Annual
Report
Cedar Woods Properties Limited ABN 47 009 259 081
20
19
Contents
Letter from the Chairman ................................................................................... 4
Letter from the Managing Director ..................................................................... 6
Financial Performance Highlights ...................................................................... 8
Our Business ................................................................................................... 10
Financial and Operating Review ...................................................................... 13
Directors’ Report .............................................................................................. 24
Directors’ Report: Chair of the Human Resources and
Remuneration Committee’s Letter to Shareholders.......................................... 29
Directors’ Report - Remuneration Report ......................................................... 30
Auditor’s independence declaration ................................................................. 51
Financial Statements ....................................................................................... 54
Notes to the Financial Statements ................................................................... 59
Section A: Key Numbers ............................................................................... 60
Section B: Financial risks .............................................................................. 79
Section C: Group Structure ........................................................................... 87
Section D: Unrecognised Items ..................................................................... 93
Section E: Further Information ...................................................................... 95
Directors’ Declaration ......................................................................................109
Independent Auditor’s report ...........................................................................110
Shareholders’ Information ...............................................................................116
Five Year Financial Performance ....................................................................120
About Cedar Woods
Cedar Woods Properties Limited (“Cedar Woods”) is a national developer of residential communities
and commercial properties.
Established in 1987, Cedar Woods has grown to become one of the country’s leading developers.
The company has established a reputation for delivering long-term shareholder value underpinned by
its disciplined approach to acquisitions, the rigour and thoughtfulness of its designs, and the creation of
dynamic communities that meet the evolving needs of its customers.
Cedar Woods’ diversified product mix ranges from land subdivisions in emerging residential
communities, to medium and high-density apartments and townhouses in vibrant inner-city
neighbourhoods and supporting retail and commercial developments. Cedar Woods’ developments
epitomise the company’s long-standing commitment to quality.
2
2019 ANNUAL REPORT
3
CEDAR WOODS PROPERTIES LIMITED Letter from
the Chairman
“ Developing and maintaining a high performance
culture is one of Cedar Woods’ Strategic Priorities”
The Company has also used this period to build the
foundations to support growth by sharpening our
internal systems and processes to ensure Cedar
Woods is appropriately set up for the future.
The ongoing assessment by our Audit & Risk
Committee of the risk factors that may affect the
Company in the short and medium term, keeps us
alert to emerging matters and suitably equips us to
navigate them effectively.
Over the years Cedar Woods has established
a reputation for strong governance, through the
recruitment and retention of a skills-based Board
with appropriate independence, especially across
its various committees. This reputation was tested
in recent months when one of our independent
directors was required to take leave of absence due
to health issues.
Fortunately, we were in the enviable position of
having two exceptionally skilled, independent
directors available to step up and chair the Audit
& Risk and Human Resources & Remuneration
Committees, and I thank them for their continued
support.
With a shared commitment to developing
sustainable communities for our customers, and
delivering consistent returns for our shareholders,
it is my privilege to thank Nathan and his team for
their valuable contribution to Cedar Woods, and
congratulate them on delivering a record profit and
positioning the Company for further growth.
On behalf of the Board, I also take this opportunity
to thank our loyal and longstanding shareholders
for their support and we look forward to serving you
over the next 12 months.
Sincerely,
William Hames
Chairman
One of the most rewarding aspects of seeing a
Company grow over more than three decades is to
witness the evolution of its culture. In the case of
Cedar Woods, this cultural evolution has created an
impenetrable point of difference between us and our
competitors and an environment for our people to
grow and advance their careers.
A sharp focus on developing and maintaining a
High-Performance Culture is one of Cedar Woods’
Strategic Priorities and, along with the other
priorities of Operational Excellence, Financial
Strength and Earnings Growth, provides an
environment for sustained success.
While the Australian property market has been
challenging over the past 12 months, it has also
created opportunity for a well-disciplined company
such as Cedar Woods. Through our corporate
planning, which guides management and provides
a five-year forward view, we have been active in
sourcing and assessing potential development
opportunities.
4
2019 ANNUAL REPORT
5
CEDAR WOODS PROPERTIES LIMITED Letter from
the Managing Director
“ Our vision – to be the best Australian property
company renowned for performance and quality
– is a constant in everything we do”
Our vision – to be the best Australian property
company renowned for performance and quality – is
a constant in everything we do and manifests itself
through examples such as
• Bushmead estate in WA, recognized by
industry with the prestigious 2018 UDIA Enviro-
Development Chairman’s Choice award for WA
• Strong EPS growth and total shareholder
returns relative to peer companies and
benchmark indices such as the S&P Small
Industrials Index (XSIAI) over the last 3 years
Customer surveys during the year produced
pleasing results. Our aim to deliver innovative
products with lasting quality is recognised by our
customers, and this showed through at Glenside
in Adelaide when our first customers were recently
handed the keys to their homes.
During the year we have focused on streamlining
our systems as part of our journey to achieving
Operational Excellence, including updating
technology throughout the business and integrating
financial systems, and we will continue to seek
opportunities to innovate and lead in our sector.
We enter the new financial year in a strong position,
both operationally and financially, with more than
9000 lots/units in our development pipeline and $330
million of presale contracts in place, which is $10
million higher than the same time last year.
Given the continued market uncertainty, this is
significant, and provides the confidence to our
funding partners and for Cedar Woods to seek out
and assess further growth opportunities.
With active projects across Queensland, South
Australia, Victoria and Western Australia, it’s an
exciting time to be a part of the Cedar Woods
journey and a privilege to lead such a high-
performing team.
I thank the Board for its continued support, the staff
for their commitment, and I look forward to more
shared success in the 2020 financial year and
beyond.
Sincerely,
Nathan Blackburne
Managing Director
The 2019 financial year has seen the achievement
of some record results for Cedar Woods, with the
adherence to our Strategic Priorities fundamental to
our success.
These priorities have kept us focused, supporting the
successful execution of our diversification strategy
– by geography, product type and price point – and
demonstrated through revenue contributions from
projects across all four states in which we operate
for the first time.
Financially, this has resulted in record sales of
$375.9 million (up 56 per cent), record net profit
of $48.6 million (up 14 per cent) and 13 per cent
growth in earnings per share for the 2019 financial
year. With a full year dividend of 31.5 cents, we
have delivered a sound 5.3 per cent return to our
highly valued shareholders.
Core to our strategy is creating a positive culture
in which people can thrive. This has created a
competitive advantage that is almost impossible to
replicate.
In my two years as Managing Director, I am regularly
reminded of Cedar Woods’ total commitment and
alignment, at all levels of the team, to who we are,
why we exist, our purpose, company vision and our
values.
6
2019 ANNUAL REPORT
7
CEDAR WOODS PROPERTIES LIMITED Financial
Performance Highlights
Net Profit
$48.6m
Up 14%
Total Revenue
$375.9m
Up 56%
Earnings Per Share
60.9c
Up 13%
Full Year Dividends
31.5c
Up 5%
2019
2018
2019
2018
2019
2018
2019
2018
Return On Equity
12.9%
Above company
benchmark
Total Shareholder Return
5.3%
Sound shareholder returns
Presales Contracts
Net Bank Debt to Equity
$330m
28.0%
Up $10m
At the lower end of target range
8
2019 ANNUAL REPORT
9
CEDAR WOODS PROPERTIES LIMITED Our Business
Our History
Cedar Woods was established in 1987 and listed on the ASX (Code: CWP) in 1994. Starting out as mainly a
developer of master planned communities in Western Australia, the company progressively branched out into
new product areas and geographies. The company expanded into Melbourne in 1997, then Brisbane in 2014
and Adelaide in 2016 and now has a significant portfolio of quality developments delivering residential lots,
townhouses, apartments and commercial projects.
The company is known for taking on complex, large scale projects, adding value through planning design
and delivery and generating strong returns from multi-year projects. As a result, it has built a reputation as an
innovative and diversified property company with a track record of strong financial performance, sustained
since inception.
Our Purpose, Vision & Values
Our Purpose, Vision and Values inform every decision we make, guide our conduct internally and our
relationships with partners, customers and investors.
We are proud to be a leading national property developer, and with an ongoing commitment to our strategy
and our values, we look forward to fulfilling our vision of becoming the best Australian property company,
renowned for performance and quality.
Purpose
Our purpose is to
create long term value
for shareholders through
the development of
vibrant communities.
Vision
Our vision is to be the
best Australian property
company renowned for
performance and quality.
Values
WE DO WHAT WE SAY WE’LL DO
We deliver what we say we will for all
our stakeholders.
WE ARE PEOPLE DEVELOPERS
We are committed to developing our
people so that they thrive in their careers.
WE THINK ABOUT TOMORROW
We take a long-term view of our performance
and the product we deliver.
WE STRIVE TO SUCCEED
We are driven to succeed in all aspects
of our business.
Our Strategy
Our strategy is to grow 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.
Geography
Good geographic spread of well located projects in 4 states.
Product Type
Range of housing lots, townhouses, apartments and office products.
Price Point
Wide range of price points offered with Western Australia,
South Australia and Queensland offering good affordability.
Value Creation Model
We deliver on our strategy via our value creation model.
Property
Acquisitions
Development
Marketing
& Sales
Disciplined approach to acquisitions
Research, design, planning and delivery
Integrated approach to optimise results
•
•
•
Tactical and research based decisions
to identify projects
Rigorous assessment and
conservative assumptions
Structure contracts to minimise risks
and optimise returns
•
•
•
Sustainable designs that optimise
quality, functionality, environmental
outcomes and returns
Collaborative approach with community
and authorities
Negotiate deliverable and
speedy approvals
• Structure contracts to minimise risks
• Manage construction closely
•
•
•
Positioning projects to maximise
demand
Pre-sell to underwrite projects
Quality brands and marketing material
• Lead generation and sales conversion
• Customer nurturing and referrals
10
2019 ANNUAL REPORT
11
CEDAR WOODS PROPERTIES LIMITED
Strategic Priorities
We optimise business performance through a focus on four strategic priorities.
High Performance Culture
On Creating a progressive, high-spirited work environment with strong staff
alignment to values and objectives, where top talent work collaboratively
and high performance is rewarded.
Operational Excellence
Being operationally strong and safe through renewed and integrated systems
and technologies, and having a strong corporate brand with quality projects.
Financial Strength
Optimising performance through disciplined capital management, a commercial
focus, cost minimisation and maintaining a strong balance sheet.
Earnings Growth
Pursuit of earnings growth is the key metric to achieve our primary objective
of creating long-term value for our shareholders. This may be achieved
organically, by mergers and acquisitions or through new business areas.
Strategic actions, which change over time, are determined under each of these priority areas and are
implemented throughout the business.
Governance
The Board of Cedar Woods is committed to achieving and demonstrating the highest standards of corporate
governance. The Board continues to review the governance framework and practices to ensure they meet the
interests of shareholders.
Cedar Woods has taken the opportunity to publish the Corporate Governance Statement on its website rather
than include it in the Annual Report. A copy of the Corporate Governance Statement and related documents can
be downloaded from the ‘Our Company’ section of the website www.cedarwoods.com.au.
Other information available under the Governance section of the website includes:
• Board and Committee Charters
• Risk Management Policy
•
Investor Communications Policy
• Continuous Disclosure Policy
• Performance Evaluation Policy
• Privacy Policy
• Primary Objectives and Company Code of Conduct
• Securities Trading Policy
• Diversity Policy
• Conflicts of Interest Policy
Financial and Operating Review
On behalf of the Board, we are pleased to present the financial and operating review of Cedar Woods to
shareholders.
Financial Review
The following summarises the results of operations during the year and the financial position of the
consolidated entity at 30 June 2019:
2019 financial highlights
• Record net profit of $48,644,000, up 14.2 per cent on the prior year
• Total dividends of 31.5 cents per share, up 5.0 per cent, generating a fully franked yield of 5.5 per cent
• Strong earnings per share of 60.9 cents, up 13.0 per cent on the prior year
• Low level of bank debt and strong interest cover
• Total shareholder return of 5.3 per cent
Net Profit After Tax (NPAT) and Dividends paid
In FY2019, the company delivered a record profit of $48.6 million, an increase of 14.2 per cent over the prior
year. This returned the company to a trend of profit growth over the last nine years, after a dip in FY2018, and
dividends declared growing from 23.0 cents to 31.5 cents per share over the same period.
NPAT and Dividends declared since FY11
50
45
40
35
30
25
20
15
10
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FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
NET PROFIT AFTER TAX
NET PROFIT AFTER TAX FY2019
DIVIDENDS DECLARED
12
2019 ANNUAL REPORT
13
CEDAR WOODS PROPERTIES LIMITED
2019 financial results summary
Capital Management
Year ended 30 June
Revenue (2018 restated)
Net profit after tax (NPAT)
Total assets
Net bank debt
Shareholders’ equity
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
Net bank debt to total tangible assets (less cash)
Interest cover
Net asset backing per share – historical cost
2019
$’000
375,857
48,644
571,711
105,314
376,530
2018
$’000
240,495
42,603
601,516
109,134
353,186
% Change
56.3%
14.2%
(5.0%)
(3.5%)
6.6%
2019
2018
% Change
¢
¢
¢
%
%
%
%
%
x
$
60.9
60.6
31.5
12.9
14.9
5.3
28.0
18.9
8.6
4.70
53.9
53.7
30.0
12.1
14.1
16.5
30.9
18.9
8.5
4.44
13.0
12.8
5.0
0.8
0.8
(11.2)
(2.9)
0.0
1.2
5.9
0.8
(0.3)
1.0
Shares on issue – end of year
Stock market capitalisation at 30 June
Share price at 30 June
’000
$’000
$
80,118
456,671
5.70
79,517
458,015
5.76
Financial year overview
During FY2019, challenging market conditions persisted in most Australian property markets, with significant
falls in house prices experienced in Melbourne and Sydney, while other state markets were subdued, with
pricing more stable. The company continued to complete counter-cyclical acquisitions, with land for new
projects acquired at Brabham and Subiaco in Western Australia.
Revenue was 56 per cent higher than the prior year mainly due to the settlement of the Target Head Office
in December 2018, an eight per cent increase in product settled and a higher proportion of apartments and
townhouses, which have a higher price point than land lots. Gross margin remains strong at 29 per cent
although compressed from 41 per cent in the prior corresponding period (pcp) as a result of changes to
product mix and some discounting. Consequently, there was a 14.2 per cent increase in NPAT for the year.
The year closed with a full year net profit of $48.6 million and basic earnings per share of 60.9 cents, an
increase of 13.0 per cent on the previous year. The Board has declared a full year dividend of 31.5 cents per
share. This is consistent with the Board’s policy of distributing approximately 50 per cent of full year net profit
to shareholders, providing a high-yield return of approximately five per cent at year end.
Return on equity of 12.9 per cent and return on capital of 14.9 per cent were above the company’s
benchmarks of 10 per cent and 12 per cent respectively.
The one-year total shareholder return was 5.3 per cent, supported by the strong dividend yield.
At 30 June 2019, net bank debt stood at a conservative $105 million. Net bank debt-to-equity at 30 June 2019
was 28 per cent, at the lower end of the company’s target debt to equity range of 20-75 per cent. Net debt to
total tangible assets less cash was 18.9 per cent at year end and interest cover was at a favourable 8.6 times.
The dividend reinvestment and bonus share plans have been reintroduced for the FY2019 final dividend to be
paid in October 2019.
Operational Review
Corporate Objectives and Progress on Strategy
Cedar Woods’ primary purpose is to create value for shareholders through the development of vibrant
communities and deliver consistent growth in net profit and earnings per share. This year, the company
reported a full year net profit after tax of $48.6 million and total fully franked dividends of 31.5 cents for
FY2019.
The overarching strategy, as illustrated on page 11, 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 strategy is delivered through the operation of our value creation model, as illustrated on page
11, and discussed further below.
Cedar Woods’ Corporate Plan guides management’s activities and provides a five-year outlook for the
company, projecting earnings and other key performance indicators.
The Corporate Plan sets out a number of key action items under each strategic priority focused on achieving
the primary purpose and addressing key risk factors. These key actions are implemented as performance
targets by senior executives, sales managers and other employees.
Market Conditions
FY2019 was characterised by soft market conditions across most states, attributed to tighter home lending
criteria, tax policy uncertainty and the distraction of the 2019 Federal election. These factors dampened
enquiry and sales for the Company around the country.
Two recent interest rate reductions, regulatory easing, the Federal election result and improved sentiment
are all serving to support housing nationally and conditions are expected to improve in some markets over
the next 12 months. The extent of improvement will depend mainly on finance availability to homebuyers. The
above factors further support other positive sector drivers such as population growth and stable employment
conditions.
Several market analysts have forecast conditions to stabilise through the remainder of calendar year 2019
with improving conditions leading to a return to moderate pricing growth in 2020.
BIS Oxford Economics is predicting median house price increases between 2019 and 2022 of seven per cent
for Perth and Melbourne, 11 per cent for Adelaide and as high as 20 per cent for Brisbane. Our outlook for
median house price growth is that it will occur more gradually.
