managing both prices and volumes
through the property cycle.
Individual projects are exposed to a number of risks including those related to obtaining the necessary approvals for
development, construction risks and delays, pricing risks and competition. The “call in” of the Upper Kedron project by
the Queensland Government provides an example of such risks, with the company’s program for that project delayed
by approximately twelve months, and although approval was received to enable development on one third of the site,
the company awaits the outcome of statutory planning process to be finalised for the rest of the site. The company
aims to balance its portfolio at any time in favour of mature projects where the project risks are generally diminished.
i) Capital Management
The company reviewed its credit facilities during the year, increasing the corporate bank facility limit by $40m to $175m,
and extending the tenure by a further year to November 2019. The increase in the facility limit provided funding for the
Wooloowin and Glenside opportunities. In addition, the company has a facility of $30m in place for the Williams Landing
Shopping Centre, expiring in February 2019. The year concluded with a low net debt to equity of 23.9 per cent at year
end, at the lower end of the company’s target debt to equity range of 20-75 per cent. Interest cover was at a favourable
13.5 times.
The dividend policy, which is to distribute approximately 50 per cent of the annual net profit, was maintained. The
dividend reinvestment and bonus share plans remained suspended during the year in response to capital management
initiatives, with the company not requiring to raise additional equity.
j) Sustainability Reporting and Corporate Governance Statement
These reports are available as separate downloadable documents on our website www.cedarwoods.com.au under the
Corporate Governance and Shareholder reports pages.
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k) People
Cedar Woods remains committed to an inclusive workplace that embraces and promotes diversity. The diversity policy
sets out a framework for the company’s diversity-related initiatives, strategies and programs. Commentary is provided in
the Corporate Governance Statement on the company’s website.
l) Board Matters
The board is conscious of its duty to ensure the company meets its performance objectives. During the year, the board
and its committees reviewed their respective charters and performance to ensure they were properly discharging their
responsibilities. The charters were updated during the year as required and are published on the company’s website.
Following the resignation of independent director Stephen Pearce in January 2017 due to relocation to London, the
Nominations committee reviewed the composition of the Board having regard to the skills, experience and diversity of
Board members.
Taking this into account and following an extensive search, in August 2017, the Board announced the appointment of
Jane Muirsmith, independent director, to the Board effective 2 October 2017. This appointment restores to parity the
number of independent and non-independent directors on the Board and provides 33% female representation, which
satisfies the company’s diversity objective in that regard.
Mrs Muirsmith brings a range of skills and experience to the board, notably as a Fellow of the Institute of Chartered
Accountants she has a strong audit and accounting background and a deep understanding of digital marketing
strategies.
In July 2017 the board announced the retirement of long standing Managing Director Paul Sadleir who is stepping
down in September, to be replaced by current Chief Operating Officer (COO) Nathan Blackburne. Succession planning
had been underway for some time and the board was pleased to be able to recruit from within.
Mr Blackburne is well-known to our shareholders and business partners and, through the national COO role, is very
familiar with all our projects. Mr Blackburne brings consistency to the position, as well as a fresh perspective with a
strong focus on workplace culture, operations and performance.
Further details of the board and governance changes are contained in this Annual Report and the Corporate
Governance Statement which is available on the company’s website and also on the ASX website.
m) Outlook
Cedar Woods is well positioned moving into FY2018 with strong pre-sales, low debt, substantial funding capacity and a
diverse portfolio of well-located developments in Melbourne, Brisbane, Perth and Adelaide.
The development program for FY2018 will see the completion of a number of stages at new projects, including at
Jackson Green, St. A, Karmara, Millars Landing and at Williams Landing.
The company anticipates that earnings will be skewed significantly to the second half of FY2018, however the first half
profit is expected to exceed that recorded in the first half of FY2017.
At this early stage in the financial year, it is difficult to forecast the exact timing of settlements of pre-sales at a number
of new projects which are subject to construction progress. These settlements are expected to commence late in
FY2018 and continue into FY2019, and accordingly earnings guidance will be provided later in the financial year.
A number of new projects, including the Target office at Williams Landing, Glenside, Port Adelaide (both in South
Australia), Mangles Bay and Millars Landing (both in Western Australia), provide a positive growth outlook for future
financial years.
William Hames
Chairman
Paul Sadleir
Managing Director
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CEDAR WOODS PROPERTIES LIMITED
The Brook at Byford, Western Australia
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Project Pipeline
as at 30 June 2017
PROJECT NAME
CORRIDOR /
LOCATION
PROJECT TYPE
LOTS / UNITS
PROJECT
LOTS / UNITS
REMAIN
FY18
FY19
FY20
FY21
FY22
FY23
PROJECT LIFE
(As of 30/6/17)
WESTERN AUSTRALIA - PERTH
Mariners Cove
Ariella
The Brook at Byford
Rivergums Baldivis
Byford on the Scarp
Karmara
Forrestdale
Bushmead
Millars Landing
Pinjarra
South
North East
South East
South
South East
South East
South East
East
South
South
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
WESTERN AUSTRALIA - REGIONAL
Elements South Hedland
Pilbara
Residential Land
WESTERN AUSTRALIA - “JV” PROJECTS
Cedar Woods Wellard (Emerald Park)
South
Residential Land
Batavia Coast Marina Apartments
Mid-West
Apartments
Harrisdale Green
Mangles Bay
Western Edge
South East
Residential Land & Townhouses
South
Pilbara
Mixed Use
Residential Land
VICTORIA - MELBOURNE
Carlingford
Bonnie Brook
St Albans
Jackson Green
Williams Landing
Williams Landing
Williams Landing
Williams Landing
Williams Landing
Williams Landing
Williams Landing
QUEENSLAND - BRISBANE
Wooloowin
Ellendale
SOUTH AUSTRALIA - ADELAIDE
North
West
North West
South East
Residential Land
Residential Land
Townhouses
Townhouses & Apartments
West
West
West
West
West
West
West
Residential Land/Townhouses/Apartments
2,418
Target Head Office (12,919m2)
Oxford Apartments
Lancaster Apartments
111 Overton Road Strata Office
Apartments
Commercial (20 hectares)
Inner North
North West
Townhouses & Apartments
Residential Land
987
480
423
1,414
312
285
330
1,102
1,580
1,080
136
665
54
506
600
600
649
135
247
450
1
103
42
40
455
279
480
Glenside
Inner South East Townhouses & Apartments
Port Adelaide (proposed)
North West
Townhouses & Apartments
1,000
500
TOTAL GROUP
16
32
316
275
430
242
131
330
1,054
1,580
1,080
15
105
25
308
600
600
7,123
136
135
247
450
549
1
103
42
40
402
2,105
279
351
630
1,000
500
1,500
11,358
CEDAR WOODS PROPERTIES LIMITED
PROJECT NAME
CORRIDOR /
LOCATION
PROJECT TYPE
LOTS / UNITS
LOTS / UNITS
PROJECT
REMAIN
FY18
FY19
FY20
FY21
FY22
FY23
PROJECT LIFE
(As of 30/6/17)
Planning, Design & Rezoning
Development & Sales
Leasing, Development & Sales
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WESTERN AUSTRALIA - PERTH
Mariners Cove
Ariella
The Brook at Byford
Rivergums Baldivis
Byford on the Scarp
Karmara
Forrestdale
Bushmead
Millars Landing
Pinjarra
South
North East
South East
South
South East
South East
South East
East
South
South
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
Residential Land
WESTERN AUSTRALIA - REGIONAL
Elements South Hedland
Pilbara
Residential Land
WESTERN AUSTRALIA - “JV” PROJECTS
Cedar Woods Wellard (Emerald Park)
South
Residential Land
Batavia Coast Marina Apartments
Mid-West
Apartments
South East
Residential Land & Townhouses
South
Pilbara
Mixed Use
Residential Land
North
West
North West
South East
Residential Land
Residential Land
Townhouses
Townhouses & Apartments
Residential Land/Townhouses/Apartments
2,418
West
West
West
West
West
West
West
Target Head Office (12,919m2)
Oxford Apartments
Lancaster Apartments
111 Overton Road Strata Office
Apartments
Commercial (20 hectares)
Inner North
North West
Townhouses & Apartments
Residential Land
VICTORIA - MELBOURNE
Harrisdale Green
Mangles Bay
Western Edge
Carlingford
Bonnie Brook
St Albans
Jackson Green
Williams Landing
Williams Landing
Williams Landing
Williams Landing
Williams Landing
Williams Landing
Williams Landing
QUEENSLAND - BRISBANE
Wooloowin
Ellendale
SOUTH AUSTRALIA - ADELAIDE
TOTAL GROUP
Glenside
Inner South East Townhouses & Apartments
Port Adelaide (proposed)
North West
Townhouses & Apartments
1,000
500
1,414
987
480
423
312
285
330
1,102
1,580
1,080
136
665
54
506
600
600
649
135
247
450
1
103
42
40
455
279
480
32
316
275
430
242
131
330
1,054
1,580
1,080
7,123
15
105
25
308
600
600
136
135
247
450
549
1
103
42
40
402
2,105
279
351
630
1,000
500
1,500
11,358
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Environmental and
Social Governance
ESG Reporting
Cedar Woods operates to realise the full potential of its land development projects across the country to optimise returns
to shareholders. Our commitment to sustainability, innovation and stakeholder partnerships underlays our development
approach, in recognition of the direct impact our actions have on environment, economic and social outcomes.
Cedar Woods’ projects make a significant contribution to the delivery of: affordable land supply; urban renewal and
revitalisation; environmental enhancement; improved efficiency and optimal use of state infrastructure assets; support to
local economies and job creation; diverse and vibrant communities; and lifestyle enhancement for those who choose to buy
in a quality Cedar Woods estate.
This section provides an update on progress against targets and outcomes identified in the company’s balanced scorecard
reporting and allows us to communicate our sustainability achievements to our business, industry and stakeholder partners.
It should be read in conjunction with Cedar Woods’ annual Sustainability Report.
Sustainability Objective:
Integrate sustainability best practice into all levels of decision making and project outcomes.
Environment and Climate Change - enhance and rehabilitate environmental assets; remediate contamination as an
integral part of project delivery; and promote renewable energy, energy efficiency and reduced energy consumption.
Cedar Woods continued to build on its track record of being an environmentally responsible developer.
Highlights and Achievements
• Bushmead is Cedar Woods first project to achieve the highest level ‘6 Leaf’ accreditation under the Urban Institute
of Australia’s EnviroDevelopment accreditation tool. Initiatives include providing 187ha for conservation, revegetation
of 38ha of formerly cleared or degraded land; and significant tree retention in the approved urban area.
• The Ellendale masterplan dedicates 40% (90 ha) of the site as a green-space corridor. It has received Federal,
State and local government environmental approvals. The project is considered to result in overall environment
enhancement, including restored habitat linkages, improved wildlife movement networks, including fauna
underpasses, squirrel glider poles and nesting boxes and ecological buffers. In FY2017 the first 50 hectares of
green space corridor land was dedicated to Council with significant revegetation completed to date and the first
wildlife movement solutions installed.
• At The Brook at Byford the ‘Forever Project’ was launched, funded by the Water Corporation, to promote water
wise design, undertaking verge makeovers and engaging with residents through workshops.
Optimising Land Use - delivering the best use of land by optimising land use mix and product yield in the context of high
quality urban places that deliver quality of life.
By the nature of our business, a key outcome of our project delivery is to assist with the residential and commercial
land supply in line with the Perth, Melbourne, Brisbane and Adelaide strategic planning frameworks. The company has
developed a proven model for delivering quality, medium-density projects in middle and inner suburbs.
Highlights and Achievements
• With a train station, freeway interchange and retail amenity, Williams Landing is increasingly the focus of commercial
investment, reflected by it becoming the future home to the Target head office. This landmark office project is one
of many commercial sites providing a development pipeline for more than 10 years. Williams Landing Town Centre
has the potential to accommodate more than 13,000 jobs and become a major commercial centre servicing the
western corridor of Melbourne.
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The Rivergums, Western Australia
Bushmead, Western Australia
Ellendale, Queensland
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• Ellendale is one of three broad-acre development areas identified within the South East Queensland Regional Plan.
It will optimise disused rural land by providing residential housing supply that compliments an established residential
area, capitalising on existing transport and service infrastructure. Stage 1 was delivered over 2016/17.
• Wooloowin is adjacent to the train station and the future northern bikeway extension in keeping with Cedar Woods’
history of delivering medium density housing projects in locations that are proximate to transport infrastructure.
Housing Diversity & Affordability - promote equality of access to housing for all sectors of the community.
Highlights and Achievements
• A number of initiatives have been initiated in Perth based land development projects, to increase density outcomes
and create more affordable small home options.
• Williams Landing is providing housing diversity in the form of 1 and 2 bedroom apartments to accommodate a
significant and growing proportion of 1 and 2 person households which are 40% of all homes in the municipality.
• Apartments at Williams Landing were priced from $269,000 making them very affordable in the Melbourne market.
Heritage - recognising Indigenous and cultural heritage.
Cedar Woods has continued to respect Indigenous and European cultural heritage across all of its project sites.
Highlights and Achievements
• Wooloowin will feature the adaptive reuse of the State listed former laundry building into a residential use and the
locally listed former convent building will be adapted into a childcare centre. Additionally, the site’s indigenous and
European history will be acknowledged in a future heritage trail to be provided on the site.
• At Bushmead, the history of the site, being a former army rifle range has been respected through the naming of
streets in the estate after Australian army bases.
• Completed in December 2016, Cedar Woods’ Community Pavilion at The Brook at Byford, was inspired by the old
agricultural sheds and the brick kilns of the Byford area. It celebrates the rich heritage of the Byford district through
the simple gable roof form and the use of recycled bricks, galvanised steel and timber. The kiln chimney and wall
ruins reference landmark structures that have been a distinctive part of the Byford landscape for over a century.
• Williams Landing continues to celebrate the aviation theme of the RAAF Williams Airbase with aviation inspired
landscape and streets and buildings named after acclaimed RAAF aviators.
Stakeholder Engagement - maintain Cedar Woods’ position as a competent and trustworthy company and joint venture
partner and a valuable contributor to the property industry.
Highlights and Achievements
• Cedar Woods has established itself as a valued and trusted joint venture partner. The company’s corporate objective
is to reinforce these partnerships with ‘professionalism, transparency and quality outcomes’. Current partnership
projects include: Harrisdale Green (WA Department of Communities); Mangles Bay (Landcorp) and Glenside
(Renewal SA).
• Active engagement strategies were undertaken for planning at Ellendale and Wooloowin with the advancement of
planning approvals. At Glenside and Port Adelaide in South Australia, Cedar Woods undertook extensive community
consultation in conjunction with Renewal SA to inform and help shape the projects’ masterplans.
Community Investment, Development and Integration - create vibrant communities by investing in their wellbeing,
nurturing a strong ‘sense of community’ and maximising social connectivity.
Highlights and Achievements
• The Perth International Arts Festival was the major corporate sponsorship focus again for Cedar Woods last year
with an annual investment of $30,000. This sponsorship allows the Festival to deliver world-class performances to
Western Australians and provides an opportunity for Cedar Woods to share the performances with investors, key
stakeholders and staff.
• Cedar Woods Neighbourhood Cinemas were once again held across a number of our communities. The Brook
at Byford, Byford on the Scarp, Ariella, The Rivergums and Emerald Park enjoyed family and neighbours coming
together. The movie events were well attended and feedback was very positive.
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• Cedar Woods’ commitment to creating vibrant sustainable urban communities has been a strong focus this
year with the engagement of Creating Communities to assist with the establishment of community engagement
initiatives for our Bushmead project. In addition, we have continued to support new, emerging and existing
community groups with our Community Grants program at Byford on the Scarp, The Brook at Byford, Piara
Central, Harrisdale Green, The Rivergums and Williams Landing. Over $70,000 of grants were awarded in FY2017.
• The Rivergums BMX pump track art project with the Baldivis Secondary College saw students applying graffiti style
art around the pump track, encouraging the students to take ownership of the open space around their school.
• Williams Landing played host to a Food Truck Festival. The Festival was located adjacent to Williams Landing
Shopping Centre and attracted around 30,000 visitors over a 4 day period.
Occupational Health & Safety - providing a safe working environment for staff and stakeholders.
Highlights and Achievements
•
In FY2016 Cedar Woods adopted a new Work Health & Safety System (WHS) in order to prepare for the
introduction of the Model Work Health and Safety Act as it is enacted across Australia to harmonise workplace
Health and Safety law.
• All staff have been inducted and undergo regular training.
• OH&S plans are prepared for all construction projects, which are subject to independent audit.
• There have not been any WHS incidents of a significant nature on any Cedar Woods construction sites during
FY2017.
• The WHS system is being further developed and enhanced to improve the management of construction sites by
Cedar Woods contractors and consultants.
2017 ANNUAL REPORT
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Newton Apartments, Williams Landing, Victoria
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Directors’ Report
Your directors present their report on the consolidated entity consisting of Cedar Woods Properties Limited (‘the
company’) and the entities it controlled (together ‘the consolidated entity’ or ‘group’) at the end of, or during, the year
ended 30 June 2017.
a) Directors
The following persons were directors of Cedar Woods Properties Limited during the whole of the financial year and up
to the date of this report, except where stated:
William George Hames (Chairman)
Robert Stanley Brown (Deputy Chairman)
Ronald Packer (Lead Independent Director)
Valerie Anne Davies (Independent Director)
Stephen Thomas Pearce (resigned 20 January 2017)
Paul Stephen Sadleir (Managing Director, retiring 18 September 2017)
Timothy Robert Brown (Alternate for R S Brown, resigned 11 August 2017)
The qualifications, experience and other details of the directors in office at the date of this report appear on page 24 of
this report.
b) Principal activities
The principal continuing activities of the consolidated entity in the course of the year ended 30 June 2017 were that of
property developer and investor and no significant change in the nature of those activities took place during the year.
c) Dividends
Dividends paid to members during the financial year were as follows:
Final fully franked ordinary dividend for the year ended 30 June 2016 of 16.5 cents
(2015 – 16.0 cents) per fully paid share, paid on 28 October 2016 (2015 – 30
October 2015)
Interim fully franked ordinary dividend for the year ended 30 June 2017 of 12 cents
(2016 – 12.0 cents) per fully paid share, paid on 28 April 2017 (2016 – 29 April 2016)
2017
$’000
2016
$’000
13,017
12,622
9,467
9,467
22,484
22,089
Since the end of the financial year the directors have recommended the payment of a final fully franked ordinary dividend
of $14,200,503 (18.0 cents per share) to be paid on 27 October 2017 out of retained earnings at 30 June 2017.
d) Financial and operating review
Information on the operations and financial position of the group and its business strategies and prospects is set out in
the financial and operating review, commencing on page 8 of this annual report.
2017 ANNUAL REPORT
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e) Business strategies and prospects for future financial years
The consolidated entity will continue property development operations in Western Australia, Victoria, Queensland and
South Australia.
Cedar Woods is well positioned moving into FY2018 with strong pre-sales, low debt, substantial funding capacity and a
diverse portfolio of well-located developments in Melbourne, Brisbane, Perth and Adelaide.
f) Significant changes in the state of affairs
There were no significant changes in the state of affairs of the consolidated entity during the year.
g) Matters subsequent to the end of the financial year
On 2 July 2017 Cedar Woods settled on the acquisition of 11 hectares of land at Bonnie Brook, Victoria for a price of
$4.2m plus GST. The Bonnie Brook site is located 30 kilometres north west of the Melbourne CBD and is anticipated to
accommodate approximately 117 dwellings.
Other than the above, no matters or circumstances have arisen since 30 June 2017 that have significantly affected or
may significantly affect:
a.
b.
c.
the consolidated entity’s operations in future financial years; or
the results of those operations in future financial years; or
the consolidated entity’s state of affairs in future financial years.
h) Likely developments and expected results of operations
Beyond the comments at items (d) and (e), further information on likely developments in the operations of the
consolidated entity and the expected results of operations have not been included in this report because the directors
believe it would be likely to result in unreasonable prejudice to the consolidated entity.
i) Environmental regulation
To the best of the directors’ knowledge, the group complies with the requirements of environmental legislation in
respect of its developments, and obtains the planning approvals required prior to clearing or development of land under
the laws of the relevant states. There have been no instances of non-compliance during the year and up to the date of
this report.
j)
Information on directors
Mr William G Hames, B Arch (Hons) MCU (Harvard) LFRAIA, MPIA, FAPI (Econ)
• Chairman of the Board of directors, non-executive director
Mr Hames is a co-founder of Cedar Woods Properties Limited. He is an architect and town planner by profession,
and received a Masters Degree in City Planning and Urban Design from the Harvard Graduate School of Design, at
Harvard University in Boston. He worked in the US property development market before returning to Australia in 1975
and establishing Hames Sharley Australia, an architectural and town planning consulting company. Mr Hames brings
substantial property experience to the Board upon which he has served as a director for twenty-seven years.
Other current listed company directorships and former listed company directorships in the last three years:
None.
