Annual
Report
Cedar Woods Properties Limited
ABN 47 009 259 081
20
20
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
Cedar Woods’ diversified product mix ranges
grown to become one of the country’s
from land subdivisions in emerging residential
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.
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.
TABLE OF
CONTENTS
Letter from the Chairman ..................................................................... 4
Letter from the Managing Director....................................................... 6
Financial Performance Highlights ........................................................ 8
Our Business ..................................................................................... 10
Financial and Operating Review ........................................................ 13
ESG Report ........................................................................................ 22
Directors’ Report ............................................................................... 34
Directors’ Report: Chair of the Human Resources and
Remuneration Committee’s Letter to Shareholders ........................... 39
Directors’ Report - Remuneration Report .......................................... 40
Auditor’s independence declaration ................................................. 62
Financial Statements ......................................................................... 63
Notes to the Financial Statements ..................................................... 69
Section A: Key Numbers ................................................................. 70
Section B: Financial risks ................................................................ 91
Section C: Group Structure ............................................................ 99
Section D: Unrecognised Items .................................................... 107
Section E: Further Information ...................................................... 109
Directors’ Declaration ...................................................................... 123
Independent Auditor’s report .......................................................... 124
Shareholders Information ............................................................... 130
Five Year Financial Performance .................................................... 134
2
CEDAR WOODS PROPERTIES LIMITED
3
Ellendale, Queensland
2020 ANNUAL REPORT LETTER FROM
THE CHAIRMAN
For more than three decades, since our inception in 1987,
Cedar Woods has successfully navigated many economic cycles.
Throughout these cyclical peaks and troughs,
establishing diversity in the Cedar Woods’ project
our disciplined and customer-focused approach
portfolio in terms of price, product and geography
has remained consistent. This approach has proven
has seen our projects continue to perform and,
fundamental to overcoming the complexities of
relatively speaking, proving somewhat resistant to
the past and it underpins the resilience of our
recent impacts.
portfolio today.
With a resilient portfolio and proven-track record
As we face the social and economic challenges of
of overcoming challenges, Cedar Woods is in a
2020, we continue to reflect on and enhance our
robust position, able to take on the complexities
ability to transcend cycles, stay the course and
of today and emerge well positioned to meet the
emerge stronger.
Beyond the sharp impact of COVID-19 we look
forward to a reshaping of the economy, sector
by sector. Assisted by the Federal Government’s
HomeBuilder package and respective state
customer demands of the future. We will continue
to make disciplined decisions that retain value in
the business for our shareholders while maximising
opportunities to meet the aspirations of Australian
home buyers.
government incentives, opportunities are available
In conclusion, I acknowledge the strong culture
in the Australian property market to those nimble
and high-performance of the Cedar Woods team.
enough to respond. As the country begins to
In the face of challenges, our people continue to
recover and migration levels rise, as the life in the
demonstrate personal strength and unwavering
‘lucky country’ is once again sought, Cedar Woods
commitment to customers. On behalf of the Board,
is well prepared.
In recent years, Cedar Woods has been quietly
responding to state governments’ pursuit of infill
I thank Nathan and his team for their valuable
contribution to Cedar Woods and delivering returns
to shareholders while building for the future.
development, investing in market intelligence to
I also take this opportunity to thank our loyal
innovate our product ready to meet future demand.
shareholders for their support.
We understand the emerging needs of new home
buyers and how to create a high-quality built form
Sincerely,
product that appeals to them.
The Company’s disciplined capital management
has enabled our expansion into this more
capital-intensive product, all the while maintaining
our moderate gearing levels. Our strategy of
William Hames
Chairman
4
5
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
LETTER FROM
THE MANAGING DIRECTOR
Last year, Cedar Woods predicted that the 2020 financial year would
be defined by the second half. While a pandemic was not predicted,
the past six months have been significant and, although challenging,
have confirmed the resilience of the Company’s operations and national
property portfolio.
As we continue to navigate our way through the
Throughout, we have maintained financial health
COVID-19 pandemic, the Company is in a strong
via prudent capital management including cost
position, both operationally and financially, with more
reduction initiatives. We continue to enjoy strong
than 9,000 lots/units in our development pipeline and
support from our banking partners, positioning us
$360 million of presale contracts in place, as at 30
well to pursue opportunities in an environment where
June 2020.
development lending has tightened.
Determined to grow even stronger from this
Given the extraordinary economic impact of
period, we continue to deploy our strategy with
COVID-19, subdued buyer confidence and ongoing
several initiatives in place to accelerate recovery.
market uncertainty, we are prepared for a multi-year
The Company’s July 2020 announcement of the
recovery. Conditions are likely to remain difficult,
conditional acquisition of land in one of Australia’s
but our customer-focused team remains up for the
highest growth areas, Burpengary, Queensland,
challenge. A strong balance sheet and an extensive
demonstrates that we continue to seek out and
list of new projects, which are starting to contribute
assess further growth opportunities.
to growth, give us a position of strength.
With a focus on quality, the Cedar Woods
I thank the Board for its continued support and
portfolio maintains a significant exposure to highly
look forward to leading our high performance
sought-after infill developments which have proven
and enterprising team as we rise to the future
to outperform the market. During the first half of the
opportunities that will present as the Australian
year, the Company advanced its development and
economy recovers.
construction program across its national portfolio
in Queensland, Western Australia, South Australia
Sincerely,
and Victoria.
When impacted by the external shocks of the second
half, our recently completed digital transformation
program enabled seamless remote working.
Marketing and sales adapted, and Cedar Woods
started to use electronic sales contracts more
widely, protecting our customers and people.
Nathan Blackburne
Managing Director
6
7
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
FINANCIAL
PERFORMANCE
HIGHLIGHTS
NET PROFIT
AFTER TAX
$20.9m
TOTAL
REVENUE
$260.7m
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
EARNINGS
PER SHARE
26.0c
FULL YEAR
DIVIDENDS
19.0c
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
6
1
0
2
7
1
0
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0
2
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0
2
0
2
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
RETURN
ON EQUITY
TOTAL
SHAREHOLDER
RETURN
5.5% Below company
benchmark of 10%
-2.4%
Outperformed All Ordinaries of -7.2%,
Small Industrials of -7.4%, Peer group
average* of -17.8%
PRESALE
CONTRACTS
NET BANK DEBT
TO EQUITY
$360m
Up $30m
37.7%At the lower end of
target range of 20%-75%
*Peer group average includes 6 ASX listed residential property developers.
8
2020 ANNUAL REPORT
9
9
CEDAR WOODS PROPERTIES LIMITED
OUR
BUSINESS
OUR HISTORY
Cedar Woods was established in 1987 and listed
The company is known for taking on complex, large
on the ASX (Code: CWP) in 1994. Starting out as a
scale projects, adding value through planning
developer of master planned communities in Western
design and delivery and generating strong returns
Australia, the company progressively branched
from multi-year projects. As a result, it has built a
out into new product areas and geographies. The
reputation as an innovative and diversified property
company expanded into Melbourne in 1997, then
company with a track record of strong financial
Brisbane in 2014 and Adelaide in 2016 and now
performance, sustained since inception.
has a significant portfolio of quality developments
delivering residential lots, townhouses, apartments
and commercial projects.
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.
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
Product Type
Price Point
Good geographic spread
Range of housing lots,
Wide range of price
of well-located projects in
apartments, townhouses and
points offered in Queensland,
our states.
commercial properties.
South Australia, Victoria and
Western Australia.
VALUE CREATION MODEL
We deliver on our strategy via our value creation model.
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.