The Housing Industry Association (HIA) has forecast solid increases to housing starts in Western Australia
and South Australia over FY2020 and FY2021. A decline in housing starts is forecast for New South Wales,
Victoria and Queensland.
Cedar Woods’ diversified portfolio ensures it is positioned to perform well through different property cycles
across state markets.
14
2019 ANNUAL REPORT
15
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Portfolio Highlights
Cedar Woods’ strategy to grow a national project portfolio diversified by geography, product type and price
point continues to prove successful. In FY2019:
• Settlements were achieved from all four states in which the Company operates for the first time (Victoria,
Queensland, South Australia, Western Australia);
• Multiple product types contributed to earnings including residential lots, townhouses, apartments and office
developments; and
• A variety of price points were offered across the portfolio appealing to a broad customer base.
Specific highlights include:
• Expansion into South Australia is progressing well, with the first residents moving in to the initial stage of
Glenside townhouses in FY2019. The first apartment building at Glenside, Botanica Apartments, is under
construction with completion anticipated mid calendar year 2020. The Company’s second project in South
Australia, Fletcher’s Slip, is achieving good townhouse presales with site preparation works underway and
first settlements due in FY2022.
•
In Victoria, townhouse project settlements are in full swing with a number of stages completed and settled
in FY2019 at St A. and Jackson Green.
• Settlement of the Target Head Office building at Williams Landing occurred in December 2018 and the fully
leased and presold 107 Overton Road office development is on track for completion in FY2020.
• Strata office development product successfully being delivered with 111 Overton Road strata offices
completed and settled in June 2019 and 101 Overton Road, currently under construction with settlements
scheduled for the 2020 calendar year.
• An increase in the number of commercial and residential projects in progress at the Company’s mixed use,
masterplanned development at Williams Landing in Victoria, with a significant pipeline of projects to come.
• Strong sales at the Ariella Estate in Brabham, WA.
Delivering on Strategic Priorities
The Company continues to deliver on its four strategic priorities of a High Performance Culture, Operational
Excellence, Financial Strength and Earnings Growth.
High Performance Culture
Significant activities have been undertaken in FY2019 to refine our business culture and human resources
practices creating a high-spirited work environment. Reward and performance management systems have
been restructured to better align reward with performance and strong accountability and delegation systems
were also put in place optimising and balancing appropriate oversight and staff empowerment. High staff
engagement scores were recorded in surveys during the year.
Operational Excellence
Management continues to implement new technologies and systems that will generate efficiencies and
provide a better platform for growth. A new budgeting system has recently been implemented and further
finance system enhancements are planned for completion in FY2020, largely completing the Company’s
digital transformation program. High quality projects have been delivered across the portfolio and the
Company’s work health safety (WHS) systems have resulted in a strong safety record across projects and
offices.
Financial Strength
In June 2019 the Company announced it had modified and extended its corporate finance facility. The
changes include the introduction of National Australia Bank (NAB) to the $205 million facility, as well as longer
facility tenure with the previous three-year facility now comprising a mix of three and five-year debt. NAB joins
ANZ and Bankwest as club facility lenders to the Company.
The introduction of a third bank to the club facility diversifies the Company’s funding sources and the longer
maturity date for approximately 20 per cent of the facility limit, further enhances Cedar Woods’ security of
funding. The facility supports the Company’s expanded operations and growth plans.
16
2019 ANNUAL REPORT
17
CEDAR WOODS PROPERTIES LIMITED
Earnings Growth
Sustainability and Social Objectives
Cedar Woods’ strategically located projects across four states and its diversified product mix positions the
Company to perform well through varying property market cycles.
The Company made three strategic acquisitions in Western Australia in 2019, capitalising on attractive buying
conditions in the state.
• During FY19 the Company successfully acquired a parcel of land adjoining the Ariella estate in Western
Australia which will add 380 lots and several years to the life of this project. Ariella has been the
Company’s highest-selling project nationally during FY19.
• Cedar Woods acquired the 1.4 hectare Subiaco TAFE site in Western Australia, with the intention of
delivering a significant urban renewal project comprising townhouses and apartments.
• The Company also acquired a small parcel of land adjoining its Karmara estate in Perth, extending the life
of this successful project.
The Company plans to continue to take advantage of relatively favourable buying conditions as development
finance proves difficult to secure for some property developers and the property cycle justifies buying in
several markets. Cedar Woods is currently assessing a number of acquisition opportunities in Queensland,
Victoria and Western Australia.
Cedar Woods does more than create vibrant communities. We are proud of our reputation for being
environmentally and socially responsible and we continue to look for ways to: reduce our ecological footprint;
optimise urban growth; promote affordable housing; respect indigenous and cultural heritage; stimulate
economic investment and jobs; foster cooperative stakeholder relationships and activate the communities we
create. This is all done in a safe work environment for all who work on Cedar Woods projects.
This section updates our progress towards on sustainability and community outcomes and allows us to
communicate key achievements to those affected by our actions.
Optimising Land Use: deliver the best use of land by optimising land use mix, product diversity and yield in the
context of high quality urban places
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.
Projects are strategically located near amenities and infrastructure, with some 9,000+ lots / dwellings in the
pipeline, across 34 projects.
Outlook
Highlights and Achievements
While Cedar Woods has a good level of presales to be carried into future financial years, the national
property market has been challenging over the past six months. Based on current market conditions we are
anticipating moderately lower full year earnings in FY20 compared to FY19.
Cedar Woods remains well placed for the medium term with more than 9,000 undeveloped lots/units in its
development pipeline across four states, with the ability to respond quickly to improved market conditions.
A number of new projects are expected to contribute to earnings from FY21, including Huntington apartments
in Victoria, Ariella (adjoining parcel) and Solaris in Western Australia, and Wooloowin in Queensland. Further
acquisitions are anticipated to supplement the portfolio for future years.
Risks
The Board has established the Audit and Risk Management Committee as responsible for risk oversight and
ensuring that internal control systems are in place to identify, assess, monitor and manage risk. During the
year the Risk Management Framework was comprehensively reviewed and updated to support the integration
of risk management within the business and to support a culture committed to building long term sustainable
value for stakeholders.
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). Demand fluctuations 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 company aims to
balance its portfolio at any time in favour of mature projects where the project risks are generally diminished.
The risk management framework also seeks to address a range of other risks that impact the business, such
as economic and political risks, competition for staff and project opportunities, and cyber risks.
• Cedar Woods projects contribute to residential and commercial land supply, consistent with Perth,
Melbourne, Brisbane and Adelaide strategic planning frameworks. The national portfolio consists of 34
projects with more than 9,000 land (34%), townhouse (31%), apartment (25%) and commercial (10%)
products to be delivered.
• Many projects transform urban spaces into vibrant communities, focusing on urban regeneration and
strategic infill development. Williams Landing, Fletcher’s Slip, Wooloowin and St. A are all oriented around
strategic public transport nodes which offer high accessibility and close proximity to employment centres.
• The Target Head Office building at Williams Landing town centre opened at the end of 2018. It marks
the first of a significant pipeline of commercial projects. 111 Overton Road strata offices were completed
in June 2019. The 107 Overton Road office development, which is fully leased to the Victorian State
Government and pre-sold, is expected to be completed in FY2020. A fourth office building, 101 Overton
Road, is now under construction with strata office unit settlements anticipated next year.
• Ellendale is transforming underutilised rural land and provides residential housing which complements
established residential areas and capitalises on existing transport and service infrastructure.
Housing Diversity & Affordability: promote equality of access to housing
Highlights and Achievements
• Tailored affordable housing initiatives are included in partnership projects with state government, such as
Harrisdale Green and Glenside. Glenside will provide 15 per cent affordable housing.
• This year saw the launch of the ‘Built On’ initiative at The Brook at Byford which will deliver quality
affordable housing and lower entry price-points to live in the estate.
• Williams Landing continues to provide housing diversity. Lancaster Apartments offer one and two-
bedroom apartments. One hundred percent presales demonstrate the strong demand for affordable
product in the Melbourne market.
Heritage: respecting indigenous and cultural heritage
Highlights and Achievements
• Wooloowin contains two historic heritage-listed buildings, the former Holy Cross laundry building (1889),
Queensland’s oldest recognisable institutional laundry, and The Holy Cross Convent (1912). Progress has
been made this year on the restoration of both heritage buildings to their original form.
18
2019 ANNUAL REPORT
19
CEDAR WOODS PROPERTIES LIMITED Environment and Climate Change: enhance and rehabilitate environmental assets; remediate contamination;
promote total water cycle management; and encourage energy efficiency
Community Investment, Development and Integration: create vibrant communities by investing in resident
wellbeing, nurturing a strong ‘sense of community’ and maximising social connectivity
Highlights and Achievements
Highlights and Achievements
• Bushmead is our first project to achieve full UDIA EnviroDevelopment accreditation. Initiatives include
significant revegetation in the 187 hectares given up for conservation and significant tree retention in the
urban areas. Bushmead has been recognised for its environmental excellence with industry awards.
• Ellendale will see the dedication of 90 hectares for a green-space corridor. Rehabilitation works including
revegetation, restoration of habitat linkages and improved wildlife movement networks progressed
throughout the year.
• At Karmara work continued on the restoration of the adjoining nature reserve, including revegetation and
maintaining wildlife movement networks. Rehabilitation maintenance will continue for another two years.
• Jackson Green townhouses incorporate many significant energy, water and conservation measures. Many
exceed a 6.5-star energy rating.
Stakeholder Engagement: position Cedar Woods as a competent and trustworthy joint venture partner; a
valuable contributor to the property industry and to engage respectfully with stakeholders
Highlights and Achievements
• Cedar Woods is a valued and trusted joint venture partner. Current partnership projects include Harrisdale
Green (WA Department of Communities) and Glenside (Renewal SA) and are reinforced with professional,
transparent and quality decision-making.
• Cedar Woods remains committed to collaborating with all levels of government, the property industry,
local community, stakeholders and customers to achieve the best possible project outcomes. Active
engagement strategies were undertaken at Ellendale and Wooloowin to advance planning approvals.
Rezoning for Ellendale was completed 1H FY2019. At Glenside and Fletcher’s Slip extensive community
consultation has helped shape the final project masterplans.
• Cedar Woods maintains membership and participation with key industry advocacy groups such as the
Property Council and Urban Development Institute of Australia.
Occupational Health and Safety: providing a safe working environment for all staff and stakeholders
Highlights and Achievements
• Cedar Woods maintains its high commitment to workplace safety. The company is preparing for the
introduction of the Model Work Health and Safety Act as it is enacted across Australia to harmonise
workplace Health and Safety law.
• The Neighbourhood Grants Program has donated over half a million dollars to support a range of local
community projects, such as funding for new equipment, uniforms, community events, wildlife protection
and environmental improvement. The Program continues to be rolled-out across the portfolio.
• Communities at The Brook at Byford, Byford on the Scarp, The Rivergums and Williams Landing enjoyed
neighbours coming together for Neighbourhood Movie Nights. Attendance is always high and resident
feedback is positive.
• Cedar Woods again sponsored the Wyndham Business Awards this year. The City of Wyndham has the
highest incidence of business registrations of any Victorian municipality, which bodes well for the future of
Williams Landing Town Centre. Williams Landing hosted a variety of community events including a circus
and food truck carnival.
• At Ellendale the opening of a new park was celebrated with games, ice-cream and live music. Other
events saw residents contributing to local environmental initiatives.
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.
On 1 July 2019 our Lead Independent Director, Ron Packer, took a leave of absence from the Board for
health reasons. In Mr Packer’s absence the following appointments were made as Acting Chairs of Board
committees, effective 1 July 2019:
•
•
Independent director Jane Muirsmith was appointed as Acting Chair of the Audit &
Risk Management Committee;
Independent director Valerie Davies was appointed as Acting Chair of the Human Resources &
Remuneration Committee; and
• Deputy Chairman Robert Brown was appointed as Acting Chair of the Nominations Committee.
Further details of the Board members 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.
William Hames
Chairman
Nathan Blackburne
Managing Director
20
2019 ANNUAL REPORT
21
CEDAR WOODS PROPERTIES LIMITED BUSHMEAD, WESTERN AUSTRALIA
Bushmead is situated just 16km from Perth’s CBD and set amongst 185 hectares
of natural bushland. Modern living shaped by nature.
22
CEDAR WOODS PROPERTIES LIMITED
2019 ANNUAL REPORT
23
Directors’ Report
Your directors present their report on the consolidated entity consisting of Cedar Woods Properties Limited
(‘the company’ or ‘Cedar Woods’) and the entities it controlled (together ‘the consolidated entity’ or ‘group’) at
the end of, or during, the year ended 30 June 2019.
a) Directors
The following persons were directors of Cedar Woods 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)
Jane Mary Muirsmith (Independent Director)
Nathan John Blackburne (Managing Director)
The qualifications, experience and other details of the directors in office at the date of this report appear on
pages 25 to 27 of this report.
b) Principal activities
The principal continuing activities of the consolidated entity in the course of the year ended 30 June 2019
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 2018 of 18.0 cents
(2017 – 18.0 cents) per fully paid share, paid on 26 October 2018 (2017 – 27 October 2017)
Interim fully franked ordinary dividend for the year ended 30 June 2019 of 18 cents
(2018 – 12.0 cents) per fully paid share, paid on 26 April 2019 (2018 – 27 April 2018)
2019
$’000
2018
$’000
13,892
14,200
14,421
9,182
28,313
23,382
Since the end of the financial year the directors have recommended the payment of a final fully franked
ordinary dividend of $10,815,899 (13.5 cents per share) to be paid on 25 October 2019 out of retained
earnings at 30 June 2019.
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 13 of this annual report.
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 FY2020 with strong pre-sales, modest 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
In July 2019 the company completed the annual review of its corporate finance facility resulting in an
18-month extension and modified terms. The changes include the introduction a third lender to the $205
million facility as well as longer facility tenure, with the previous three year facility now comprising a mix of
three year and five year debt.
In August 2019 the company completed due diligence and went unconditional on its contract to acquire 133
Salvado Road, Subiaco, a 1.4 hectare former TAFE site located 4.7km from Perth. The $15.05m (plus GST)
acquisition will settle in July 2020.
Other than the above, no matters or circumstances have arisen since 30 June 2019 that have significantly
affected or may significantly affect:
•
•
•
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. 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-nine years.
Other current listed company directorships and former listed company directorships in the last three years:
None.
Mr Robert S Brown, MAICD, AIFS
• Deputy Chairman of the Board of directors, non-executive director
• Member of the Human Resources and Remuneration Committee
• Member & Acting Chair 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 for thirty years.
Other current listed company directorships and former listed company directorships in the last three years:
Luiri Gold Limited.
24
2019 ANNUAL REPORT
25
CEDAR WOODS PROPERTIES LIMITED Mr Ronald Packer, BCom (UWA), FAICD, Solicitor Supreme Court of England & Wales
Mr Nathan J Blackburne, BB (Curtin), AMP (Harvard), GAICD
• 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 thirteen years and chairs all of the Board’s
committees. At the date of this report Mr Packer is on leave of absence from the Board.
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 and Acting Chair of the Human Resources and Remuneration Committee
• Member of the Audit and Risk Management Committee
• Member of the Nominations Committee
Ms Davies, a leading communications advisor to numerous individuals and Tier 1 companies via her own
consultancy One.2.One Communications Pty Ltd, has in parallel, over the past 20 years established herself as
one of Western Australia’s most experienced non-executive directors.
She currently serves on the boards of major entertainment, hospitality and leisure operator, Event Hospitality
& Entertainment Ltd, as well as Tourism Western Australia.
Previous non-executive roles include HBF, Iluka Resources, ASG, and Integrated Group (now Programmed).
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. A member
of CEW and a previous winner of the Telstra Businesswoman of the Year Award (WA) she has served as a
Councillor and Vice President of the Australian Institute of Company Directors (WA division).
Ms Davies is a non-executive, independent Director and has served on the board for four years.
Other current listed company directorships and former listed company directorships in the last three years:
Event Hospitality & Entertainment Ltd.
Mrs Jane M Muirsmith, B Com (Hons), FCA, MAICD
• Non-executive director
• Member and Acting Chair of the Audit and Risk Management Committee
Mrs Muirsmith is an accomplished digital and marketing strategist, having held several executive positions in
Sydney, Melbourne, Singapore and New York.
She is Managing Director of Lenox Hill, a digital strategy and advisory firm and is a non-executive director of
Australian Finance Group Limited (AFG), Healthdirect Australia and the Telethon Kids Institute.
Mrs Muirsmith is a Graduate of the Australian Institute of Company Directors and a Fellow of Chartered
Accountants in Australia and New Zealand, with an audit and accounting background together with deep
expertise in digital transformation. Mrs Muirsmith is a member of the Ambassadorial Council UWA Business
School and is a former President of the Women’s Advisory Council to the WA Government.
Mrs Muirsmith 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:
Australian Finance Group Limited.
• Managing Director, executive director
Mr Blackburne has worked since 1993 in various sectors of the property industry including valuations, asset
management, commercial leasing and property development.