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Mr Robert S Brown, MAICD, AIFS
• Deputy Chairman of the Board of directors, non-executive director
• Member of the Audit and Risk Management Committee
• Member of the Human Resources and Remuneration Committee
• Member of the Nominations Committee
Mr Brown is Executive Chairman of Westland Group Holdings Pty Ltd, with responsibilities in mining, agribusiness,
biotechnology and venture capital. He is a past president of the Federation of Building Societies of WA and has participated
in and chaired various Western Australian government advisory committees related to the housing industry. Mr Brown
brings to the Board his diversified experience as a director of these companies and other listed entities and has served as a
director of Cedar Woods Properties Limited for twenty-nine years.
Other current listed company directorships and former listed company directorships in the last three years:
Luiri Gold Limited.
Mr Ronald Packer, BCom (UWA), FAICD, Solicitor Supreme Court of England & Wales
• Non-executive director
• Chairman of the Audit and Risk Management Committee
• Chairman of the Human Resources and Remuneration Committee
• Chairman of the Nominations Committee
Mr Packer is the lead independent director of the Board, bringing a wide range of property experience in the public and
private arena. He is the former Managing Director of PA Property Management Limited, the responsible entity for the PA
Property Trust and is currently the Chairman of Terrace Properties and Investments Pty Ltd. Mr Packer has served as a
director for eleven years and chairs all of the Board’s committees.
Other current listed company directorships and former listed company directorships in the last three years:
None.
Ms Valerie A Davies, FAICD
• Non-executive director
• Member of the Audit and Risk Management Committee
• Member of the Human Resources and Remuneration Committee
• Member of the Nominations Committee
Ms Davies is an experienced company director and leading communications advisor to numerous Tier 1 companies via her
own consultancy, One.2.One Communications Pty Ltd, she has worked for nearly two decades on issues management and
presentation skills delivery with senior corporate leaders across the spectrum of business and industry. She is a previous
winner of the Telstra Business Woman of the Year (WA) Award.
Concurrently, Ms Davies has over the past 20 years established herself as one of Western Australia’s leading non-
executive directors. She serves on the boards of major entertainment, hospitality and leisure operator Event Hospitality &
Entertainment Ltd as well as the HBF Health Fund and Tourism Western Australia. Previous non-executive director roles
include global mineral sands resources company, Iluka Resources Limited and labour hire firm Integrated Group (now
Programmed Maintenance Services). She has also held positions on the boards of government trading enterprises such
as Tourism Australia, Gold Corporation and the TAB (WA), as well as Screenwest and Fremantle Hospital & Health Service.
Beyond Ms Davies’ day to day work, she has contributed to peak business groups such as the Australian Institute of
Company Directors (AICD), where she was a Councillor and co-Vice President of the WA branch. Ms Davies is a non-
executive, independent Director and has served on the board for two years.
Other current listed company directorships and former listed company directorships in the last three years:
Event Hospitality & Entertainment Ltd.
2017 ANNUAL REPORT
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Mr Paul S Sadleir, BE, MBA, AAPI, FAICD
• Managing Director, executive director
Mr Sadleir has extensive experience in the property sector including strategic planning, portfolio management, acquisition
analysis, equity and finance raising and investor relations management. Mr Sadleir holds Masters of Business Administration
and Bachelor of Engineering degrees from the University of Western Australia. Prior to joining Cedar Woods, he was
manager of the Bunnings Warehouse Property Trust and previously held roles with Wesfarmers Limited, Western Power
and Barrack Mines. He is currently the Deputy Chairman of the Brightwater Care Group, one of the largest providers of
residential aged care in Western Australia, a Division Councillor at the WA Division of the Australian Institute of Company
Directors and a Senate member of Murdoch University. Mr Sadleir has served as a director for fourteen years.
Other current listed company directorships and former listed company directorships in the last three years:
None.
Company Secretary
The Company Secretary is Mr Paul S Freedman, BSc, CA, GAICD. Mr Freedman was appointed to the position in 1998. He
is a member of the Institute of Chartered Accountants in Australia and is a member of the Australian Institute of Company
Directors. He brings to the company a background of over twenty years in financial management in the property industry,
preceded by employment in senior roles with major accountancy firms.
k) Shares issued on the exercise of options
No share options were in existence during the year and none have been issued up to the date of this report.
l) Directors’ interests in shares
Directors’ relevant interests in shares of Cedar Woods Properties Limited at the date of this report, as defined by
sections 608 and 609 of the Corporations Act 2001, are as follows:
Director
William G Hames
Robert S Brown*
Ronald Packer
Valerie A Davies
Paul S Sadleir
m) Committees of the Board
Interest in ordinary shares
10,088,044
7,982,584
167,859
15,000
1,057,445
As at the date of this report Cedar Woods Properties Limited had the following committees of the Board:
Audit and Risk Management
Committee
Human Resources and
Remuneration Committee
Nominations Committee
R Packer (Chairman)
R Packer (Chairman)
R Packer (Chairman)
R S Brown
V A Davies
R S Brown
V A Davies
R S Brown
V A Davies
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n) Meetings of directors
The following table sets out the numbers of meetings of the company’s directors (including meetings of committees of
directors) held during the year ended 30 June 2017, and the numbers of meetings attended by each director:
Board Meetings
Meetings of Committees
Audit and Risk
Management
Human Resources
and Remuneration
Nominations
Number of meetings held:
W G Hames
R S Brown
R Packer
S T Pearce
V A Davies
P S Sadleir
T Brown (alternate director)
* Not a member of this committee.
8
8
8
8
3
7
8
-
4
*
1
4
3
4
*
-
4
*
3
4
2
2
*
-
4
*
4
4
-
4
*
-
S T Pearce resigned on 20 January 2017 and attended all Board and Human Resources and Remuneration Committee
meetings held up to that date.
R S Brown was appointed to the Audit and Risk Management Committee on 20 January 2017 and has attended all
meetings held after that date.
V A Davies was appointed to the Nominations Committee and Human Resources & Remuneration Committee on 20
January 2017 and has attended all meetings held after that date.
Timothy Robert Brown (Alternate for R S Brown) resigned on 11 August 2017.
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Directors’ Report:
Chairman of the Human Resources and
Remuneration Committee’s Letter to Shareholders
Dear Shareholders,
I am pleased to provide this letter setting out the key highlights in relation to remuneration matters for FY2017. The Financial
and Operating Review notes that Cedar Woods had another successful year, reporting a record profit and achievements
across the various areas within the company’s operations, as described in our “balanced scorecard” in section r) of this
report. The balanced scorecard provides the company’s FY2017 objectives and performance against targets as assessed
by the Board.
On 27th July we announced that our long standing Managing Director Paul Sadleir would be stepping down in September,
to be replaced by current Chief Operating Officer Nathan Blackburne. Key details regarding Mr Blackburne’s new
remuneration package were included in that ASX release.
On 17 August we announced Mrs Jane Muirsmith would join the Board as an independent non executive director, effective
2 October 2017.
We continue to engage with shareholders and proxy advisory groups to ensure our policies and practices in relation to
remuneration matters are both well described and appropriate for the company and its shareholders.
Review of the
executive remuneration
framework
Fixed remuneration
In 2015 the company engaged EY to provide advice on Cedar Woods’ executive
remuneration framework with the objective of improving the link between shareholder
returns and executive remuneration as well as a closer alignment of remuneration with the
Corporate strategy. Aspects of the new executive remuneration framework applied from 1
July 2015 including transitioning to a greater emphasis on variable pay with the introduction
of a new long-term incentive program (as outlined below).
The company identified where adjustments were appropriate, based on market
benchmarking information. For FY2017 the Managing Director’s (MD’s) fixed remuneration
remained unchanged and other executives’ in continuing roles had fixed remuneration
increases of 2%. Nathan Blackburne and Patrick Archer were promoted during the year and
their remuneration packages were aligned with market remuneration levels in both listed and
non-listed property companies.
Short-term incentives
(“STIs”)
To ensure the STI’s were appropriately aligned to the Corporate plan, the company
continued with its balanced scorecard of measures for determining the STI awards for
FY2017.
Long-term incentives
(“LTIs”)
Scorecard sections have been grouped into financial and non-financial categories.
The LTI plan introduced in 2015 continues to operate and has two vesting conditions a) a 3
year service condition and b) two performance conditions measured over a 3 year period:
50 percent of the LTI grant will be tested against a relative total shareholder return (“TSR”)
hurdle (measured against the S&P / ASX Small Industrials Index) and 50 per cent against
earnings per share (“EPS”) growth targets, set in the context of the Corporate plan.
The relative TSR performance condition was chosen as it offers a relevant indicator
of measuring changes in shareholder value by comparing the company’s return to
shareholders against the returns of companies of a similar size and investment profile.
The EPS performance condition was chosen as it is a primary determinant of shareholder
value in a listed company context.
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Non Executive Director
(”NED”) fees
The potential maximum aggregate NED remuneration for FY2017 was $750,000, as
approved by shareholders at the company’s FY2014 AGM. Chair and NED fees were
increased by 2% effective 1 July 2016 to maintain market competitiveness. Total NED fees
paid for FY2017 were $535,971.
Clawback policy
The company implemented an incentive clawback policy for executives and other staff that
applies for FY2015 onwards. Under the policy, the Board may at its absolute discretion
claw back vested and unvested incentives in the case where an “inappropriate benefit” has
arisen, as may be the case in a material mis-statement of financial results.
The Remuneration Report provides information on Non Executive Directors and executives and the remuneration outcomes
for FY2017.
It was pleasing to note that shareholders voted overwhelmingly in favour of the FY2016 Remuneration Report at the 2016
Annual General Meeting, with 98.2 per cent of votes in favour.
I look forward to answering any questions you may have at our 2017 Annual General Meeting in November.
Yours faithfully,
Ronald Packer
Chairman
Human Resources and Remuneration Committee
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Directors’ Report:
Remuneration Report
The directors present Cedar Woods Properties Limited’s FY2017 Remuneration Report which sets out remuneration
information for the directors and other key management personnel (“KMP”) for the year ended 30 June 2017.
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations
Act 2001.
The Remuneration Report is presented under the following sections:
o)
p)
q)
r)
s)
t)
Introduction
Remuneration governance
Executive remuneration policy and framework
Executive remuneration outcomes for FY2017 (including link to performance)
Executive contracts
Non-Executive Director fee arrangements
u)
Additional statutory disclosures
o) Introduction
Page
30
31
32
37
42
43
44
The Remuneration Report details the remuneration arrangements for KMP who are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the company, directly or
indirectly.
The table below outlines the KMP of the company during the financial year ended 30 June 2017. Unless otherwise
indicated, the individuals were KMP for the entire financial year. For the purposes of this report, the term “executive”
includes the executive director and senior executives of the company.
KMP
Position
Term as KMP
Non-Executive directors (“NEDs”)
W G Hames
R S Brown
R Packer
V A Davies
S T Pearce
Executive directors
P S Sadleir
Senior executives
N J Blackburne
P Archer
P S Freedman
B G Rosser
Non-Executive Chair
Non-Executive Deputy Chair
Lead Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
(resigned 20 January 2017)
Managing Director (“MD”)
Chief Operating Officer (“COO”) –
promoted effective 1 September 2016
State Manager - Victoria and South Australia –
promoted effective 1 September 2016
Full year
Full year
Full year
Full year
Part year
Full year
Full year
Part year
Chief Financial Officer (“CFO”) and Company Secretary
Full year
State Manager - Western Australia
Full year
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Changes since the end of the reporting period
P S Sadleir will retire from the position of MD with effect from 18 September 2017.
N Blackburne has been promoted to the position of MD with effect from 18 September 2017.
J Muirsmith was appointed as a Non-Executive Director commencing 2 October 2017.
p) Remuneration governance
Role of the Human Resources and Remuneration Committee
The Human Resources and Remuneration Committee is a committee of the Board. It is responsible for making
recommendations to the Board on:
•
•
•
•
the over-arching executive remuneration framework,
NED fees,
operation of incentive plans and key performance hurdles for the executive team, and
remuneration levels of the MD and other executives.
The Human Resources and Remuneration Committee’s objective is to ensure remuneration policies and structures are
fair and competitive and aligned with the long-term interests of the company. The Human Resources and Remuneration
Committee periodically obtains independent remuneration information to ensure NED fees and executive remuneration
packages are appropriate and in line with the market, please refer to the Use of remuneration advisors section below.
The Corporate Governance Statement provides further information on the role of the Human Resource and
Remuneration Committee, and may be found on the company’s website under the Investor Relations link.
Use of remuneration advisors
In FY2015 the Human Resources and Remuneration Committee appointed EY as its external remuneration advisor to
assist with the review of the overall executive remuneration framework.
EY’s terms of engagement included specific measures designed to protect its independence. The Human Resources
and Remuneration Committee recognises that, to effectively perform its role, it is necessary for EY to interact with
members of Cedar Woods’ management. However, to ensure EY remained independent, members of Cedar
Woods’ management were precluded from requesting services that would be considered to be a ‘remuneration
recommendation’ as defined by the Corporations Amendment (improving Accountability on Director and Executive
Remuneration) Act 2011.
No remuneration recommendations were provided by EY or any other advisor during the reporting period.
Clawback of remuneration
For FY2015 and subsequent years, vested and unvested STI’s & LTI’s are subject to potential clawback based on the
Board’s judgment.
The Board may exercise its judgment in relation to STI or LTI outcomes:
STI
LTI
at the end of the financial year when assessing performance against scorecard objectives to determine the STI
payments, when determining if there are any matters impacting the initial performance assessment.
at any time prior to, or at, the final vesting date of the performance rights and will take account of factors such
as any material misstatements of financial results or individual instances of non-compliance with Cedar Woods’
policies.
The clawback policy also provides that the Board can recover an STI or LTI award previously paid to an employee.
Remuneration Report approval at FY2016 Annual General Meeting (“AGM”)
At the company’s 2016 AGM, 98.2 per cent of eligible votes cast were in favour of the Remuneration Report for
FY2016.
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q) Executive remuneration policy and framework
The information contained within this section outlines the details pertaining to the executive remuneration policy and
framework for FY2017. As noted, following a review of the executive remuneration program last year, changes have
been initiated and applied from 1 July 2015. Where relevant, these changes have been highlighted.
i. Principles and strategy
Company objective
To create long-term value for shareholders through
the disciplined acquisition, development and marketing of properties
Remuneration strategy linkages to company objective
The Board of directors ensures our approach to
executive reward satisfies the following key criteria for
good reward governance practices:
Attract, motivate and retain high performing
individuals:
• The remuneration offering rewards capability and
• Competitiveness and reasonableness
experience
• Acceptability to shareholders
• Reflects competitive reward for contribution to
• Alignment of executive remuneration to company
growth in shareholder wealth
performance
• Transparency of the link between performance
and reward
The framework is aligned to shareholders’ interests by
having:
• STIs linked to current year performance and
subject to clawback
• From 1 July 2015 - LTIs linked to both long term
external (relative total shareholder return (“TSR”))
and internal (earnings per share (“EPS”) growth)
performance. Unvested LTIs also subject to
clawback
Component
Vehicle
Purpose
Link to performance
Fixed
remuneration
Comprises base
salary, superannuation
and non-monetary
benefits
STIs
Paid in cash
LTIs
From 1 July 2015 –
new equity based LTI
grants awarded in
Performance Rights
)
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To provide
competitive fixed
remuneration set with
reference to role,
market and skills
and experience of
individuals
Rewards executives
for their contribution
to achievement of
company outcomes
Rewards executives
for their contribution
to the creation of
shareholder value
over the longer term
Group and individual performance are
considered during the annual remuneration
review process
No guaranteed fixed remuneration
increases included in executives’ contracts
Linked to the Corporate Plan and
achievement of personal objectives
established at the start of the year
From 1 July 2015 - Vesting of new grants
is dependent on TSR performance relative
to S&P / ASX Small Industrials Index and
annual compound growth rate in EPS, both
over a three year period
Performance related outcomes are determined each year following the audit of the annual results. Outcomes may be
adjusted up or down in line with over and under achievement against the target performance levels, at the discretion of
the Board (based on a recommendation from the Human Resources and Remuneration Committee).
The Human Resources and Remuneration Committee also considers issues of succession planning, career
development and staff retention.
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ii. Approach to setting remuneration
In FY2017, the executive remuneration framework consisted of fixed remuneration and short and long-term incentives
as outlined below.
The company aims to reward executives with a level and mix of remuneration appropriate to their position,
responsibilities and performance within the organisation and aligned with market practice.
The company’s approach is generally to position total remuneration between the median and upper quartile of our
direct industry peers, both listed and unlisted, and other Australian listed companies of a similar size and complexity.
Based on performance and experience, individuals have the potential to move from median to upper quartile over a
period of time.
Remuneration levels are reviewed annually through a process that considers market data, insights into remuneration
trends, the performance of the company and the individual, and the broader economic environment.
The “at risk” components (STI’s and LTI’s) ensure a proportion of remuneration varies with performance of both the
individual and the company. The 2015 review of executive remuneration identified a need for a greater weighting of “at
risk” components within the total remuneration opportunity (remuneration mix) particularly for the MD and a need for
an equity based LTI plan. The Board intends continuing the transitioning to the new remuneration mix, noting some
variations may occur during this time due to influencing factors such as changing market conditions. In making this
transition, the Board wishes to keep total remuneration increases at modest levels, with the majority of increases
directed into LTI’s.
The graph below illustrates the current (FY2017) and anticipated remuneration mix by FY2019.
Managing Director - remuneration mix
FY17
By FY19
COO - remuneration mix
FY17
By FY19
60%
50%
62%
60%
State Managers - remuneration mix
30%
10%
25%
25%
19%
20%
19%
20%
FY17
By FY19
70%
67%
16%
20%
14%
13%
CFO and Company Secretary – remuneration mix
FY17
By FY19
78%
75%
14%
8%
15%
10%
STI and LTI are based on the maximum opportunity when remuneration levels are determined by the HR&R committee.
Fixed remuneration
Max STI opportunity
Max LTI opportunity
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iii. Details of incentive plans
Short-term incentives (STI)
Who participates?
Executives
How is the STI delivered?
Cash
What is the STI opportunity?
What are the performance
conditions for FY2017?
Each executive has a target STI opportunity depending on the accountabilities
of the role and impact on organisational performance. The company seeks to
deliver steady annual growth and accordingly the maximum STI opportunity is the
target opportunity. The maximum STI opportunity for KMP’s is detailed in section r)
Executive remuneration outcomes.
Actual STI payments to each executive depend on the extent to which specific
targets set at the beginning of the financial year are met with regard to both company
and individual performance criteria.
The weightings that applied in FY2017 to components of the company’s business
model are set out in the table below:
Weighting (%)
MD
COO
State
Managers
CFO and
Company
Secretary
Financial
Developments
Sales and customer experience
Financial performance and risk
management
Non-financial
Business development
People and culture
Shareholder engagement and
satisfaction
Sustainability
20%
20%
20%
15%
10%
10%
5%
15%
20%
20%
20%
15%
5%
5%
20%
20%
15%
15%
20%
5%
5%
0%
5%
40%
15%
20%
20%
0%
Refer to section r) Executive remuneration outcomes for further details of
performance outcomes for FY2017, and STI awards to KMP.
The categories of “Developments” and “Sales and customer experience” involve
close monitoring of revenues and financial expenditure and together with “Financial
performance and risk management” provide a significant weighting to overall financial
performance.
On an annual basis, after consideration of performance against set balanced scorecard
objectives, the Chairman and Chair of the Human Resource and Remuneration
Committee recommends to the Board the amount of STI to be paid to the MD.
For senior executives, the Human Resource and Remuneration Committee will seek
recommendations from the MD before making its determination.
The Human Resources and Remuneration Committee has the discretion to determine
STI outcomes in the light of personal and company performance.
How is performance
assessed?
What happens if an Executive
leaves Cedar Woods?
Executives who leave prior to the end of the financial year generally forego their
entitlement. The Human Resources and Remuneration Committee has discretion in
this regard.
Long-term incentives (LTI)
Previous LTI plan effective up to FY2015
The company operated a long term incentive plan, which first commenced in FY2012 with the final grants made
in FY2015. The incentive was designed as a cash bonus opportunity that vests three years after award, based on
company and individual performance criteria assessed in the first year and ongoing employment with the company for
the remaining two years. The FY2015 LTI awards were based on the same criteria used for FY2015 STI awards, with
KMP amounts detailed in section r) Executive remuneration outcomes.
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If the employee left the company before the vesting date no bonus was paid, although the Board may waive this
restriction at its discretion, for example when an employee retires. If an employee was made redundant after the award
but before the vesting date then the bonus would be paid out.
In FY2015 a total of $447,000 was awarded under the incentive plan for participants, which will vest on 1 July 2017.
The total awarded under the plan in previous years which has vested on 1 July 2016 is $260,750.
Current LTI plan effective 1 July 2015
The company has introduced a new LTI plan, effective 1 July 2015. Key features of the new LTI plan are as follows:
Why have a new LTI plan?
Who participates?
What LTI’s are available?