Property Acquisitions
Development
Marketing & Sales
Disciplined approach
to acquisitions:
Research, design,
planning and delivery:
Integrated approach to
optimise results:
y Tactical and research based
decisions to identify projects
y Rigorous assessment and
conservative assumptions
y Structure contracts to
minimise risks and optimise
returns
y Sustainable designs that
optimise quality, functionality,
environmental outcomes and
returns
y Collaborative approach with
community and authorities
y Negotiate timely value-adding
approvals
y Structure contracts to
minimise risks
y Manage construction closely
y Positioning projects to
maximise demand
y Pre-sell to underwrite projects
y Quality brands and marketing
material
y Lead generation and sales
conversion
y Customer nurturing and
referrals
10
11
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
STRATEGIC PRIORITIES
We optimise business performance through a focus on four strategic priorities.
FINANCIAL AND
OPERATING REV IEW
High Performance Culture
Financial Strength
Creating a progressive, high-spirited
Optimising performance through disciplined
work environment with strong staff alignment
capital management, a commercial focus,
to values and objectives, where top talent
cost minimisation and maintaining a strong
work collaboratively and high performance
balance sheet.
is rewarded.
Operational Excellence
Earnings Growth
Being operationally strong and safe
Pursuit of earnings growth is the key metric
through renewed and integrated systems
to achieve our primary objective of creating
and technologies, having a strong corporate
long-term value for our shareholders. This may be
brand with quality projects and delivering
achieved organically, by mergers and acquisitions
sustainable projects.
or through new business areas.
On behalf of the Board, we are pleased to present the financial and
operating review of Cedar Woods to shareholders.
The following summarises the results of operations during the year and the financial position of the consolidated
entity at 30 June 2020 which were significantly impacted by COVID-19:
2020 FINANCIALS
AT A GLANCE
NET PROFIT AFTER TAX
(NPAT) AND DIVIDENDS
y Revenue of $260,660,000 down 30.5 per cent on
In FY2020, the company delivered a profit of $20.9
the prior year
y Net profit after tax of $20,899,000, down 57.0 per
cent on the prior year
y Total dividends of 19.0 cents per share, down
39.7 per cent, generating a fully franked yield
of 3.6 per cent at year end
million. This was down 57.0 per cent from the prior
year, although followed profit growth in eight of the
nine previous years. Dividends declared for FY2020
were 19.0 cents per share, also down from 31.5
cents per share in the prior year after nine years of
y Earnings per share of 26.0 cents, down 57.3
increasing or stable dividends.
per cent on the prior year
y Total shareholder return of -2.4 per cent
NPAT AND DIVIDENDS DECLARED SINCE FY11
s
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M
$
50
45
40
35
30
25
20
15
10
5
0
12
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Dividend H1
Dividend H2
NPAT
35
30
25
20
15
10
5
0
C
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s
13
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
2020 FINANCIAL RESULTS SUMMARY
Year ended 30 June
Revenue
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 tangible asset backing per share – historical cost
2020
$’000
260,660
20,899
646,742
142,671
378,685
2019
$’000
375,149
48,644
571,711
105,314
376,530
% Change
(30.5)
(57.0)
13.1
35.5
0.6
2019 % Change
(57.3)
60.9
¢
¢
¢
%
%
%
%
%
x
$
2020
26.0
25.8
19.0
5.5
6.2
-2.4
37.7
22.3
6.1
4.67
60.6
31.5
12.9
14.9
5.3
28.0
18.9
8.6
4.67
(57.4)
(39.7)
(7.4)
(8.7)
(7.7)
9.7
3.4
(2.5)
-
0.4
(7.7)
(8.1)
Shares on issue – end of year
Stock market capitalisation at 30 June
Share price at 30 June
’000
$’000
$
80,448
421,547
5.24
80,118
456,671
5.70
FINANCIAL YEAR OVERVIEW
Cedar Woods started FY2020 with expectations of delivering moderately lower earnings than the record
net profit of $48.6 million achieved in FY2019. This outlook was supported by pre-sale contracts on hand
at 30 June 2019 totaling $330 million, approximately two thirds of which were expected to settle in FY2020.
While property market conditions remained challenging in the first half of FY2020, the Company delivered a
net profit of $10.2 million in the first half and remained on track to meet its full year earnings target, albeit with
earnings weighted to the second half and particularly the final quarter, which is not unusual for the Company.
The first two and a half months of calendar year 2020 saw improving conditions in most property markets and
particularly WA, which had experienced consecutive months of good enquiry and improved sales following a
summer marketing campaign. In February 2020 some of our builders expressed some concern over the timely
availability of particular building materials that were sourced from China, which was experiencing disruptions
to manufacturing as it dealt with the early stages of the COVID-19 pandemic. This risk was noted in our first half
results release in February 2020 and was largely resolved in the subsequent months with alternative supplies
being sourced locally or from China following factories returning to business.
Over February and March 2020, Cedar Woods took early proactive measures across the business to safeguard
its staff, customers and other stakeholders and to ensure as much as possible the smooth running of its
property developments in the face of the evolving COVID-19 pandemic. The digital transformation the business
had undertaken over the previous eighteen months, as part of delivering on the Company’s Operational
Excellence strategic priority, put the technology and business continuity systems in place to support a mobile
and flexible workforce and allowed the Company to remain engaged with staff, customers and business
partners and continue to operate effectively while working remotely from corporate offices.
In response to the evolving pandemic in Australia, on 20 March 2020, the Company made an ASX
announcement informing the market that it was unable to confirm profit guidance given the potential disruption
that could arise from construction workers, local councils and other certifying authorities being unable to attend
work and thus the impact on the delivery and settlement of a significant number of lots, homes and offices that
were due to settle in the final quarter of FY2020.
While sales centres remained open via appointment, social restrictions and weak buyer demand impacted
enquiry and sales over late March, April and May 2020. Further social distancing guidelines for construction
sites slowed the rate of construction and impacted development completions, with a significant portion
of settlements previously anticipated in May and June 2020 being delayed to early FY2021. This resulted
in revenue and profit being significantly down in FY2020 on the prior year, 31 per cent and 57 per cent
respectively. Gross margin moderated from 29 per cent in FY2019 to 27 per cent in FY2020 as a result of
different product mix settling and some discounting to accommodate market conditions. The Company had
settlements from 24 projects in FY2020, each with different profit margins and the portion of settlements from
each project impacting the overall gross margin for the Company.
Acknowledging the important contribution the housing industry makes to the national economy, and the
potential disruption to the industry caused by the COVID-19 pandemic, in early June 2020, the Federal
Government announced the HomeBuilder scheme, which provides a $25,000 grant to owner-occupiers to build
new homes, subject to certain criteria. In addition to this, the WA State Government announced the Building
Bonus Package, which provides an additional $20,000 grant for new homes in single-tier developments, that are
contracted by 31 December 2020. The national HomeBuilder grant resulted in increased sales enquiry around
the country in June 2020 and the combined grants on offer for WA home buyers saw the Company achieve
WA sales of more than four times usual levels in June 2020, with the sales expected to deliver settlements and
revenue in FY2021.
The combined impact of slower development completions which delayed a number of settlements into FY2021
and strong sales performance in June 2020 contributed to the Company’s $360 million balance of contracted
pre-sales at 30 June 2020, which is $30 million higher than the same time in the prior year. These pre-sales are
expected to settle over FY2021 and FY2022, with approximately two thirds expected to settle in FY2021.