He commenced his career with Cedar Woods in 2002 with the mandate to establish and grow the company in
Melbourne. Starting off as State Manager for Victoria, he later led the expansion of the company into Brisbane
and Adelaide to become State Manager for Victoria, Queensland and South Australia.
In 2016, Mr Blackburne was appointed as Chief Operating Officer for the company and in September 2017
was appointed to the position of Managing Director.
Mr Blackburne has a Bachelor of Business degree majoring in Valuations and Land Economics and is a
Graduate of the Australian Institute of Company Directors. He is also a Graduate of Harvard Business School
in Boston having completed their Advanced Management Program. Mr Blackburne is a member of the
Presbyterian Ladies College Masterplanning, Design & Infrastructure Committee.
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-five
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 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
Jane M Muirsmith
Nathan J Blackburne
Interest in ordinary shares
10,246,965
7,982,584
167,859
15,785
10,523
34,691
m) Committees of the Board
As at the date of this report Cedar Woods had the following committees of the Board:
Audit and Risk Management
Committee
Human Resources and
Renumeration Committee
Nominations Committee
J M Muirsmith (Acting Chair)
V A Davies (Acting Chair)
R S Brown (Acting Chair)
R S Brown
V A Davies
R S Brown
J M Muirsmith
V A Davies
J M Muirsmith
26
2019 ANNUAL REPORT
27
CEDAR WOODS PROPERTIES LIMITED 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 2019, 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
V A Davies
J M Muirsmith
N J Blackburne
14
14
13
14
13
13
14
* Not a member of this committee.
5
*
1*
5
5
5
5*
4
3*
3
4
4
4*
4*
1
1*
1
1
1
1*
1*
Directors’ Report: Chair of the Human Resources and
Remuneration Committee’s Letter to Shareholders
Dear Shareholders,
I am pleased to provide this letter setting out the highlights in relation to remuneration matters for FY2019.The
Financial and Operating Review notes that Cedar Woods had another strong 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 sets out the company’s FY2019 objectives and
records performance against targets as assessed by the Board.
We continue to engage with shareholders and proxy advisors 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 FY2019 the Committee commenced a review of executive remuneration levels and structures with
the objective of furthering the transition towards a greater proportion of ‘at-risk’ pay for executives,
thereby improving alignment with shareholder returns, as well as ensuring that remuneration levels
and structures are competitive in an environment where the competition for talent is very high
around the country. This process is being assisted by external consultants and will result in some
adjustments to both the Short-Term Incentive Plan and the Long-term Incentive Plan, which will be
detailed in the FY20 Remuneration Report.
For FY2019 the Managing Director’s (MD’s) fixed remuneration was limited to 54% of his total
package and was increased, based on market benchmarking information and in lieu of his successful
transition to the role, having been appointed in September 2017 at a salary significantly lower than
the previous incumbent. Whilst not guaranteed in his terms of employment, the transition to market-
based remuneration was phased over two years. Other executives in continuing roles had average
fixed remuneration increases in line with inflation, with remuneration packages 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 strategy, the company continued with
its balanced scorecard of measures for determining the STI awards for FY2019. Scorecard sections
have been grouped into financial and non-financial categories, within the relevant strategic priority
areas.
Long-term
incentives
(“LTIs”)
Changes made to the STI plan in FY2019, noted in last year’s remuneration report, are detailed
below.
The LTI plan introduced in 2015 continues to operate and has two vesting conditions a) a three year
service condition and b) two performance conditions measured over a three year period: 50 per cent
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 strategy.
The relative TSR performance condition was chosen as it offers a means 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.
For FY2020, the Board has approved the recommendation of the Human Resources and
Remuneration Committee to amend the vesting schedule for the EPS component of the LTI Plan,
details of which are set out in the section ‘LTI Plan effective for FY2020 (from 1 July 2019)’ on page
38 below.
Non-Executive
Director
(“NED”) fees
The potential maximum aggregate NED remuneration for FY2019 was $750,000, as approved by
shareholders at the FY2014 AGM. Chair and NED fees were increased by approximately 2% effective
1 July 2018 to provide an increase in line with CPI. Total NED fees paid for FY2019 were $596,200.
The Remuneration Report provides information on the remuneration outcomes for FY2019.
It was pleasing to note that shareholders voted overwhelmingly in favour of the FY2018 Remuneration Report
at the 2018 Annual General Meeting, with 97.4 per cent of votes cast in favour.
I look forward to answering any questions you may have at our 2019 Annual General Meeting on 6 November.
Yours faithfully,
Valerie A Davies
Acting Chair - Human Resources and Remuneration Committee
28
2019 ANNUAL REPORT
29
CEDAR WOODS PROPERTIES LIMITED Directors’ Report - Remuneration Report
p) Remuneration governance
The directors present Cedar Woods’ FY2019 Remuneration Report which sets out remuneration information
for the directors and other key management personnel (“KMP”) for the year ended 30 June 2019.
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
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;
The Remuneration Report is presented under the following sections:
Page
• NED fees;
o)
p)
q)
r)
s)
t)
u)
Introduction
Remuneration governance
Executive remuneration policy and framework
Executive remuneration outcomes for FY2019 (including link to performance)
Executive contracts
Non-Executive Director fee arrangements
Additional statutory disclosures
30
31
32
39
46
46
47
o)
Introduction
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 2019. Unless
otherwise indicated, the individuals were KMP for the entire financial year. For the purposes of this report, the
term “executive” includes the managing 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
J M Muirsmith
Executive Director
N J Blackburne
Senior Executives
P Archer
L M Hanrahan
P S Freedman
Non-Executive Chair
Non-Executive Deputy Chair
Lead Independent Non-Executive
Director
Independent Non-Executive Director
Independent Non-Executive Director
Managing Director (“MD”)
Chief Operating Officer (“COO”)
Chief Financial Officer (“CFO”)
Company Secretary
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Changes since last year
The position of State Manager that was included in KMP in the prior year, reports to the COO and is no longer
included in KMP.
Changes since the end of the reporting period
There were no changes to KMP after the reporting date and before the date the annual report was authorised
for issue.
• 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.
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 Our Company/Governance
link.
Use of remuneration advisors
During the year the Human Resources and Remuneration Committee commenced a process of reviewing the
executive remuneration framework assisted by external consultants, further details of which are set out below.
Remuneration benchmarking was obtained by the Committee during the reporting period.
The terms of engagement for the consultants included specific measures designed to protect their
independence. The Human Resources and Remuneration Committee recognises that, to effectively perform
its role, it is necessary for the consultants to interact with members of Cedar Woods’ management. However,
to ensure the consultants 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 Act 2001.
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 FY2018 Annual General Meeting (“AGM”)
At the company’s 2018 AGM, 97.4 per cent of eligible votes cast were in favour of the Remuneration Report
for FY2018.
30
2019 ANNUAL REPORT
31
CEDAR WOODS PROPERTIES LIMITED
q) Executive remuneration policy and framework
ii) Approach to setting remuneration
The information contained within this section outlines the details pertaining to the executive remuneration
policy and framework for FY2019.
i) Principles and strategy
Company objective
To create long-term value for shareholders through the development of vibrant communities
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
• TIs linked to both long term external (relative
total shareholder return (“TSR”)) and
internal (earnings per share (“EPS”) growth)
performance. LTIs also subject to clawback
Component
Vehicle
Purpose
Link to performance
Fixed
remuneration
Comprises
base salary,
superannuation
and non-monetary
benefits
To provide competitive
fixed remuneration set
with reference to role,
market and skills and
experience of individuals
Group and individual performance
are considered during the annual
remuneration review process
No guaranteed fixed remuneration
increases included in executives’
contracts
Fixed remuneration may be
phased to market benchmark for
new appointments, conditional on
performance
STIs
Paid in cash
LTIs
Equity based LTI
grants awarded in
Performance Rights
Rewards executives
for their contribution to
achievement of company
outcomes
Linked to the Corporate Plan
and achievement of personal
objectives established at the start
of the year
Rewards executives for
their contribution to the
creation of shareholder
value over the longer
term
Vesting of 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
)
”
R
T
“
(
n
o
i
t
a
r
e
n
u
m
e
r
l
a
t
o
T
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.
In FY2019, 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. In recent years the Board has made gains in restructuring executive
remuneration to provide a greater weighting of ‘at risk’ components within the total remuneration opportunity
(remuneration mix) particularly for the MD and introduced an equity based LTI plan.
The Human Resources and Remuneration Committee will continue to review the balance of fixed versus
‘at risk’ pay in FY2020 with the objective of ensuring that the relative proportions continue to meet the
expectations of shareholders and candidates in a market that is highly competitive for talent. Given this, it is
anticipated that the weighting of ‘at risk’ components of executive pay will increase in FY2020.
Some variations may however occur year to year due to influencing factors such as changing market
conditions.
The graphs below illustrate the remuneration mix for FY2019 compared to FY2018 and demonstrate the
progress made this year in increasing the proportion of ‘at risk’ pay.
Managing Director
COO
CFO
Company Secretary
STI and LTI in red and green respectively in the above graphs are based on 100% of the target opportunity
when remuneration levels are determined by the HR&R Committee. STI’s awarded may exceed the target
opportunity (refer to ‘STI Plan effective for FY2019’ below). LTI’s may be awarded up to the target opportunity.
Fixed remuneration is shown in blue in the above graphs.
32
2019 ANNUAL REPORT
33
CEDAR WOODS PROPERTIES LIMITED
iii) Details of incentive plans
Short-term incentives (STI)
Who participates?
Executives and key staff
How is the STI
delivered?
What is the STI
opportunity?
What were the
performance
conditions for
FY2019?
Cash
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 for FY2019.
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 FY2019 to components of the company’s business model are set
out in the table below:
Weighting (%)
Financial
Strategic
Priority
MD
COO
State
Managers CFO
Company
Secretary
Developments Operational
15%
15%
20%
15%
0%
5%
0%
0%
0%
0%
excellence
Operational
excellence
Financial
strength
Earnings
growth
High
performance
culture
Operational
excellence
Operational
excellence
Sales and
customer
experience
Financial
performance
Business
development
Non-financial
People and
culture
Shareholder
engagement
and
satisfaction
Risk
management
and
sustainability
20%
20%
40%
15%
15%
20%
25%
15%
20%
20%
10%
15%
20%
15%
15%
10%
5%
10%
25%
25%
5%
5%
10%
25%
25%
Refer to section r) Executive remuneration outcomes for FY2019 for further details of
performance outcomes for FY2019, and STI awards to KMP.
The categories of ‘Developments’ and ‘Sales and customer experience’ involve close monitoring
of revenues and financial expenditure. ‘Business development’ is regarded as a financial
component as it is aimed at providing for future earnings and includes systems development.
These, together with ‘Financial performance’ provide a significant weighting to overall financial
performance.
How is performance
assessed?
On an annual basis, after consideration of performance against set balanced scorecard
objectives, the Chair of the Human Resource and Remuneration Committee recommends to the
Board the amount of STI to be paid to the Managing Director.
For senior executives, the Human Resource and Remuneration Committee will seek
recommendations from the Managing Director 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.
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.
What happens if an
Executive leaves
Cedar Woods?
STI Plan changes effective for FY2019 (effective 1 July 2019)
As noted in the FY2018 Remuneration Report, the company introduced changes to the STI plan, effective 1
July 2018. Key changes to the STI plan are set out below.
Why have a review of
the STI plan?
Whilst the STI Plan has been effective, it has been further refined to reward staff for
overachievement, limit the reward payable for underperformance and link better to the
annual staff performance review process. Maintaining a high-performance culture is a
Strategic Priority and the revised STI plan better serves this.
Who participates?
Executives and key staff
How is the STI
delivered?
Cash
What STI’s are
available and what
are the performance
conditions for
FY2019?
Each executive has a target STI opportunity depending on the accountabilities of the role
and impact on organisational performance.
The STI plan provides as follows:
a) Up to 75% of the bonus based on personal performance, with the actual percentage
awarded based on the executive’s overall rating measured against personal objectives as
determined in the annual performance review and using categories and percentages set
out in the table below.
Overall Rating
Incentive
5. Exceeded Expectations
125% - 150%
4. Overly Met Expectations
100% - 125%
3. Met Expectations
80% - 100%
2. Nearly Met Expectations
50% - 80%
1. Below Expectations
0%
b) Up to 25% of the cash incentive awarded based on the HR&R Committee’s assessment
of the company’s overall performance using the Balanced Scorecard system referred to in
section r) Executive remuneration outcomes for FY2019 below.
In essence, the personal / company split changed from 50/50 in FY2018 to 75/25 in
FY2019. This was implemented as part of the High-Performance Culture strategic priority
area, to place greater emphasis on individual performance contributions rather than overall
Company performance in the STI plan.
Performance ratings of up to 150% of the STI opportunity were also introduced to further
encourage and reward personal performance when it exceeds expectations.
Although a record profit and strong EPS and TSR growth was delivered for shareholders in
FY19, no executive received more than 94% of their STI opportunity in FY2019.
The greater focus of the STI on personal performance was also deemed appropriate to
attract and retain executives.
Actual STI payments to each executive depend on the extent to which specific targets set at
the beginning of the financial year for that executive are met, with regard to both company
and individual performance.
How is performance
assessed?
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.
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.
What happens in the
event of change of
control
For the Managing Director, eligibility to receive a STI in any financial year will not be
affected if he resigns from employment because, following a takeover or substantial change
of control of the company, there is a material variation or diminution of his position, duties,
reporting structure or status. In those circumstances the Managing Director will remain
eligible to receive the STI subject to any performance conditions being tested and satisfied
in accordance with terms set by the Board.
34
2019 ANNUAL REPORT
35
CEDAR WOODS PROPERTIES LIMITED Long-term incentives (LTI)
LTI plan effective up to 30 June 2019
The company introduced the LTI plan, effective 1 July 2015. Key features of the LTI plan are as follows:
Why have a LTI
plan?
The LTI plan builds a sense of business ownership and alignment which benefits all shareholder
interests. It encourages a greater focus on sustainable long-term growth and seeks to attract and
retain key executives.
Who participates?
Executives and key staff. NEDs are not eligible to participate in the LTI plan.
What LTI’s are
available?
Each executive has a maximum LTI opportunity depending on the accountabilities of the role and
impact on organisational performance.
How is the LTI
delivered?
How are the
number of rights
determined for each
LTI grant?
The maximum LTI for each KMP is detailed in section r) Executive remuneration outcomes for
FY2019.
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 target LTI opportunity outlined in the prior section. For the LTI, the target opportunity is the
maximum opportunity.
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 2019 financial year. This fixes the
maximum number of shares and the actual number will vest in accordance with the performance
conditions set out below.
When does the LTI
vest?
The Board will determine the outcomes at the end of the three-year performance period (1 July
2018 to 30 June 2021), 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.
What happens if an
Executive leaves
Cedar Woods?
If cessation of employment occurs, the following treatment will apply in respect of unvested
rights:
•
•
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 rights 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 rights to remain ‘on foot’ on
cessation of employment).
What happens in
the event of change
of control
Unless the Board determines otherwise, a pro-rata number of the participant’s unvested rights
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.
A participant cannot enter into any scheme, arrangement or agreement (including options and
derivative products) under which the participant may alter the economic benefit to be derived
from any unvested rights.
No, there are no further retests of the performance conditions.
Do participants
receive dividends
on LTI grants?
Can a participant
deal with or trade
their performance
rights before
vesting?
Is performance
retested if
performance
hurdles are not
exceeded?
Do clawback
provisions apply to
LTI’s?
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.
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 included in this index. 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 as 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 Villa World) and changes to business models and operations
(e.g. Aveo and Devine).
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:
as reported by a company at the most recent financial-year
end preceding the calculation date.
Weighted number of shares
on issue:
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 company’s Corporate Plan,
particularly with reference to the most recent internal five-year forecasts;
• The level of stretch associated with those Corporate 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%
36
2019 ANNUAL REPORT
37
CEDAR WOODS PROPERTIES LIMITED LTI plan effective for FY2020 (from 1 July 2019).
r)
Executive remuneration outcomes for FY2019 (including link to performance)
As noted in section p) Remuneration Governance, the Human Resources & Remuneration Committee
reviewed the remuneration framework with advice from external consultants. While the review of the
framework is ongoing, changes to the LTI Plan have been proposed for FY2020.
How is performance
assessed and rewarded
against the hurdles under the
changes?
The awards will continue to be 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 described in the previous
section is unchanged for FY2020.
EPS compound annual growth rate (50%): From 1 July 2019 the target range in the
EPS vesting schedule will be reviewed on an annual basis. The relevant inputs when
setting the EPS target range will be:
• 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 Corporate Plan targets;
• Any earnings guidance that has been provided to the market;
• Shareholder and analyst (individual and consensus) expectations;
• The rate of growth in the Australian economy and the performance of the
property sector.
The Human Resources & Remuneration Committee will consider the appropriate
EPS target range and the level of payout if targets are met for the Executives. This
may include setting any maximum payout under the LTI plan and minimum levels of
performance to trigger payment of LTI.
All other key terms of the LTI plan remain unchanged.