How is the LTI delivered?
How are the number of rights
determined for each LTI
grant?
When does the LTI vest?
What happens if an Executive
leaves Cedar Woods?
What happens in the event of
change of control
Do participants receive
dividends on LTI grants?
Is performance retested if
performance hurdles are not
exceeded?
Do clawback provisions apply
to LTI’s?
To encourage a greater alignment of the interests of executives and shareholders,
focus on sustainable long term growth and attract and retain key executives.
Executives and key staff. NEDs are not eligible to participate in the LTI plan.
Each executive has a maximum LTI opportunity depending on the accountabilities
of the role and impact on organisational performance.
It is intended for annual grants to be made under the plan and over time for these to
become a larger proportion of total remuneration, so as to keep total remuneration
in check.
The maximum LTI for each KMP is detailed in section r) Executive remuneration
outcomes.
Awards under the LTI plan are made in the form of performance rights, which
provide, when vested, one share at nil cost (provided the specified performance
hurdle is met). No dividends are paid on unvested LTI awards. A new share will
be issued for each vested performance right. At the discretion of the board the
LTI awards may be satisfied in cash rather than shares by payment of the cash
equivalent value.
The number of performance rights allocated for each executive is calculated by
reference to the maximum LTI opportunity outlined in the prior section.
Allocations are made based on a face value approach using the Volume Weighted
Average Price of Cedar Woods’ shares over the first five trading days of the 2017
financial year. This fixes the maximum number of shares and the actual number will
vest in accordance with the performance conditions set out below.
The Board will determine the outcomes at the end of the three year performance
period (1 July 2016 to 30 June 2019), with vesting, if any, occurring once results
are released and within a trading window. Once vested, there are no restrictions on
trading the shares, subject to the company’s Securities Trading Policy.
If cessation of employment occurs, the following treatment will apply in respect of
unvested Shares:
• If the Participant ceases employment with Cedar Woods on resignation or on
termination for cause, unvested Rights will normally be forfeited.
• If the Participant ceases employment in other circumstances (for example,
due to illness, total or permanent disablement, retirement, redundancy or
other circumstances determined by the Board), unvested Shares will stay ‘on
foot’ and may vest at the end of the original performance period to the extent
performance conditions are met. The Board may determine in its discretion that
the number of Rights available to vest will be reduced pro-rata for time at the
date employment ceases.
The Board will retain discretion to allow for accelerated vesting (pro-rated for
performance and/or time) in special circumstances (as opposed to allowing
unvested Shares to remain ‘on foot’ on cessation of employment).
Unless the Board determines otherwise, a pro-rata number of the participant’s
unvested awards will vest based on the proportion of the performance period that
has passed at the time of the change of control. Vesting will also be subject to
the achievement of pro-rata performance conditions at the time of the change of
control.
Not prior to any vesting.
No, there are no further retests of the performance conditions.
The company has an incentive claw back policy in place for executives and other
staff. Under the policy, the Board may at its absolute discretion claw back vested
and unvested incentives in the case of an “inappropriate benefit” arising.
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How is performance assessed
and rewarded against these
hurdles?
The awards are subject to two equally weighted performance conditions which
operate independently, so that awards can be made under either or both
categories.
Relative TSR hurdle (50%): The relative TSR hurdle provides a comparison
of external performance. The ASX Small Industrials Index is comprised of the
companies included in the S&P/ASX 300 (excluding companies in the S&P/ASX
100) who have a Global Industry Classification Standard (GICS) classification
other than Energy or Metals & Mining, with Cedar Woods ranked approximately
130th of 168 companies in this index at present. TSR (Total Shareholder Return)
measures changes to share price and dividends paid to show the total return and is
widely used in the investment community and is an appropriate hurdle it aligns the
experience of shareholders and executives.
This index was chosen, rather than a peer group, as there are a limited number
of companies with similar operations and in recent years the number of these has
reduced even further through takeovers (e.g. Australand & CIC) and changes to
business models and operations (e.g. Aveo, Devine & Port Bouvard).
Executives will only derive value from this component of the LTI if the company’s
TSR performance is greater than the Index. Maximum vesting of the TSR hurdle at
or above 15% of the Index recognises significant out-performance of the company
over 3 years.
The vesting schedule is as follows:
Relative TSR performance outcome
Percentage of TSR-tested rights vesting
< Index
At the Index
Nil
50%
> Index and up to 15% above the Index
Pro-rata between 50% and 100%
> = 15% above the Index
100%
EPS compound annual growth rate (50%): EPS is a method of calculating the
performance of an organisation, capturing information regarding an organisation’s
earnings in proportion to the total number of shares issued by the organisation. The
EPS calculation is:
EPS =
Statutory net profit after tax
Weighted number of shares on issue
Where:
Statutory net profit after tax:
Weighted number of shares on issue:
as reported by a company at the most
recent financial-year end preceding the
calculation date.
The weighted number of shares on issue
for the financial year.
The relevant inputs when setting the EPS target range are generally:
• The earnings and EPS targets contained in the Corporate plan, particularly with
reference to the most recent internal five year forecasts;
• The level of stretch associated with those business plan targets;
• Any earnings guidance that has been provided to the market;
• Shareholder and analyst (individual and consensus) expectations.
The vesting schedule for this component of the LTI is as follows:
EPS compound annual growth rate
Percentage of EPS-tested rights
vesting
<5%
5%
Nil
50%
Between 5% - 10%
Pro-rata between 50% and 100%
> = 10%
100%
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r) Executive remuneration outcomes for FY2017 (including link to performance)
Performance against STI balanced scorecard objectives
The table below outlines FY2017 STI objectives and performance against target outcomes as assessed by the Board. This
performance measurement framework provides a close alignment to the company’s overriding objective of providing long
term value to shareholders and links to our business model as described on page 7.
Objective
Measures
Outcomes
Performance
assessment
Timely approvals achieved
Approvals received for FY2017
programs, some delays experienced
with approvals for future projects.
Achieved
FINANCIAL
Developments
Maximise value,
minimize risk with
project delivery on
time and on budget
Create quality
communities which
embrace innovation
and sustainable
development
Enhanced value of sites
Monthly reporting of actual vs
budget development costs and
program
Compliance with Corporate
Sustainability Policy
Innovation and quality in projects
Sales and customer experience
Position projects to
meet market and
customer demand
Settlements
Sales
Achieved
Partially
achieved
Achieved
Approvals generally received in
line with highest and best use
applications. e.g. Anstey Road,
Forrestdale.
Costs kept within budget. Delayed
expenditure at several future projects
due to project approvals behind
schedule.
Good environmental initiatives
achieved across the projects e.g.
Bushmead, Ellendale.
Williams Landing & Banbury Village
finalists in 2017 Property Council
Awards.
Settlements achieved to meet
company forecast
Budgeted sales not achieved,
primarily due to weakness in WA
market
Achieved
Not
achieved
Enquiry & conversion rates
Enquiry levels exceeded budget.
Achieved
Budget expenditure
Expenditure was kept within budget
Achieved
Pricing
Customer satisfaction
Pricing above budget in Victoria &
Qld and in line with budget in WA
Good levels of referral and high
satisfaction levels at Newton
apartments
Financial performance and risk management
Continued growth in a
risk controlled manner
Growth in NPAT and EPS
NPAT up 4.2% and EPS up 4.2%,
slightly below EPS target
Satisfactory ROE and ROC
Conservative gearing (debt/equity)
Capital management
ROE 13.8% and ROC 16.5%, both
above company benchmarks
Gearing 24% at year end, at the
lower end of the target range
Corporate finance facility increased
and extended on annual review
Risk management framework in place Risks identified and mitigated.
New WH&S system operating
satisfactorily
Achieved
Achieved
Not
achieved
Achieved
Achieved
Achieved
Achieved
2017 ANNUAL REPORT
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Objective
Measures
Outcomes
NON-FINANCIAL
Business development
To build and replenish
the portfolio by
acquiring quality
assets
Undertake due diligence
investigations for new acquisitions
consistent with approved checklist
and reporting measures in a
thorough and disciplined manner
Detailed assessment of numerous
properties in VIC and QLD and to a
lesser extent WA and SA. Additional
channels employed to locate
opportunities.
Acquire 1-2 new complementary
projects each year, consistent with
the corporate growth strategy
New project secured in Bonnie
Brook (Vic) and additional land
acquired at Forrestdale, WA.
Pursue joint venture
opportunities
Respond to existing joint venture
partners with professionalism,
transparency and quality outcomes
Existing joint ventures (or
development agreements) in WA
with LandCorp (Mangles Bay &
Western Edge) and Dept. of Housing
(Harrisdale) all progressed.
Performance
assessment
Achieved
Achieved
Achieved
Seek new joint venture opportunities
to add to project diversity and
corporate reputation
Joint ventures bids lodged on
various projects, awaiting outcomes.
Achieved
Residential and
commercial building
Establish strategic alliances to
add value, product diversity and
profitability
Builder alliances continuing with a
focus on product innovation.
Achieved
People and culture
Attract, motivate and
retain staff
Be an employer of choice
Succession planning & leadership
training
Staff productivity
Staff development
Achieved
Achieved
Achieved
Achieved
Concerted efforts to attract and
retain talented staff continue.
Employee turnover has been low.
The code of conduct & policies
manual document has been
refreshed and a Study Support
Policy has been introduced. An
employee engagement survey was
conducted which reflected high
levels of employee engagement.
A number of staff received
promotions during the year. An
internally designed people manager
development program was facilitated
to current and future managers of
people resources.
Cost levels were consistent with the
budget and corporate plan.
Staff development continues to be
a priority. Staff have undertaken
numerous group and individual
training programs. Staff are actively
encouraged to attend industry
events.
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Measures
Outcomes
Shareholder engagement and satisfaction
Shareholders support
the company
Participation in share issues
No share issues and dividend
reinvestment plan and bonus share
plans suspended.
Company investor relations program Regular roadshows and investor
briefings held during the year and
an institutional investor tour held
in Brisbane kept the investment
community informed.
Total shareholder return (TSR)
Support for board resolutions
One year TSR satisfactory (CWP
29.7% - compared to Small
Industrials index 7.9%). TSR for 3
years unsatisfactory (CWP -3.6%
compared to Small Industrials index
9.2%). Five year TSR satisfactory
(CWP 16.0% - compared to Small
Industrials index 11.4%)
All resolutions supported by
shareholders at 2016 AGM
Proxy advisors support board
resolutions
Proxy advisor firms supported all
resolutions at 2016 AGM
Performance
assessment
N/A
Achieved
Achieved
for 1 and 5
years, not for
3 years.
Achieved
Achieved
Sustainability
Environment &
Climate Change;
Optimising Land Use;
Housing Diversity
& Affordability;
Heritage; Stakeholder
Engagement;
Community
Investment,
Development &
Integration
Enhance and rehabilitate
environmental assets and rehabilitate
contamination as an integral part of
project delivery
Promote total water cycle
management and efficient water use
Promote energy efficiency and use of
renewables
Deliver the best use of land by
optimising land use mix and
densities in the context of high
quality urban places that deliver safe
and healthy lifestyles
Promote equality of access to
housing for all sectors of the
community through diversity of
product and embracing opportunities
to assist those disadvantaged by the
market
Recognising indigenous and cultural
heritage
Engage with key stakeholders
throughout project delivery
Create vibrant communities by
investing in their wellbeing, nurturing
a strong ‘sense of community’ and
maximizing social connectivity
Strong performance continued in the
delivery of local, state and federal
environmental approvals.
Achieved
Urban water management remains
a focus, with 100% of projects
meeting regulatory performance
requirements.
The sustainability Living Guide was
rolled out to new projects, such as
Bushmead.
Achieved
Achieved
100% of projects achieve statutory
density and landuse requirements.
Achieved
Numerous projects adopted specific
affordable housing strategies.
Achieved
All projects with identified heritage
values recognised those values
through either building conservation
and reuse, parkland themes and/or
street naming.
Fostering strong stakeholder
relationships remained a priority.
Communication Strategies remain
an effective guide to meaningful
engagement in negotiating project
approvals and delivery.
Sponsorship strategies were
implemented at both corporate and
project levels. The Perth International
Arts Festival was the major corporate
sponsorship focus again for Cedar
Woods in the FY2017 financial year.
Achieved
Achieved
Achieved
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The following table outlines the proportion of maximum STI earned and forfeited in relation to FY2017 and the maximum
STI that was available.
Proportion of maximum STI
earned in FY2017
Proportion of maximum STI
forfeited in FY2017
MD
COO
State
Manager
VIC & SA
State
Manager
WA
CFO and
Company
Secretary
MD
COO
State
Manager
VIC & QLD
State
Manager
WA
CFO and
Company
Secretary
Total %
87%
85%
$346,000 $110,500
85%
$67,600
80%
$59,625
83%
$58,100
13%
$54,000
15%
$19,500
15%
$12,400
20%
$15,375
17%
$11,900
Total $
Max STI
opportunity
$400,000 $130,000
$80,000
$75,000
$70,000
Performance against LTI objectives
The company introduced a new equity based LTI scheme in FY2016. The plan has two vesting conditions a) a 3 year
service condition and b) two performance conditions measured over a 3 year period: 50 percent of the LTI grant will be
tested against a relative total shareholder return (“TSR”) hurdle (measured against the S&P / ASX Small Industrials Index)
and 50 per cent against earnings per share (“EPS”) growth compared with the Corporate plan targets.
The relative TSR performance condition was chosen as it offers a relevant indicator of measuring changes in
shareholder value by comparing the company’s return to shareholders against the returns of companies of a similar size
and investment profile.
The EPS performance condition was chosen as it is a primary determinant of shareholder value in a listed company
context.
The following table outlines the proportion of maximum LTI that were granted to KMP during FY2017.
MD
COO
LTI awards in FY2017
State Manager
VIC & SA
CFO and
Company
Secretary
State Manager
WA
Value granted
(max LTI opportunity)
$126,000
$130,000
$80,000
$40,000
$50,000
The LTI awards earned vest on 31 August 2019 subject to the two vesting conditions.
Terms and conditions of the share-based payment arrangements
The terms and conditions of each grant of rights affecting remuneration in the current or a future reporting period are
as follows:
Incentive
Plan
Grant
date
Performance
period
Vesting
date
Value
at start of
performance
period
FY2016
Award 1
(Employees)
FY2016 –
Award 2
(MD)
28/08/2015
9/11/2015
1/7/15
to
30/6/18
1/7/15
to
30/6/18
31/08/2018
$5.33
31/08/2018
$5.33
Incentive
Plan
Grant
date
Performance
period
Vesting
date
Value
at start of
performance
period
FY2017 –
Award 1
(Employees)
FY2017 –
Award 2
(MD)
25/08/2016
10/11/2016
1/7/16
to
30/6/19
1/7/16
to
30/6/19
31/08/2019
$4.35
31/08/2019
$4.35
Performance
hurdle
EPS Growth
Relative TSR
EPS Growth
Relative TSR
Performance
hurdle
EPS Growth
Relative TSR
EPS Growth
Relative TSR
Value
per share
right at grant
date
Performance
achieved
%
Vested
$4.12
$2.04
$3.43
$0.96
to be
determined
to be
determined
n/a
n/a
Value
per share
right at grant
date
Performance
achieved
%
Vested
$4.29
$2.75
$4.15
$2.87
to be
determined
to be
determined
n/a
n/a
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The number of share rights granted to key management personnel under the LTI scheme during FY2017 is shown in
the table below. Rights granted will only vest upon satisfaction of the Performance Conditions which are measured
over the Performance Period. The number of rights granted has been determined by dividing the FY2017 LTI grant
opportunity by the market value of shares at the beginning of the performance period, which is the volume weighted
average price of the company’s shares over the first five trading days in FY2017 ($4.35). The market value of the shares
is not discounted.
Upon vesting, each right is convertible into one fully paid ordinary share in the company. The executives do not receive
any dividends in relation to the rights during the vesting period. If an executive ceases employment before the rights
vest, the rights will normally be forfeited, except in limited circumstances that are approved by the board on a case-by-
case basis.
The fair value of the rights has been determined using the amount of the grant date fair value.
Reconciliation of share rights held by KMP
The following table shows how many share rights were granted, vested and forfeited during the year for KMP.
Name &
grant dates
Balance at
start of year
Number
Granted
during year
Number
Vested
Number
Vested
%
Forfeited
Number
Forfeited
%
Executive director
P S Sadleir
10 Nov 2016
Senior executives
N Blackburne
25 Aug 2016
P Archer
25 Aug 2016
P Freedman
25 Aug 2016
B Rosser
25 Aug 2016
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-
-
-
-
28,965
29,885
18,391
9,195
11,494
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
end of year
(unvested)
Number
Maximum
value yet
to vest *
28,965
$93,469
29,885
$96,451
18,391
$59,355
9,195
$29,676
11,494
$37,096
* The LTI awards earned vest on 31 August 2019 subject to the two vesting conditions. The maximum value of the
deferred shares yet to vest has been determined as the amount of the grant date fair value of the rights that is yet to be
expensed.
Performance of shareholder return metrics
In FY2017, the company delivered a record profit of $45.4 million, an increase of 4.2 per cent. This was the seventh
consecutive record profit for the company.
The returns to shareholders of Cedar Woods Properties Limited over the last 1, 3 and 5 years are detailed in the table
below:
Returns to shareholders over 1, 3 and 5 years (%)
1 year
3 years
5 years
EPS growth
Share price growth
Dividend growth (paid dividend)
CWP TSR (change in share price and dividends)
S&P Small Industrials Index (XSIAI)
4.2
19.8
1.8
29.67
7.86
1.9
(10.7)
1.8
-3.56
9.24
1.6
7.9
4.4
16.0
11.44
The total shareholder return in FY2017 was 29.67 per cent which compared favourably with the S&P Small Industrials
Index total return of 7.86 per cent over the same period. Whilst the returns over 3 years did not compare favourably, the
returns over 5 years compare favourably to the returns of the S&P Small Industrials Index. Management is focussed on
delivering consistent earnings per share and dividend growth. The company’s share price is subject to market factors
that are beyond the company’s control.
The measures of the company’s financial performance over the last five years as required by the Corporations Act 2001 are
shown in the table below. However, these are not necessarily consistent with the measures used in determining the variable
amounts of remuneration awarded to KMP, the basis for which is outlined above. As a consequence, there may not always
be a direct correlation between the statutory key performance measures and the variable remuneration awarded.
2017 ANNUAL REPORT
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Profit for the year ($’000)
Basic earnings per share (cents)
Dividends per share (cents)
Increase (decrease) in share price (%)
2017
45,445
57.6
30.0
19.8
2016
43,602
55.3
28.5
(17.3)
2015
42,585
54.3
28.0
(28.0)
2014
40,313
54.4
27.5
41.4
2013
36,337
49.9
26.0
45.2
Executive remuneration for the years ended 30 June 2017 and 30 June 2016
Details of the remuneration of each executive of Cedar Woods Properties Limited is set out below.
Short-term benefits
Post
Employ-
ment
Long-term benefits
Name
Financial
year
Cash
salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Cash
bonus
$
Share
based
payment #
$
Long-
service
leave
$
Total
$
Perfor-
mance
related
%
Executive director
P S Sadleir
Senior executives
N Blackburne *
P Archer **
P S Freedman
B G Rosser ***
Total
2017
2016
2017
2016
2017
2017
2016
2017
2016
2017
2016
765,198
346,000
762,383
328,000
410,384
110,500
390,692
88,000
345,384
348,520
341,000
260,884
255,727
67,600
58,100
57,400
59,625
54,750
7,151
9,434
6,813
8,411
7,886
1,098
1,075
-
-
33,699
33,699
19,616
19,308
19,616
35,000
35,000
19,616
19,273
2,130,370
641,825
1,749,802
528,150
22,948
18,920
127,547
107,280
-
-
-
-
-
-
-
-
-
-
-
17,085
13,338
1,182,471
9,423
13,375
1,156,314
23,555
12,944
14,685
6,559
6,472
8,199
8,090
70,083
36,929
11,942
582,810
9,074
528,429
11,833
467,004
8,656
9,410
1,552
495
457,933
450,357
349,876
338,335
47,321
3,040,094
32,354
2,473,435
31%
29%
23%
19%
18%
14%
14%
19%
19%
* N Blackburne was promoted from State Manager - Victoria and Queensland to Chief Operating Officer effective 1
September 2017.
** P Archer was promoted to the role of State Manager - Victoria and South Australia effective 1 September 2017 and
joined the senior executive group on this date. Amounts shown above include P Archer’s total FY2017 remuneration.
P Archer’s total remuneration of $467,004 disclosed above includes $77,834 relating to the period prior to joining the
senior executive group.
*** The company appointed Ben Rosser as the Western Australian State Manager on 20 July 2015.
# Equity-settled share-based payments relate to the component of the fair value of awards from the 2016 and 2017 LTI
schemes attributable to the year measured in accordance with AASB 2 Share Based Payments. No awards vested in
FY2017.