The lower FY2020 profit result correspondingly impacted the Company’s returns, with return on equity of
5.5 per cent and return on capital of 6.2 per cent falling below the Company’s benchmarks of 10 per cent and
12 per cent respectively. The one-year shareholder return of negative 2.4 per cent significantly outperformed
the All Ordinaries index (negative 7.2 per cent), the Small Industrials index (negative 7.4 per cent) and a peer
group average (negative 17.8 per cent). The peer group being made up of six ASX listed residential property
developers.
CAPITAL MANAGEMENT
While earnings were delayed, the Company’s history of disciplined capital management and continued
focus on its strategic priority of Financial Strength positioned it well to deal with the economic fallout of
the pandemic.
At 30 June 2020, net bank debt stood at $143 million leaving approximately $68 million in undrawn headroom
in the Company’s long term debt facilities to fund the development of the Company’s existing property portfolio
and make additional land acquisitions for growth. Following a significant number of settlements taking place in
July 2020, facility headroom increased to more than $85 million at 31 July 2020.
Net bank debt-to-equity at 30 June 2020 was 38 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 22 per cent at year end and
interest cover was 6.1 times, well in excess of minimum facility covenant of 2 times. The Company continued to
operate within all of its facility covenants throughout FY2020.
14
15
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED Considering the lower earnings outcome in FY2020 of $20.9 million, the Company’s low gearing, significant
facility headroom at 31 July 2020 and significant presales at 30 June 2020 of $360 million, the Board declared
a full year dividend of 6.5 cents per share at a cash cost of $5 million. This brings total FY2020 dividends to
19.0 cents representing a payout ratio of approximately 73 per cent. The Board elected to depart from its
longstanding policy of distributing approximately 50 per cent of full year net profit to shareholders, considering
the Company’s strong capital position, the relatively low cash cost of the final dividend to the Company and the
benefit of the fully franked dividends in the hands of shareholders.
The dividend reinvestment and bonus share plans have been reintroduced for the FY2020 final dividend to be
paid in October 2020 after being suspended for the interim dividend paid in April 2020 when equity markets
were experiencing volatile conditions.
PORTFOLIO HIGHLIGHTS
Cedar Woods’ strategy to grow a national project portfolio diversified by geography, product type and price
point continues to prove successful. In FY2020 there were many highlights across the portfolio despite the
challenging conditions:
y In Western Australia, the launch of Solaris, a 290 lot land subdivision within the strong inner south east growth
corridor of Perth in March 2020, which has met with strong demand.
y Very strong sales across the WA portfolio in June 2020 of more than four times usual levels, in response to
Federal and State Government housing grants announced and available until 31 December 2020.
y In South Australia, completion of the Botanica Apartments in June 2020 which saw the first residents moving
into the growing community at Glenside.
y Commencement of construction of Grace Apartments, also at Glenside after encouraging early sales that
included a penthouse apartment priced at $2.7 million.
y In Victoria, completion of 101 Overton Road and 107 Overton Road offices at Williams Landing, with the
Victorian Government moving into 107 Overton Road to operate an emergency communications facility from
the offices.
y Commencement of construction of Huntington Apartments at Jackson Green in Victoria with the 165
apartments also selling out in FY2020.
y In Queensland, continuing strong sales performance at the Ellendale estate in Upper Kedron.
Cedar Woods’ diversified portfolio helps ensures it is positioned to perform well through different property
cycles across state markets.
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16
17
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
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 $20.9 million and total fully franked dividends of 19.0 cents.
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.
The experience of dealing with the COVID-19 pandemic in FY2020 has reinforced the Board’s and Management’s
view that the Company’s strategy is appropriate for current and future economic conditions. Diversity of product
type has ensured the Company has significant product offering available to purchasers seeking to take advantage
of Federal and State Government housing grants predominantly designed for affordable dwellings. Further, with
differing market conditions in each state, the company is realising the benefit of its geographical diversity.
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.
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
A focus on maintaining our high performing and high-spirited work environment continued in FY20. Refinement
of the Company’s reward and accountability systems, recruitment practices and career management has further
aligned employee performance to Cedar Woods’ objectives.
During FY2020 approximately 10 per cent of existing staff members were promoted to more senior roles,
continuing the Company’s culture of people development and internal promotion.
Operational Excellence
Important milestones were achieved in the year through the implementation of new technologies and systems.
The Company’s new Microsoft ERP system went live in October 2019. This new system has improved processes
and created efficiencies in procurement, payments, document storage, reporting and data access, and
has provided a cloud-based platform to support future business growth. During the onset of the COVID-19
pandemic, staff were able to move seamlessly from being office based to working from home because of the
flexibility these new systems provided. The Company has embarked on initiatives in digital marketing to improve
customer experience and create a more powerful platform for lead generation and sales.
The Company’s excellent safety record continues with the Company having no reportable incidents during the
year and maintaining industry-standard safety practices across workplaces and projects.
Sustainability, efficiency and quality continue to drive project design across the portfolio. The Company will
review its sustainability practices in FY2021 with a view to reducing environmental and climate-change impacts
across its operations. An enhanced Environment, Social, Governance (ESG) report is incorporated into this
year’s annual report.
Supporting local community groups remains an important part of the Company’s core values. The Neighbourhood
Grants Scheme provides funds for small community groups such as sporting clubs, special interest groups and
emergency services around the country, funding and supporting activities that play important roles in creating and
maintaining community spirit.
Financial Strength
During the year the Company announced the introduction of National Australia Bank (NAB) to the $205 million
corporate finance facility and an extension of a component of the facility from 3 to 5 years, diversifying the
Company’s funding sources and providing a longer maturity date for approximately 20 per cent of the facility.
NAB joined ANZ and Bankwest as club facility lenders to the Company. In February 2020 the Company
completed the annual review of the facility and extended the terms to 30 January 2023 for the 3-year debt ($165
million) and to 30 January 2025 for the 5-year debt ($40 million).
In June 2020, the Company also extended the tenor of its $30 million finance facility for the Williams Landing
Shopping Centre at Williams Landing in Victoria. The facility term was extended to have a further 3 years tenure to
June 2023.
Earnings Growth
Cedar Woods’ strategically located projects across four states, and its diversified product mix, have proven
resilient during the COVID-19 pandemic led downturn, notwithstanding the reduction in market demand during the
second half, resulting in strong pre-sales at the start of FY2021.
The Company has maintained a growth mindset taking advantage of soft market conditions to secure four
significant development sites during the year. In October 2019 the Company announced the acquisition of a
43-hectare site at Wollert, Victoria and, earlier, infill projects in Subiaco and Hamersley in Western Australia.
The Company also conditionally acquired 28 hectares of land in Burpengary, Queensland, located within the
high growth area of Moreton Bay. These acquisitions will add more than 1,100 dwellings/lots to the Company’s
national portfolio.
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.
MARKET OUTLOOK
The COVID-19 pandemic and the resultant economic downturn has resulted in challenging market conditions
across all of the sectors in which the Company operates. These factors will likely have an adverse impact on
property markets until a vaccine is widely available.
Australia’s international borders remain closed. Population growth is expected to fall from 1.4 per cent in 2019
(ABS) to around 0.5 per cent in 2020 (Australian Government Treasury), as net overseas migration falls to near
zero and temporary residents leave Australia. Victoria and New South Wales have been heavily impacted by
this fall in population growth, as these states traditionally receive the highest numbers of immigrants and
temporary residents.
Australian GDP is forecast to fall by 3.75 per cent in 2020, followed by an increase of around 2.5 per cent
in 2021. Unemployment is forecast to peak at 9.25 per cent in the December 2020 quarter (Australian
Government Treasury).
New housing starts are expected to fall by 15 per cent nationally in FY2021 with the majority of falls occurring in
the apartment sector (HIA). Median house prices for established property declined by 2 per cent nationally over
the June quarter (Domain) with further falls expected.