Changes were made to the LTI plan for the following reasons:
•
Improving the LTI plan supports the objective of increasing the weighting of ‘at-risk’ components of
executive remuneration, as outlined in section q) ii) Approach to setting remuneration.
• To ensure that a significant component of at-risk remuneration is equity based, thereby increasing the ‘skin
in the game’ held by the company’s executives over time.
•
It was deemed important that performance targets remain relevant, challenging and achievable in the
current economic and market conditions.
• The Company’s previous EPS target range had been set a number of years ago in a period of higher
growth in the economy and property markets nationally, and in being a fixed range did not allow the target
to be adjusted for prevailing economic and market conditions.
The changes are designed to ensure that, in combination with other components of executive remuneration,
the LTI plan offers sufficient incentive to attract and retain executive staff and aligns to current shareholder
return expectations.
Performance against STI balanced scorecard objectives
The table below provides a summary of the FY2019 STI objectives and performance of the company 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
value creation model as described on page 11.
Objectives
Measures
Outcomes
Business development
Performance
assessment
Undertake due diligence
investigations for new
acquisitions consistent
with approved checklist
and reporting measures
in a thorough and
disciplined manner
Acquire at least two
strong margin projects
each year, consistent
with the corporate growth
strategy
Deepen relationships
with business
partners acting with
professionalism,
transparency and with
quality outcomes
Detailed assessment of numerous properties
across four states.
Achieved
Two new properties secured in WA. A further site
is under exclusive due diligence.
Achieved
Existing joint ventures (or development
agreements) in WA with LandCorp (Western
Edge) and Department of Housing (Harrisdale)
progressed. New relationships being created &
nurtured.
Achieved
To build and
replenish the
portfolio by acquiring
quality assets
Pursue joint venture
opportunities
and business
partnerships forged
Developments
Maximise value,
minimise risk with
project delivery on
time and on budget
Planning and engineering
approvals achieved in
time
Most of the approvals occurred in line with
assumptions and project programs remain on
track.
Manage expenditure
diligently, seeking
opportunities to reduce
costs and be in line with
budget
Development costs predominantly kept within
budget. Delayed expenditure at some projects
due to projects behind schedule. Costs are
competitively tendered or benchmarked to confirm
value for money.
Achieved
Partially
achieved
Achieved
Create quality
communities which
embrace innovation
and sustainability
Innovation and quality in
projects
A number of projects across all 4 states
demonstrate innovation, product diversity and
sustainability.
Sales and customer experience
Position projects to
meet market and
customer demand
Settlements
Settlements achieved under budget, however
sufficient to achieve strong uplift in profit.
Achieved
Sales volumes and
revenue
Budgeted sales not achieved, primarily due to
weaknesses in the WA market. Sales prices
generally achieved in each state.
Not achieved
Enquiry
Enquiry levels exceeded budget.
Customer satisfaction
Good net promoter scores achieved for settled
stages in each state.
Financial performance
Growth in earnings
and financial
strength.
Growth in NPAT and EPS
Strong NPAT growth of 14% and EPS growth of
13%.
Satisfactory ROE and
ROC
ROE 13% (vs 10% min) and ROC 14% (vs 12%
min), both above company benchmarks.
Achieved
Achieved
Achieved
Achieved
Gearing (debt/equity)
Gearing at 30 June was 28%, at the lower end of
the target range.
Achieved
38
2019 ANNUAL REPORT
39
CEDAR WOODS PROPERTIES LIMITED The following table outlines the proportion of maximum STI earned and forfeited in relation to FY2019 and the
maximum STI that was available.
Proportion of maximum STI earned and forfeited in FY2019
Total earned of target%
MD
90%
COO
91%
CFO
94%
Total earned of target $
$256,500
$104,363
$46,875
Total forfeited of target%
Total forfeited of target $
Target STI opportunity
Maximum STI opportunity
10%
$28,500
$285,000
$391,875
9%
$10,637
$115,000
$158,125
6%
$3,125
$50,000
$68,750
Company Secretary
89%
$44,250
11%
$5,750
$50,000
$68,750
Performance against LTI objectives
The equity based LTI scheme plan has two vesting conditions a) a 3 year service condition and b) two
performance conditions measured over a 3 year period: 50 per cent 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 shows the maximum LTI opportunities that were granted to KMP during FY2019.
Value granted (max LTI opportunity)
$285,000
$105,000
The LTI awards earned vest on 31 August 2021 subject to the two vesting conditions.
LTI awards in FY2019
MD
COO
CFO
$50,000
Objectives
Measures
Outcomes
Performance
assessment
Risk Management
Appropriate risk
management in
place
People and culture
Attract, motivate and
retain staff
Risk management
framework in place
Risk framework comprehensively reviewed and
updated and risk reviews performed and reported
to the Audit & Risk Management Committee.
Achieved
Be a preferred employer
Employee engagement survey returned strong
results.
New performance management process
implemented to align high performance culture
objectives and incentives.
Employee turnover for FY2019 was within the
accepted range.
Succession planning and
training
A number of staff were promoted in the year
including one into an executive position.
Staff attended numerous group and individual
training courses and industry events in FY2019
Achieved
Achieved
Achieved
Achieved
Achieved
Shareholder engagement and satisfaction
Shareholders
support the company
Participation in share
issues
The dividend reinvestment plan and bonus share
plan were reactivated for the 2018 final dividend
enabling shareholders to participate.
Achieved
Company investor
relations program
Regular roadshows and investor briefings held
during the year.
Achieved
Total Shareholder Return
(TSR)
One-year TSR for CWP of 5.3%, was lower than
the Small Industrials Index’s TSR of 6.4%.
Not achieved
Support for AGM
resolutions
All resolutions were overwhelmingly supported by
shareholders at 2018 AGM.
Achieved
Proxy advisors support
Board resolutions
All resolutions were supported by proxy advisors
and ASA at 2018 AGM with one exception on one
resolution.
Achieved
Sustainability & WHS
Environment;
Optimising land use;
Housing Diversity;
Heritage
Rehabilitate
contaminated sites and
conservation land
Remediation conducted at sites across the
portfolio, with some unforeseen costs and delays
experienced.
Partially
achieved
Sustainability outcomes
across all projects
Strong sustainability outcomes achieved across all
projects.
Achieved
Delivering the best use of
land by optimising land
use mix and product yield
Appropriate densities embraced across infill
developments. Diverse product mix being
delivered across the portfolio.
Recognising indigenous
and cultural heritage
Heritage assessments undertaken for projects as
required. Heritage building adaption promoted at
several new projects.
Create vibrant
communities
Create and support
communities
WHS
Providing a safe working
environment
Neighbourhood grants schemes in place
across many projects with significant financial
contributions. Facilitated many community events
across the portfolio.
New national WHS consultant appointed to
undertake audits. 100% compliance received on
audit. Some reportable incidents, injuries and
near misses, but none involving serious injury.
Achieved.
Achieved
Achieved
Achieved
Partially
achieved
40
2019 ANNUAL REPORT
41
CEDAR WOODS PROPERTIES LIMITED Terms and conditions of the share-based payment arrangements
Reconciliation of share rights held by KMP
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
FY2016 – Award 1
(Employees)
25/08/2015
FY2016 - Award 2
(MD)
9/11/2015
FY2017 – Award 1
(Employees)
25/08/2016
FY2017 - Award
2 (MD)
10/11/2016
FY2018 – Award 1
(Employees)
25/08/2017
FY2018 - Award 2
(MD)
9/11/2017
FY2019 – Award 1
(Employees)
14/09/2018
FY2019 - Award 2
(MD)
13/11/2018
Performance
period
Vesting date
Value at
start of
performance
period
1/7/15 to
30/6/18
1/7/15 to
30/6/18
1/7/16 to
30/6/19
1/7/16 to
30/6/19
1/7/17 to
30/6/20
1/7/17 to
30/6/20
1/7/18 to
30/6/21
1/7/18 to
30/6/21
31/08/2018
$5.33
31/08/2018
$5.33
31/08/2019
$4.35
31/08/2019
$4.35
31/08/2020
$5.16
31/08/2020
$5.16
31/08/2021
$6.08
31/08/2021
$6.08
Performance
hurdle
EPS Growth
Relative
TSR
EPS Growth
Relative
TSR
EPS Growth
Relative
TSR
EPS Growth
Relative
TSR
EPS Growth
Relative
TSR
EPS Growth
Relative
TSR
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
$4.29
$2.75
$4.15
$2.87
No
No
No
Yes
No
Yes
$4.62
$2.68
to be
determined
$4.92
$2.81
to be
determined
$5.21
$3.01
to be
determined
$4.62
$2.59
to be
determined
Nil
Nil
n/a
n/a
n/a
n/a
n/a
n/a
The number of share rights granted to key management personnel under the LTI scheme during FY2019 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 FY2019 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 FY2019
($6.08). 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. Shares converting under the FY2017 LTI plan will be
issued in FY2020.
The fair value of the rights has been determined using the amount of the grant date fair value.
The following table shows how many share rights were granted, vested and forfeited during the year for KMP.
Name &
grant dates
Executive director
N J Blackburne
13 Nov 2018
22 Aug 2017
25 Aug 2016
28 Aug 2015
Senior executives
P Archer
14 Sep 2018
22 Aug 2017
25 Aug 2016
28 Aug 2015
L M Hanrahan
14 Sep 2018
22 Aug 2017
25 Aug 2016
28 Aug 2015
P S Freedman
22 Aug 2017
25 Aug 2016
28 Aug 2015
Balance
at start
of year
Number
Granted
during year
Number
-
46,875
36,434
29,885
15,009
-
-
-
-
17,270
16,473
18,391
8,443
-
3,488
2,759
2,251
7,752
9,195
7,505
-
-
-
8,224
-
-
-
-
-
-
Vested
Number
Vested
Forfeited
Number
Forfeited %
Balance at
end of year
(unvested)
Number
Max. value
yet to vest*
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,009
100
-
-
-
-
-
-
8,443
100
-
-
-
-
-
-
2,251
100
-
-
-
-
7,505
100
46,875
36,434
29,885
-
17,270
16,473
18,391
-
8,224
3,488
2,759
-
7,752
9,195
-
$119,685
$51,190
$41,092
-
$50,497
$22,074
$25,288
-
$24,047
$4,674
$3,794
-
$10,388
$12,643
-
* The LTI awards granted in FY2019 vest on 31 August 2021 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.
42
2019 ANNUAL REPORT
43
CEDAR WOODS PROPERTIES LIMITED Performance of shareholder return metrics
In FY2019, the company delivered a profit of $48.6 million, an increase of 14.2 per cent over the prior year.
The returns to shareholders of Cedar Woods over the last 1, 3 and 5 years are detailed in the table below:
Returns to shareholders over 1, 3 and 5 years (%)
1 year
3 years
5 years
EPS growth
Share price growth
Dividend growth (paid dividend)
CWP TSR (change in share price and dividends)
S&P Small Industrials Index (XSIAI) TSR
13.0
(1.0)
20.0
5.3
6.4
3.2
31.0
28.6
55.4
35.8
2.2
(22.0)
33.3
2.8
64.1
The total shareholder return in FY2019 was 5.3 per cent which was lower than the S&P Small Industrials
Index total return of 6.4 per cent over the same period. The returns over 3 years compare favourably to the
returns of the S&P Small Industrials Index, although the returns over 5 years do not compare favourably.
Returns over the last 3 years compare favourably to listed peers in the property sector, noting the sector has
faced challenging conditions nationally.
Management is focused on delivering consistent earnings per share and dividend growth. The company’s
share price is subject to market factors that are beyond the company’s control. The measures of the
company’s financial performance over the last five years as required by the Corporations Act 2001 are shown
in the table below. However, these are not necessarily consistent with the measures used in determining the
variable amounts of remuneration awarded to KMP, the basis for which is outlined above. As a consequence,
there may not always be a direct correlation between the statutory key performance measures and the
variable remuneration awarded.
2019
2018
2017
2016
2015
Profit for the year ($’000)
48,644
42,603
45,445
43,602
42,585
Basic earnings per share (cents)
Dividends per share (cents)
Increase (decrease) in share price (%)
60.9
31.5
(1.0)
53.9
30.0
10.6
57.6
30.0
19.8
55.3
28.5
54.3
28.0
(17.3)
(28.0)
Executive remuneration for the years ended 30 June 2019 and 30 June 2018
When determining the remuneration mix for executives, the Human Resources and Remuneration committee
used the target STI and LTI opportunities contained in the tables on page 41, which differ from the amounts
calculated in the table below. In the below table, the actual cash bonuses are shown and the share based
payment is calculated in accordance with AASB 2 Share Based Payments.
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44
2019 ANNUAL REPORT
45
CEDAR WOODS PROPERTIES LIMITED
s)
Executive contracts
NED remuneration for the years ended 30 June 2019 and 30 June 2018
Remuneration and other terms of employment for executives are formalised in employment agreements.
The table below outlines fees paid to NEDs for FY2019 and FY2018 in accordance with statutory rules and
applicable accounting standards.
Details of executive service contract for the Managing Director and other executives
The Managing Director, Mr N J Blackburne is employed under an ongoing contract.
Mr Blackburne’s total remuneration package for FY2019 was as follows:
• Fixed remuneration of $680,000 per annum
• Target STI opportunity of $285,000, Maximum STI opportunity of $391,875
• Target & Maximum LTI opportunity $285,000.
The target STI and LTI opportunity each represent 23% of the total target remuneration. The maximum STI
opportunity represents 29% of the maximum remuneration.
If the Managing Director resigns following a takeover or substantial change of control of the company due to a
material variation or diminution in his position duties, reporting structure or status, he will be entitled to be paid
the maximum amount permitted under s 200G of the Corporations Act 2001.
The agreements for the executives are reviewed annually by the Human Resources and Remuneration
Committee for each KMP and details are as follows:
Executive director
N J Blackburne
Contract term
No fixed term
Notice required to
terminate contract
Termination benefit *
6 months
Either party may terminate
with 6 months’ notice
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 q) iii. Details of incentive
plans section of the Directors Report.
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 or for memberships of directors on subsidiary Boards). 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 FY2019 was
$596,200. The Board will not seek any increase for the NED maximum aggregate fee pool at the 2019 AGM.
Fee policy
NEDs’ annual fees were last reviewed from FY2019 (effective date: 1 July 2018). The annual fees (inclusive of
superannuation) for FY2019 and FY2018 are set out in the table below:
Chair
Deputy Chair
Other NEDs
Committee Chair
Committee member
46
FY2019
$
164,000
126,500
88,700
13,200
Nil
FY2018
$
161,000
124,000
87,000
13,000
Nil
Name
W G Hames
R S Brown
R Packer
V A Davies
J M Muirsmith *
Total
Short-term benefits
Post employment
Financial year
Board and
committee fees $
Superannuation
$
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
149,772
147,032
115,525
113,242
104,601
102,301
81,005
79,452
81,005
59,589
531,908
501,616
14,228
13,968
10,975
10,758
23,699
23,699
7,695
7,548
7,695
5,661
64,292
61,634
Total
$
164,000
161,000
126,500
124,000
128,300
126,000
88,700
87,000
88,700
65,250
596,200
563,250
* Mrs J M Muirsmith was appointed on 2 October 2017.
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, including their personally-related parties, are set out below. There were no shares granted
during the period as remuneration.
2019
NEDs
W G Hames *
R S Brown
R Packer
V A Davies
J M Muirsmith
Executive director
N J Blackburne
Senior executives
P Archer
L M Hanrahan
P S Freedman
Number of shares at
the start of the year
Other changes
during the year
Number of shares at
the end of the year
10,343,320
7,985,584
167,859
15,297
10,198
230
-
-
488
325
10,343,550
7,985,584
167,859
15,785
10,523
42,870
4,465
47,335
20,277
11,398
107,583
24
-
1,000
20,301
11,398
108,583
2019 ANNUAL REPORT
47
CEDAR WOODS PROPERTIES LIMITED
Number of shares at
the start of the year
Other changes
during the year
Number of shares at
the end of the year
Aggregate amounts of each of the above types of other transactions with key management personnel of
Cedar Woods or their related entities:
Amounts recognised as expense
Creative design services
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 or their related entities:
Inventory
Investment property
2019
$
2018
$
30,908
189,616
-
3,182
26,240
181,985
10,000
3,182
223,706
221,407
221,993
221,993
445,699
219,718
2,275
221,993
578,016
578,016
799,423
571,316
6,700
578,016
There are no aggregate amounts payable to directors of Cedar Woods at balance date. There are no amounts
payable to related entities at balance date relating to the above types of other transactions.
At 30 June 2019, an amount of $Nil (2018 - $5,365) 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. There are no other amounts owing from related entities at balance date.
v)
Independent audit of remuneration report
The remuneration report has been audited by PricewaterhouseCoopers (PwC). See page 114 of this annual
report for PwC’s report on the remuneration report.
2018
NEDs
W G Hames *
R S Brown
R Packer
V A Davies
J M Muirsmith
Executive Directors
N J Blackburne
Senior executives
P Archer
L M Hanrahan
P S Freedman
10,195,091
7,985,584
167,859
15,000
0
38,283
20,262
11,398
105,912
148,229
0
0
297
10,198
4,587
15
0
1,671
10,343,320
7,985,584
167,859
15,297
10,198
42,870
20,277
11,398
107,583
* Includes 2,014,439 (2018 – 2,014,439) shares over which W G Hames has voting rights and a first right of refusal to
purchase.