When determining the remuneration mix for executives, the Human Resources and Remuneration committee used the
maximum STI and LTI opportunities contained in the tables on page 40, which differ from the amounts calculated in the
table above.
s) Executives contracts
Remuneration arrangements for executives are formalised in employment agreements. The following outlines the details
of these agreements.
Details of renegotiated executive service contract for the Managing Director
The Managing Director, Mr Sadleir is employed under an ongoing contract.
Mr Sadleir’s total remuneration package for FY2017 was as follows:
• Fixed remuneration of $800,000 per annum
• Maximum STI opportunity of 30.2% of total remuneration
• Maximum LTI opportunity of 9.5% of total remuneration.
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Service agreements
Remuneration and other terms of employment for the executives are formalised in employment agreements. The
agreements for the executives provide for performance related cash bonuses and other benefits. The agreements are
reviewed annually by the Human Resources and Remuneration Committee for each KMP and details are as follows:
Executive director
P S Sadleir
Contract term
Notice required to
terminate contract
Termination benefit*
No fixed term
12 months
See below**
Other senior executives
No fixed term
Up to 3 months
Up to 3 months base salary
*For treatment of STI and LTI awards upon cessation of employment please refer to iii. Details of incentive plans section
of the Directors Report.
** As well as allowing for participation (subject to shareholder approval) in the LTI Plan, Mr Sadleir’s contract has
been varied such that on termination by the company on ordinary notice or if he resigns following a material variation/
diminution in his role, responsibilities or status he will be entitled to be paid the maximum amount permitted under
section 200G of the Corporations Act. Taking into account Mr. Sadleir’s period of service, the maximum payment
under the Act would be the average annual base salary that Mr. Sadleir received from the company and related bodies
corporate during the previous 3 years.
Current Chief Operating Officer Nathan Blackburne will become the company’s Managing Director on 18 September
2017. Details of Mr Blackburne’s new remuneration package were included in the ASX release on 27 July 2017.
t) NED fee arrangements
Determination of fees and maximum aggregate NED fee pool
On appointment to the Board, all NEDs enter into a service agreement with the company in the form of a letter of
appointment. The letter details the terms, including fees, relevant to the office of the NED. Fees and payments to NEDs
reflect the demands which are made on, and the responsibilities of the NEDs.
NEDs’ receive an additional fee for chairing committees (no additional fees are paid for committee membership). No
additional fees are paid for memberships of directors on subsidiary Boards. NEDs’ fees and payments are reviewed
from time to time by the Board, taking into account comparable roles and market data. NEDs do not receive
performance based remuneration.
Remuneration of NEDs is determined by the Board, after receiving recommendations from the Human Resources and
Remuneration Committee, within the maximum aggregate amount approved by the shareholders from time to time
(currently set at $750,000). The total of NED fees paid in FY2017 was $535,971. The Board will not seek any increase
for the NED maximum aggregate fee pool at the FY2017 AGM.
Fee policy
NEDs’ annual fees were last reviewed from FY2017 (effective date: 1 July 2016).
The annual fees (inclusive of superannuation) for FY2017 and FY2016 are set out in the table below:
Chair
Deputy Chair
Other NEDs
Committee Chair
Committee member
FY2017
$
157,800
121,600
85,300
12,800
Nil
FY2016
$
154,734
119,187
83,640
12,546
Nil
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NED remuneration for the years ended 30 June 2017 and 30 June 2016
The table below outlines fees paid to NEDs for FY2017 and FY2016 in accordance with statutory rules and applicable
accounting standards.
Name
W G Hames
R S Brown
R Packer
S T Pearce*
V A Davies **
Total
Short-term
benefits
Board and
committee fees
$
Post employment
Superannuation
$
Financial year
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
144,110
141,310
111,050
108,847
90,002
87,831
43,444
76,384
77,900
59,966
466,506
474,338
13,690
13,424
10,550
10,340
33,698
33,447
4,127
7,256
7,400
5,697
69,465
70,164
Total
$
157,800
154,734
121,600
119,187
123,700
121,278
47,571
83,640
85,300
65,663
535,971
544,502
* Mr S T Pearce resigned effective on 20 January 2017.
** Ms V A Davies was appointed on 21 September 2015.
u) Additional statutory disclosures
Equity instrument disclosures relating to KMP
The numbers of ordinary shares in the company held during the financial year by each director and other KMP of Cedar
Woods Properties Limited, including their personally-related parties, are set out below. There were no shares granted
during the period as remuneration.
2017
NEDs
W G Hames†
RS Brown*
R Packer
S T Pearce
V A Davies
T S Brown (alternate for R S Brown)*
Executive directors
P S Sadleir
Senior executives
P S Freedman
N J Blackburne
P Archer
B G Rosser
Number of
shares at the
start of the year
Other changes
during the year
Number of
shares at the
end of the year
10,195,091
7,985,584
167,859
20,000
15,000
4,596,980
1,091,529
105,912
25,639
20,262
0
0
0
0
0
0
0
0
0
0
0
0
10,195,091
7,985,584
167,859
20,000
15,000
4,596,980
1,091,529
105,912
25,639
20,262
0
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NEDs
W G Hames†
RS Brown*
R Packer
S T Pearce
V A Davies
T S Brown (alternate for R S Brown)*
Executive directors
P S Sadleir
Senior executives
P S Freedman
N J Blackburne
B G Rosser
Number of
shares at the
start of the year
Other changes
during the year
Number of
shares at the
end of the year
10,082,559
112,532
10,195,091
7,985,584
167,859
15,000
0
4,596,980
0
0
5,000
15,000
0
7,985,584
167,859
20,000
15,000
4,596,980
1,049,529
42,000
1,091,529
105,912
18,303
0
0
7,336
0
105,912
25,639
0
† Includes 2,014,439 (2016 – 2,014,439) shares over which W G Hames has voting rights and a first right of refusal to
purchase.
*Interest of T R Brown relates to shares also shown under R S Brown.
The interests shown above comply with AASB124 Related Party Disclosures and differ to those shown at item l) of the
directors’ report which comply with the requirements of sections 608 and 609 of the Corporations Act 2001. The table
above includes the shares held by related parties of the KMP.
Other transactions with key management personnel
The consolidated entity uses a number of firms for architectural, urban design and planning services, creative design
services and settlement services and the use of these services increased significantly in FY2017 as a result of the higher
levels of development activity across the group. Accordingly the company has a high level of knowledge regarding
commercial rates for these services.
Where entities related to directors are able to fulfil the requisite criteria to provide the services at competitive rates, they
may be engaged by the company to perform the services. Should entities connected with the directors be engaged, the
directors declare their interests in those dealings and take no part in decisions relating to them.
During the year planning, architectural and consulting services were provided by Hames Sharley Architects of which Mr
W G Hames is a principal. The transactions were performed on normal commercial terms and conditions and fees paid
were consistent with market rates. The value of services provided was higher than in the previous year as a result of
architectural and design work performed on the Williams Landing Shopping Centre and the major start-up phase of the
Glenside project in Adelaide. The Glenside project was introduced to the company by Hames Sharley.
During the year creative design services were provided by Axiom Design, an entity associated with the family of Mr W
G Hames. Mr Hames has no beneficial interest in Axiom Design. The services were performed on normal commercial
terms and conditions and the level of services decreased compared with 2016.
Property settlement charges were paid to Westland Settlement Services Pty Ltd, a company associated with the family
of Mr R S Brown. The charges were based on normal commercial terms and conditions. At the estates where Westland
Settlement Services was engaged, the number of lots that settled in FY2017 was higher than that of the previous
year and as a result the value of transactions with Westland Settlement Services Pty Ltd increased. Across the group,
settlements and associated fees were also significantly higher.
Cedar Woods has for many years been a member of the Australian Institute of Company Directors (AICD). During the
2015 year Mr P S Sadleir became a council member of AICD WA. The annual subscriptions paid in 2017 and 2016
were performed on normal commercial terms and conditions.
In 2017 no payments were made for sponsorship of the Warren Jones Foundation Inc. of which Mr R Packer is a
trustee with no beneficial interest.
2017 ANNUAL REPORT
45
Aggregate amounts of each of the above types of other transactions with key management personnel of Cedar Woods
Properties Limited or their related entities:
Amounts recognised as expense
Creative design services
Architectural fees
Settlement fees
Subscriptions
Sponsorships
Amounts recognised as inventory / investment property
Architectural fees
Total amounts recognised in year
Aggregate amounts of assets at balance date relating to the above types of
other transactions with directors of Cedar Woods Properties Limited or their
related entities:
Inventory
Investment property
2017
$
31,001
5,000
107,450
10,000
0
2016
$
62,323
24,500
78,355
10,000
9,500
153,451
184,678
455,468
455,468
153,995
153,995
608,919
338,673
445,668
9,800
455,468
90,020
63,975
153,995
There are no aggregate amounts payable to directors of Cedar Woods Properties Limited at balance date. An amount
of $1,501 was payable to related entities (Axiom Deisgn) at balance date. There are no other amounts payable to
related entities at balance date relating to the above types of other transactions.
At 30 June 2017, an amount of $11,217 was outstanding on a loan to a key management personnel employee issued
under the former employee share plan. Under the now discontinued plan, certain employees were granted shares
funded by interest free loans from the company and with the loans repaid by dividends. This employee was not a
member of key management personnel in 2016. There are no other amounts owing from related entities at balance
date.
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CEDAR WOODS PROPERTIES LIMITED
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v)
Independent audit of remuneration report
The remuneration report has been audited by PricewaterhouseCoopers (PwC). See page 104 of this annual report for
PwC’s report on the remuneration report.
w) Retirement, election and continuation in office of directors
Mr William Hames retires by rotation at the forthcoming Annual General Meeting and being eligible, will offer himself for
re-election.
x)
Insurance of officers
During the financial year, Cedar Woods Properties Limited paid a premium in respect of directors’ and officers’ liabilities
that indemnifies certain officers of the company and its controlled entities. The officers of the company covered by the
insurance policy include the directors and the Company Secretary. The liabilities insured include costs and expenses
that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity
as officers of the company and its controlled entities. The directors have not included more specific details of the nature
of the liabilities covered or the amount of the premium paid in respect of the policy, as such disclosure is prohibited
under the terms of the contract.
y) Non-audit services
The group may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the company and/or group are important.
Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year are set
out in note 36 in the other information section of this report.
The Board of directors has considered the position and, in accordance with the advice received from the Audit and Risk
Management Committee, is satisfied that the provision of the non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of
non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act
2001 for the following reasons:
• All non-audit services have been reviewed by the Audit and Risk Management Committee to ensure they do not
impact the impartiality and objectivity of the auditor.
• None of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
z) Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 forms
part of this directors’ report and is set out on page 48.
aa) Rounding of amounts
The company is of a kind referred to in AISC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts
in the directors’ report. Amounts in the directors’ report have been rounded off in accordance with the instrument to the
nearest thousand dollars, or in certain cases, to the nearest dollar.
The directors reporting including the remuneration report is signed in accordance with a resolution of the directors of
Cedar Woods Properties Limited.
P S Sadleir
Managing Director
21 August 2017
2017 ANNUAL REPORT
47
Auditor’s Independence Declaration
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CEDAR WOODS PROPERTIES LIMITED
Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income ........................................................... 50
Consolidated Balance Sheet ......................................................................................................................................... 51
Consolidated Statement of Changes in Equity ............................................................................................................. 52
Consolidated Cash Flow Statement .............................................................................................................................. 53
These financial statements are consolidated financial statements for the group consisting of Cedar Woods Properties
Limited and its subsidiaries. A list of major subsidiaries is included in note 28.
The financial statements are presented in the Australian currency.
Cedar Woods Properties Limited is a company limited by shares, incorporated and domiciled in Australia.
Its registered office and principal place of business is:
Ground Floor,
50 Colin Street
WEST PERTH WA 6005.
The financial statements were authorised for issue by the directors on 21 August 2017. The directors have the power to
amend and reissue the financial statements.
2017 ANNUAL REPORT
49
Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 30 June 2017
Revenue from operations
Sale of land and buildings
Development services
Rent from properties
Interest revenue
Other Income
Expenses
Cost of sales of land and buildings
Cost of providing development services
Other expenses from ordinary activities:
Project operating costs
Occupancy
Administration
Other
Finance costs
Share of net profit of joint ventures accounted for using the
equity method
Profit before income tax
Income tax expense
Note
1
1
31a
2
Consolidated
2017
$’000
2016
$’000
210,165
169,181
6,611
4,555
938
787
3,892
1,299
222,269
175,159
127
76
(114,457)
(5,332)
(16,929)
(694)
(16,133)
(1,514)
(2,947)
109
64,499
(19,054)
(79,186)
(71)
(13,440)
(597)
(14,483)
(1,912)
(3,755)
41
61,832
(18,230)
Profit for the year
20 & 3
45,445
43,602
Total comprehensive income for the year
45,445
43,602
Total comprehensive income attributable to members of
Cedar Woods Properties Limited
45,445
43,602
Earnings per share for profit attributable to the ordinary
equity holders of the company:
Basic earnings per share
Diluted earnings per share
3
3
57.6 cents
55.3 cents
57.4 cents
55.2 cents
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
50
Financial StatementsCEDAR WOODS PROPERTIES LIMITED
Consolidated Balance Sheet
As at 30 June 2017
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Deferred development costs
Total current assets
Non-current assets
Receivables
Inventories
Deferred development costs
Investments accounted for using the equity method
Property, plant and equipment
Investment properties
Lease incentives
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Other financial liabilities
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Other financial liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained profits
Total equity
Note
Consolidated
2017
$’000
2016
$’000
4
5
6
7
5
6
7
8
9
10
11
12
15
16
13
14
15
16
17
18
19
20
8,400
5,882
95,145
831
110,258
16
326,969
14,893
4,125
5,122
43,425
816
395,366
505,624
24,175
4,065
9,701
9,330
47,271
87,340
407
37,412
73
2,887
128,119
175,390
330,234
119,525
210
210,499
330,234
1,697
8,374
55,644
6,535
72,250
6,890
311,542
11,836
4,016
4,080
41,542
573
380,479
452,729
13,497
27,446
6,070
7,125
54,138
52,041
728
34,086
271
4,277
91,403
145,541
307,188
119,525
159
187,504
307,188
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
2017 ANNUAL REPORT
51
Financial Statements Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2017
Consolidated
Note
Contributed
equity
$’000
Reserves
$’000
Retained
profits
$’000
Total
$’000
Balance at 1 July 2015
119,525
186
165,894
285,605
Profit for the year
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Transfers from reserves to retained profits
Dividends provided for or paid
Employee share plan reserve
26
19
-
-
-
-
-
-
Balance at 30 June 2016
119,525
-
-
43,602
43,602
43,602
43,602
(97)
-
70
(27)
159
97
-
(22,089)
(22,089)
-
70
(21,992)
(22,019)
187,504
307,188
Balance at 1 July 2016
119,525
159
187,504
307,188
Profit for the year
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Transfers from reserves to retained profits
Dividends provided for or paid
Employee share plan reserve
26
19
-
-
-
-
-
-
-
-
45,445
45,445
45,445
45,445
(34)
-
85
51
34
-
(22,484)
(22,484)
-
85
(22,450)
(22,399)
Balance at 30 June 2017
119,525
210
210,499
330,234
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
52
Financial StatementsCEDAR WOODS PROPERTIES LIMITED
Consolidated Cash Flow Statement
For the Year Ended 30 June 2017
Cash flows from operating activities
Receipts from customers (incl. GST)
Payments to suppliers and employees (incl. GST)
Note
Consolidated
2017
$’000
239,677
(56,175)
2016
$’000
190,846
(51,468)
Payments for land and development
(161,588)
(112,887)
Interest received
Borrowing costs paid
Income taxes paid
363
(4,860)
(16,812)
516
(3,941)
(18,799)
Net cash inflows from operating activities
22
605
4,267
Cash flows from investing activities
Repayments of loan by joint ventures
Cash acquired in business combinations
Payments for investment properties
Payments for property, plant and equipment
-
66
(4,762)
(1,895)
1,108
-
(3,656)
(2,052)
Net cash outflows from investing activities
(6,591)
(4,600)
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Dividends paid
35,167
-
(22,478)
44,708
(22,481)
(22,083)
26
Net cash inflows from financing activities
12,689
144
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
6,703
1,697
(189)
1,886
Cash and cash equivalents at the end of the year
4
8,400
1,697
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
2017 ANNUAL REPORT
53
Financial Statements Notes to the Financial Statements
These are the consolidated financial statements of Cedar Woods Properties Limited and its subsidiaries. A list of major
subsidiaries is included in note 28.
The notes are set out in the following main sections:
A Key numbers:
Provides a breakdown of those individual line items in the financial statements that the directors consider most relevant in
the context of the operations of the group, or where there have been significant changes that required specific explanations;
the section further explains what accounting policies have been applied to determine these line items and how the amounts
were affected by significant estimates and judgements made in calculating the final numbers.
B Financial risks:
Discusses the group’s exposure to various financial risks, explains how these affect the group’s financial position and
performance and what the group does to manage these risks.
C Group structure:
Explains significant aspects of the group structure and how changes have affected the financial position and performance of
the group.
D Unrecognised items:
Provides information about items that are not recognised in the financial statements, but could potentially have a significant
impact on the group’s financial position and performance.
E Other information:
Information that is not immediately related to individual line items in the financial statements, such as related party
transactions, share based payments and a full list of the accounting policies applied by the entity.
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CEDAR WOODS PROPERTIES LIMITED
Section A:
Key Numbers
This section provides a breakdown of those individual line items in the financial statements that the directors consider most
relevant in the context of the operations of the group, or where there have been significant changes that required specific
explanations, what accounting policies have been applied to determine these line items and how the amounts were affected
by significant estimates and judgements made in calculating the final numbers.
Profit or Loss Information ............................................................................................................................................... 56
1.
2.
3.
Expense items ...................................................................................................................................................... 56
Income tax ............................................................................................................................................................ 57
Earnings per share ................................................................................................................................................ 57
Balance Sheet Information ............................................................................................................................................. 58
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Cash and cash equivalents ................................................................................................................................... 58
Trade and other receivables .................................................................................................................................. 58
Inventories ............................................................................................................................................................ 59
Deferred development costs ................................................................................................................................. 60
Investments accounted for using the equity method ............................................................................................. 60
Property, plant and equipment .............................................................................................................................. 60
Investment properties ........................................................................................................................................... 61
Lease incentives ................................................................................................................................................... 62
Trade and other payables ...................................................................................................................................... 62
Borrowings ........................................................................................................................................................... 62
Derivative financial instruments ............................................................................................................................. 63
Other financial liabilities ......................................................................................................................................... 64
Provisions ............................................................................................................................................................. 64
Deferred tax .......................................................................................................................................................... 65
Equity ................................................................................................................................................................... 67
Reserves............................................................................................................................................................... 67
Retained profits ..................................................................................................................................................... 68
Categories of financial assets and financial liabilities .............................................................................................. 68
Cash Flow information .................................................................................................................................................... 69
22.
Reconciliation of profit after income tax to net cash inflows from operating activities ............................................. 69
2017 ANNUAL REPORT
55
A – Key Numbers
Profit or Loss Information
1. Expense items
Profit before income tax expense includes the following specific expenses:
Finance costs
Interest and finance charges
Interest – other financial liabilities
Unrealised financial instrument (gains) losses
Less: amount capitalised
Finance costs expensed
a. Capitalised borrowing costs
Notes
a
Consolidated
2017
$’000
4,872
2,857
(321)
(4,461)
2,947
2016
$’000
3,861
2,564
660
(3,330)
3,755
Where qualifying assets have been financed by the entity’s corporate facility, the capitalisation rate used to
determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the
entity’s corporate facility during the year, in this case 3.28% (2016 – 3.68%) per annum. Where qualifying assets are
financed by specific facilities, the applicable borrowing costs of those facilities are capitalised.
Consolidated
Net loss on disposal of property, plant and equipment
Rental expense relating to operating leases
Minimum lease payments
Provision for customer rebates
Provision for impairment of trade receivables
Superannuation
Depreciation of property, plant and equipment
Depreciation of investment properties
Employee benefits expense
Other
Write-down of inventory
Impairment of available for sale financial assets: units in the
BCM Apartment Trust
Impairment of loan to the BCM Apartment Trust
Impairment of lease incentives and capitalised lease costs
16a
5
9
10
5
10
2017
$’000
295
826
4,631
191
895
678
1,083
10,753
1,336
-
-
178
1,514
2016
$’000
2
696
1,647
348
809
458
996
9,743
-
1,029
449
434
1,912
56
A – Key NumbersCEDAR WOODS PROPERTIES LIMITED 2.
Income tax
This note provides an analysis of the group’s income tax expense and how the tax expense is affected by non-
assessable and non-deductible items.
a.