18
19
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED In response to these conditions, the Federal Government and some state governments have moved quickly to
supply chain (mainly in causing delays to completion of projects and settlements). In recent times Federal and
support the construction sector with new housing grants announced in June 2020 to stimulate and maintain
State governments have recognised the contribution of the residential housing industry to the economy and have
employment. The design of the grants favour residential land estates with titled, or soon to be titled stock.
introduced significant stimuli which to an extent has offset the economic impact of the pandemic.
This stimulus has resulted in significant increases in sales volumes for some land estates, which is expected to
taper off towards the end of 2020. The property industry continues its dialogue with those state governments
who are yet to provide targeted housing stimulus, and it is hoped that additional support is announced in
coming months.
COMPANY OUTLOOK
While national property market conditions remain challenging with uncertainty over the depth and duration of
the economic downturn due to COVID-19, Cedar Woods starts FY2021 in a strong position with $360 million in
presales expected to settle over FY2021 and FY2022. Subject to the ability of Federal and State Government’s
to effectively manage COVID-19, the company is targeting strong growth on FY2020 earnings for FY2021.
Cedar Woods remains well placed for the medium term with more than 9,000 undeveloped lots/units in its
development pipeline across four states, maintaining the ability to respond quickly to improved market conditions.
A number of new projects are expected to contribute to earnings from FY2022, including Grace Apartments
and Fletcher’s Slip in South Australia, Subiaco and Hamersley in Western Australia, Greville (Wooloowin) and
Burpengary in Queensland and Mason Quarter (Wollert) and several apartment buildings in Victoria. Further
acquisitions are anticipated to supplement the portfolio in future years.
RISKS
The Board has established the Audit and Risk Management Committee to assist the Board in the effective
discharge of its responsibility for risk oversight and ensuring that internal control systems are in place to
identify, assess, monitor and manage risk. A Risk Management Framework has been established to support the
integration of risk management within the business and to promote a culture committed to building long term
sustainable value for stakeholders.
The general risks to the Company’s 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 metropolitan markets in which it operates, i.e. Western
Australia, Victoria, Queensland and South Australia. 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 objectives by managing both prices and
volumes through the property cycle.
As described above, during FY2020 the COVID-19 pandemic caused major disruption to the economy and
business globally and within Australia, including the business conducted by the Company. During this time
management formed a response team led by the Managing Director to formulate and execute its response to
the changing situation and impacts on the operations within the business. Frequent meetings were held with the
Board, to review and approve the response plan. The ongoing pandemic remains a material risk to the Company
insofar as it impacts upon economic activity, employment and migration to Australia and hence population
growth, which are major drivers of consumer confidence and housing demand, as well through impacts to the
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, climate change risks, competition for staff and project opportunities, and cyber risks.
While the Company has no material exposures to environmental, social and governance (ESG) risks, aside from
those related to COVID-19 mentioned above, the ESG report starting on page 22 provides further details on
how the Company is managing ESG risks.
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, Independent Director Ron Packer took leave of absence from the Board for health reasons,
returning on 5 December 2019. The Board notes that Mr Packer is due to retire by rotation at the forthcoming
Annual General Meeting and is not seeking re-election to the Board. Accordingly, the Board wishes to
sincerely thank Mr Packer for his long service to the Company and wishes him well in his retirement. We invite
shareholders to join the Board to farewell Mr Packer at the 2020 Annual General Meeting.
During the year the Board consolidated the Human Resources and Remuneration Committee and the
Nominations Committee into one committee, the Remuneration and Nominations Committee. In addition:
y Independent director Valerie Davies was appointed as Chair of the Remuneration and Nominations Committee;
and
y Independent director Jane Muirsmith was appointed as Chair of the Audit and Risk Management 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.
William Hames
Chairman
Nathan Blackburne
Managing Director
20
21
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
ESG
REPORT
Our vision is to be the best Australian property company renowned for
performance and quality. We aim to play a positive role in society over
the long-term, through our products and services, which are fundamental
to human wellbeing in homes and businesses, and through behaving
responsibly in our markets and in our communities.
Cedar Woods does more than create vibrant
communities. We are proud of our reputation for
being environmentally and socially responsible. We
continually look for ways to:
y reduce our ecological footprint
y promote affordable housing
y respect indigenous and cultural heritage
y stimulate economic investment and jobs
y foster cooperative stakeholder relationships
y activate the communities we create
y foster diversity, equal opportunity and career
development in the workplace
y provide a safe work environment for all who work
on Cedar Woods projects; and
y instill our values and promote an ethical business
culture through strong governance.
This section communicates our progress and
achievements on sustainability, community
outcomes and governance, benefiting those
affected by our actions.
The link between our values and our sustainability objectives
ENVIRONMENT
We think about
tomorrow.
SOCIETY
We deliver what we
say we will for all
our stakeholders.
GOVERNANCE
We abide by our
Code of Conduct &
company values.
ENVIRONMENT
Protecting the Environment
Environmental issues, including climate change, are a challenge affecting
society globally and we must address them collectively to preserve our
planet for future generations.
Cedar Woods recognises that its development activities carry the risk of environmental impact. The strategies to
limit this impact are summarised below.
Our Objectives
This year the company formulated its Environmental
Management Policy which incorporates mitigation
and adaption measures for climate change
throughout the business lifecycle.
y Our focus on urban infill seeks to mitigate climate
change by redeveloping existing brownfield sites
to avoid further impact on the natural environment,
lower travel emissions by reducing travel distances
and encouraging the use of public transport.
y When evaluating the business case for new
projects we investigate potential climate change
impacts, along with the adoption of mitigation
strategies. These factors affect urban design,
development outcomes and project feasibility.
y During detailed design we plan for climate
responsive solutions, such as conservation and
protection of natural bushland, rehabilitation of
degraded land, design guidelines (with energy
and water efficiency measures) and bush fire
risk mitigation.
y During construction we implement strategies
and initiatives relating to conservation,
revegetation, offsets, environmental management,
wildlife protection, water management and, in
some cases, infrastructure for renewable energy.
We also work to reduce and recycle demolition and
construction waste.
y Post construction we engage in activities to monitor
and manage ongoing environmental impacts such
as fauna surveys, ground water monitoring, and
conservation reserve management.
Key Areas
SUSTAINABLE
COMMUNITIES
Cedar Woods has a strategic focus
on creating sustainable communities,
with a growing involvement in
transit-oriented-development and
urban renewal. This enables us to
better respond to climate change by
reducing urban sprawl, maximising
use of existing infrastructure,
including public transport, and by
developing more compact cities.
BIODIVERSITY
Land development on greenfield
estates can impact local bushland
habitat, ecological communities
and significant species. We aim to
minimise and mitigate these impacts
to protect biodiversity in surrounding
environments. In most cases, only that
part of a project site already degraded
or denuded is suitable for urban
development and environmental
rehabilitation.
WATER
Australia’s climate is characterised
by variability, either severe flooding
or long-term drought / water scarcity
(often resulting in water restrictions).
In response, Cedar Woods is
constantly considering where its water
is sourced, how efficiently it is used
and how water quality is managed.
ENERGY
Implementing strategies to reduce
energy use from fossil fuels and
increase the uptake of renewable
energy is an important part of our
carbon emissions mitigation strategy.
Most energy initiatives are realised at
the building stage.
WASTE
Investigating land for potential
contamination, identifying hazardous
waste and undertaking remediation
and removal of waste to enable
urban development, are important
considerations when considering new
acquisitions and project delivery. We
manage demolition and construction
impacts by containing or removing
contaminants and minimising waste to
landfill with subsequent environment
and financial benefits.