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
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, subject to the Board considering the
services under the Conflict of Interest policy, available on the Company website. 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.
The consolidated entity uses a number of firms for architectural, urban design and planning services, creative
design services and settlement services. Accordingly, the company has a high level of knowledge regarding
commercial rates for these services. In addition, tenders and market reviews are regularly conducted to
ensure that services are provided on competitive terms and conditions.
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 lower than in the
previous year as a result of the timing of architectural and design work performed on the Williams Landing Town
Centre and 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.
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 FY2019 was similar to that
of the previous year and as a result the value of transactions with Westland Settlement Services Pty Ltd is also
similar.
Cedar Woods has for many years been a member of the Australian Institute of Company Directors (AICD). Mr
P S Sadleir (former Managing Director) was a council member of AICD WA. The annual subscription paid in
2018 was based on normal commercial terms and conditions.
In 2019 and 2018 a payment was made for sponsorship of the Property Education Foundation Inc. of which
Mr R Packer is a trustee with no beneficial interest. The transaction was based on normal commercial terms
and conditions.
48
2019 ANNUAL REPORT
49
CEDAR WOODS PROPERTIES LIMITED
Auditor’s independence declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Cedar Woods Properties Limited for the year ended 30 June 2019, I
declare that to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Cedar Woods Properties Limited and the entities it controlled during
the period.
Helen Bathurst
Partner
PricewaterhouseCoopers
Perth
27 August 2019
w) Retirement, election and continuation in office of directors
Mr W G Hames and Mr R S Brown retire by rotation at the forthcoming Annual General Meeting and being
eligible, will offer themselves for re-election.
x)
Insurance of officers
During the financial year, Cedar Woods 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 51.
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.
N J Blackburne
Managing Director
27 August 2019
50
2019 ANNUAL REPORT
51
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
CEDAR WOODS PROPERTIES LIMITED
TARGET HEAD OFFICE
Located at Williams Landing town centre.
52
CEDAR WOODS PROPERTIES LIMITED
2019 ANNUAL REPORT
53
Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 30 June 2019
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
For the Year Ended 30 June 2019
Consolidated Balance Sheet
As at 30 June 2019
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2019
Consolidated Cash Flow Statement
For the Year Ended 30 June 2019
55
56
57
58
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 27 August 2019. The directors have the
power to amend and reissue the financial statements.
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 (loss) of joint ventures accounted
for using the equity method
Profit before income tax
Income tax expense
Profit for the year
Total comprehensive income for the year
Total comprehensive income attributable to
members of Cedar Woods Properties Limited
Earnings per share for profit attributable to the
ordinary equity holders of the company:
Basic earnings per share
Diluted earnings per share
Note
2019
$’000
2018
*Restated $’000
1
1
1
2
2
29(iii)
361,571
232,329
7,351
6,227
708
1,401
6,086
679
375,857
240,495
1,662
2,946
(254,142)
(138,265)
(6,433)
(691)
(24,027)
(21,794)
(751)
(708)
(19,810)
(16,653)
(364)
(3,072)
22
(40)
(4,020)
(122)
68,942
61,148
3
(20,298)
(18,545)
21 & 4
48,644
48,644
48,644
42,603
42,603
42,603
4
4
60.9 cents
53.9 cents
60.6 cents
53.7 cents
* See Note 39 for details regarding the restatement as a result of a change in accounting policy.
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
54
2019 ANNUAL REPORT
55
CEDAR WOODS PROPERTIES LIMITEDFINANCIAL STATEMENTSFINANCIAL STATEMENTS Consolidated Balance Sheet
As at 30 June 2019
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2019
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
Derivative financial instruments
Other financial liabilities
Current tax liabilities
Contract 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
2019
$’000
2018
*Restated $’000
5
6
7
8
6
7
8
9
10
11
12
13
15
16
1(ii)
17
14
15
16
17
18
19
20
21
13,442
9,903
144,778
2,921
171,044
2
337,065
8,317
2,725
9,692
41,642
1,224
400,667
571,711
30,881
230
9,338
3,822
5,813
4,094
23,692
13,689
183,108
2,182
222,671
69
314,731
9,309
3,028
7,688
42,561
1,459
378,845
601,516
46,376
121
38,454
16,515
7,079
1,024
54,178
109,569
118,756
132,826
31
16,849
125
5,242
141,003
195,181
376,530
125,979
427
250,124
376,530
63
1,224
77
4,571
138,761
248,330
353,186
123,018
442
229,726
353,186
* See Note 39 for details regarding the restatement as a result of a change in accounting policy.
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Contributed
equity
Note
$’000
Reserves
$’000
Retained
profits
$’000
Total
$’000
Balance at 1 July 2017
119,525
210
210,499
330,234
Profit for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction
costs and tax
Transfers from reserves to retained profits
Dividends provided for or paid
Employee share plan reserve
19
27
20
Balance at 30 June 2018
-
-
3,493
-
-
-
3,493
123,018
-
-
-
(6)
-
238
232
442
42,603
42,603
42,603
42,603
-
6
3,493
-
(23,382)
(23,382)
-
238
(23,376)
(19,651)
229,726
353,186
Balance at 1 July 2018
123,018
442
229,726
353,186
Profit for the year
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Contributions of equity, net of transaction
costs and tax
Transfers from reserves to retained profits
Dividends provided for or paid
Employee share plan reserve
Balance at 30 June 2019
-
-
2,961
-
-
-
2,961
125,979
19
27
20
-
-
-
-
-
(15)
(15)
427
48,644
48,644
48,644
48,644
-
-
2,961
-
(28,313)
(28,313)
67
52
(28,246)
(25,300)
250,124
376,530
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
56
2019 ANNUAL REPORT
57
CEDAR WOODS PROPERTIES LIMITEDFINANCIAL STATEMENTSFINANCIAL STATEMENTS
Note
2019
$’000
2018
$’000
These are the consolidated financial statements of Cedar Woods Properties Limited and its subsidiaries. A list
of major subsidiaries is included in note 28.
Notes to the Financial Statements
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 Further 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.
Consolidated Cash Flow Statement
For the Year Ended 30 June 2019
Cash flows from operating activities
Receipts from customers (incl. GST)
Payments to suppliers and employees (incl. GST)
Payments for land and development
Interest received
Borrowing costs paid
Income taxes paid
403,651
(84,556)
265,092
(62,703)
(245,814)
(191,633)
737
(8,601)
407
(7,682)
(32,329)
(10,026)
Net cash inflows (outflows) from operating activities
23
33,089
(6,545)
Cash flows from investing activities
Proceeds from capital return from joint venture
Payments for investment properties
Payments for property, plant and equipment
Net cash outflows from investing activities
Cash flows from financing activities
(Repayment of) proceeds from borrowings
Dividends paid
Net cash (outflows) inflows from financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
325
(309)
(3,776)
(3,760)
(14,246)
(25,335)
(39,581)
(10,250)
23,692
13,442
975
(1,129)
(3,736)
(3,890)
45,600
(19,873)
25,727
15,292
8,400
23,692
27
5
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
58
2019 ANNUAL REPORT
59
CEDAR WOODS PROPERTIES LIMITEDFINANCIAL STATEMENTSFINANCIAL STATEMENTS
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
1. Revenue
2. Expense items
3.
Income tax
4. Earnings per share
Balance Sheet Information
5. Cash and cash equivalents
6. Trade and other receivables
7.
Inventories
8. Deferred development costs
9.
Investments accounted for using
the equity method
10. Property, plant and equipment
11. Investment properties
12. Lease incentives
13. Trade and other payables
14. Borrowings
15. Derivative financial instruments
16. Other financial liabilities
17. Provisions
18. Deferred tax
19. Equity
20. Reserves
21. Retained profits
22. Categories of financial assets
and financial liabilities
Cash Flow information
23. Cash Flow Information
61
61
62
63
64
65
65
65
66
66
67
67
67
68
68
69
70
71
71
72
74
75
75
76
77
77
Profit or Loss Information
1. Revenue
(i) Disaggregation of revenue from contracts with customers
Timing of revenue recognition
At a point in time
Sale of land and buildings
Development services
Over time
Rent from properties
(ii) Assets and liabilities related to contracts with customers
Current contract assets
Commissions relating to property sales
Total contract assets
Costs to fulfil a contract
2019
$’000
2018
*Restated $’000
361,571
7,351
232,329
1,401
6,227
6,086
2019
$’000
2,144
2,144
2018
$’000
1,968
1,968
Commissions relating to property sales
2,030
820
Sales commissions incurred to fulfill a property sale contract were previously classified as prepayments in the
balance sheet when incurred and expensed when the associated settlement revenue was recognised. These
are now classified as contract assets when incurred and continue to be expensed when associated revenue is
recognised.
Current contract liabilities
Customer rebates
Total contract liabilities
2019
$’000
2018
*Restated $’000
5,813
5,813
7,079
7,079
Revenue recognised that was included in the contract
liability balance at the beginning of the period
Customer rebates
4,483
6,033
* See Note 39 for details regarding the restatement as a result of a change in accounting policy.
60
2019 ANNUAL REPORT
61
CEDAR WOODS PROPERTIES LIMITEDKEY NUMBERS KEY NUMBERS
(iii) Transaction price allocated to remaining performance obligations
3.
Income tax
The transaction price allocated to partially unsatisfied performance obligations at 30 June 2019 is set out below:
Within one year
More than one year
Total
2019
$’000
223,802
106,596
330,398
As permitted under the transitional provisions in AASB 15 Revenue from contracts with customers the
comparative of 30 June 2018 is not disclosed.
2. 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 losses (gains)
Less: amount capitalised
Finance costs expensed
(i) Capitalised borrowing costs
Note
(i)
2019
$’000
8,511
579
76
(6,094)
3,072
2018
$’000
7,239
2,585
(223)
(5,581)
4,020
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 2.8% (2018 – 2.9%) per annum. Where qualifying
assets are financed by specific facilities, the applicable borrowing costs of those facilities are capitalised.
Net loss on disposal of property, plant and equipment
Rental expense relating to operating leases
Minimum lease payments
Provision for customer rebates
Loss allowance of trade receivables
Superannuation
Depreciation of property, plant and equipment
Depreciation of investment properties
Employee benefits expense
Note
2019
$’000
2018
*Restated $’000
280
935
3,585
(302)
1,093
1,246
1,029
12,007
159
793
3,828
(107)
987
948
1,072
11,550
6
10
11
* See Note 39 for details regarding the restatement as a result of a change in accounting policy.
Note
2019
$’000
2018
$’000
Other
Write-down of inventory
Impairment of lease incentives and capitalised lease costs
11
Available for sale financial assets
271
98
(5)
364
38
2
-
40
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.
(i) Income tax expense
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:
Decrease in deferred tax assets
(Decrease) increase in deferred tax liabilities
Note
18
18
(ii) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax
Tax at the Australian tax rate of 30% (2018 – 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
- Subsidiary company profit
- Interest revenue
- Employee share scheme
- Share of net profit (loss) of joint venture
- Sundry items
Adjustments for current tax of prior periods:
- Research and development
Income tax expense
2019
$’000
19,699
671
(72)
20,298
1,130
(459)
671
2019
$’000
68,942
20,683
(477)
149
(4)
(7)
21
(318)
(67)
(67)
20,298
2018
$’000
16,971
1,684
(110)
18,545
356
1,328
1,684
2018
$’000
61,148
18,344
(28)
210
71
36
22
311
(110)
(110)
18,545
62
2019 ANNUAL REPORT
63
CEDAR WOODS PROPERTIES LIMITEDKEY NUMBERS KEY NUMBERS 4. Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
2019
60.9
60.6
2018
53.9
53.7
Net profit attributable to the ordinary owners of the company ($’000)
48,644
42,603
Weighted average number of ordinary shares used as the denominator
in the calculation of earnings per share
79,925,054
79,001,250
Weighted average number of ordinary shares used as the denominator
in the calculation of diluted earnings per share
80,332,583
79,331,776
The calculation of diluted earnings per share includes performance rights that may vest under the
company’s LTI plan.
Balance Sheet Information
5. Cash and cash equivalents
Cash at bank and in hand
2019
$’000
13,442
13,442
2018
$’000
23,692
23,692
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 1.8% (2018: 0 – 1.8%) per annum depending on the balances.
The Group’s exposure to interest rate risk is discussed in note 25 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.
6. Trade and other receivables
Current
Trade receivables
Less: Loss allowance
Other receivables
Contract assets
Prepayments
Non-Current
Prepayments
Notes
(ii)
(i), (ii)
(ii)
(iii)
(iii)
Loans – employee share scheme (discontinued)
37
2019
$’000
2018
*Restated $’000
4,786
(130)
1,310
2,144
1,793
9,903
-
2
2
11,162
(432)
142
1,968
849
13,689
60
9
69
i) Credit risk
To measure the lifetime expected credit loss for rental debtors, a provision is raised against each debtor
based upon the payment profile over the last 12 months, adjusted for current and forward-looking information
supporting the expected settlement of the receivable.
ii) 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 accounting
policies for trade and other receivables are outlined in note 38(h).
iii) Reclassification
Certain prepayments totalling $1,968,000 at 30 June 2018 have been reclassified as contract assets in
accordance with the adoption of AASB15 Revenue from Contracts with Customers.
64
2019 ANNUAL REPORT
65
CEDAR WOODS PROPERTIES LIMITEDKEY NUMBERS KEY NUMBERS
7.
Inventories
Total Inventory
Current inventory
Non-current inventory
Aggregate carrying amount
Current
Property held for resale
- at cost
- at valuation 30 June 1992
- capitalised development costs
Notes
(i), (ii)
(i), (ii)
2019
$’000
2018
$’000
144,778
337,065
481,843
183,108
314,731
497,839
2019
$’000
2018
$’000
32,666
29
112,083
144,778
43,352
-
139,756
183,108
The 1992 valuations were independent valuations which were based on current market values at that time.
Non-Current
Property held for resale
- at cost
- at valuation 30 June 1992
- capitalised development costs
- at net realisable value
2019
$’000
2018
$’000
229,175
226,167
62
102,577
5,251
91
83,264
5,209
337,065
314,731
The 1992 valuations were independent valuations which were based on current market values at that time.
i) Current and non-current assets pledged as security
Refer to note 14 for information on current assets pledged as security by the parent entity or its controlled
entities.
ii) Accounting for inventory
Refer to note 38(i) for the recognition and classification of inventory.
8. Deferred development costs
Current
Deferred development costs
Non-Current
Deferred development costs
2019
$’000
2,921
2,921
8,317
8,317
2018
$’000
2,182
2,182
9,309
9,309
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.
9.
Investments accounted for using the equity method
Unlisted securities
Shares in joint ventures
i) Cedar Woods Wellard Limited
2019
$’000
2018
$’000
2,725
3,028
The consolidated entity owns a 32.5% (2018: 32.5%) interest in Cedar Woods Wellard Limited, a property
development company incorporated in Australia. Refer to note 29.
10. Property, plant and equipment
Plant and Equipment at Cost
At start of the year
Additions
Assets disposed
At end of the year
Accumulated depreciation on Plant and Equipment
At start of the year
Charge for year
Assets disposed
At end of the year
Net book value
2019
$’000
10,422
3,792
(1,326)
12,888
2,734
1,246
(784)
3,196
9,692
2018
$’000
7,236
3,736
(550)
10,422
2,114
948
(328)
2,734
7,688
a) Non-current assets pledged as security
Refer to note 14 for information on non-current assets pledged as security by the parent entity or its controlled
entities.
11.
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:
Completed investment property
(i),(ii),(iii),(iv)
Closing balance at the end of the year
Note
2019
$’000
2018
$’000
42,561
208
(1,029)
(98)
41,642
41,642
41,642
43,425
210
(1,072)
(2)
42,561
42,561
42,561
66
2019 ANNUAL REPORT
67
CEDAR WOODS PROPERTIES LIMITEDKEY NUMBERS KEY NUMBERS
i) Amounts recognised in profit or loss for investment properties
14. Borrowings
Rental income
Direct operating expenses from property that generated rental income
Impairment of lease incentives and capitalised lease costs
ii) Fair value of investment property
2019
$’000
5,417
(3,870)
(98)
2018
$’000
5,357
(3,110)
(2)
The fair value of the Williams Landing Shopping Centre which makes up completed investment property at
30 June 2019 is $72.0m exclusive of GST, based on a management valuation (2018 - $70.0m based on an
independent valuation). This includes land surrounding the shopping centre for future development which is
on the same title.
iii) 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
2019
$’000
4,387
19,064
21,826
45,277
2018
$’000
4,471
16,333
30,107
50,911
iv) Non-current assets pledged as security
Refer to note 14 for information on non-current assets pledged as security by the parent entity or its controlled
entities.