Income tax expense
Consolidated
Notes
Current tax
Deferred tax
Adjustments for current tax of prior periods
Income tax expense attributable to profit
Deferred income tax expense (revenue) included in income
tax expense comprises:
(Increase) in deferred tax assets
(Decrease) increase in deferred tax liabilities
17
17
b. Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax
2017
$’000
20,744
(1,390)
(300)
19,054
(1,323)
(67)
(1,390)
Consolidated
2017
$’000
64,499
2016
$’000
16,511
2,041
(322)
18,230
(35)
2,076
2,041
2016
$’000
61,832
Tax at the Australian tax rate of 30% (2016 – 30%)
19,350
18,550
Tax effect of amounts which are not deductible in calculating
taxable income:
- Share of net profit of joint venture
- Sundry items
Adjustments for current tax of prior periods:
- Research and development
Income tax expense
3. Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
Net profit attributable to the ordinary owners of the
company ($’000)
Weighted average number of ordinary shares used as the
denominator in the calculation of earnings per share
Weighted average number of ordinary shares used as the
denominator in the calculation of diluted earnings per share
(34)
38
4
(300)
(300)
(13)
15
2
(322)
(322)
19,054
18,230
2017
57.6
57.4
2016
55.3
55.2
45,445
43,602
78,891,681
78,891,681
79,110,619
78,966,990
The calculation of diluted earnings per share includes performance rights that may vest under the company’s LTI plan.
2017 ANNUAL REPORT
57
A – Key Numbers Balance Sheet Information
4. Cash and cash equivalents
Cash at bank and in hand
Consolidated
2017
$’000
8,400
8,400
2016
$’000
1,697
1,697
The above figure reconciles to the amount of cash shown in the statement of cash flows at the end of the year.
Cash at bank includes cash held in day to day bank transaction accounts and deposit accounts earning interest from
0 to 2.1% (2016: 0 – 2.3%) per annum depending on the balances.
The Group’s exposure to interest rate risk is discussed in note 24. Financial risk management. The maximum exposure
to credit risk at the reporting date is the carrying amount of each class of cash and cash equivalents mentioned above.
5. Trade and other receivables
Consolidated
Current
Trade receivables
Provision for impairment
Other receivables
Loan to BCM Apartment Trust (Secured)
Prepayments
Non-Current
Loans to BCM Apartment Trust (Secured)
Provision for impairment
Loans – employee share scheme (discontinued)
Notes
a & b
a & b
a & b
c
c
c
36
2017
$’000
4,201
(191)
278
-
1,594
5,882
-
-
16
16
2016
$’000
2,213
(348)
2,578
1,998
1,933
8,374
7,317
(449)
22
6,890
a. Classification as trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. Loans and other receivables are non-derivative financial assets with fixed or determinable payments and
are not quoted in an active market. If collection of the amounts is expected in one year or less they are classified as
current assets. If not, they are presented as non-current assets. Trade receivables are generally due for settlement
within 30 days and therefore are all classified as current. The group’s impairment and other accounting policies for
trade and other receivables are outlined in note 38(k) and 38(y).
b. Current trade and other receivables
Current trade and other receivables include interest and non-interest bearing receivables (see note 24. Financial risk
management). Trade receivables are initially recorded at fair value and subsequently carried at amortised cost. A
provision for impaired trade receivables of $191,000 was in place at 30 June 2017 (2016 – $348,000) for Williams
Landing Shopping Centre rental that is past due, where there is low probability of recovery in full. Other receivables
include GST receivable in relation to the payment of Other financial liabilities - Current in note 15.
The fair values of non-current receivables of the group approximate the carrying values.
Other non-current receivables and loans under the discontinued employee share scheme are non-interest bearing.
None of these are impaired, or past due but not impaired.
58
A – Key NumbersCEDAR WOODS PROPERTIES LIMITED c. Secured loan to BCM Apartment Trust
On 31 January 2017 changes to the board of Champion Bay Nominees Pty Ltd, the trustee of the BCM Apartment
Trust, resulted in Cedar Woods Properties Limited obtaining management control of Champion Bay Nominees Pty
Ltd and thus BCM Apartment Trust. The operating results and assets and liabilities of BCM Apartment Trust have
thus been consolidated into the accounts of Cedar Woods Properties Limited from that date and transactions and
balances between the two parties eliminated on consolidation. Refer to note 27 for details.
In the year ended 30 June 2017, finance facilities continued to be provided by Cedar Woods Properties Limited to
BCM Apartment Trust, secured over all of the apartments in the Batavia Coast Marina Apartments development,
however these balances have been eliminated on consolidation. The interest rate on these facilities is BBSY plus
4.5% per annum.
A provision for doubtful debts of $449,000 was made during 30 June 2016 for a loan to Champion Bay Nominees
Pty Ltd ATF the BCM Apartment Trust.
6.
Inventories
Total Inventory
Current inventory
Non-current inventory
Aggregate carrying amount
Current
Property held for resale
- land at cost
- at valuation 30 June 1992
- capitalised development costs
Notes
a & b
a & b
Consolidated
2017
$’000
95,145
326,969
422,114
2016
$’000
55,644
311,542
367,186
Consolidated
2017
$’000
2016
$’000
38,061
11
57,073
95,145
9,433
87
46,124
55,644
The 1992 valuations were independent valuations which were based on current market values at that time.
Non-Current
Property held for resale
- land at cost
- at valuation 30 June 1992
- capitalised development costs
- at net realisable value
Consolidated
2017
$’000
2016
$’000
251,055
251,330
91
70,666
5,157
74
54,994
5,144
326,969
311,542
The 1992 valuations were independent valuations which were based on current market values at that time.
a. Current and non-current assets pledged as security
Refer to note 13 for information on current assets pledged as security by the parent entity or its controlled entities.
b. Accounting for inventory
Refer to note 38(g) for the recognition and classification of inventory.
2017 ANNUAL REPORT
59
A – Key Numbers 7. Deferred development costs
Current
Deferred development costs
Non-Current
Deferred development costs
Consolidated
2017
$’000
831
831
14,893
14,893
2016
$’000
6,535
6,535
11,836
11,836
Development costs incurred by the group for the development of land not held as inventory by the group are recorded
as deferred development costs in the balance sheet.
8.
Investments accounted for using the equity method
Unlisted securities
Shares in joint ventures
a. Cedar Woods Wellard Limited
Consolidated
2017
$’000
2016
$’000
4,125
4,016
The consolidated entity owns a 32.5% (2016: 32.5%) interest in Cedar Woods Wellard Limited, a property
development company incorporated in Australia. Refer to note 29.
b. BCM Apartment Trust
The consolidated entity owns 100 ordinary units for $1 each (a 50% interest in the ordinary units) in the BCM
Apartment Trust. The consolidated entity’s interests in the ordinary units do not entitle it to a share of the revenue,
profit/loss and net assets of BCM.
The consolidated entity also owns 10 ordinary shares for $1 each (a 50% interest) in Champion Bay Nominees Pty
Ltd, the trustee of BCM.
The company’s interest in the BCM Apartment Trust and Champion Bay Nominees Pty Ltd were accounted for
as investments accounted for using the equity method during 30 June 2016. As a result of a change in control of
Champion Bay Nominees Pty Ltd in the year ended 30 June 2017, these entities were consolidated in the accounts
of Cedar Woods Properties Limited at 30 June 2017. Refer to note 27 for details.
9. Property, plant and equipment
Plant and Equipment at Cost
At start of the year
Consolidation of subsidiary
Additions
Assets disposed
At end of the year
Accumulated depreciation on Plant and Equipment
At start of the year
Consolidation of subsidiary
Charge for year
Assets disposed
At end of the year
Net book value
60
Consolidated
2017
$’000
6,634
195
1,896
(1,489)
7,236
2,554
40
678
(1,158)
2,114
5,122
2016
$’000
4,586
-
2,052
(4)
6,634
2,107
-
458
(11)
2,554
4,080
A – Key NumbersCEDAR WOODS PROPERTIES LIMITED a. Non-current assets pledged as security
Refer to note 13 for information on non-current assets pledged as security by the parent entity or its controlled entities.
10. Investment properties
Non-current assets – at cost
Opening balance at the start of the year
Capitalised expenditure
Depreciation
Impairment of capitalised lease costs
Closing balance at the end of the year
Represented by:
Property under construction
Completed investment property
Closing balance at the end of the year
Notes
a
Consolidated
2017
$’000
41,542
2,998
(1,083)
(32)
43,425
-
43,425
43,425
2016
$’000
37,982
4,631
(996)
(75)
41,542
4,547
36,995
41,542
a.
Investment properties under construction
For investment properties that are under construction at 30 June 2017 depreciation has not yet commenced.
b. Amounts recognised in profit or loss for investment properties
Rental income
Direct operating expenses from property that generated rental income
Impairment of lease incentives and capitalised lease costs
c. Fair value of investment property
Consolidated
2017
$’000
4,005
(3,079)
(178)
2016
$’000
3,627
(2,709)
(434)
The fair value of the Williams Landing Shopping Centre which makes up completed investment property at 30
June 2017 is $66.5m (2016 - $58.0m) exclusive of GST, based on an independent valuation. This includes land
surrounding the shopping centre for future development which is on the same title and adding subsequent
development.
d. Leasing arrangements
Investment properties are leased to tenants under long term operating leases. Minimum lease payments under non-
cancellable leases are receivable as follows:
Within one year
Later than one year but not later than 5 years
Later than 5 years
Consolidated
2017
$’000
3,453
12,834
25,681
41,968
2016
$’000
3,308
13,402
30,566
47,276
e. Non-current assets pledged as security
Refer to note 13 for information on non-current assets pledged as security by the parent entity or its controlled entities.
2017 ANNUAL REPORT
61
A – Key Numbers 11. Leasing incentives
Lease incentives
Amortisation of lease incentives
Impairment of lease incentives
Consolidated
2017
$’000
1,665
(344)
(505)
816
2016
$’000
1,118
(186)
(359)
573
a. Non-current assets pledged as security
Refer to note 13 for information on non-current assets pledged as security by the parent entity or its controlled entities.
12. Trade and other payables
Trade payables
Accruals
GST payable
Other payables
Consolidated
2017
$’000
9,885
9,670
3,839
781
2016
$’000
7,053
3,853
2,256
335
24,175
13,497
Trade payables are unsecured and are usually paid within 30 days of recognition. The carrying amounts of trade and
other payables are assumed to be the same as their fair values due to their short-term nature.
13. Borrowings
Non-Current
Bank loans – secured (Corporate facilities)
Bank loan – secured (Williams Landing Shopping Centre facility)
Facility fees capitalised (amortised over the period of facility)
Amortisation of facility fees
The fair value of non-current borrowings equals their carrying amount.
a. Security for borrowings
Consolidated
2017
$’000
58,400
29,193
(429)
176
87,340
2016
$’000
26,400
25,909
(558)
290
52,041
All of the consolidated entity’s assets are pledged as security for the group’s finance facilities.
Bank loans of $29,200,000 provided by ANZ Bank (2016 - $13,200,000) and $29,200,000 provided by
Commonwealth Bank trading as Bankwest (2016 - $13,200,000) are secured by first registered mortgages over
some of the consolidated entity’s land holdings, and first registered charges, guarantees and indemnities provided
by Cedar Woods Properties Limited and applicable subsidiary entities. Cedar Woods Properties Limited has
provided first registered charges over its assets and undertakings in relation to the corporate loan facility (see
below).
The Williams Landing Shopping Centre facility is secured by a first registered mortgage over the Williams Landing
Shopping Centre disclosed in investment properties at note 10.
62
A – Key NumbersCEDAR WOODS PROPERTIES LIMITED b. Financing arrangements
Unrestricted access was available to the following lines of credit at balance date:
Corporate facilities
Total facilities (loan and guarantees)
Used at balance date
Unused at balance date
Williams Landing Shopping Centre facility
Total facility
Used at balance date
Unused at balance date
Total Facilities
Used at balance date
Unused at balance date
Consolidated
2017
$’000
2016
$’000
175,000
73,838
101,162
30,000
29,193
807
205,000
103,031
101,969
135,000
40,545
94,455
30,000
25,909
4,091
165,000
66,454
98,546
The consolidated entity has total corporate finance facilities of $175,000,000 (2016 - $135,000,000), with
$87,500,000 (2016 - $67,500,000) each provided by ANZ Bank and Commonwealth Bank trading as Bankwest.
The facilities expire on 30 November 2019. The conditions of the facilities impose certain covenants including the
consolidated entity’s revenue, interest cover and loan-to-valuation ratio. The corporate facilities provide funding for
the consolidated entity’s existing operations, ongoing development and future acquisitions. The funding structure
has been set up as a club facility with a security trustee, providing the flexibility for other banks to enter, should the
group’s requirements grow and more lenders are required. The interest on the corporate loan facilities is variable
and at 30 June 2017 was an average rate of 3.04% per annum (2016 - 3.28%).
The corporate facilities include bank guarantee facilities of $20,500,000 (2016 - $18,000,000) subject to similar
terms and conditions, which were drawn to a total amount of $15,438,000 at 30 June 2017 (2016 - $14,145,000).
The consolidated entity has a facility of $30,000,000 (2016 - $30,000,000) in place for the Williams Landing
Shopping Centre provided by Commonwealth Bank trading as Bankwest. The conditions of the facility impose
certain covenants including loan-to-valuation ratio and interest cover ratio. The facility extends to February 2019.
The interest on the Williams Landing Shopping Centre loan facility is variable and at 30 June 2017 was an average
rate of 2.97% (2016 - 3.20%) per annum.
Details of the group’s exposure to risk arising from current and non-current borrowings are set out in note 24.
Financial risk management.
14. Derivative financial instruments
Non-current liabilities
Interest rate swap contracts
a.
Instruments used by the group
Consolidated
2017
$’000
407
407
2016
$’000
728
728
The group is party to derivative financial instruments in the normal course of business in order to manage exposure
to fluctuations in interest rates in accordance with the group’s financial risk management policies.
2017 ANNUAL REPORT
63
A – Key Numbers Interest rate swap contracts
The bank loans currently bear an average variable interest rate of 3.04% per annum (2016 – 3.28% per annum).
It is the group’s policy to protect part of the loans from exposure to fluctuations in interest rates. Accordingly the
consolidated entity has entered into interest rate swap contracts under which part of the consolidated entity’s
projected borrowings are protected for the period from 1 July 2017 to 30 June 2020.
The swaps effectively fix interest rates applicable to bank bills issued with a duration of 1 month (BBSY Bid) at
certain levels between 2.070% - 2.495% per annum (2016 – 2.255% - 2.495% per annum). Swaps currently in
place cover approximately 63% (2016 – 57%) of the variable loans outstanding at balance date, with terms expiring
in 2019 and 2020. The group is not applying hedge accounting to these derivatives. The gain or loss from re-
measuring the derivative financial instruments at fair value is recognised in profit or loss.
15. Other financial liabilities
Current
Due to vendors of properties under contracts of sale
Non-Current
Due to vendors of properties under contract of sale
Other payables
16. Provisions
Current
Employee benefits
Customer rebates
Non-current
Employee benefits
a. Movements in customer rebate provisions
Carrying amount at start of year
Charged to profit or loss
Payments
Carrying amount at end of year
Notes
a
Consolidated
2017
$’000
4,065
4,065
36,188
1,224
37,412
2016
$’000
27,446
27,446
34,086
-
34,086
Consolidated
2017
$’000
1,415
7,915
9,330
Consolidated
2017
$’000
73
73
Consolidated
2017
$’000
5,809
4,631
(2,525)
7,915
2016
$’000
1,316
5,809
7,125
2016
$’000
271
271
2016
$’000
7,057
1,647
(2,895)
5,809
Customers are generally entitled to customer rebates within 12 months of balance date, however in some instances
claims and payments may not be made within 12 months of balance date.
64
A – Key NumbersCEDAR WOODS PROPERTIES LIMITED 17. Deferred tax
a. Assets
The balance comprises temporary differences
attributable to:
Notes
Inventory
Provision for customer rebates
Available for sale financial asset
Provision for employee benefits
Other
Receivables
Derivative financial instruments
Share issue expenses
Borrowing costs
Other
Sub-total other
Total deferred tax assets
Set-off of deferred tax assets pursuant to set-off
provisions
Net deferred tax assets
Deferred tax assets at the start of the year
Increase in deferred tax assets credited to income tax
expense
2
Deferred tax assets at the end of the year
Deferred tax assets expected to be recovered within
12 months
Deferred tax assets expected to be recovered after
more than 12 months
Consolidated
2017
$’000
2,947
2,354
1,858
763
7,922
296
122
51
80
186
735
8,657
(8,657)
-
7,334
1,323
8,657
4,883
3,774
8,657
Provision for
customer
rebates
$’000
Special Unit
in the BCM
Apartment
Trust
$’000
Provision for
employee
benefits
$’000
Inventory
$’000
2,501
2,117
1,549
834
(173)
2,328
619
2,947
(374)
1,743
611
2,354
309
1,858
-
1,858
(58)
776
(13)
763
Other
$’000
298
331
629
106
735
Movements
At 1 July 2015
(Charged)/credited
- to profit or loss
At 30 June 2016
(Charged)/credited
- to profit or loss
At 30 June 2017
2016
$’000
2,328
1,743
1,858
776
6,705
239
218
102
18
52
629
7,334
(7,334)
-
7,299
35
7,334
3,445
3,889
7,334
Total
$’000
7,299
35
7,334
1,323
8,657
2017 ANNUAL REPORT
65
A – Key Numbers b. Liabilities
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss
Inventory
Deferred development costs
Prepayments
Investment Property
Other
Lease incentives
Revaluation reserve
Other
Sub-total other
Notes
Consolidated
2017
$’000
2016
$’000
5,958
4,633
370
305
5,212
5,372
439
367
11,266
11,390
245
24
9
278
172
38
11
221
Total deferred tax liabilities
11,544
11,611
Set off of deferred tax assets pursuant to set-off
provisions
Net deferred tax liabilities
Deferred tax liabilities at the start of the year
(Decrease) increase in deferred tax liabilities (credited)
debited to income tax expense
2
Deferred tax liabilities at the end of the year
Deferred tax liabilities expected to be settled within 12
months
Deferred tax liabilities expected to be settled after more
than 12 months
(8,657)
2,887
11,611
(67)
11,544
(7,334)
4,277
9,535
2,076
11,611
3,123
3,643
8,421
11,544
7,968
11,611
Movements
At 1 July 2015
Charged/(credited)
- to profit or loss
At 30 June 2016
Charged/(credited)
- to profit or loss
At 30 June 2017
Deferred
development
costs
$’000
Inventory
$’000
Prepayments
$’000
Investment
Property
$’000
4,872
3,706
411
215
340
5,212
746
5,958
1,666
5,372
(739)
4,633
28
439
(69)
370
152
367
(62)
305
Other
$’000
331
(110)
221
57
278
Total
$’000
9,535
2,076
11,611
(67)
11,544
66
A – Key NumbersCEDAR WOODS PROPERTIES LIMITED
18. Equity
Movement in ordinary share capital
2017
Shares
2016
Shares
2017
$’000
2016
$’000
Start of the year
End of the year
78,891,681 78,891,681
119,525
119,525
78,891,681 78,891,681
119,525
119,525
Holders of ordinary shares are entitled to participate in dividends and the proceeds on any winding up of the company
in proportion to the number of shares held. On a show of hands every holder of ordinary shares present at a meeting in
person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
a. Dividend reinvestment plan
The company has established a dividend reinvestment plan under which holders of ordinary shares may elect to
have all or part of their dividend satisfied by the issue of new ordinary shares rather than being paid in cash. Shares
may be issued under the plan at a discount to the market price, at the discretion of the Directors.
b. Bonus share plan
The company has established a bonus share plan under which holders of ordinary shares may elect not to receive
dividends but to receive instead additional fully paid shares issued as ‘Bonus Shares’ to the equivalent value of
the dividend foregone. The entitlement for shares issued under the plan is calculated based on the same pricing
mechanism as the dividend reinvestment plan, including any discount.
The dividend reinvestment plan and bonus share plan remained suspended during the 2017 financial year in response
to capital management initiatives, having regard to the company share price.
19. Reserves
The following table shows the composition and movement in reserves during the year. A description of the nature and
purpose of reserves is provided below the table.
Notes
Consolidated
2017
$’000
2016
$’000
Composition
a) Asset revaluation reserve (pre 1992)
b) Employee share plan reserve
Movements
a) Asset revaluation reserve
Balance at the beginning of the year
Transfer to retained profits
Balance at the end of the year
b) Share-based payments reserve
Balance at the beginning of the year
Share-based payments expense
Balance at the end of the year
20
55
155
210
89
(34)
55
70
85
155
89
70
159
186
(97)
89
-
70
70
The asset revaluation reserve was used until 1992 to record increments and decrements on the revaluation of non-
current assets. Refer to note 38(g).
The share-based payments reserve is used to recognise the grant date fair value of the rights issued to employees
adjusted for those rights not expected to vest. Refer to note 37.
2017 ANNUAL REPORT
67
A – Key Numbers 20. Retained profits
Retained profits at the start of the year
Net profit attributable to members of Cedar Woods
Properties Limited
Transfers from reserves
Dividends provided for or paid
Retained profits at the end of the year
Notes
19
26
Consolidated
2017
$’000
2016
$’000
187,504
165,894
45,445
34
(22,484)
210,499
43,602
97
(22,089)
187,504
21. Categories of financial assets and financial liabilities
Notes 4, 5, 12, 13, 14, and 15 provide information about the group’s financial instruments, including:
a. Specific information about each type of financial instrument
b. Accounting policies
c.