22
23
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
Sustainable Communities
Biodiversity
How we are Implementing
Our Progress
How we are Implementing
Our Progress
We define a sustainable community as having the following
attributes:
y Compact infill built-form in existing urban areas
(brownfields), or new urban expansion areas
(greenfields) that benefit from urban infrastructure,
community centres, major transport networks and
proximity to commercial centres and employment; or
y Compact infill urban development connected to
high-frequency public transport, such as train stations
and bus corridors.
The company has some 2,700 townhouses and
apartments in its national development pipeline, making it
one of Australia’s largest density infill builders. In financial
year 2020, for lots / dwellings settled:
y 50 per cent are urban infill, within 20 km of a capital city
y 88 per cent are close to a commercial centre and major
transport network
y 40 per cent are medium-high density townhouses or
apartments
y 38 per cent are within 1 km proximity to high frequency
public transport.
All greenfield land development projects within the
portfolio are in a ‘Sustainable Communities’ context.
Design and construction of the new Emergency
Communications Facility in Williams Landing will bring
300 additional workers to the Town Centre, bringing total
employment to 2,100 persons. The Town Centre has some
17 hectares of development land still available for a mix
of office, retail and residential projects and is adjacent to
rail, bus and freeway connections.
The company acquired a 1.4 hectare infill urban renewal
site in Subiaco (WA) and a 43 hectare site in Wollert
(VIC). In Subiaco we will deliver a quality medium density
residential development consisting of townhouses and
apartments. Wollert will be a master-planned community
of over 500 lots and provides for a future train station,
town centre, schools and community facilities.
Cedar Woods seeks to minimise impacts on biodiversity in
line with requirements and internal goals. This includes the
preparation of a range of environmental management plans
which are referred to authorities for review and approval.
Environmental management initiatives vary by project and
include measures such as:
y
vegetation protection, including handing land over to
relevant long-term conservation management;
y on-site and off-site revegetation and rehabilitation;
y wetland management and enhancement; and
y
fauna protection and relocation.
Auditing for compliance against obligations under the
applicable management plans and conditions of approval
are carried out by authorities.
y Bushmead (WA). We continue to implement our
environmental management plan, preserving over
185 hectares of this community as pristine natural
bushland. This has included bushland revegetation
and rehabilitation and the installation of black cockatoo
nesting boxes.
y Ellendale (QLD). Ellendale offers 91 hectare of
open space corridors, over 40 per cent of the estate.
Our work has consisted of ongoing vegetation
maintenance and monitoring of revegetation.
y Ariella (WA). Referred for Commonwealth
environmental approval. We continue to implement the
management plan to conserve wetland park, including
revegetation and implement the fauna relocation plan
(relocation of kangaroos). Revegetation monitoring and
maintenance is ongoing.
y Millars Landing (WA). We continue ongoing
revegetation maintenance and monitoring in the
Tramway reserve.
y Harrisdale Green (WA). This estate is adjacent
to the Jandakot Regional Park. Our work includes
implementation of a bushland management plan, and
interface management, including fencing, with the
adjoining ‘Bushforever’ conservation area.
y The Rivergums (WA). We continue ongoing
revegetation maintenance and monitoring in reserves
and parks. Preparation of acid sulphate soils
management plan was completed. We achieved audit
clearance for the landscape management plan.
y Solaris (WA). Solaris is situated adjacent a
‘Bushforever’ area and incorporates a conservation
wetland, for which our management plan was approved
by the City of Armadale.
y Karmara (WA). Contamination was removed
and remediation audit approved by authorities.
Revegetation monitoring and maintenance is ongoing.
y Carlingford (VIC). The estate incorporates important
conservation areas and habitat links. The company
continues to protect and manage local fauna under the
kangaroo management plan.
y Williams Landing (VIC). We implement ongoing
management and maintenance of conservation
management plan for grassland and wetland reserves.
24
25
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED Water
Waste
How we are Implementing
Our Progress
How we are Implementing
Our Progress
Often projects involve the investigation of land for
contamination, identifying hazardous waste material and
undertaking remediation and removal of waste arising from
historic land uses.
We manage construction impacts to minimise waste
to landfill.
y Subiaco TAFE Site (WA). Due diligence included
detailed investigations to manage the risk of site and
building contamination.
y Port Adelaide (SA). Continuation of asbestos
management, site contamination remediation and
bulk earthworks.
y Glenside (SA). Completion of Stage 1 and 2
contamination remediation, with audit certificates
issued for both stages.
y Williams Landing (VIC). Environmental surveys
completed. Cedar Woods maintains all relevant
Certificates and Statements of Environmental Audit
at Williams Landing including those secured prior to
acquisition and those relating to the repurpose of the
land for residential use.
y Bushmead (WA). We used recycled concrete
pavement in road base and recycled concrete eco
blocks for retaining wall construction. Bushmead
recently featured as an Urban Development Institute
of Australia (UDIA) webinar case study on the use
of recycled materials. At Bushmead we are trialing
the different soil profiles to increase the use of in
situ material for fill and reduce the amount of waste
removed from the site.
y Botanica Apartments (SA). Construction
incorporated a 3-bin waste management system to
achieve zero waste taken to landfill.
We ensure our greenfield projects comply with Better
Urban Water Management Guidelines. These require the
preparation of a strategic and detailed plan demonstrating
how an urban project achieves a holistic water balance
and addresses stormwater recharge and water quality.
Our Design Guidelines help achieve water efficiency in
new home construction. Purchasers are encouraged to
reduce potable water consumption by installing rainwater
tanks and plumbing them directly for toilet flushing or use
in the laundry or installing grey-water systems which use
laundry and shower water for irrigation.
In Bushmead (WA) and Harrisdale Green (WA), Cedar
Woods provides a financial rebate to incentivise the
installation of rainwater tanks.
y All projects conform with applicable state government
water sensitive urban design principles to enhance
natural water systems, integrate stormwater treatment
into the landscape, protect water quality from urban
development, manage runoff and reduce peak flows by
using retention measures.
y The year saw ongoing groundwater monitoring across
most greenfield projects to ensure water quality is
maintained.
y Design Guidelines apply to all vacant lot sales.
y At Bushmead (WA) over $150,000 was invested in new
rainwater tanks through customer rebates. The estate
has met the criteria for compliance and accreditation
with UDIA EnviroDevelopment (Water), achieving a 20
per cent reduction in potable water use from statutory
compliance.
y At Williams Landing Town Centre (VIC) the
Emergency Communications Facility and 101 Overton
Road incorporate rainwater tanks for local harvesting
and onsite re-use in addition to water efficient fixtures
and fittings for taps, showers and toilets.
As part of its rebate scheme, Cedar Woods offers new lot
purchasers with a rebate for waterwise front landscaping
packages, to promote water efficiency in our new
residential communities.
y Newly appointed landscape contractors for land
development estates in WA are ‘waterwise accredited’.
During FY20 358 waterwise gardens were completed
across WA projects.
Energy
How we are Implementing
Our Progress
Greenfield land development estates incorporate climate
responsive subdivision lot layouts. Our Design Guidelines
recommend strategies to reduce energy consumption and
increase the take-up of renewable energy.
In Bushmead (WA) and Harrisdale Green (WA), Cedar
Woods provides a financial rebate to incentivise the
installation of photovoltaic systems.
y Land development estate Design Guidelines make
recommendations that encourage purchasers to
incorporate climate responsive design principles; take
advantage of renewable energy systems (photovoltaic
cells and solar hot water); and incorporate energy
efficient fittings and appliances when building their new
home.
y At Bushmead (WA), Cedar Woods has complied
with the UDIA EnviroDevelopment (Energy) criteria by
achieving a 20 per cent reduction in off-the-grid power
consumption across the estate.