12. Lease incentives
Lease incentives
Amortisation of lease incentives
Impairment of lease incentives
2019
$’000
2,626
(816)
(586)
1,224
2018
$’000
2,516
(552)
(505)
1,459
(i) Non-current assets pledged as security
Refer to note 14 for information on non-current assets pledged as security by the parent entity or its controlled
entities.
13. Trade and other payables
Trade payables
Accruals
GST payable
Other payables
2019
$’000
8,751
19,057
2,849
224
30,881
2018
$’000
12,985
24,061
8,365
965
46,376
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.
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
2019
$’000
89,800
29,193
(414)
177
2018
$’000
104,000
29,193
(546)
179
118,756
132,826
The fair value of non-current borrowings equals their carrying amount.
i) Security for borrowings
All of the consolidated entity’s assets are pledged as security for the group’s finance facilities.
Bank loans totalling $89,800,000 (2018 - $104,000,000) provided by two major banks $44,900,000 each
(2018 - $52,000,000 each) each 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
and applicable subsidiary entities. Cedar Woods 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 11.
ii) 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
111 Overton Road facility
Total facility
Used at balance date
Unused at balance date
Total Facilities
Used at balance date
Unused at balance date
2019
$’000
205,000
104,579
100,421
30,000
29,193
807
-
-
-
235,000
133,772
101,228
2018
$’000
240,000
120,942
119,058
30,000
29,193
807
27,070
-
27,070
297,070
150,135
146,935
68
2019 ANNUAL REPORT
69
CEDAR WOODS PROPERTIES LIMITEDKEY NUMBERS KEY NUMBERS
The consolidated entity has total corporate finance facilities of $205,000,000 (2018 - $240,000,000), with
$102,500,000 (2018 - $120,000,000) each provided by two major banks, expiring 30 November 2020. The
company modified and extended its corporate finance facility in July 2019 introducing a third major bank. The
changes include longer facility tenure, with the previous three year facility now comprising:
• $165,000,000 (approximately 80%) of the facility extending to June 2022; and
• $40,000,000 (approximately 20%) of the facility extending to June 2024.
The conditions of the facilities impose certain covenants including the consolidated entity’s revenue, interest
cover and loan-to-valuation ratio. The interest on the corporate loan facilities is variable and at 30 June 2019
was an average rate of 2.73% (2018 - 3.37%) per annum. The corporate facilities include bank guarantee
facilities of $20,000,000 (2018 - $20,000,000) subject to similar terms and conditions, which were drawn to a
total amount of $14,779,000 at 30 June 2018 (2018 - $16,941,000).
The consolidated entity has a facility of $30,000,000 (2018 - $30,000,000) in place for the Williams Landing
Shopping Centre investment property. The conditions of the facility impose certain covenants including loan-
to-valuation ratio and interest cover ratio. The facility extends to June 2021. The interest on the Williams
Landing Shopping Centre loan facility is variable and at 30 June 2019 was an average rate of 2.95% (2018 –
3.29%) per annum.
16. Other financial liabilities
Current
Due to vendors of properties under contracts of sale
Other payables
Non-Current
Due to vendors of properties under contract of sale
Other payables
Notes
(i)
(i)
2019
$’000
8,957
381
9,338
16,849
-
16,849
2018
$’000
38,454
-
38,454
-
1,224
1,224
The 111 Overton Road facility expiring November 2019, was paid out early and closed during 2019.
i) Fair value adjustment
Details of the group’s exposure to risk arising from current and non-current borrowings are set out in note 25.
Financial risk management.
During the period the group re-assessed its project cash flows associated with the other payables, resulting in
a fair value adjustment through profit or loss.
15. Derivative financial instruments
Current liabilities
Interest rate swap contracts
Non-current liabilities
Interest rate swap contracts
2019
$’000
2018
$’000
230
31
261
121
63
184
a) Instruments used by the group
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.
Interest rate hedge contracts
The bank loans currently bear an average variable interest rate of 2.73% per annum (2018 – 3.37% 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 hedge contracts under which part of the
consolidated entity’s projected borrowings are protected for the period from 1 July 2019 to 30 June 2022. The
group uses a combination of swaps, caps and collars to hedge interest rates.
The swaps effectively fix interest rates applicable to bank bills issued with duration of 1 month (BBSY Bid)
at certain levels between 2.070% - 2.495% per annum (2018 – 2.070% - 2.495% per annum). The caps
effectively cap interest rates applicable to bank bills issued with duration of 3 months (BBSY Bid) at certain
levels between 1.50% - 1.95% (2018 – N/A). The collars effectively cap interest rates applicable to bank bills
issued with duration of 3 months (BBSY Bid) at 1.50% and apply a floor to interest rates of 0.87% (2018 –
N/A).
Interest rate hedge contracts currently in place cover approximately 46% (2018 – 41%) of the variable loans
outstanding at balance date, with terms expiring in 2020, 2021 and 2022. 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.
17. Provisions
Current
Employee benefits
Site remediation
Non-current
Employee benefits
i) Movements in site remediation provisions
Carrying amount at start of year
Capitalised to inventory
Payments
Carrying amount at end of year
Notes
(i)
2019
$’000
1,073
3,021
4,094
2019
$’000
125
125
2019
$’000
-
3,400
(379)
3,021
2018
$’000
1,024
-
1,024
2018
$’000
77
77
2018
$’000
-
-
-
Site remediation provision has been recognised in respect of an obligation under a land acquisition contract.
70
2019 ANNUAL REPORT
71
CEDAR WOODS PROPERTIES LIMITEDKEY NUMBERS KEY NUMBERS
18. Deferred tax
a) Assets
The balance comprises temporary differences attributable to:
Notes
Inventory
Special Unit in the BCM Apartment Trust
Provision for customer rebates
Provision for employee benefits
Other
Derivative financial instruments
Borrowing costs
Receivables
Share issue expenses
Other sundry items
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
(Decrease) in deferred tax assets (debited) to income tax expense
3
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
2019
$’000
2,572
1,858
1,744
744
6,918
78
58
39
5
73
253
7,171
(7,171)
-
8,301
(1,130)
7,171
3,175
3,996
7,171
Special Unit
in the BCM
Apartment
Trust $’000
Inventory
$’000
Provision
for
customer
rebates
$’000
Provision
for
employee
benefits
$’000
Other $’000
Movements
At 1 July 2017
2,947
1,858
2,354
763
735
(Charged)/credited
- to profit or loss
At 30 June 2018
(Charged)/credited
- to profit or loss
At 30 June 2019
467
3,414
(842)
2,572
-
1,858
-
1,858
(405)
1,949
(205)
1,744
(259)
504
240
744
(159)
576
(323)
253
2018
$’000
3,414
1,858
1,949
504
7,725
75
68
286
53
94
576
8,301
(8,301)
-
8,657
(356)
8,301
4,404
3,897
8,301
Total
$’000
8,657
(356)
8,301
(1,130)
7,171
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 sundry items
Sub-total other
Notes
2019
$’000
2018
$’000
7,671
3,371
647
324
8,266
3,130
656
348
12,013
12,400
367
21
12
400
438
26
8
472
Total deferred tax liabilities
12,413
12,872
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
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
3
(7,171)
5,242
12,872
(459)
12,413
(8,301)
4,571
11,544
1,328
12,872
6,284
4,549
6,129
12,413
8,323
12,872
Movements
Inventory
$’000
Deferred
development
costs $’000
Prepayments
$’000
Investment
Property
$’000
At 1 July 2017
5,958
4,633
Charged/(credited)
- to profit or loss
At 30 June 2018
Charged/(credited)
- to profit or loss
At 30 June 2019
2,308
8,266
(595)
7,671
(1,503)
3,130
241
3,371
370
286
656
(9)
647
305
43
348
(24)
324
Other $’000
Total $’000
278
11,544
194
472
(72)
400
1,328
12,872
(459)
12,413
72
2019 ANNUAL REPORT
73
CEDAR WOODS PROPERTIES LIMITEDKEY NUMBERS KEY NUMBERS
19. Equity
20. Reserves
Movement in ordinary share capital
Start of the year
79,516,567
78,891,681
123,018
119,525
Notes
2019
$’000
2018
$’000
2019
Shares
2018
Shares
2019
$’000
2018
$’000
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.
Shares issued pursuant to the dividend
reinvestment plan:
Ordinary shares issued on 26 October 2018 at
$5.64
Ordinary shares issued on 27 April 2018 at
$6.06
Shares issued pursuant to the bonus share
plan:
526,554
-
2.970
-
-
577,860
-
-
-
(9)
2,961
3,502
-
-
(9)
3,493
Ordinary shares issued on 26 October 2018
74,646
Ordinary shares issued on 27 April 2018
Transaction costs arising on share issues
-
-
-
47,026
-
601,200
624,886
End of the year
80,117,767
79,516,567
125,979
123,018
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.
i) 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.
ii) 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 were in place during the 2019 financial year.
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
21
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
49
378
427
49
-
49
393
(15)
378
49
393
442
55
(6)
49
155
238
393
The asset revaluation reserve was used until 1992 to record increments and decrements on the revaluation of
non-current assets. Refer to note 38(i).
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.
21. Retained profits
Retained profits at the start of the year
Net profit attributable to members of Cedar Woods
Transfers from reserves
Dividends provided for or paid
Retained profits at the end of the year
Notes
19
27
2019
$’000
229,726
48,644
67
(28,313)
250,124
2018
$’000
210,499
42,603
6
(23,382)
229,726
74
2019 ANNUAL REPORT
75
CEDAR WOODS PROPERTIES LIMITEDKEY NUMBERS KEY NUMBERS
22. Categories of financial assets and financial liabilities
Notes 5, 6, 13, 14, 15, and 16 provide information about the group’s financial instruments, including:
(i)
Specific information about each type of financial instrument
(ii)
Accounting policies
(iii)
Information about determining the fair value of the instruments, including judgements and estimation
uncertainty involved.
The group holds the following financial instruments:
Financial Assets
2019
Cash and cash equivalents
Trade and other receivables*
Total
2018
Cash and cash equivalents
Trade and other receivables*
Total
*Excluding prepayments and contract assets
Financial assets
at amortised cost
$’000
Notes
5
6
5
6
13,442
5,968
19,410
23,692
10,881
34,573
Financial Liabilities
Notes
Derivatives used
for hedging
$’000
Liabilities at
amortised cost
$’000
2019
Trade and other payables
Borrowings
Derivative financial instruments
Other financial liabilities
Total
2018
Trade and other payables
Borrowings
Derivative financial instruments
Other financial liabilities
Total
13
14
15
16
13
14
15
16
-
-
261
-
261
-
-
184
-
184
30,881
118,756
-
26,187
175,824
46,376
132,826
-
39,678
218,880
Total
$’000
13,442
5,968
19,410
23,692
10,881
34,573
Total
$’000
30,881
118,756
261
26,187
176,085
46,376
132,826
184
39,678
219,064
Cash Flow information
23. Cash Flow information
i) Reconciliation of profit after income tax to net cash inflows (outflows) from operating activities
Profit after income tax
Depreciation
Amortisation of lease incentives
Write down of assets – investment property and lease incentives
Write down of inventory
Write down/ loss on sale of non-current assets
Write down of available for sale financial assets – BCM Apartment Trust
Fair value loss (gain) on derivative financial instrument
Non-cash share-based payments (reversal) expense
Share of profit (loss) in equity accounted investment
Changes in operating assets and liabilities
Increase (decrease) in provisions for employee benefits
Increase (decrease) in provisions
Decrease (increase) in inventories
Decrease in other deferred development costs
Decrease in deferred tax assets
(Decrease) increase in current income tax payable
(Decrease) increase in deferred tax liability
Decrease (increase) in capitalised borrowing costs
Decrease (increase) in debtors
(Decrease) increase in creditors
(Decrease) in other financial liabilities
Net cash inflows (outflows) from operating activities
2019
$’000
48,644
2,275
263
98
271
280
(843)
77
(15)
(22)
97
1,755
15,996
253
1,130
(12,694)
(459)
176
3,846
(15,391)
(12,648)
33,089
2018
$’000
42,603
2,020
208
2
37
159
-
(223)
238
122
(387)
(836)
(75,725)
4,233
356
6,807
1,328
(114)
(7,867)
22,293
(1,799)
(6,545)
76
2019 ANNUAL REPORT
77
CEDAR WOODS PROPERTIES LIMITEDKEY NUMBERS KEY NUMBERS ii) Net debt reconciliation
This section sets out an analysis of net debt and the movements in debt for each of the periods presented.
Section B: Financial risks
Cash and cash equivalents
Borrowings – repayable within one year
Borrowings – repayable after one year
Net debt
Cash and cash equivalents
Gross debt – fixed interest rates
Gross debt – variable interest rates
Net debt
2019
$’000
13,442
-
2018
$’000
23,692
-
(118,756)
(132,826)
(105,314)
(109,134)
13,442
23,692
-
-
(118,756)
(132,826)
(105,314)
(109,134)
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.
24. Significant estimates and judgements
25. Financial Risk Management
80
81
26. Capital management objectives and gearing 85
27. Dividends
86
F
I
N
A
N
C
I
A
L
R
I
S
K
S
Other Assets
Liabilities from financing activities
Cash $’000
Borrowings due
within 1 year
$’000
Borrowings due
after 1 year $’000
Net debt as at 1 July 2017
Cash flows
Other non-cash movements
Net debt as at 30 June 2018
Cash flows
Other non-cash movements
Net debt as at 30 June 2019
8,400
15,292
-
23,692
(10,250)
-
13,442
-
-
-
-
-
-
-
(87,340)
(45,600)
114
Total
$’000
(78,940)
(30,308)
114
(132,826)
(109,134)
14,246
(176)
3,996
(176)
(118,756)
(105,314)
78
2019 ANNUAL REPORT
79
CEDAR WOODS PROPERTIES LIMITEDKEY NUMBERS
F
I
N
A
N
C
I
A
L
R
I
S
K
S
Significant estimates and judgements
Financial risk management
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.
24. 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(i).
There were no critical judgements other than those involving estimates referred to above, that management
made in applying the group’s accounting policies.
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.
25. 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
Credit risk
Cash and cash equivalents,
trade and other receivables
and derivative financial
instruments
Cash flow forecasting
Interest rate swaps
Sensitivity analysis
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
2019
$’000
13,442
9,903
23,345
30,881
26,187
118,756
260
176,084
2018
$’000
23,692
13,689
37,381
46,376
39,678
132,826
184
219,064
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.
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 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, cap and collar
contracts under which a part of the consolidated entity’s projected borrowings are protected for the period
from 1 July 2019 to 30 June 2022.
There is an indirect exposure to interest rate changes caused by the impact of these changes upon the
80
2019 ANNUAL REPORT
81
CEDAR WOODS PROPERTIES LIMITEDFINANCIAL RISKS
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 swaps effectively fix interest rates applicable to bank bills issued with duration of 1 month (BBSY
Bid) at certain levels between 2.070% - 2.495% per annum (2018 – 2.070% - 2.495% per annum). Interest
rate caps effectively cap interest rates applicable to bank bills issued with duration of 3 months (BBSY Bid)
at certain levels between 1.50% - 1.95% (2018 – N/A). Interest rate collars effectively cap interest rates
applicable to bank bills issued with duration of 3 months (BBSY Bid) at 1.50% and apply a floor to interest
rates of 0.87% (2018 – N/A). Hedge contracts currently in place cover 46% (2018 - 41%) of the variable loan
outstanding at balance date, with terms expiring in 2020, 2021 and 2022.
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 hedge contracts described above
covered 46% of the bank loan at balance sheet date of $118,993,000 (2018 - $133,193,000).
The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate for
receivables and borrowings is set out below.
2019
2018
Interest
bearing -
variable $’000
Non-interest
bearing $’000
Total $’000
Interest
bearing -
variable $’000
Non-interest
bearing $’000
Total $’000
Receivables
Other
receivables
Employee
share loans
Interest
bearing
liabilities
Bank loans
Other financial
liabilities
-
-
-
9,903
9,903
2
2
9,905
9,905
-
-
-
13,689
13,689
9
9
13,698
13,698
Interest
bearing
- fixed
$’000
2019
Interest
bearing
- variable
$’000
Total $’000
Interest
bearing
- fixed
$’000
2018
Interest
bearing
- variable
$’000
Total $’000
-
118,993
25,806
-
118,993
25,806
-
133,193
38,454
-
133,193
38,454
25,806
118,993
144,799
38,454
133,193
171,647
The weighted average interest rate at year end is 2.73% (2018: 3.37%)
An analysis by maturity is provided in 25(c)i. 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 financial assets is not significant. Refer to comments above for further information on
the impact of changes in interest rates upon the group.
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 mitigate 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.