Information about determining the fair value of the instruments, including judgements and estimation uncertainty
involved
The group holds the following financial instruments:
Financial Assets
2017
Cash and cash equivalents
Trade and other receivables*
Total
2016
Cash and cash equivalents
Trade and other receivables*
Total
* Excluding prepayments
Financial Liabilities
2017
Trade and other payables
Borrowings
Derivative financial instruments
Other financial liabilities
Total
2016
Trade and other payables
Borrowings
Derivative financial instruments
Other financial liabilities
Total
Notes
4
5
4
5
Financial
assets at
amortised cost
$’000
8,400
4,304
12,704
1,697
13,331
15,028
Notes
Derivatives used
for hedging
Liabilities at
amortised cost
12
13
14
15
12
13
14
15
$’000
-
-
407
-
407
-
-
728
-
728
$’000
24,175
87,340
-
41,477
152,992
13,497
52,041
-
61,532
127,070
Total
$’000
8,400
4,304
12,704
1,697
13,331
15,028
Total
$’000
24,175
87,340
407
41,477
153,399
13,497
52,041
728
61,532
127,798
68
A – Key NumbersCEDAR WOODS PROPERTIES LIMITED Cash Flow Information
22. Reconciliation of profit after income tax to net cash inflows from operating activities
Consolidated
Profit after income tax
Depreciation
Amortisation of lease incentives
Write down of assets – investment property and lease incentives
Write down/ loss on sale of non-current assets
Write down of assets - Available for sale financial assets –BCM Apartment Trust
Write down of assets - Impairment of loan to the BCM Apartment Trust
Fair value (gain) loss on derivative financial instrument
Non-cash share based payments expense
Accrued interest on receivables
Share of profit in equity accounted investment
Changes in operating assets and liabilities
Decrease in provisions for employee benefits
Increase (decrease) in provisions
Increase in inventories
Decrease (increase) in other deferred development costs
Increase in deferred tax assets
Increase (decrease) in current income tax payable
(Decrease) Increase in deferred tax liability
Decrease in capitalised borrowing costs
Decrease (increase) in debtors
Increase (decrease) in creditors
(Decrease) increase in other financial liabilities
Net cash inflows from operating activities
2017
$’000
45,445
1,761
158
178
295
-
-
(321)
85
(412)
(109)
(99)
2,106
(44,447)
2,647
(1,323)
3,631
(67)
132
406
11,818
(21,279)
605
2016
$’000
43,602
1,454
138
434
2
1,029
449
660
70
(760)
(41)
(132)
(1,248)
(56,896)
(6,008)
(35)
(2,609)
2,076
20
(3,752)
(3,612)
29,426
4,267
2017 ANNUAL REPORT
69
A – Key Numbers Section B:
Financial Risks
This section of the notes discusses the group’s exposure to various risks and shows how these could affect the group’s
financial position and performance.
23.
Significant estimates and judgements .......................................................................................................... 71
24.
Financial risk management ............................................................................................................................. 72
a)
b)
c)
d)
Market risk ...........................................................................................................................................................72
Credit risk ........................................................................................................................................................... 74
Liquidity risk ........................................................................................................................................................ 74
Fair value measurement ...................................................................................................................................... 75
Capital management .................................................................................................................................................... 76
25.
26.
Capital management objectives and gearing .................................................................................................. 76
Dividends .......................................................................................................................................................... 77
70
B – Financial RisksCEDAR WOODS PROPERTIES LIMITED Significant Estimates and Judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgement in applying the group’s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity and of items which
are more likely to be materially adjusted due to estimates and judgements turning out to be inaccurate. Detailed information
about each of these estimates and judgements is presented below.
23. Significant estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity. The judgements that have a significant risk
of causing a material adjustment to the carrying amounts or presentation of assets and liabilities within the next financial
year are discussed below.
a.
Inventory - classification
Judgement is exercised with respect to estimating the classification of inventory between current and non-current
assets. Inventory is classified as current only when sales are expected to result in realisation of cash within the next
twelve months, based on management’s sales forecasts.
b.
Inventory - valuation
The recoverable amount of inventory is estimated based on an assessment of net realisable value including
future development costs. This requires judgement as to the future cash flows likely to be generated from the
properties included in inventory, including in some cases, judgement regarding the likelihood and timing of obtaining
development approvals. If the approvals are not received when anticipated, the recoverable amount of inventory
may be significantly impaired. Refer also to note 38(g).
c. Fair values of assets and liabilities recognised from business combination
The fair value of assets and liabilities recognised as part of the consolidation of the BCM Apartment Trust were
based on assumptions on future market conditions, and included estimating sales rates and prices of the
apartments. Refer to note 27 for details.
There were no critical judgements other than those involving estimates referred to above, that management made in
applying the group’s accounting policies.
2017 ANNUAL REPORT
71
B – Financial Risks Financial Risk Management
This note explains the group’s exposure to financial risks and how these risks could affect the group’s future financial
performance. Current year profit and loss information has been included where relevant to add further context.
24. Financial Risk Management
The group’s activities expose it to a variety of financial risks:
Risk
Exposure arising from
Measurement
Management
Market risk –
interest rate risk
Long term borrowings at
variable rates
Cash flow forecasting
Sensitivity analysis
Interest rate swaps
Credit risk
Cash and cash equivalents,
trade and other receivables,
available-for-sale financial
assets and derivative
financial instruments
Ageing analysis
Credit ratings
Ongoing checks by
management
Management of deposits
Contractual arrangements
Liquidity risk
Borrowings
and other liabilities
Forecast and
actual cash flows
Flexibility in
funding arrangements
Financial risk management is considered part of the overall risk management program overseen by the Audit and Risk
Management committee. Further detail on the types of risks to which the group is exposed and the way the group
manages these risks is set out below.
The group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Other financial liabilities
Borrowings
Derivative financial instruments
a. Market risk
i. Price risk
2017
$’000
8,400
5,882
14,282
24,175
41,477
87,340
407
2016
$’000
1,697
15,264
16,961
13,497
61,532
52,041
728
153,399
127,798
The consolidated entity has no foreign exchange exposure or price risk on equity securities
ii. Cash flow and fair value interest rate risk
As the consolidated entity does not have a significant portfolio of interest-bearing assets, the income and
operating cash inflows are not materially exposed to changes in market interest rates.
The group has issued loans to the BCM Apartment Trust that bears an interest rate of BBSY plus 4.5%. Loans
issued at fixed rates or at a fixed range of rates expose the group to fair value interest rate risk. These loans
have been eliminated on consolidation in 2017.
Interest rate risk arises from exposures to long term borrowings, where those borrowings are issued at variable
interest rates. Borrowings issued at variable interest rates expose the group to cash flow interest rate risk. The
72
B – Financial RisksCEDAR WOODS PROPERTIES LIMITED consolidated entity reviews the potential impact of variable interest rate changes and considers various interest rate
management products in the context of prevailing monetary policy of the Reserve Bank and economic conditions.
Accordingly the consolidated entity has entered into interest rate swap contracts under which a significant part of the
consolidated entity’s projected borrowings are protected for the period from 1 July 2017 to 30 June 2020.
There is an indirect exposure to interest rate changes caused by the impact of these changes upon the property
market. The group addresses this risk by virtue of managing its pricing, product offer and planned development
programs.
iii. Instruments used by the group
Interest rate swap contracts effectively fix interest rates applicable to bank bills issued with a duration of 1 month (BBSY
Bid) at certain levels between 2.070% - 2.495% (2016 – 2.255% - 2.495%) per annum. Swaps currently in place cover
63% (2016 - 57%) of the variable loan outstanding at balance date, with terms expiring in 2019 and 2020.
The consolidated entity’s policy is to limit a significant proportion of its borrowings to a maximum fixed rate using
interest rate swaps or caps to achieve this when necessary. The swaps described above covered 63% of the bank loan
at balance sheet date of $87,593,000 (2016 - $52,309,000).
The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate for receivables
and borrowings is set out below.
Receivables
Other receivables
Employee share loans
Loan to BCM Apartment Trust
Interest
bearing
- variable
$’000
2017
Non-
interest
bearing
$’000
Interest
bearing
- variable
$’000
Total
$’000
2016
Non-
interest
bearing
$’000
Total
$’000
-
-
-
-
5,882
5,882
16
-
16
-
5,898
5,898
-
-
8,866
8,866
6,376
6,376
22
-
22
8,866
6,398
15,264
The weighted average interest rate at year end is 6.17% (2016: 6.41%)
Interest
bearing
- fixed
$’000
2017
Interest
bearing
- variable
$’000
Total
$’000
Interest
bearing
- fixed
$’000
2016
Interest
bearing
- variable
$’000
Total
$’000
Interest bearing liabilities
Bank loans
-
87,593
87,593
-
52,309
52,309
Other financial liabilities
36,188
-
36,188
34,086
-
34,086
36,188
87,593
123,781
34,086
52,309
86,395
The weighted average interest rate at year end is 3.04% (2016: 3.28%).
An analysis by maturity is provided in 24(c) below.
iv. Summarised interest rate sensitivity analysis
The potential impact of a change in bank interest rates of + / -1% is not significant to the group’s net profit and equity.
The potential impact on financials assets is not significant. Refer to comments above for further information on the
impact of changes in interest rates upon the group.
2017 ANNUAL REPORT
73
B – Financial Risks b. Credit risk
The consolidated entity has minimal exposure to credit risk from customers as title to lots or units in the consolidated
entity’s developments does not generally pass to customers until funds are received.
Policies and procedures are in place to manage credit risk including management of deposits and review of the
financial capacity of customers. Ongoing checks are performed by management to ensure that settlement terms
detailed in individual contracts are adhered to. For land under option the consolidated entity secures its rights by way of
encumbrances on the underlying land titles. The maximum exposure to credit risk at the reporting date is the carrying
amount of the financial assets as summarised above.
Derivative counterparties and cash deposits are placed with high credit quality financial institutions, such as major
trading banks.
Credit risk may arise in relation to bank guarantees given to certain parties. These guarantees are supported by
contractual arrangements that bind the counterparty, providing security against inappropriate presentation of the bank
guarantees.
In relation to the loans to BCM Apartment Trust, loans are secured by way of registered first mortgages over property
held by the BCM Apartment Trust. The majority of the loans take priority over payment of any return to the special units
(class A, class B and class C). The portion of the loans that rank behind the payment of any returns to the special units
has been impaired. These loans have been eliminated on consolidation in 2017.
c. Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and available credit facilities to manage the
consolidated entity’s financial commitments. The group manages liquidity risk by continuously monitoring forecast and
actual cash flows and matching the maturity profiles of financial assets and liabilities. Due to the dynamic nature of the
underlying businesses, the group aims at maintaining flexibility in funding by keeping committed credit lines available.
At 30 June 2017 the group had undrawn committed facilities of $101,162,000 (2016 - $94,455,000) and cash of
$8,400,000 (2016 - $1,697,000) to cover short term funding requirements. Refer to 13(b) for details.
i. Maturities of financial liabilities
The tables below analyse the group’s financial liabilities into relevant maturity groupings based on the remaining
period at the reporting date to the contractual maturity date. The amounts disclosed in the table for non-interest
bearing liabilities are the contractual undiscounted cash flows. For variable interest rate liabilities the cash flows
have been estimated using interest rates applicable at the reporting date.
Group – at 30 June 2017
Non-derivatives
Non-interest bearing
Fixed rate
Variable rate
Derivatives
Total
Group – at 30 June 2016
Non-derivatives
Non-interest bearing
Fixed rate
Variable rate
Derivatives
Total
74
Less than
1 year
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Total
contractual
cash flows
$’000
24,175
4,065
-
-
-
39,000
30,757
335
-
-
64,109
72
24,175
43,065
94,866
407
Carrying
amount
$’000
24,175
40,254
87,340
407
28,240
70,092
64,181
162,513
152,176
Less than
1 year
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Total
contractual
cash flows
$’000
13,497
25,037
-
-
38,534
-
-
-
-
-
-
39,000
57,607
728
13,497
64,037
57,607
728
97,335
135,869
127,798
Carrying
amount
$’000
13,497
61,532
52,041
728
B – Financial RisksCEDAR WOODS PROPERTIES LIMITED d. Fair value measurement
This note provides information on the judgements and estimates made by the group in determining the fair values of the
financial instruments.
i. Fair value hierarchy
To provide an indication about the reliability of the inputs used in determining fair value, the group classifies its
financial instruments into three levels prescribed under the accounting standards. An explanation of each level
follows underneath the table.
The following table presents the group’s financial liabilities measured and recognised at fair value at 30 June 2017
and 30 June 2016:
As at 30 June 2017
Notes
Liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
Derivatives used for hedging
14
Total liabilities
-
-
407
407
-
-
As at 30 June 2016
Notes
Liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
Derivatives used for hedging
14
Total liabilities
-
-
728
728
-
-
Total
$’000
407
407
Total
$’000
728
728
ii. Valuation techniques used to determine fair values
Level 1 – The fair value of financial instruments traded in active markets (such as publicly traded derivatives) is
based on quoted (unadjusted) market prices at the end of the reporting period. The quoted market price used for
the financial assets held by the group is the current bid price. These instruments are included in level 1.
Level 2 – The fair value of financial instruments that are not traded in an active market (such as derivatives
provided by trading banks) is determined using market valuations provided by those banks at reporting date. These
instruments are included in level 2.
Level 3 – If one or more of the significant inputs is not based on observable market data, the instruments is
included in level 3.
2017 ANNUAL REPORT
75
B – Financial Risks Capital Management
25. Capital management objectives and gearing
The consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a going concern,
so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group will consider a range of alternatives which may include:
•
raising or reducing borrowings
• adjusting the dividend policy
•
•
•
issue of new securities
return of capital to shareholders
sale of assets.
Gearing is a measure used to monitor the levels of debt used in the business to fund operations. The gearing ratio is
calculated as interest bearing bank debt net of cash and cash equivalents divided by shareholders’ equity. Gearing is
managed by reference to a guideline which sets the desirable upper and lower limits for the gearing ratio. The group’s
gearing is then addressed by utilising capital management initiatives as discussed above.
The gearing ratios were as follows:
Total interest bearing bank debt
Less: cash and cash equivalents
Net debt
Shareholders’ equity
Gearing ratio
Note
13
4
2017
$’000
87,340
(8,400)
78,940
2016
$’000
52,041
(1,697)
50,344
330,234
23.9%
307,188
16.4%
The group’s guideline is to target gearing generally within the range of 20-75% although periods where the gearing is
outside of this range are acceptable, depending upon the timetable for acquisition payments and the construction and
settlement of developments.
a. Loan Covenants
Under the terms of the major borrowing facilities, the group has complied with covenants throughout the reporting
period. Debt covenants are disclosed in note 13 and include requirements in relation to a maximum loan to
valuation ratio and a minimum interest cover ratio.
76
B – Financial RisksCEDAR WOODS PROPERTIES LIMITED 26. Dividends
a. Ordinary shares
Fully franked based on tax paid at 30%
Final dividend for the year ended 30 June 2016 of 16.5 cents
(2015 – 16.0 cents) per fully paid share
- Paid in cash
- Applied to the employee share loans
Interim dividend for the year ended 30 June 2017 of 12.0 cents
(2016 – 12.0 cents) per fully paid share
- Paid in cash
- Applied to the employee share loans
Total
b. Dividends not recognised at the year end
Consolidated
2017
$’000
2016
$’000
13,014
3
12,619
3
9,464
3
22,484
9,464
3
22,089
In addition to the above dividends, since year end the directors have recommended the payment of a final dividend
of 18.0 cents per fully paid ordinary share (2016 – 16.5 cents), fully franked based on the tax paid at 30%. The
aggregate amount of the proposed dividend expected to be paid on 27 October 2017 out of retained profits at 30
June 2017, but not recognised as a liability at year end is below:
Dividends not recognised at year end
c. Franked Dividends
Consolidated
2017
$’000
14,201
2016
$’000
13,017
The franked portions of the final dividend proposed at 30 June 2017 will be franked from existing franking credits or
from franking credits arising from the payment of income tax in the next financial year.
Franking credits available for the subsequent financial year
on a tax-paid basis of 30% (2016 – 30%)
Consolidated
2017
$’000
2016
$’000
82,211
70,516
The above amounts represent the franking accounts at the end of the financial year, adjusted for:
i. Franking credits that will arise from the payment of the current tax liability;
ii. Franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
iii. Franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The impact on the franking account of the dividend recommended by the directors since year end, but not
recognised as a liability at year end, will be a reduction in the franking account of $6,086,000 (2016 - $5,579,000).
2017 ANNUAL REPORT
77
B – Financial Risks s
s
k
k
s
s
R
R
i
i
l
l
i
i
a
a
c
c
n
n
a
a
n
n
F
F
i
i
–
–
3
3
B
B
Section C:
Group Structure
This section provides information which will help users understand how the group structure affects the financial position and
performance of the group as a whole.
27.
Business Combination ........................................................................................................................................79
Interests in Other Entities .................................................................................................................................................80
28.
Subsidiaries .........................................................................................................................................................80
29.
Interests in joint arrangements ...........................................................................................................................81
30.
Commitments and contingent liabilities in respect of the joint ventures ..........................................................81
31.
Summarised financial information for joint ventures .........................................................................................81
78
C – Group StructureCEDAR WOODS PROPERTIES LIMITED
Business Combination
27. Business Combination
The consolidated entity owns 100 ordinary units for $1 each (a 50% interest in the ordinary units) in the BCM Apartment
Trust and 1 special unit (class B). The consolidated entity’s interests in the ordinary units do not entitle it to a share of
the revenue, profit/loss and net assets of BCM Apartment Trust. The special unit (class B) entitles the consolidated
entity to a fixed return upon repurchase of the 1 special unit (class B) at cost where profits are sufficient to make a
return. The fixed return is preferential to any return being received by the other ordinary unit holder.
The consolidated entity also owns 10 ordinary shares for $1 each (a 50% interest) in Champion Bay Nominees Pty
Ltd, the trustee of BCM Apartment Trust. The net assets of Champion Bay Nominees Pty Ltd are not material to the
consolidated entity.
The company’s interest in the BCM Apartment Trust and Champion Bay Nominees Pty Ltd were accounted for as
investments using the equity method during 30 June 2016.
On 31 January 2017 changes to the board of Champion Bay Nominees Pty Ltd, the trustee of the BCM Apartment
Trust, resulted in Cedar Woods Properties Limited obtaining management control of Champion Bay Nominees Pty Ltd
and thus the BCM Apartment Trust. The operating results and assets and liabilities of BCM Apartment Trust have thus
been consolidated into the accounts of Cedar Woods Properties Limited from that date and transactions and balances
between the two parties eliminated on consolidation. There was no consideration provided and no goodwill was
recognised on consolidation.
The assets and liabilities recognised as a result of the consolidation are as follows:
Cash
Trade and other receivables
Inventory
Property, plant and equipment
Trade payables
Provisions
Non-current payables
Net assets consolidated
Fair Value
$000
66
1
10,493
152
(14)
(94)
(1,326)
9,278
Loans of $9,278,000 receivable from the BCM Apartment Trust are eliminated upon consolidation in accordance with
accounting policy in note 38(b).
No non-controlling interests have been recognised by the consolidated entity due to the return of the other ordinary
unit holder ranking behind the consolidated entity and forecast profits of BCM Apartment Trust are not expected to be
sufficient to make a return to the other ordinary unit holder.
Revenue and profits (losses) of BCM Apartment Trust for the period or year ended 30 June 2017 are not material to the
consolidated entity.
There were no business acquisitions during the year ended 30 June 2016.
2017 ANNUAL REPORT
79
C – Group Structure Interests in Other Entities
28. Subsidiaries
The group’s operating subsidiaries at 30 June 2017 are set out below. Unless otherwise stated, they have share capital
consisting solely of ordinary shares or units that are held directly by the group and the proportion of ownership interest
held equals the voting rights held by the group. The subsidiaries are incorporated or established in Australia.
The consolidated financial statements incorporate the assets, liabilities and results in accordance with the accounting
policy described in note 38(b).