Cedar Woods has the opportunity to contribute to
sustainability progress by putting an emphasis on smart
and resource-efficient building construction.
y Botanica Apartments (SA) achieved 7-star energy
rating, with common areas supported by photovoltaic
systems.
y At the Emergency Communications Facility (VIC)
a 4.5 star NABERS energy performance was targeted
through use of optimized glazing, building fabric, solar
renewable energy system, LED sensor lighting control
and air-cooled chiller air-conditioning.
y At 101 Overton Road (VIC) a 4.0 Star NABERS energy
performance was targeted through use of double
glazing, VRV/VRF heating and cooling systems and
LED sensor lighting control.
y
In the coming year Cedar Woods will review its
procurement tendering and selection processes to
emphasise the company’s preference for: supporting
local materials; supplies and jobs; emission reduction
strategies; and waste minimisation.
Cedar Woods has started to examine how it can further
influence its supply chain to improve its procurement
practices by requiring suppliers to optimise environmental
outcomes.
26
27
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED SOCIETY
In support of our people objectives we have policies on:
Equal employment opportunity
Diversity
Whistleblowing
Flexible working arrangements and special leave
Anti-bribery and corruption
Grievance
Study support
Workplace health and safety
Maintaining strong Stakeholder relationships is fundamental to
Cedar Woods’ long-term sustainable success.
Our People
Our Objectives
Key Areas
Creating a progressive, high spirited, inclusive and safe
work environment with strong staff alignment to values and
objectives, where top talent work collaboratively and high
performance is rewarded.
Strong culture, equal opportunities, diversity, health &
safety, development and progression, flexible workplace
policies.
How we are Engaging
Our Progress
Employee engagement surveys are conducted annually
and provide valuable insight on the issues that matter to
our workforce and our culture.
Our staff communications platform, ‘Woodsy’ enables our
employees to keep up to date with the latest news across
the Company, access employment policies, collaborate
with colleagues and share experiences and content.
Utilising an on-line training platform and external
providers, we provide targeted training and development
opportunities, including health and safety training, and the
tools needed to deliver enhanced operational and financial
performance in line with our growth strategy.
We increased our gender diversity in the company
during the year, with the proportion of females in the
workforce increasing from 53 per cent to 56 per cent.
We are cognisant that we need to promote and recruit
more females to senior management and executive
positions, with this objective being positively pursued in
our career development and recruitment programs.
We were pleased that in our most recent survey 97 per
cent of our people completed the employee survey and
90 per cent were either engaged or highly engaged in
their roles.
Our good health and safety record continued through the
effective operation of our work, health and safety systems
resulting in no reportable incidents.
Our workplace policies in the areas of anti-bribery
and corruption and whistleblowing were introduced
or updated.
Gender Diversity
40%
56%
40%
39%
30%
0%
30%
33%
Proportion of women employed
in the whole organisation
Proportion of women in senior
management positions
Proportion of women in senior
executive positions
Proportion of women
on the Board
Long term objective %
FY20 Actuals %
COVID-19
During the COVID-19 pandemic we safeguarded
technology and systems enabled the smooth
our staff by taking pro-active measures across
transition to remote working arrangements,
the business, including introducing new social
including on-line training and performance
distancing and hygiene policies, enhanced
management and assessment. The program
cleaning practices, formalised working from
has informed our digital strategy and business
home arrangements, and a series of other policies
continuity planning.
informed by government guidelines. Our leading
28
29
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED Our Suppliers
Our Objectives
Developing strong relationships with like-minded suppliers
renowned for good safety and sustainability is key to the
operational success of our businesses and ensures that
we have agility to develop new and market competitive
solutions to meet our customers’ needs.
Key Areas
y Long term relationships
y Social impacts
y Health and Safety
Community
Our Objectives
Key Areas
We create vibrant, socially beneficial communities by
investing in resident wellbeing, nurturing a strong sense of
community and maximising social connectivity. We respect
indigenous and cultural heritage.
Improving quality of life
y Social impact
y
y Respecting heritage
y Housing and workplace affordability
How we are Engaging
Our Progress
How we are Engaging
Our Progress
Cedar Woods values long term business relationships built
on trust and shared values and behaviours.
We recognise our role to ensure that the products and
materials included in our developments are responsibly
sourced with a view to ensure the company’s values are
reflected within its supply chain.
Our principal suppliers are regularly engaged with and
assessed for performance on a range of metrics, with
remediation action taken place where required.
We are committed to limiting the risk of modern slavery
occurring within our business, infiltrating the supply chain
or through any other business relationship.
As part of this ongoing process we review our principal
suppliers’ health and safety systems to ensure our own,
and the suppliers’ workforce is adequately protected.
This is enforced with regular audits and occasional site
briefings for our Board. Activity on work sites is monitored
with regular reports to the Board.
Our Customers
Our Objectives
Our customers play an essential role in ensuring the
sustainability of our operations. Our aim is to provide our
customers improved quality of life, in the fulfilment of our
company vision as a company renowned for performance
and quality.
Our most recent review of our suppliers’ performance
resulted in 98 per cent passing or exceeding the required
benchmark, up from 97 per cent in the previous year.
During the year we introduced our Modern Slavery Policy
and communicated this to our suppliers, with key terms
being included in our construction contracts. Test checks
have been carried out with major suppliers in our supply
chain. Employees responsible for purchasing were
trained in order to help us meet our obligations under the
Modern Slavery Act 2018.
Our good health and safety record continued through
the effective operation of our work, health and safety
systems resulting in no serious injuries or fatalities on
contractor sites.
Key Areas
y Quality
y Value
y Customer focus
How we are Engaging
Our Progress
Cedar Woods engages with its customers from initial
enquiry through to eventual product settlement and
beyond that as a member of each community.
We engage digitally with our customers via our websites
and through social media, and in our customer sales
centres. Focus groups are frequently established to market
test new products before delivery.
Customer surveys are conducted throughout the year
as products are completed, providing valuable feedback
to help us to refine our customer offering and to help drive
innovation.
Feedback received from our customers through surveys
have indicated high net promoter scores.
Our customer relationship management (CRM) system
continues to be refined to enhance data analytics and
learn more about our customers’ requirements.
We have embarked on a digital strategy to more
effectively capture and manage our leads and enquiries,
and a corporate marketing strategy to better coordinate
national marketing initiatives.
We create communities with amenities, public open space
and easy access to transport and community facilities
such as schools and ovals. Many of our projects are
located close to train stations or transport hubs.
We engage with the communities we create with regular
family events such as festivals, family fun days, local
environmental initiatives and entertainment.
At the grass roots level, we support our local communities
through the Neighbourhood Grants program.
Within particular projects, we preserve local heritage,
such as at the Wooloowin project in Queensland, which
contains two historic heritage-listed buildings that will be
restored and re-purposed within the development.
Certain communities include affordable dwellings and
offices to appeal to younger or less affluent buyers.
Feedback received from our community engagement
provides us vital feedback to help further improve our
products.
During the year the company received FOUR coveted
Urban Development Institute of Australia Awards, being
the Residential Excellence Award (more than 250 lots), for
Bushmead in WA and best Master-planned Development,
best Residential Development and Excellence in Urban
Renewal for the Glenside project in SA.
Since its inception The Neighbourhood Grants program
has donated more than half a million dollars to support
a range of community projects, organisations and clubs
that operate in the localities of our projects.