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 2019 the group had undrawn committed facilities of $101,228,000 (2018 - $146,935,000) and cash
of $13,442,000 (2018 - $23,692,000) to cover short term funding requirements. Refer to 14(ii) 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 2019
Less than 1 year
$’000
Between 1 and 2
years
$’000
Between 2 and 5
years
$’000
Total contractual
cash flows
$’000
Carrying amount
$’000
Non-derivatives
Non-interest
bearing
Fixed rate
Variable rate
Derivatives
Total
31,262
9,941
-
-
41,203
-
16,925
125,479
230
142,634
-
-
31
31
31,262
31,262
26,866
125,479
261
183,868
25,806
118,756
261
176,085
Group – at 30
June 2018
Less than 1 year
$’000
Between 1 and 2
years $’000
Between 2 and 5
years $’000
Total contractual
cash flows $’000
Carrying amount
$’000
Non-derivatives
Non-interest
bearing
Fixed rate
Variable rate
Derivatives
Total
d) Fair value measurement
47,600
39,000
-
121
86,721
-
-
-
63
63
-
-
147,297
-
147,297
47,600
47,600
39,000
147,297
184
234,081
38,454
132,826
184
219,064
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 on 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.
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CEDAR WOODS PROPERTIES LIMITEDFINANCIAL RISKSFINANCIAL RISKS
The following table presents the group’s financial liabilities measured and recognised at fair value at 30 June
2019 and 30 June 2018:
Capital Management
As at 30 June 2019
Liabilities
Derivatives used for hedging
Total liabilities
As at 30 June 2018
Liabilities
Derivatives used for hedging
Total liabilities
Notes
15
Notes
15
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
261
261
-
-
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
184
184
-
-
Total
$’000
261
261
Total
$’000
184
184
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.
26. 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
14
5
2019
$’000
118,756
(13,442)
105,314
376,530
28.0%
2018
$’000
132,826
(23,692)
109,134
353,186
30.9%
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 14 and include requirements in relation to a maximum
loan to valuation ratio and a minimum interest cover ratio.
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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.
28. Subsidiaries
29.
Interests in joint arrangements
30. Deed of cross guarantee
31. Parent entity financial information
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27. Dividends
a) Ordinary shares
Fully franked based on tax paid at 30%
Final dividend for the year ended 30 June 2018 of 18.0 cents (2017 – 18.0
cents) per fully paid share
- Paid in cash
- Satisfied by shares under the dividend reinvestment plan
- Applied to the employee share loans
Interim dividend for the year ended 30 June 2019 of 18.0 cents (2018 – 12.0
cents) per fully paid share
- Paid in cash
- Satisfied by shares under the dividend reinvestment plan
- Applied to the employee share loans
Total
b) Dividends not recognised at the year end
2019
$’000
2018
$’000
10,918
2,970
4
14,417
-
4
14,196
-
4
5,677
3,502
3
28,313
23,382
In addition to the above dividends, since year end the directors have recommended the payment of a final
dividend of 13.5 cents per fully paid ordinary share (2018 – 18.0 cents), fully franked based on the tax paid at
30%. The aggregate amount of the proposed dividend expected to be paid on 25 October 2019 out of retained
profits at 30 June 2019, but not recognised as a liability at year end is below:
Dividends not recognised at year end
c) Franked Dividends
2019
$’000
10,816
2018
$’000
14,313
The franked portions of the final dividend proposed at 30 June 2019 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% (2018 – 30%)
2019
$’000
96,261
2018
$’000
88,952
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 $4,635,000 (2018 -
$6,134,000).
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CEDAR WOODS PROPERTIES LIMITEDFINANCIAL RISKS
Group Structure
28. Subsidiaries
The group’s operating subsidiaries at 30 June 2019 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
2019
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%
2018
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%
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.
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29.
Interests in joint arrangements
Set out below are the joint ventures of the group as at 30 June 2019. The principal place of business and
country of incorporation (or origin) is Australia for all entities.
Name of entity
Cedar Woods Wellard
Limited
% of
ownership
interest
2019
%
32.5
Nature of
relationship
Measurement
method
Carrying
amount
2018
%
32.5
Joint Venture
Equity
method
2019
$’000
2725
2018
$’000
3,028
The carrying amount represents the amount attributable to the group.
Cedar Woods Wellard Limited is developing the Emerald Park residential estate at Wellard, WA.
(i) Commitments and contingent liabilities in respect of the joint ventures
Cedar Woods Wellard Limited has no commitments for expenditure at 30 June 2019 (2018: nil) and has
no contingent liabilities (2018: nil) to various local authorities supporting development and maintenance
commitments.
(ii) 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’ 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
Total Non-current liabilities
Total liabilities
Net assets
Group’s share in %
Group’s share in $
(iii) Movements in carrying amounts – Cedar Woods Wellard Limited
At start of the year
Share of profit (loss) after income tax
Capital return
At end of the year
Share of profit (loss) before income tax
Income tax expense
Share of profit (loss) after income tax
Share of joint venture’s revenue, assets, liabilities and contingent liabilities
Revenue
Assets
Liabilities
Contingent liabilities (bank guarantees)
2019
$’000
1,599
4,200
5,799
4,803
10,601
229
-
229
10,372
32.5%
3,371
2019
$’000
3,028
22
(325)
2,725
22
-
22
1,042
3,445
(74)
-
2018
$’000
1,019
2,875
3,894
7,685
11,579
275
-
275
11,304
32.5%
3,674
2018
$’000
4,125
(122)
(975)
3,028
(52)
(70)
(122)
1,324
3,763
(89)
-
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CEDAR WOODS PROPERTIES LIMITEDGROUP STRUCTURE
The consolidated entity owns a 32.5% (2018 – 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.
30. Deed of Cross Guarantee
Cedar Woods Properties Limited and all subsidiaries listed at note 28 except for Champion Bay Nominees
Pty Ltd and the BCM Apartment Trust are parties to a deed of cross guarantee under which each company
guarantees the debts of the others. By entering the deed, the wholly-owned entities have been relieved from
the requirement to prepare a financial report and directors’ report under ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785.
The companies referred to above as parties to the deed of cross guarantee represent a ‘closed group’ for
the purposes of the instrument, and as there are no other parties to the deed of cross guarantee that are
controlled by Cedar Woods Properties Limited, they also represent the ‘extended closed group’.
Set out below is a consolidated statement of profit or loss and comprehensive income, summary of
movements in consolidated retained earnings and consolidated balance sheet for the closed group.
a) Consolidated statement of profit or loss and comprehensive income, and summary of movements in
consolidated retained earnings
Revenue from continuing operations
Other Income
Cost of sales of land and buildings
Cost of providing development services
Other expenses from ordinary activities:
Finance costs
Share of net profit of joint ventures accounted for using the equity method
Profit before income tax
Income tax expense
Profit for the year
Total comprehensive income for the year
b) Summary of movements in consolidated retained earnings
Retained earnings at the beginning of the financial year
Profit for the period
Transfers from reserves
Dividends provided for or paid
Retained earnings at the end of the financial year
2019
$’000
367,593
819
(246,851)
(6,433)
(44,725)
(3,072)
22
67,353
(20,298)
47,055
47,055
2019
$’000
228,595
47,055
67
(28,313)
247,404
c) Consolidated balance sheet
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
Derivative financial instruments
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
2019
$’000
13,277
9,836
141,892
2,921
167,926
2
337,065
8,317
2,725
9,640
41,642
1,224
400,614
568,540
30,811
230
8,957
3,822
9,907
53,727
118,756
31
16,849
125
5,242
141,003
194,730
373,810
125,979
427
247,404
373,810
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31. Parent Entity Financial Information
The financial information for the parent entity, Cedar Woods, 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:
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.
32. Contingent Liabilities
33. Commitments
34. Events occurring after the reporting period
94
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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
2019
$’000
56,728
398,901
(49,050)
2018
$’000
69,854
452,073
(92,930)
(138,991)
(196,836)
259,910
255,237
125,979
123,018
379
133,552
259,910
23,643
23,643
393
131,826
255,237
28,876
28,876
i. Investments in subsidiaries and joint venture entities
Investments in subsidiaries and joint venture entities are accounted for at cost in the financial statements of
Cedar Woods. 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 and its wholly owned Australian controlled entities have implemented the tax consolidation
legislation.
The head entity, Cedar Woods, 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 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.
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CEDAR WOODS PROPERTIES LIMITEDGROUP STRUCTURE
Section E: Further 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
36. Remuneration of Auditors
37. Employee Share Scheme
38. Summary of Accounting Policies
39. Changes in Accounting Policies
40. Segment Information
96
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105
106
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Unrecognised Items
32. Contingent liabilities
a) Bank guarantees
At 30 June 2019 bank guarantees totalling $14,779,000 (2018 - $16,941,000) had been provided to various
state and local authorities supporting development and maintenance commitments.
b) Claims
Cedar Woods has initiated legal proceedings to recover damages from a contractor in relation to civil and
electrical works in 2016 and 2017 at the St. A project in Victoria. In response the contractor has lodged a
counterclaim for unspecified damages against Cedar Woods. It is not practical to estimate the potential effect
of the counterclaim but legal advice indicates the merits of the counterclaim are not strong and that it is not
probable that a significant liability will arise.
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
2019
$’000
936
2,287
3,222
2018
$’000
745
1,099
1,844
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 2019 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 $11,994,000 (2018 - $5,597,000), for building
construction was $92,381,000 (2018 - $103,331,000) and for landscaping construction was $2,425,000 (2018
- $6,426,000). This work will be substantially completed in the next 12 months.
34. Events occurring after the reporting period
In July 2019 the company completed the annual review of its corporate finance facility resulting in an
18-month extension and modified terms. The changes include the introduction of a third lender to the $205
million facility as well as longer facility tenure, with the previous three year facility now comprising a mix of
three year and five year debt. The updated terms include:
• Extension of an additional year for approximately 80% ($165 million) of the facility to June 2022;
• Facility term extended to five years for approximately 20% ($40 million) of the total facility to June 2024;
and
• Tailoring the facility terms to suit the Company’s current and future requirements.
The improved terms will assist in providing funding for the ongoing growth of the company’s national portfolio.
In August 2019 the company completed due diligence and went unconditional on its contract to acquire 133
Salvado Road, Subiaco, a 1.4 hectare former TAFE site located 4.7km from Perth. The $15.05m (plus GST)
acquisition will settle in July 2020.
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35. Related Party Transactions
a) Key management personnel compensation
Additional disclosures relating to key management personnel are set out in the Directors’ Report.
Aggregate amounts of each of the above types of other transactions with key management personnel of
Cedar Woods or their related entities:
2019
$
2018
$
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Termination benefit
2019
$
2018
$
2,561,165
3,067,325
154,052
16,553
-
181,388
245,255
74,523
2,731,770
3,568,491
At 30 June 2019, an amount of $Nil (2018 - $5,365) 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.
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 $284,427 (2018 - $378,896) 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 lower than in the
previous year as a result of the timing of architectural and design work performed on the Williams Landing Town
Centre and 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.
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 FY2019 was similar to that
of the previous year and as a result the value of transactions with Westland Settlement Services Pty Ltd is also
similar.
Cedar Woods has for many years been a member of the Australian Institute of Company Directors (AICD). Mr
P S Sadleir (former Managing Director) was a council member of AICD WA. The annual subscription paid in
2018 was based on normal commercial terms and conditions.
In 2019 and 2018 a payment was made for sponsorship of the Property Education Foundation Inc. of which
Mr R Packer is a trustee with no beneficial interest. The transaction was based on normal commercial terms
and conditions.
Amounts recognised as expense
Creative design services
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 or their
related entities:
Inventory
Investment property
30,908
189,616
-
3,182
223,706
221,993
221,993
445,699
219,718
2,275
221,993
26,240
181,985
10,000
3,182
221,407
578,016
578,016
799,423
571,316
6,700
578,016
There are no aggregate amounts payable to directors of Cedar Woods at balance date. There are no 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
There were no balances outstanding at the end of the reporting period in relation to transactions with related
parties (2018 – Nil).
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
2019
$
2018
$
- Audit and review of the financial statements
215,457
243,680
Non-audit services
- Taxation advice and reviews
- Accounting advice
Total fees for non-audit services
48,960
10,896
59,856
27,540
-
27,540
Total assurance and non-audit services
275,313
271,220
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97
37. Employee Share Scheme
The current Long Term Incentive (LTI) plans effective from 1 July 2016 for FY2017, from 1 July 2017 for
FY2018 and from 1 July 2018 for FY2019 will continue in FY2020.
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 per cent 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 36 to 38 of
this annual report.
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 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 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 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. New and amended standards adopted by the group
A number of new or amended standards became applicable in the current reporting period and the group had
to change its accounting policies as a result of adopting the following standards:
• AASB 9 Financial Instruments
• AASB 15 Revenue from Contracts with Customers
The impact of the adoption of these standards and the new accounting policies are disclosed in Note 39.
iv. New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30
June 2019 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.
Title of
Standard
Nature of
change
AASB 16 Leases
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.
Title of
Standard
Impact
AASB 16 Leases
(continued)
The group has reviewed all of the group’s leasing arrangements in light of the new lease accounting
rules in AASB 16. The standard will affect primarily the accounting for the group’s operating leases.
As at the reporting date, the group has non-cancellable operating lease commitments of $3,222,000,
see note 33. Of these commitments, approximately $27,000 relate to short-term leases which will be
recognised on a straight-line basis as expense in profit or loss.
For the remaining lease commitments, the group expects to recognise right-of-use assets of
approximately $2,792,000 on 1 July 2019, lease liabilities of $2,984,000 (after adjustments for
prepayments and accrued lease payments recognised as at 30 June 2019) and deferred tax assets
of $57,000. Overall net assets will be approximately $134,000 lower, and net current assets will be
$771,000 lower due to the presentation of a portion of the liability as a current liability.
The group expects that net profit after tax will decrease by approximately $136,000 for FY2020 as a
result of adopting the new rules. Adjusted EBIT is expected to increase by approximately $98,000 as
the operating lease payments were included in EBIT, but the interest on the lease liability is excluded
from this measure.
Operating cash flows will increase and financing cash flows decrease by approximately $98,000 as
repayment of the principal portion of the lease liabilities will be classified as cash flows from financing
activities.
The group’s activities as a lessor are not material and hence the group does not expect any significant
impact on the financial statements. However, some additional disclosures will be required from next
year.
Mandatory
application
date/ Date of
adoption by
group
The group will apply the standard from its mandatory adoption date of 1 July 2019. The group intends
to apply the simplified transition approach and will not restate comparative amounts for the year prior
to first adoption. Right-of-use assets will be measured on transition as if the new rules had always
been applied.
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.
v. Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is the functional and
presentation currency of Cedar Woods.
b) Principles of consolidation
i. Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Cedar
Woods (parent) as at 30 June 2019 and the results of all subsidiaries for the year then ended. Cedar Woods
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.
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CEDAR WOODS PROPERTIES LIMITEDFURTHER INFORMATION FURTHER INFORMATION 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 28.
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) 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.
d) 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.
e) Revenue recognition
i. Sale of land and buildings
Revenue arising from the sale of land and buildings is recognised when control over the property has been
transferred to the customer. In most of the group’s contracts this is the point in time at which legal title passes
to the customer.
The revenue is measured at the transaction price agreed under the contract, with revenue relating to
customer rebates recognised separately where applicable.
ii. Sale of land and buildings – customer rebates
Certain contracts for the sale of land and buildings include an obligation of the group to provide goods,
services, or payments to the customer, subject to certain performance conditions. These contracts provide a
right to customers that forms a separate performance obligation.
The transaction price is allocated to the performance obligations on a relative stand-alone selling basis.
Management estimates the stand-alone selling prices at the point in time that legal title passes to the
customer based on the contract value, and observable market prices of similar services.
The likelihood of redemption of each customer rebate is estimated at the time of transfer of legal title. If the
performance conditions of the customer are not met within the terms of the contract, the obligation expires,
and the group recognises the revenue attributable to the performance obligation without delivery of the goods,
services or payment
iii. Development services
Revenue from development services is recognised at a point in time where the group has satisfied contractual
performance obligations and control over the output has passed to the customer. In most instances this
coincides with the transfer of legal title of the developed land or building.
iv. Lease income
Income from operating leases is recognised over time on a straight-line basis over the period of the lease.
f)
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 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.
g) 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.
h) Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business. 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.
For trade receivables, the group applies the simplified approach permitted by AASB9, which requires
expected lifetime credit losses to be recognised from initial recognition of the receivables. To measure the
lifetime expected credit loss for rental debtors, a provision is raised against each debtor based upon the
payment profile over the last 12 months, adjusted for current and forward-looking information supporting the
expected settlement of the receivable.
i)
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
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2019 ANNUAL REPORT
101
CEDAR WOODS PROPERTIES LIMITEDFURTHER INFORMATION FURTHER INFORMATION 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.
j) 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.
k) 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.
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:
iii. Impairment
From 1 July 2018, the group assesses on a forward-looking basis the expected credit losses associated with
its financial assets carried at amortised cost. The impairment methodology applied depends on whether there
has been a significant increase in credit risk.
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) 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.
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.
• Plant and equipment – 3 to 15 years (straight line and diminishing value methods)
r) Leases
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 and other financial assets
i. Classification
From 1 July 2018, the group classifies its financial assets in the following categories:
•
•
those to be measured at fair value through profit or loss; and
those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses will be recorded in profit or loss.
ii. Measurement
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition
of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
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.
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.