Company
Notes
Equity Holding
BCM Apartment Trust
Champion Bay Nominees Pty Ltd
Cedar Woods Properties Finance Pty Ltd
Cedar Woods Properties Harrisdale Pty Ltd
Cedar Woods Properties Investments Pty Ltd
Cedar Woods Properties Management Pty Ltd
Cedar Woods Property Sales Pty Ltd
a
b
Cranford Pty Ltd
Daleford Property Pty Ltd
Dunland Property Pty Ltd
Esplanade (Mandurah) Pty Ltd
Eucalypt Property Pty Ltd
Flametree Property Pty Ltd
Galaway Holdings Pty Ltd
Gaythorne Pty Ltd
Geographe Property Pty Ltd
Huntsman Property Pty Ltd
Jarrah Property Pty Ltd
Kayea Property Pty Ltd
Lonnegal Property Pty Ltd
Osprey Property Pty Ltd
Silhouette Property Pty Ltd
Terra Property Pty Ltd
Upside Property Pty Ltd
Vintage Property Pty Ltd
Williams Landing Home Improvement Pty Ltd
Williams Landing Home Improvement Trust
Williams Landing Shopping Centre Pty Ltd
Williams Landing Shopping Centre Trust
Williams Landing Town Centre Pty Ltd
Woodbrooke Property Pty Ltd
Yonder Property Pty Ltd
Zamia Property Pty Ltd
2017
50%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2016
-
-
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
a. The forecast profits of BCM Apartment Trust not expected to be sufficient to make a return to the other ordinary
unit holder that ranks behind the consolidated entity for trust distributions. Accordingly, the consolidated entity has
not recognised a non-controlling interest.
b. The net assets of Champion Bay Nominees Pty Ltd are not material to the consolidated entity.
80
C – Group StructureCEDAR WOODS PROPERTIES LIMITED 29. Interests in joint arrangements
Set out below are the joint ventures of the group as at 30 June 2017. The principal place of business and country of
incorporation (or origin) is Australia for all entities.
Name of entity
% of ownership
interest
Nature of
relationship
Measurement
method
Cedar Woods Wellard Limited
BCM Apartment Trust
2017
%
32.5
-
2016
%
32.5
50
Carrying amount
2017
$’000
2016
$’000
Joint Venture
Equity method
4,125
4,016
Joint Venture
Equity method
-
-
The carrying amount represents the amount attributable to the group.
Cedar Woods Wellard Limited is developing the Emerald Park residential estate at Wellard, WA.
BCM Apartment Trust, owns the Batavia Coast Marina Apartments project in Geraldton. The consolidated entity owns
100 ordinary units for $1 each (a 50% interest in the ordinary units) in the BCM Apartment Trust, which owns the
Batavia Coast Marina Apartments project in Geraldton. The consolidated entity’s interest in the ordinary units does not
entitle it to a share of the revenue, profit/loss or net assets of BCM.
The consolidated entity also owns 10 ordinary shares for $1 each (a 50% interest) in Champion Bay Nominees Pty Ltd,
the trustee of BCM.
The company’s interest in the BCM Apartment Trust and Champion Bay Nominees Pty Ltd were accounted for
as investments accounted for using the equity method during 30 June 2016. As a result of a change in control of
Champion Bay Nominees Pty Ltd in the year ended 30 June 2017, these entities were consolidated in the accounts of
Cedar Woods Properties Limited at 30 June 2017. Refer to note 27 for details.
30. Commitments and contingent liabilities in respect of the joint ventures
Cedar Woods Wellard Limited has commitments for expenditure at 30 June 2017 of $23,022 (2016: $111,263) and has
provided $2,047,433 (2016: $2,075,100) in bank guarantees to various local authorities supporting development and
maintenance commitments.
BCM Apartment Trust has no commitments for expenditure nor contingent liabilities at 30 June 2017 (2016: nil).
31. Summarised financial information for joint ventures
The following table provides summarised financial information for those joint ventures that are material to the group. The
information disclosed reflects the amounts presented in the financial statements of the relevant joint ventures and not
Cedar Woods Properties Limited’s share of those amounts.
Cedar Woods Wellard Limited
Current assets
Cash
Other current assets
Total current assets
Total non-current assets
Total assets
Total current liabilities
Non-current liabilities
Total liabilities
Net assets
Group’s share in %
Group’s share in $
2017
$’000
2,843
5,451
8,294
6,713
15,007
329
-
329
14,678
32.5%
4,770
2016
$’000
867
7,745
8,612
9,538
18,150
3,807
-
3,807
14,343
32.5%
4,661
2017 ANNUAL REPORT
81
C – Group Structure a. Movements in carrying amounts – Cedar Woods Wellard Limited
At start of the year
Share of profit after income tax
At end of the year
Share of profit before income tax
Income tax expense
Share of profit after income tax
Share of joint venture’s revenue, assets, liabilities and
contingent liabilities
Revenue
Assets
Liabilities
Contingent liabilities (bank guarantees)
2017
$’000
4,016
109
4,125
271
(162)
109
2,495
4,877
(107)
(665)
2016
$’000
3,975
41
4,016
59
(18)
41
1,091
5,899
(1,237)
(674)
The consolidated entity owns a 32.5% (2016 – 32.5%) interest in Cedar Woods Wellard Limited, a property
development company incorporated in Australia.
The directors have determined that they do not control Cedar Woods Wellard Limited as no one investor can direct
the activities without the co-operation of the others.
82
C – Group StructureCEDAR WOODS PROPERTIES LIMITED Section D:
Unrecognised Items
This section of the notes provides information about items that are not recognised in the financial statements as they do not
satisfy the recognition criteria..
Contingent Liabilities ....................................................................................................................................................... 84
32.
Bank Guarantees ................................................................................................................................................ 84
33.
Commitments ..................................................................................................................................................... 85
34.
Events occurring after the reporting period ...................................................................................................... 86
2017 ANNUAL REPORT
83
D – Unrecognised Items Contingent Liabilities
At 30 June 2017 the group had contingent liabilities in respect of:
32. Bank guarantees
At 30 June 2017 bank guarantees totalling $15,438,000 (2016 - $14,145,000) had been provided to various state and
local authorities supporting development and maintenance commitments.
84
D – Unrecognised ItemsCEDAR WOODS PROPERTIES LIMITED Commitments
33. Commitments
a) Non-cancellable operating leases
Commitments for minimum lease payments in relation to non-cancellable operating leases contracted for at the
reporting date but not recognised as liabilities are payable as follows:
Within 1 year
Later than 1 year but not later than 5 years
Consolidated
2017
$’000
759
830
1,589
2016
$’000
683
1,294
1,977
The group leases various offices under non-cancellable operating leases expiring within 5 years. The leases have
varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
b) Capital commitments
At 30 June 2017 the consolidated entity had commitments under civil works, building construction and landscaping
construction for development of its projects in the ordinary course of business. The total amount contracted for work
yet to be completed for civil works was $9,809,000 (2016 - $19,220,000), for building construction was $98,079,000
(2016 - $34,931,000) and for landscaping construction was $2,945,000 (2016 - $2,375,000). This work will be
substantially completed in the next 12 months.
2017 ANNUAL REPORT
85
D – Unrecognised Items Events occurring after the reporting period
34. Events occurring after the reporting period
In July 2017 the company settled on the acquisition of 11 hectares of land at Bonnie Brook, Victoria for a price of
$4.2m plus GST. The Bonnie Brook site is located 30 kilometres west of the Melbourne CBD and is anticipated to
realise 135 residential lots, with development commencing around 2020. Bonnie Brook is a new residential suburb
located between Plumpton and Rockbank in Melbourne’s quickly developing western growth corridor.
In August 2017 the company contracted to acquire an infill development site of approximately 1390m2 in North
Melbourne for $9.8m on a GST exempt basis. Located 2 kilometres north of the Melbourne CBD, the project is
anticipated to realise 14 premium 3 and 4 bedroom townhouses, with construction anticipated to commence shortly
after settlement in June 2018. North Melbourne is a vibrant inner city location with the site enjoying close proximity
to Flagstaff Gardens, Queen Victoria Market, University High School, University of Melbourne, The Royal Melbourne
Hospital, Royal Park and The Melbourne Zoo.
86
D – Unrecognised ItemsCEDAR WOODS PROPERTIES LIMITED
Section E:
Other Information
Section E contains information that is not immediately related to individual line items in the financial statements, such as
related party transactions, share based payments and a full list of the accounting policies applied by the entity.
35.
Related Party Transactions ............................................................................................................................... 88
36. Remuneration of Auditors ................................................................................................................................. 90
37.
Employee Share Scheme .................................................................................................................................. 91
38.
Summary of Accounting Policies ...................................................................................................................... 92
39.
Segment Information ....................................................................................................................................... 100
40. Parent Entity Financial Information ................................................................................................................. 101
2017 ANNUAL REPORT
87
E – Other Information Related Party Transactions
35. Related Party Transactions
a) Key management personnel compensation
Additional disclosures relating to key management personnel are set out in the Directors’ Report.
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Termination benefit
Consolidated
2017
$
2016
$
3,261,649
2,771,210
197,012
117,404
-
177,444
69,283
-
3,576,065
3,017,937
At 30 June 2017, an amount of $11,217 was outstanding on a loan to a key management personnel employee
issued under the former employee share plan. Under the now discontinued plan, certain employees were granted
shares funded by interest free loans from the company and with the loans repaid by dividends. This employee was
not a member of key management personnel in 2016.
b) Group
The group consists of Cedar Woods Properties Limited and its controlled entities. A list of these entities and the
ownership interests held by the parent entity are set out in note 28.
c) Parent entity
The parent entity within the group is Cedar Woods Properties Limited.
d) Transactions with other related parties
Cedar Woods Properties Management Pty Ltd and Cedar Woods Property Sales derived management and selling
fees totalling $684,191 (2016 - $312,413) from Cedar Woods Wellard Limited.
During the year planning, architectural and consulting services were provided by Hames Sharley Architects of which
Mr W G Hames is a principal. The transactions were performed on normal commercial terms and conditions and
fees paid were consistent with market rates. The value of services provided was higher than in the previous year
as a result of architectural and design work performed on the Williams Landing Shopping Centre and the major
start-up phase of the Glenside project in Adelaide. The Glenside project was introduced to the company by Hames
Sharley.
During the year creative design services were provided by Axiom Design, an entity associated with the family of
Mr W G Hames. Mr Hames has no beneficial interest in Axiom Design. The services were performed on normal
commercial terms and conditions and the level of services decreased compared with 2016.
Property settlement charges were paid to Westland Settlement Services Pty Ltd, a company associated with the
family of Mr R S Brown. The charges were based on normal commercial terms and conditions. At the estates
where Westland Settlement Services was engaged, the number of lots that settled in FY2017 was higher than that
of the previous year and as a result the value of transactions with Westland Settlement Services Pty Ltd increased.
Across the group, settlements and associated fees were also significantly higher.
Cedar Woods has for many years been a member of the Australian Institute of Company Directors (AICD). During
the 2015 year Mr P S Sadleir became a council member of AICD WA. The annual subscriptions paid in 2017 and
2016 were performed on normal commercial terms and conditions.
In 2017 no payments were made for sponsorship of the Warren Jones Foundation Inc. of which Mr R Packer is a
trustee with no beneficial interest.
88
E – Other InformationCEDAR WOODS PROPERTIES LIMITED Aggregate amounts of each of the above types of other transactions with key management personnel of Cedar Woods
Properties Limited or their related entities:
Amounts recognised as expense
Creative design services
Architectural fees
Settlement fees
Subscriptions
Sponsorships
Amounts recognised as inventory/ investment property
Architectural fees
2017
$
31,001
5,000
107,450
10,000
0
2016
$
62,323
24,500
78,355
10,000
9,500
153,451
184,678
455,468
455,468
153,995
153,995
Total amounts recognised in year
608,919
338,673
Aggregate amounts of assets at balance date relating to the above
types of other transactions with directors of Cedar Woods Properties
Limited or their related entities:
Inventory
Investment property
445,668
9,800
455,468
90,020
63,975
153,995
There are no aggregate amounts payable to directors of Cedar Woods Properties Limited at balance date. An amount
of $1,501 was payable to related entities (Axiom Design) at balance date. There are no other amounts payable to
related entities at balance date relating to the above types of other transactions.
e) Terms and conditions
Management and selling fees are derived according to management agreements in place between the parties. These
are based on normal terms and conditions, at market rates at the time of entering into the agreements.
f) Outstanding balances arising from sales / purchases of goods and services
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
Current receivables (sales of goods and services)
Cedar Woods Wellard Limited
2017
$
-
-
2016
$
315
315
2017 ANNUAL REPORT
89
E – Other Information Remuneration of Auditors
36. Remuneration of Auditors
During the year the following fees were paid or payable to the auditor of the parent entity:
PricewaterhouseCoopers – Australian firm
Assurance services
- Audit and review of the financial statements of the parent entity,
controlled entities and co-development projects
Non-audit services
- Accounting advice
- Other taxation advice and reviews
Total fees for non-audit services
2017
$
2016
$
209,383
196,238
-
47,430
43,430
256,813
1,530
7,575
9,105
205,343
90
E – Other InformationCEDAR WOODS PROPERTIES LIMITED
Employee Share Scheme
37. Employee Share Scheme
The current Long Term Incentive (LTI) plan effective from 1 July 2015 for FY2016 and from 1 July 2016 for FY2017 will
continue in FY2018.
The current LTI plan has two vesting conditions a) a 3 year service condition and b) two performance conditions
measured over a 3 year period: 50 percent of the LTI grant will be tested against a relative total shareholder return
(“TSR”) hurdle (measured against the S&P / ASX Small Industrials Index) and 50 per cent against earnings per share
(“EPS”) growth targets, set in the context of the Corporate plan.
Full details of the operation of the current LTI plan are set out in the remuneration report on pages 35 and 36 of this
annual report.
2017 ANNUAL REPORT
91
E – Other Information Summary of Accounting Policies
38. Summary of Accounting Policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated. Where
necessary, comparative information is reclassified and restated for consistency with current period disclosures. The
financial statements are for the consolidated entity consisting of Cedar Woods Properties Limited and its subsidiaries.
a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act
2001. Cedar Woods Properties Limited is a for-profit entity for the purpose of preparing the financial statements.
i. Compliance with International Financial Reporting Standards (IFRS)
The financial statements of the Cedar Woods Properties Limited group also comply with IFRS as issued by the
International Accounting Standards Board (IASB).
ii. Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the
revaluation of available-for-sale financial assets and derivative financial instruments.
iii. Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or where assumptions and estimates are significant to the
financial statements, are disclosed in note 23.
iv. Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is the functional and
presentation currency of Cedar Woods Properties Limited.
b) Principles of consolidation
i. Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Cedar
Woods Properties Limited (parent) as at 30 June 2017 and the results of all subsidiaries for the year then
ended. Cedar Woods Properties Limited and its subsidiaries together are referred to in these financial
statements as the consolidated entity or the group.
Subsidiaries are those entities over which the parent has the power to govern the financial and operating
policies, generally accompanying a shareholding of one-half or more of the voting rights.
The acquisition method of accounting is used to account for business combinations by the group. Subsidiaries
are fully consolidated from the date on which control is transferred to the parent. They are de-consolidated from
the date that control ceases.
All inter-company balances and transactions between companies within the consolidated entity are eliminated
upon consolidation.
ii. Joint arrangements
Joint arrangements – Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as
either joint operations or joint ventures. The classification depends on the contractual rights and obligations of
each investor, rather than the legal structure of the joint arrangement.
Joint operations - The consolidated entity recognises its direct right to assets, liabilities, revenues and expenses
of joint operations, which have been incorporated in the financial statements under the appropriate headings.
Joint ventures - Interest in joint ventures are accounted for using the equity method (see below), after initially
being recognised at cost in the consolidated balance sheet. Details of the joint ventures are set out in note 29.
92
E – Other InformationCEDAR WOODS PROPERTIES LIMITED iii. Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to
recognise the group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the group’s
share of movements in other comprehensive income.
c) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and is recognised net of discounts and
taxes paid. The following specific recognition criteria must also be met before revenue is recognised:
i. Sale of land and buildings
Revenue arising from the sale of land and buildings held for resale is recognised at settlement.
ii.
Interest
Interest income is recognised using the effective interest method. When a receivable is impaired, the group reduces
the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original
effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income
on impaired loans is recognised using the original effective interest rate.
iii. Dividends
Dividends are recognised as revenue when the right to receive payment is established.
iv. Lease income
Income from operating leases is recognised on a straight line basis over the period of each lease.
v. Commissions and fees
Commission and fee income is recognised when the right to receive the income has been earned in accordance
with contractual arrangements.
d) Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income
based on the income tax rate in Australia adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses, if any.
The current income tax charge is calculated on the basis of the tax laws enacted or substantially enacted at the end
of the reporting period.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income
tax is determined using the tax rates expected to apply when the assets are recovered or liabilities are settled,
based on those tax rates which are enacted or substantively enacted.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority.
Cedar Woods Properties Limited and its wholly owned Australian controlled entities have implemented the tax
consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets
and liabilities of these entities are set off in the consolidated financial statements.
Current and deferred tax is recognised in profit and loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity respectively.
e) Earnings per share
i. Basic earnings per share
Basic earnings per share is determined by dividing the profit attributable to owners of Cedar Woods Properties
Limited by the weighted average number of ordinary shares outstanding during the financial year, adjusted for any
bonus elements in ordinary shares issued during the year.
2017 ANNUAL REPORT
93
E – Other Information ii. Diluted earnings per share
Diluted earnings per share adjusts the earnings used in the determination of basic earnings per share to take account
of any effect on borrowing costs associated with the issue of dilutive potential ordinary shares. The weighted average
number of ordinary shares is adjusted to reflect the conversion of all dilutive potential ordinary shares.
f) Cash and cash equivalents
For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, and deposits at
call which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value. Bank
overdrafts are shown within borrowings in current liabilities on the balance sheet.
g) Inventories
i. Property held for development and resale
Since 1 July 1992, property purchased for development and sale is valued at the lower of cost and net realisable
value. Cost includes acquisition and subsequent development costs, and applicable borrowing costs incurred
during development. Net realisable value is the estimated selling price in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make the sale. All property held
for development and sale is regarded as inventory and is classified as such in the balance sheet. Property is
classified as current inventory only when sales are expected to result in realisation of cash within the next twelve
months, based on management’s sales forecasts. Borrowing costs incurred prior to active development and after
development is completed, are expensed as incurred.
Prior to 1 July 1992 the consolidated entity’s land assets were classified on acquisition as non-current investments
and initially recorded at cost with regular independent valuations being undertaken. Increments or decrements were
reflected in the balance sheet and also recognised in equity. The balance of this land is stated at 1992 valuation,
which is its deemed cost. The amount remaining in the Asset Revaluation Reserve represents the balance of the
net revaluation increment for land revalued prior to 1 July 1992 which is now classified as inventory and which is
still held by the consolidated entity. When revalued assets are sold, it is policy to transfer any amounts included in
reserves in respect of those assets to retained earnings.
The acquisition of land is recognised when an unconditional purchase contract exists.
When property is sold, the cost of the land and attributable development costs, including borrowing costs, is
expensed through cost of sales.
h) Deferred development costs
Development costs incurred by the group for the development of land not held as an asset by the group are recorded
as deferred development costs in the balance sheet. They are included in current assets, except for those which are
not expected to be reimbursed within 12 months of the reporting period, which are classified as non-current assets. In
instances when the deferred development costs are reimbursed by the land owner, they are expensed in the profit or loss.
i) Assets classified as held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use and a sale is considered highly probable. They are measured at the
lower of carrying amount and fair value, less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal) to fair value less
costs to sell. A gain is recognised for any subsequent increase in fair value less costs to sell of an asset (or disposal),
but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by
the date of the sale of the non-current asset (or disposal) is recognised at the date of derecognition.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Non-current assets
classified as held for sale are presented separately from the other assets in the balance sheet.
j) Business combinations
The acquisition method of accounting is used to account for all business combinations. Cost is measured as the fair value
of the assets given, or liabilities undertaken at the date of acquisition. Acquisition related costs are expensed as incurred.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to
their present values at the date of acquisition. The discount rate used is the incremental borrowing rate applied by the
consolidated entity’s financiers for a similar borrowing under comparable terms and conditions.
94
E – Other InformationCEDAR WOODS PROPERTIES LIMITED k)
Impairment of assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount of an asset is the higher of its fair value less costs of disposal and value
in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately
identifiable cash generating units, which is generally the project level. Assets that suffered an impairment are reviewed
for possible reversal of the impairment at the end of each reporting period.
l) Property, plant and equipment
Property, plant and equipment is substantially made up of furniture, fittings and equipment and is stated at historical cost
less depreciation. Depreciation is calculated on a straight line or diminishing value basis to write off the net cost of each
item of property, plant and equipment, including leased equipment, over its expected useful life to the consolidated entity.
The expected useful lives of items of property, plant and equipment and the depreciation methods used are:
• Plant and equipment – 3 to 15 years (straight line and diminishing value methods)
The assets’ residual values and useful lives are reviewed for impairment and adjusted if appropriate, at each reporting date.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the
profit or loss.
m) Investments, other financial assets and other financial liabilities
The group classifies its financial assets in the following categories: financial assets at fair value through profit or loss,
loans and receivables and available for sale financial assets. The classification depends on the purpose for which
investments were acquired. Management determines the classification of its investments at initial recognition.
i. Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held
for trading unless they are designed as hedges. Assets in this category are classified as current assets if they are
expected to be settled within 12 months, otherwise they are classified as non-current.
ii. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in non-current assets, except for those with maturities less than 12 months
after the reporting period which are classified as current assets. Loans and receivables are included in receivables in
the balance sheet. Loans and receivables are carried at amortised cost using the effective interest method.
iii. Available-for sale financial assets
Available-for-sale financial assets, comprising marketable equity securities and other securities, are non-derivatives
that are either designated in this category or not classified in any of the other categories. They are included in non-
current assets as management does not intend to sell them within 12 months. Available-for-sale financial assets
are carried at fair value. Changes in the fair value not arising from impairment or interest are recognised in other
comprehensive income.