During the year we created 4 social housing lots at
Harrisdale Green (WA) and 13 affordable housing
apartments at Glenside (SA).
Affordable Housing
Partnering with the Department of Communities
(WA) to provide affordable housing, where 1 in 9 of
the dwellings at Harrisdale Green are dedicated to
affordable housing product.
Shareholders
Our Objectives
Key Areas
Our purpose is to create long term value for our
shareholders. We are committed to transparent and open
engagement with our investors.
y Returns to shareholders
y Shareholder engagement and communications
y
Investor relations
How we are Engaging
Our Progress
The Managing Director and Chief Financial Officer engage
with shareholders and potential investors throughout the
year with briefings and investor roadshows. The half year
and full year results are presented by way of a webcast
followed by a question and answer forum. Directors and
staff are available to meet with shareholders at the Annual
General Meeting.
The company conducts investor shareholder feedback
surveys on a regular basis to obtain feedback from
institutional and retail investors and engages an investor
relations consulting firm to assist with its investor
relations strategy.
Returns to shareholders over 1, 3 and 5 years are detailed
in the remuneration report at page 54 of the annual
report.
Further details with respect to our shareholder
communications and disclosures are set out in the
Corporate Governance Statement available on our
website.
When asked in the independently conducted survey how
timely Cedar Woods is with its investor communications,
investors rated the Company 4.5 out of 5.
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31
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED CORPORATE GOVERNANCE & BUSINESS ETHICS
The Board of Cedar Woods is committed to achieving and demonstrating the highest standards of corporate
governance. The Company updates its comprehensive Corporate Governance Statement annually, a copy of
which is lodged with ASX on the date that the Company publishes its full year results. Investors may find a copy
in the Governance section (under ‘Our Company’) on the company website www.cedarwoods.com.au.
Governance
Governance is overseen by the Board and its Committees, with the main responsibility areas as follows:
Board of Directors
50% Independent
William Hames – Chair
Robert Brown – Deputy
Ronald Packer
Valerie Davies
Jane Muirsmith
Nathan Blackburne
y Purpose & Vision
y Culture
y Values
y Policies
y Strategy
y Corporate Plan
y Monitoring
y Performance Assessment
y Shareholder Engagement
y Executive Appointments
Audit & Risk
Management
Committee
100% Independent
Remuneration
& Nominations
Committee
100% Independent
Jane Muirsmith – Chair
Valerie Davies – Chair
Ronald Packer
Valerie Davies
Ronald Packer
Jane Muirsmith
y Risk Management Framework
y Risk Monitoring
y Financial Reporting
y Compliance
y W.H.S.
y Cyber Security
y Whistleblowing
y External Auditor Engagement
y Board Composition, Skills and
Independence
y Nominations
y Succession
y Director Induction
y Board and Executive
Remuneration
y Human Resources
y Diversity
Risk Management Process
The Board has ultimate responsibility for
internal compliance and control. The Board has
established the Audit and Risk Management
Committee as responsible for overseeing and
ensuring that internal control systems are in place
to monitor and manage risk.
The Board has adopted a Risk Management
Framework that governs the identification,
management and monitoring of risks in the business.
The framework incorporates a number of tools that
are used in the business to identify, assess and
manage risks and opportunities, assess how they are
controlled and whether further actions are required.
Risk Management Framework
During the year, updates from management are
provided to the Committee, and ultimately the
Board, covering all principal risks.
In addition, the Board requires that each major
proposal submitted to the Board for a decision
is accompanied by a comprehensive risk
assessment and, where required, management’s
proposed mitigation strategies.
An overview of the Risk Management Framework is
provided below.
RISK REPORTING
& MONITORING
Tools
Risk Committee Report
MD Report
Risk as part of ‘business
as usual’
RISK
IDENTIFICATION
Tools
Risk Reviews
Policies & Procedures
Risk Management Tools
RISK
MANAGEMENT
Tools
Board Risk Register
Project Risks Registers
Other Risk Registers
Policies and Procedures
RISK
ASSESSMENT
Tools
Risk Impact Matrix
Risk Likelihood Matrix
Risk Rating Matrix
Risk Register
Risk Appetite
Statement
Corporate Policies
In support of the governance framework and the company’s culture, and to promote sound business ethics the company has
developed corporate policies, copies of which are available on our website.
y Code of Conduct
y Anti-bribery & Corruption
y Conflicts of Interests
y Continuous Disclosure
y Diversity
y Environmental Management &
Climate Change
Investor Communications
y
y Modern Slavery
y Performance Evaluation
y Privacy
y Risk Management
y Securities Trading
y Whistleblower
y Other internal policies
32
33
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED 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 2020.
a. Directors
f. Significant changes in the state of affairs
The consolidated entity was significantly impacted by the social and political response to the COVID-19
pandemic, resulting in a contraction in customer demand and disruptions to the company’s second half sales
and settlement program. As a consequence, the consolidated entity’s revenue and profit was significantly
reduced compared to the previous year. Further details can be found in the financial and operating review,
commencing on page 13 of this annual report. There were no other significant changes in the state of affairs of
the consolidated entity during the year.
g. Matters subsequent to the end of the financial year
Refer to item (c) of this Directors’ Report for details of the dividend recommended by directors since the end of
The following persons were directors of Cedar Woods during the whole of the financial year and up to the date
the financial year.
of this report, except where stated:
William George Hames (Chairman)
Robert Stanley Brown (Deputy Chairman)
Ronald Packer (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 35 to 37 of this report.
b. Principal activities
The principal continuing activities of the consolidated entity in the course of the year ended 30 June 2020 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 2019 of 13.5 cents
(2018 – 18.0 cents) per fully paid share, paid on 25 October 2019 (2018 – 26 October 2018)
Interim fully franked ordinary dividend for the year ended 30 June 2020 of 12.5 cents
(2019 – 18.0 cents) per fully paid share, paid on 24 April 2020 (2019 – 26 April 2019)
2020
$’000
2019
$’000
10,653
13,892
10,056
14,421
20,709
28,313
Since the end of the financial year the directors have recommended the payment of a final fully franked ordinary
dividend of 6.5 cents (2019 - 13.5 cents per share) to be paid on 30 October 2020 out of retained profits at 30
June 2020.
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 FY2021 with strong pre-sales, modest debt, substantial funding
capacity and a diverse portfolio of well-located developments in Melbourne, Brisbane, Perth and Adelaide.
No other matters or circumstances have arisen since 30 June 2020 that have significantly affected or may
significantly affect:
y the consolidated entity’s operations in future financial years; or
y the results of those operations in future financial years; or
y 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)
y 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 thirty years.
Other current listed company directorships and former listed company directorships in the last three years:
None.
Mr Robert S Brown, MAICD, AIFS
y Deputy Chairman of the Board of directors, non-executive director
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-one years.
Other current listed company directorships and former listed company directorships in the last three years:
Luiri Gold Limited.
34
35
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
Mr Ronald Packer, BCom (UWA), FAICD, Solicitor Supreme Court of England & Wales
Mr Nathan J Blackburne, BB (Curtin), AMP (Harvard), GAICD
y Non-executive director
y Member of the Audit and Risk Management Committee
y Member of the Remuneration and Nominations Committee
Mr Packer is an independent director, 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 fourteen years.
Other current listed company directorships and former listed company directorships in the last three years:
None.
Ms Valerie A Davies, FAICD
y Non-executive director
y Chair of the Remuneration and Nominations Committee
y Member of the Audit and Risk Management Committee
Valerie Davies is a professional company director with broad experience across the spectrum of public and
private companies, government boards and community organisations. ASX experience includes her current
role on the Board of Event Hospitality and Entertainment Limited and she is a Commissioner of Tourism Western
Australia.