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CEDAR WOODS PROPERTIES LIMITEDFURTHER INFORMATION FURTHER INFORMATION 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) 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.
u) 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.
v) 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. Liabilities in this category are classified as current liabilities if they
are expected to be settled within 12 months, otherwise they are classified as non-current.
w) 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.
x) 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.
y) 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.
z) Earnings per share
i. Basic earnings per share
Basic earnings per share is determined by dividing the profit attributable to owners of Cedar Woods 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.
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.
aa) 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.
ab) 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.
39. Changes in Accounting Policies
This note explains the impact of the adoption of AASB 9 Financial Instruments and AASB 15 Revenue from
Contracts with Customers on the group’s financial statements.
a) Impact on the financial statements
As a result of the changes in the entity’s accounting policies, prior year financial statements had to be
restated.
The following tables show the adjustments recognised for each individual line item. Line items that were not
affected by the changes have not been included. As a result, the total profit and net assets disclosed cannot
be recalculated from the numbers provided. The adjustments are explained in more detail by standard below.
Statement of profit or loss and other comprehensive
income (extract) - Year ended 30 June 2018
As originally
presented
$’000
Impact of
AASB15
$’000
Restated
$’000
Revenue from operations
Sale of land and buildings
Expenses
Cost of sales of land and buildings
Profit for FY2018
Balance Sheet (extract) -
As at 30 June 2018
Current liabilities
Provisions
Contract Liabilities
Total current liabilities
Net assets / Equity
231,495
834
232,329
(137,431)
42,603
As originally
presented
$’000
8,103
-
109,569
353,186
(834)
-
Impact of
AASB15
$’000
(7,079)
7,079
-
-
(138,265)
42,603
Restated
$’000
1,024
7,079
109,569
353,186
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CEDAR WOODS PROPERTIES LIMITEDFURTHER INFORMATION FURTHER INFORMATION b) AASB9 Financial Instruments – impact of adoption
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.
AASB 9 replaces the provisions of AASB 139 that relate to the recognition, classification and measurement of
financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets
and hedge accounting.
AASB 9 was adopted without requiring restatement of comparative information. No adjustments arose from
applying the new impairment rules to trade receivables. The group does not adopt hedge accounting and does
not have the categories of financial assets removed from the standard’s application.
The adoption of AASB 9 from 1 July 2018 resulted in changes in accounting policies. The new accounting
policies are set out in Note 38.
c) AASB15 Revenue from contracts with Customers – impact of adoption
The group has adopted AASB15 from 1 July 2018 which resulted in changes in accounting policies and
adjustments to the amounts recognised in the financial statements. In accordance with the transition
provisions in AASB 15, the group has adopted the new rules retrospectively and has restated comparatives
for the 2018 financial year.
i. Accounting for customer rebates
Obligations to deliver goods and services to customers after residential lot settlements such as the provision
of fencing and landscaping are recognised as provisions at settlement. Under AASB15 revenue relating to this
component of sales revenue previously recognised at settlement of the residential lot is now deferred to the
time the good or service is delivered. The corresponding expense relating to delivering the good or service is
also deferred. The timing of profit recognition has not been impacted by this change.
The adoption of AASB 15 from 1 July 2018 has not required any adjustment to retained earnings in prior
periods and the changes required to the amounts recognised in the statement of profit or loss and other
comprehensive income for the comparative period presented (year ended 30 June 2018) are reflected in the
table in note 39(a) above.
ii. Presentation of assets and liabilities related to contracts with customers
The group has also changed the presentation of certain amounts in the balance sheet to reflect the
terminology of AASB15, with contract liabilities now recognised for customer rebates formerly presented as
provisions for customer rebates ($5,813,000 at 30 June 2019; $7,079,000 at 30 June 2018) and advanced
sales commissions now disclosed as contract assets within trade receivables formerly disclosed as
prepayments within trade receivables ($2,144,000 at 30 June 2019; $1,968,000 at 30 June 2018).
40. 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 development and investment 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 mainly sells products to the public and is not generally reliant upon any single customer for 10%
or more of the group’s revenue. In FY2019 the sale of the Target Head Office building resulted in a single
sale to a single customer for greater than 10% of the group’s full year revenue, however this is not a typical
occurrence.
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CEDAR WOODS PROPERTIES LIMITEDFURTHER INFORMATION FURTHER INFORMATION T
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Section F: Declaration and Independent Auditor’s
report
Directors’ Declaration
In the directors’ opinion:
Directors’ Declaration
Independent Auditor’s Report
109
110
a)
the financial statements that are set out in the financial statements section and notes on pages 54 to
107 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 2019 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, and
c) at the date of this declaration, there are reasonable grounds to believe that the members of the
extended closed group identified in Note 28 will be able to meet any obligations or liabilities to which
they are, or may become, subject by virtue of the deed of cross guarantee described in Note 30.
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.
Nathan Blackburne
Managing Director
Perth, Western Australia
27 August 2019
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CEDAR WOODS PROPERTIES LIMITEDDECLARATION & AUDIT REPORT
Independent Auditor’s report
Independent auditor’s report
To the members of Cedar Woods Properties Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Cedar Woods Properties Limited (the Company) and its
controlled entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2019 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
the consolidated balance sheet as at 30 June 2019
the consolidated statement of changes in equity for the year then ended
the consolidated cash flow statement for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the financial statements, which include a summary of significant accounting policies
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Cedar Woods Properties Limited is an Australian property development company. The Group'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.
Materiality
Audit scope
Key audit matters
Our audit focused on where the
Amongst other relevant
topics, we communicated the
following key audit matters to
the Audit and Risk
Management Committee:
Valuation of inventory
Recognition of revenue
These are further described
in the Key audit matters
section of our report.
Group made subjective
judgements; for example,
significant accounting
estimates involving
assumptions and inherently
uncertain future events.
The accounting processes are
structured around a Group
finance function at its head
office in Perth. Our audit
procedures were predominately
performed at the Group head
office, along with a number of
property and development site
visits being performed across
the year.
For the purpose of our audit we
used overall Group materiality of
$3.4 million, which represents
approximately 5% of the Group’s
profit before tax.
We applied this threshold,
together with qualitative
considerations, to determine the
scope of our audit and the
nature, timing and extent of our
audit procedures and to evaluate
the effect of misstatements on
the financial report as a whole.
We chose Group profit before tax
because, in our view, it is the
benchmark against which the
performance of the Group is
most commonly measured.
We utilised a 5% threshold based
on our professional judgement,
noting it is within the range of
commonly acceptable thresholds.
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CEDAR WOODS PROPERTIES LIMITEDDECLARATION & AUDIT REPORTDECLARATION & AUDIT REPORT
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Valuation of inventory
(Refer to note 7) $482m
We obtained an understanding and evaluated the
design of relevant controls in relation to inventory
valuation.
As of 30 June 2019, the Group recognised total
inventory of property held for sale of $482m.
We tested the capitalisation of a sample of expenses
and interest into inventory during the period.
Inventory is stated at the lower of cost and net
realisable value for each development project.
The Group’s estimate of net realisable value includes
assumptions about future market and economic
conditions which inherently are subject to the risk of
change. These assumptions include future sales prices,
future settlement rates, forecast costs of completion,
selling costs and the nature, quality and location of
inventory held.
This was a key audit matter given the relative size of the
inventory balance in the consolidated balance sheet and
the significant judgement involved in the estimates
used to calculate net realisable value.
We obtained publically available independent property
market reports to inform our understanding of market
conditions.
We applied a risk-based assessment to determine those
development projects where there is a greater risk that
the carrying value of the inventory may be in excess of
net realisable value. Our risk based selection criteria
incorporates our knowledge of the life cycle of each
project from prior years, site visits and our
understanding of current economic conditions relevant
to individual project locations. In addition to these risk
conditions we focus on specific projects for testing
which are large contributors to revenue and profit in
the year or are experiencing declining gross margins.
For the selected projects we performed a combination
of one or more of the following audit procedures:
We discussed current project performance with the
development manager including factors such as the
key project risks, strategy, construction progress,
current market conditions and the outlook for sales
revenue over the remaining life of the project.
We obtained management’s net realisable value
assessment of the project.
We obtained the cash flow model performed by
management and assessed the key assumptions. A
key focus was comparing development expenditure
and forecast sales value for each project to actuals
known from the current period and comparable
projects. We also performed a sensitivity analysis
on certain assumptions in the cash flow model as
well as assessing mathematical accuracy of the cash
flow model.
Key audit matter
How our audit addressed the key audit matter
In addition and where available for a project, we
obtained the external third party prepared valuation
reports, not older than 12 months. We compared the
valuation in the external third party prepared valuation
report to the carrying value of the project inventory.
We obtained confirmations from settlement agents and
lawyers for land and buildings settled during the year,
and compared the sales price and settlement date on
the confirmation to the Group’s accounting records. We
vouched total revenue from sale of land and buildings
to settlement proceeds received in the bank account.
We evaluated a sample of settlements recorded for the
month of June 2019 and July 2019 against supporting
documentation to determine whether they were
recorded in the correct period based on the terms in the
relevant sales agreement.
Recognition of revenue
(Refer to note 1) $376m
Revenue was the most significant amount in the
consolidated statement of profit or loss and other
comprehensive income. Revenue of $376m was
comprised of a number of streams, including sale of
land and buildings of $362m.
Sale of land and buildings was a key audit matter due to
the financial significance of these sales to the Group’s
results and the complexity around the timing of
recognition of revenue.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2019, but does not include the
financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other
information we obtained included the Letter from the Chairman, Letter from the Managing Director,
Financial Performance Highlights, Our Business, Financial and Operating Review, Directors' Report,
Corporate Directory and About Cedar Woods. We expect the remaining other information to be made
available to us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action to take.
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CEDAR WOODS PROPERTIES LIMITEDDECLARATION & AUDIT REPORTDECLARATION & AUDIT REPORT
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 30 to 49 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the remuneration report of Cedar Woods Properties Limited for the year ended 30
June 2019 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
Matters relating to the electronic presentation of the audited financial
report
This auditor’s report relates to the financial report of Cedar Woods Properties Limited for the year
ended 30 June 2019 included on Cedar Woods Properties Limited's web site. The directors of the
Company are responsible for the integrity of Cedar Woods Properties Limited's web site. We have not
been engaged to report on the integrity of this web site. The auditor’s report refers only to the financial
report named above. It does not provide an opinion on any other information which may have been
hyperlinked to/from the financial report. If users of this report are concerned with the inherent risks
arising from electronic data communications they are advised to refer to the hard copy of the audited
financial report to confirm the information included in the audited financial report presented on this
web site.
PricewaterhouseCoopers
Helen Bathurst
Partner
Perth
27 August 2019
114
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CEDAR WOODS PROPERTIES LIMITEDDECLARATION & AUDIT REPORTDECLARATION & AUDIT REPORT
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
Dividend and dividend policy
Investors’ Summary
Shareholder Information
Five Year Financial Performance
117
118
120
The dividend policy is to distribute approximately 50% of the full year net profit after tax. The final dividend for
the 2019 financial year is 13.5 cents per share, fully franked. The dividend will be paid on 25 October 2019.
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, apartments or strata commercial units at the
group’s developments. A summary of the main terms and conditions follows:
For residential lots, shareholders must hold a minimum number of 1,000 shares for at least 6 months before
purchasing a lot to qualify for the discount;
For off the plan purchases of ‘built-form’ lots (such as townhouses, apartments or commercial units),
shareholders must hold a minimum number of 1,000 shares at the time of purchasing a lot and hold the
shares through to settlement of the lot to qualify for the discount;
The number of shareholder discounts available will be limited in any sales release to two discounts, although
the Company may extend this for a particular release; 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.
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.
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 in operation for the final dividend for the 2019 financial year.
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
28 August 2019
26 September 2019
25 October 2019
October 2019
6 November 2019
February 2020
April 2020
May 2020
August 2020
116
2019 ANNUAL REPORT
117
CEDAR WOODS PROPERTIES LIMITED c.
Substantial shareholders of ordinary shares
As disclosed in substantial shareholder notices lodged with the ASX at 31 August 2019
Name
Number of shares
Percentage of shares1
William George Hames and related entities
Robert Stanley Brown and related entities
AustralianSuper Pty Ltd
9,314,668
7,937,627
4,133,714
12.90
10.87
5.24
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.
Shareholder Information
The shareholder information set out below was applicable at 31 August 2019.
a.
Distribution of ordinary shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number of
holders
Number of
shares
1,128
1,380
452
471
50
477,566
3,729,828
3,379,754
11,905,730
60,686,149
3,481
80,179,027
There were 282 holders of less than a marketable parcel of shares.
b.
Twenty largest shareholders of ordinary shares as disclosed in the share register
Name
Number of
shares
Percentage of
shares
JP Morgan Nominees Australia Limited
11,008,723
HSBC Custody Nominees (Australia) Limited
Hamsha Nominees Pty Ltd (The Nowra Projects Unit Fund A/C)
Westland Group Holdings Pty Ltd
Citicorp Nominees Pty Ltd
Zero Nominees Pty Ltd
Beach Corporation Pty Ltd
National Nominees Limited
Helen Kaye Poynton
BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C)
Joia Holdings Pty Ltd
Australian Executor Trustees Limited (No 1 Account)
Mr Paul Sadleir
Netwealth Investments Limited (Wrap Services A/C)
Dr A Gerraty & Mrs P Gerraty (A & P Gerraty S/F A/C)
BNP Paribas Nominees Pty Ltd (HUB24 Custodial Serv Ltd DRP)
Leblon Holdings Pty Ltd (William Hames Super Fund A/C)
Mr JH Tucker & Mrs KJ Tucker (Tucker Family Super Fund A/C)
Gold Plaza Pty Ltd
Croftwell Pty Ltd
9,514,423
5,040,216
4,596,980
4,554,965
3,510,373
3,382,604
2,227,734
1,677,095
1,493,558
1,316,233
1,193,231
1,127,283
834,677
600,000
581,688
478,551
475,002
387,980
383,297
13.73
11.87
6.29
5.73
5.68
4.38
4.22
2.78
2.09
1.86
1.64
1.49
1.41
1.04
0.75
0.73
0.60
0.59
0.48
0.48
54,384,613
67.84
118
2019 ANNUAL REPORT
119
CEDAR WOODS PROPERTIES LIMITED Five Year Financial Performance
All figures in $’000 except where stated
Financial Year
2019
2018
2017
2016
2015
Financial Year
2019
2018
2017
2016
2015
Financial Performance
Key Performance Measures
Revenue from operations
375,857
239,661
222,269
175,159
178,637
Dividend per share, fully franked (cents)
31.5
30.0
30.0
28.5
28.0
Proceeds from investment Properties
-
-
-
-
36,000
EBIT Margin
19.2%
27.2%
30.3%
37.4%
34.3%
Earnings before interest and tax
72,012
65,168
67,446
65,587
61,220
Interest cover (times)
8.6
8.5
13.9
16.6
9.9
Finance costs
3,072
4,020
2,947
3,755
3,397
Return on Equity
12.9%
12.1%
13.8%
14.2%
14.9%
Operating profit before tax
68,942
61,148
64,499
61,832
57,823
Investment in inventory during year
245,814
191,633
161,588
112,887
120,620
Income tax expense
20,298
18,545
19,054
18,230
15,238
Net tangible assets backing per share ($)
4.70
4.44
4.19
3.89
3.62
Net profit after tax
48,644
42,603
45,445
43,602
42,585
Net bank debt
105,314
109,134
78,940
50,344
27,908
Financial Position
Total assets
Total liabilities
571,711
601,516
505,624
452,729
383,330
Stock Market capitalisation at 30 June
456,671
458,015
411,026
343,179
414,970
195,181
248,330
175,390
145,541
97,725
Number of employees at 30 June
95
90
79
67
62
Net bank debt to equity
28.0%
30.9%
23.9%
16.4%
9.8%
Share price – end of year ($)
5.70
5.76
5.21
4.35
5.26
Shareholders’ equity
376,530
353,186
330,234
307,188
285,605
Number of shares on issue – end of year (‘000)
80,118
79,517
78,892
78,892
78,892
Basic earnings per share (cents)
60.9
53.9
57.6
55.3
54.3
Returns to shareholders over 1, 3, & 5
years
1 Year
3 Year
5 Year
Earnings per share growth %
Share price growth %
Dividend growth % (paid dividend)
Total shareholder return %
13.0
(1.0)
20.0
5.3
3.2
31.0
28.6
55.4
2.2
(22.0)
33.3
2.8
120
2019 ANNUAL REPORT
121
CEDAR WOODS PROPERTIES LIMITED CENTRAL PARK, JACKSON GREEN
Just 20km from Melbourne’s CBD, Jackson Green is a 6.5ha site delivering
151 townhouses and approximately 400 apartments, including an internal road
network, parks and pedestrian links to the surrounding streets. Jackson Green
has been shortlisted in the 2019 VIC UDIA Excellence Awards for the categories
of Urban Renewal and Medium Density.
122
CEDAR WOODS PROPERTIES LIMITED
2019 ANNUAL REPORT
123
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
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: Wednesday 6 November 2019
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CEDAR WOODS PROPERTIES LIMITED