The group assesses at the end of each reporting period whether there is objective evidence that a financial asset
is impaired. If there is evidence of impairment, the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows, excluding future credit losses that have not been
incurred. In the case of loans and receivables, the cash flows are discounted at the financial asset’s original effective
interest rate. The loss is recognised in profit or loss.
iv. Other financial liabilities
Other financial liabilities at fair value through profit or loss are financial liabilities due to vendors of properties under
contracts of sale and other payables. Assets in this category are classified as current assets if they are expected to
be settled within 12 months, otherwise they are classified as non-current.
2017 ANNUAL REPORT
95
E – Other Information n)
Investment property
Investment property, principally comprising retail property, is held for long term rental yields and is not occupied by the
consolidated entity. Investment property includes properties under construction for future use as investment property
and is stated at historical cost less depreciation. Depreciation is calculated on a straight line basis to write off the net
cost of each investment over its expected useful life to the consolidated entity. The expected useful life of investment
property buildings is 40 years.
When the company elects to dispose of investment property, it is presented as assets classified as held for sale in the
balance sheet where it meets the relevant criteria. Net gains or losses on sale are disclosed in the profit or loss.
o) Lease incentives
Lease incentives provided under an operating lease by the group as lessor are recognised on a straight line basis
against rental income over the lease period.
p) Employee benefits
i. Short term obligations
Liabilities for wages and salaries, bonuses and annual leave expected to be settled within 12 months of the
reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are
measured at the amounts expected to be paid when the liabilities are settled. All other short-term employee benefit
obligations are presented as payables.
ii. Other long term employee benefit obligations
The liability for long service leave which is not expected to be settled within 12 months after the end of the period in
which the employees render the related service is recognised in the provision for employee benefits and measured
as the present value of expected future payments to be made in respect of services provided by employees up
to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the reporting
date on national corporate bonds with terms to maturity that match, as closely as possible, the estimated future
cash flows.
iii. Bonus plans
The group recognises a liability and expense for bonuses earned during the financial year where contractually
obliged or where past practice has created a constructive obligation.
iv. Superannuation
Contributions by the consolidated entity to employees’ superannuation funds are charged to the profit or loss when
they are payable. The consolidated entity does not operate any defined benefit superannuation funds.
q) Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of
the financial year and which are unpaid. These amounts are unsecured and are usually paid within 30 to 60 days of
recognition.
r) Leases
Leases of property, plant and equipment in which a significant portion of the risks and rewards of ownership are not
transferred to the consolidated entity as lessee are classified as operating leases. Operating lease payments are
charged to the profit or loss in the periods in which they are incurred as this represents the pattern of benefit derived
from the leased assets.
Lease income from operating leases where the group is a lessor is recognised in income on a straight line basis over
the lease term. The respective leased assets are included in the balance sheet as investment properties.
s) Borrowings and borrowing costs
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
96
E – Other InformationCEDAR WOODS PROPERTIES LIMITED Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case the fee is deferred until the commencement of
the facility when draw down occurs.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled
or expired. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement
of the liability for at least 12 months after the end of the reporting period.
Borrowing costs are recognised as expenses in the period in which they are incurred, except where they are included in
the costs of qualifying assets during the period when the asset is being prepared for its intended use or sale.
t) Provisions for customer rebates
Provision is made for the estimated liability arising from obligations in existence at balance date to customers for the
provision of landscaping and fencing rebates and other incentives, to which customers are generally entitled within 12
months of balance date.
u) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the financial year but not distributed at balance date.
v) Maintenance
Routine operating maintenance and repairs are charged as expenses as incurred.
w) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
x) Segment reporting
Management has determined the operating segment based on the reports reviewed by the Managing Director that are
used to make strategic decisions. The Managing Director has been identified as the chief operating decision maker.
y) Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Trade receivables are generally due for settlement within one year.
Collectability of trade receivables is reviewed regularly. Receivables that are uncollectable are written off by reducing the
carrying amount directly. Receivables include prepayments and loans made under the discontinued employee share
scheme.
z) Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. Changes to fair value are taken to profit or loss and are included in
other income or expenses.
aa) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of the asset or as part of the
expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to, taxation authorities, are presented as operating cash flows.
2017 ANNUAL REPORT
97
E – Other Information bb) New accounting standards and interpretations
The group has applied the following standards and amendments for the first time for the annual reporting period
commencing 1 July 2016:
AASB 2014-1 Amendments to Australian Accounting Standards
The amended standards only affected the disclosures in the notes to the financial statements.
New accounting standards not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017
reporting periods and have not been early adopted by the group. The group’s assessment of the impact of these new
standards and interpretations is set out below.
Mandatory application date /
Date of adoption by group
Must be applied for financial
years commencing on or after
1 January 2018.
Expected date of adoption by
the group: 1 July 2018.
Mandatory for financial years
commencing on or after 1
January 2018.
Expected date of adoption by
the group: 1 July 2018.
Mandatory for financial years
commencing on or after 1
January 2019.
Expected date of adoption by
the group: 1 July 2019.
Title of Standard
Nature of change
Impact
AASB 9
Financial
Instruments
AASB 15
Revenue from
Contracts with
Customers
AASB 16
Leases
AASB 9 addresses the
classification, measurement
and derecognition of financial
assets and financial liabilities,
introduces new rules for
hedge accounting and a new
impairment model for financial
assets.
The AASB has issued a new
standard for the recognition
of revenue. This will replace
AASB 118 which covers
revenue arising from the sale
of goods and the rendering
of services and AASB 111
which covers construction
contracts.
The new standard is based
on the principle that revenue
is recognised when control of
a good or service transfers to
a customer.
The standard permits either a
full retrospective or a modified
retrospective approach for
the adoption.
The application of the
standard at the operative
date is not expected to
have a significant impact on
the group’s accounting for
financial assets and liabilities.
The application of the
standard at the operative
date is not expected to have
a significant impact on the
group’s annual results.
The vast majority of the
group’s revenue relates to
sale of land and buildings
which will continue to be
recognised upon settlement
under the new standard.
The timing of recognition
of revenue and expenses
relating to customer rebates
may be impacted, however
profit is not expected to be
affected.
Revenue from services
and property rental is not
expected to be impacted by
the new standard.
AASB 16 was issued in
February 2016. For lessees,
it will result in almost all
leases being recognised
on the balance sheet, as
the distinction between
operating and finance leases
is removed. Under the new
standard, an asset (the right
to use the leased item) and a
financial liability to pay rentals
are recognised. The only
exceptions are short-term
and low-value leases.
The accounting for lessors
will not significantly change.
The application of the
standard at the operative
date is not expected to have
a material impact on the
group’s annual results.
The standard will affect
primarily the accounting for
the group’s operating leases.
As at the reporting date, the
group has operating lease
commitments over the next 5
years of $1,589,000. Some of
the commitments may relate
to arrangements that will not
qualify as leases under AASB
16.
There are no other standards that are not yet effective and that are expected to have a material impact on the
consolidated entity in the current or future reporting periods and on foreseeable future transactions.
98
E – Other InformationCEDAR WOODS PROPERTIES LIMITED cc) Rounding of amounts
The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts
in the financial statements.
Amounts in the financial statements have been rounded off in accordance with the instrument to the nearest thousand
dollars, or in certain cases, to the nearest dollar.
2017 ANNUAL REPORT
99
E – Other Information Segment Information
39. Segment Information
The board has determined the operating segment based on the reports reviewed by the Managing Director that are
used to make strategic decisions.
The board has considered the business from both a product and a geographic perspective and has determined that the
group operates a single business in a single geographic area and hence has one reportable segment.
The group engages in property investment and development which takes place in Australia. The group has no separate
business units or divisions.
The internal reporting provided to the Managing Director includes key performance information at a whole of group
level. The Managing Director uses the internal information to make strategic decisions, based primarily upon the
expected future outcome of those decisions on the group as a whole. Material decisions to allocate resources are
generally made at a whole of group level.
The group sells products to the public and is not reliant upon any single customer for 10% or more of the group’s
revenue.
All of the group’s assets are held within Australia.
The Managing Director assesses the performance of the operating segment based on the net profit after tax, earnings
per share and net tangible assets per share.
100
E – Other InformationCEDAR WOODS PROPERTIES LIMITED
Parent Entity Financial Information
40. Parent Entity Financial Information
The financial information for the parent entity, Cedar Woods Properties Limited, has been prepared on the same basis
as the consolidated financial statements, except as detailed in notes (i) and (ii) below.
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholders’ equity
Issued capital
Reserves
Retained earnings
Profit for the year
Total comprehensive income
i.
Investments in subsidiaries and joint venture entities
2017
$’000
2016
$’000
52,930
405,678
(106,070)
(164,684)
240,994
48,760
355,945
(98,884)
(126,107)
229,838
119,525
119,525
155
121,314
240,994
28,521
28,521
70
110,243
229,838
28,790
28,790
Investments in subsidiaries and joint venture entities are accounted for at cost in the financial statements of Cedar
Woods Properties Limited. Such investments include both investments in shares issued by the subsidiary and other
parent entity interests that in substance form part of the parent entity’s investment in the subsidiary. These include
investments in the form of interest free loans which have no fixed repayment terms and which have been provided
to subsidiaries as an additional source of long term capital. Dividends received from joint ventures are recognised in
the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments.
ii. Tax consolidation legislation
Cedar Woods Properties Limited and its wholly owned Australian controlled entities have implemented the tax
consolidation legislation.
The head entity, Cedar Woods Properties Limited, and the controlled entities in the tax-consolidated group
account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the
tax-consolidated group continues to be a standalone taxpayer in its own right. In addition to its own current and
deferred tax amounts, Cedar Woods Properties Limited also recognises the current tax liabilities (or assets) and the
deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the
tax-consolidated group.
The entities have also entered into a tax funding agreement under which the 100% subsidiaries fully compensate
the parent for any current tax payable assumed and are compensated by the parent for any current tax receivable
and deferred tax assets relating to unused tax losses that are transferred to the parent under the tax consolidation
legislation. The funding amounts are determined by reference to the amounts recognised in the 100% subsidiaries’
financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from
the head entity when it is issued. The head entity may require payment of interim funding amounts to assist with its
obligations to pay tax instalments.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current
amounts receivable from or payable to other entities in the group.
2017 ANNUAL REPORT
101
E – Other Information Section F:
Declaration and Independent
Auditor’s Report
Directors’ Declaration .............................................................................................................................................. 103
Independent Auditor’s Report .................................................................................................................................. 104
102
F – Declaration and Independent Auditor’s ReportCEDAR WOODS PROPERTIES LIMITED
Directors’ Declaration
In the directors’ opinion:
a)
the financial statements that are set out in the financial statements section and notes on pages 49 to 101 are in
accordance with the Corporations Act 2001, including:
i. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
ii. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and of its performance
for the financial year ended on that date; and
b)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
Note 38(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.
The directors have been given the declarations by the Managing Director and Chief Financial Officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
P S Sadleir
Managing Director
Perth, Western Australia
21 August 2017
2017 ANNUAL REPORT
103
F – Declaration and Independent Auditor’s Report 104
F – Declaration and Independent Auditor’s ReportCEDAR WOODS PROPERTIES LIMITED 2017 ANNUAL REPORT
105
F – Declaration and Independent Auditor’s Report 106
F – Declaration and Independent Auditor’s ReportCEDAR WOODS PROPERTIES LIMITED 2017 ANNUAL REPORT
107
F – Declaration and Independent Auditor’s Report 108
F – Declaration and Independent Auditor’s ReportCEDAR WOODS PROPERTIES LIMITED 2017 ANNUAL REPORT
109
F – Declaration and Independent Auditor’s Report Section G:
Shareholders’ Information
This section provides information for shareholders on distributions and other shareholder benefits, the composition of the
share register and past financial performance.
Investors’ Summary ......................................................................................................................................................111
41.
Dividend and dividend policy ...........................................................................................................................111
42.
Shareholder discount scheme .........................................................................................................................111
43.
Electronic payment of dividends .....................................................................................................................111
44.
Dividend re-investment plan and Bonus share plan......................................................................................111
45.
Shareholders’ timetable ...................................................................................................................................111
46.
Shareholder Information ..................................................................................................................................112
Five Year Financial Performance .................................................................................................................................114
110
G – Shareholders’ InformationCEDAR WOODS PROPERTIES LIMITED
Investors’ Summary
41. Dividend and dividend policy
The dividend policy is to distribute approximately 50% of the full year net profit after tax. The final dividend for the 2017
financial year is 18.0 cents per share, fully franked. The dividend will be paid on 27 October 2017.
42. Shareholder discount scheme
The group operates a shareholder discount scheme which entitles shareholders to a 5% discount off the listed price of
any residential lot, or 2.5% off the listed price of houses or apartments at the group’s developments. A summary of the
main terms and conditions follows:
• Shareholders must hold a minimum number of 1,000 shares for at least 12 months before purchasing a lot or
dwelling to qualify for the discount;
• There is no limit to the number of lots or dwellings which a shareholder may purchase under the scheme, subject
to any statutory restrictions; and
• The shareholder discount scheme does not apply to lots or dwellings at joint venture projects.
The above is a summary of the main conditions and shareholders should apply to the company or visit the website for
the full terms and conditions.
43. Electronic payment of dividends
The group continues to offer the electronic payment of dividends, which is now in use by the majority of our
shareholders. Shareholders may nominate a bank, building society or credit union account for the payment of dividends
by direct credit. Payments are electronically credited on the dividend payment date and confirmed by mailed advice.
Shareholders wishing to take advantage of this facility for the first time should contact the company’s share registrar,
Computershare Investor Services Pty Ltd, by visiting www.computershare.com.au.
44. Dividend re-investment plan and Bonus share plan
The dividend re-investment plan and bonus share plan are operated from time to time as part of measures to manage
the group’s capital. Shareholders can change their participation status in the plans by completing an election form in
accordance with the rules of each plan. The dividend re-investment plan and bonus share plan are currently suspended.
45. Shareholders’ timetable
Dividend announcement
Share register closes for dividend (Record date)
Final dividend payment date
First quarter update
Annual General Meeting
Half-year result announcement
Interim dividend payment date
Third quarter update
Full year result and dividend announcement
22 August 2017
3 October 2017
27 October 2017
October 2017
9 November 2017
February 2018
April 2018
May 2018
August 2018
2017 ANNUAL REPORT
111
G – Shareholders’ Information 46. Shareholder Information
The shareholder information set out below was applicable at 31 August 2017.
a. Distribution of ordinary shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000 and over
There were 268 holders of less than a marketable parcel of shares.
b. Twenty largest shareholders of ordinary shares as disclosed in the share register
Number
of holders
1,064
1,358
460
484
54
Number
of shares
463,463
3,795,712
3,465,745
12,118,323
59,048,438
3,420
78,891,681
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Hamsha Nominees Pty Ltd (The Nowra Projects Unit Fund A/C)
Westland Group Holdings Pty Ltd
Zero Nominees Pty Ltd
Citicorp Nominees Pty Ltd
Beach Corporation Pty Ltd
National Nominees Limited
Helen Kaye Poynton
Australian Executor Trustees Limited (No 1 Account)
Joia Holdings Pty Ltd
Mr Paul Sadleir
BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C)
BNP Paribas Nominees Pty Ltd (DRP A/C)
Dr A Gerraty & Mrs P Gerraty (A & P Gerraty S/F A/C)
Netwealth Investments Limited (Wrap Services A/C)
Mr JH Tucker & Mrs KJ Tucker (Tucker Family Super Fund A/C)
Leblon Holdings Pty Ltd (William Hames Super Fund A/C)
Ramneg Pty Ltd (Lang Superannuation Fund)
Croftwell Pty Ltd (Croft Class A/C)
Number
of shares
11,617,222
9,033,499
5,040,216
4,596,980
4,077,221
2,704,712
2,384,963
1,838,624
1,677,095
1,501,892
1,177,922
1,045,445
948,312
607,619
600,000
566,805
475,002
458,058
442,977
428,755
Percentage
of shares
14.73
11.45
6.39
5.83
5.17
3.43
3.02
2.33
2.13
1.90
1.49
1.33
1.20
0.77
0.76
0.72
0.60
0.58
0.56
0.54
51,223,319
64.93
112
G – Shareholders’ InformationCEDAR WOODS PROPERTIES LIMITED c. Substantial shareholders of ordinary shares
As disclosed in substantial shareholder notices lodged with the ASX at 31 August 2017.
Number
of shares
9,314,668
7,967,627
4,133,714
4,025,000
Percentage
of shares 1
12.90
10.87
5.24
5.10
William George Hames and related entities
Robert Stanley Brown and related entities
AustralianSuper Pty Ltd
Westoz Funds Management Pty Ltd
1 Percentage of issued capital held as at the date notice provided.
d. Voting rights
The voting rights attaching to each class of equity securities are set out below:
Ordinary shares
On a show of hands every member present in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
2017 ANNUAL REPORT
113
G – Shareholders’ Information
Five Year Financial Performance
All figures in $’000 except where stated
Financial Year
Financial Performance
Revenue from operations
2017
2016
2015
2014
2013
222,269
175,159
178,637
214,465
172,751
Proceeds from sale of investment properties
-
-
Earnings before interest and tax
67,446
65,587
2,947
64,499
19,054
45,445
3,755
61,832
18,230
43,602
36,000
61,220
3,397
57,823
15,238
42,585
-
382
56,172
53,022
606
55,566
15,253
40,313
1,580
51,442
15,105
36,337
Finance costs
Operating profit before tax
Income tax expense
Net profit after tax
Financial Position
Total assets
Total liabilities
505,624
452,729
383,330
409,948
301,024
175,390
145,541
97,725
148,347
93,280
Shareholders’ equity
330,234
307,188
285,605
261,601
207,744
Number of shares on issue – end of year (‘000)
78,892
78,892
78,892
78,336
73,360
Basic earnings per share (cents)
57.6
55.3
54.3
54.4
49.9
Key Performance Measures
Dividend per share, fully franked (cents)
30.0
28.5
28.0
27.5
26.0
EBIT Margin
Interest cover (times)
Return on Equity
30.3%
37.4%
34.3%
26.2%
30.7%
13.9
16.6
9.9
10.4
12.6
13.8%
14.2%
14.9%
15.4%
17.5%
Investment in inventory during year
161,588
112,887
120,620
158,149
145,474
Net tangible assets backing per share ($)
Net bank debt
Net bank debt to equity
Share price – end of year ($)
4.19
78,940
23.9%
5.21
3.89
50,344
16.4%
4.35
3.62
27,908
9.8%
5.26
3.34
32,602
12.5%
7.31
2.83
37,762
18.2%
5.17
Stock Market capitalisation at 30 June
411,026
343,179
414,970
572,639
379,269
Number of employees at 30 June
79
67
62
56
54
Returns to shareholders over 1, 3, & 5 years
Earnings per share growth %
Share price growth %
Dividend growth % (paid dividend)
Total shareholder return %
1 Year
4.2
19.8
1.8
29.67
3 Year
1.9
(10.7)
1.8
(3.56)
5 Year
1.6
7.9
4.4
16.0
114
G – Shareholders’ InformationCEDAR WOODS PROPERTIES LIMITED Corporate Directory
A.B.N. 47 009 259 081
Directors
William George Hames, BArch (Hons) MCU (Harvard) LFRAIA, MPIA, FAPI (Econ) – Chairman
Robert Stanley Brown, MAICD, AIFS – Deputy Chairman
Ronald Packer, BCom (UWA), FAICD, Solicitor Supreme Court of England & Wales
Valerie Anne Davies, FAICD
Jane Mary Muirsmith, FCA, GAICD
Nathan John Blackburne, BB, AMP, GAID – Managing Director
Company Secretary
Paul Samuel Freedman, BSc, CA, GAICD
Registered office and principal place of business
Ground Floor, 50 Colin Street
WEST PERTH WA 6005
Postal address: P.O. Box 788 West Perth WA 6872
Phone: (08) 9480 1500
Fax: (08) 9480 1599
Email: email@cedarwoods.com.au
Website: www.cedarwoods.com.au
Share registry
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
PERTH WA 6000
Auditor
PricewaterhouseCoopers
125 St Georges Terrace
PERTH WA 6000
Securities exchange listing
Cedar Woods Properties Limited shares are listed on the Australian Securities Exchange (ASX)
ASX code: CWP
Annual general meeting
Venue: Kings Park Function Centre, Fraser Avenue, West Perth WA 6005
Time: 10:00am
Date: Thursday 9 November 2017
2017 ANNUAL REPORT
115
www.cedarwoods.com.au