Previous non-executive roles include HBF, lluka 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.
Aside from the boardroom Ms Davies’ career spans more than 30 years across a range of industries
including media, marketing and television production. A specialist provider of communications and strategic
issues management services, she has worked at the highest level with numerous tier 1 national and
international business organisations addressing the complexities of issues management, communications,
coaching and mentoring.
y 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 New Zealand 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.
Ms Davies is a member of Chief Executive Women (CEW), a former Telstra Business Woman of the Year (WA)
l. Directors’ interests in shares
and a past Vice-President of the Australian Institute of Company Directors (WA).
Ms Davies is a non-executive, independent Director and has served on the board for five 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, GAICD
y Non-executive director
y Chair of the Audit and Risk Management Committee
y Member of the Remuneration and Nominations 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), the Telethon Kids Institute and Chair of Healthdirect Australia.
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 three years.
Other current listed company directorships and former listed company directorships in the last three years:
Australian Finance Group Limited.
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
7,818,633
167,859
15,785
10,734
72,901
Nathan J Blackburne also has an interest in performance rights under the executive long term incentive plan,
details of which are set out in the remuneration report within this report.
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
Remuneration and Nominations
Committee
J M Muirsmith (Chair)
V A Davies (Chair)
R Packer
V A Davies
R Packer
J M Muirsmith
36
37
2020 ANNUAL REPORTCEDAR 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 2020, and the numbers of meetings attended by
each director:
Number of
meetings held:
W G Hames
R S Brown
R Packer***
V A Davies
J M Muirsmith
N J Blackburne
Board meetings
Meetings of Committees
Audit and Risk
Management
Human Resources
and Remuneration
Nominations
Remuneration and
Nominations
9
9
9
7
9
9
9
5
1*
4**
2
5
5
5*
2
2*
2
-
2
2
2*
1
1*
1
-
1
1
1*
8
8*
8**
5
8
8
8*
* Not a member of this committee.
** Member of committee for 3 meetings.
*** On board approved leave of absence from 1 July 2019 to 5 December 2019.
The Human Resources and Remuneration and Nominations Committees were replaced by one committee,
the Remuneration and Nominations Committee during the year. The above table shows the meetings of all
committees.
DIRECTORS’ REPORT: LETTER TO SHAREHOLDERS FROM
THE CHAIR OF THE REMUNERATION & NOMINATIONS
COMMITTEE
Dear Shareholders,
I am pleased to provide this letter setting out the highlights in relation to remuneration matters for FY2020. The
Financial and Operating Review notes that Cedar Woods’ result was significantly impacted by COVID-19, while
there were other good achievements across the various areas within the company’s operations, as described
in our revised “balanced scorecard” in section r) of this report. The balanced scorecard sets out the company’s
FY2020 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
In FY2020 the Committee reviewed 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 was assisted by external consultants and has resulted in some
adjustments to both the Short-Term Incentive Plan and the Long-term Incentive Plan, which are
detailed in this Remuneration Report.
Fixed
remuneration
For FY2020 the Managing Director’s (MD’s) fixed remuneration was limited to 41% of his total
package and was increased, based on market benchmarking information. 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”)
Long-term
incentives
(“LTIs”)
To ensure the STI’s were appropriately aligned to the corporate strategy, the company updated and
simplified its balanced scorecard of measures for determining the STI awards for FY2020. Scorecard
sections have been grouped into financial and non-financial categories, within the relevant strategic
priority areas. Part of the Managing Director’s STI was deferred into equity as detailed later in this report.
The LTI plan continues to operate for the executives 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.
As noted in the 2019 remuneration report, for FY2020, the Board approved the recommendation
of the Remuneration and Nominations 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 48 below.
Non-Executive
Director
(“NED”) fees
The potential maximum aggregate NED remuneration for FY2020 was $750,000, as approved
by shareholders at the FY2014 AGM. Chair and NED fees were increased by approximately 2%
effective 1 July 2019 to provide an increase in line with CPI. Total NED fees paid for FY2020 were
$638,000.
The Remuneration Report provides information on the remuneration outcomes for FY2020.
It was pleasing to note that shareholders voted overwhelmingly in favour of the FY2019 Remuneration Report at
the 2019 Annual General Meeting, with 92.9 per cent of votes cast in favour.
I look forward to answering any questions you may have at our 2020 Annual General Meeting on 4 November.
Yours faithfully,
Valerie A Davies
Chair - Remuneration and Nominations Committee
38
39
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED DIRECTORS’ REPORT - REMUNERATION REPORT
The directors present Cedar Woods’ FY2020 Remuneration Report which sets out remuneration information for
the directors and other key management personnel (“KMP”) for the year ended 30 June 2020.
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
The Remuneration Report is presented under the following sections:
Page
o)
Introduction
p) Remuneration governance
q) Executive remuneration policy and framework
r) Executive remuneration outcomes for FY2020 (including link to performance)
s) Executive contracts
t) Non-Executive Director fee arrangements
u) Additional statutory disclosures
o.
Introduction
40
41
42
49
57
57
58
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 2020. 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
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
Changes since last year
None.
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
Term as
KMP
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
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.
40
p. Remuneration governance
Role of the Remuneration and Nominations Committee
The Remuneration and Nominations Committee is a committee of the Board. In relation to remuneration matters,
it is responsible for making recommendations to the Board on:
y the over-arching executive remuneration framework;
y remuneration levels of the MD and other executives;
y operation of incentive plans and key performance hurdles for the executive team; and
y NED fees.
The 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 Committee periodically obtains independent
remuneration information to ensure executive remuneration packages and NED fees are appropriate and in
line with the market.
The Corporate Governance Statement provides further information on the role of the Remuneration and
Nominations Committee and may be found on the company’s website under the Our Company/Governance link.
Use of remuneration advisors
During the year the Remuneration and Nominations Committee reviewed 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 Remuneration and Nominations 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
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 (cash) 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.
STI
at any time prior to, or at, the final vesting date of the award and will take account of factors such
(deferred)
as any material misstatements of financial results or individual instances of non-compliance with
Cedar Woods’ policies.
LTI
at any time prior to, or at, the final vesting date of the award 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 FY2019 Annual General Meeting (“AGM”)
At the company’s 2019 AGM, 92.9 per cent of eligible votes cast were in favour of the Remuneration Report for
FY2019.
41
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
q. Executive remuneration policy and framework
ii. Approach to setting remuneration
Attract, motivate and retain high performing individuals:
Remuneration levels are reviewed annually through a process that considers market data, insights into
The information contained within this section outlines the details pertaining to the executive remuneration policy
and framework for FY2020.
i.
Principles and strategy
Company purpose
To create long-term value for shareholders through the development of vibrant communities
Remuneration strategy linkages to company purpose
The Board ensures our approach to executive reward
satisfies the following key criteria for good reward
governance practices:
y
y
y
y
Competitiveness and reasonableness
Acceptability to shareholders
Alignment of executive remuneration to company
performance
Transparency of the link between performance and
reward
y
y
The remuneration offering rewards capability and
experience
Reflects competitive reward for contribution to
growth in shareholder wealth
The framework is aligned to shareholders’ interests by
having:
y
y
STIs (cash & deferred) linked to current year
performance and subject to clawback
LTIs linked to both long term external (relative total
shareholder return (“TSR”)) and internal (earnings
per share (“EPS”) growth) performance. LTIs are
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
STIs
Paid in cash
Rewards executives for their
contribution to achievement of
company outcomes
No guaranteed fixed
remuneration increases
included in executives’
contracts
Fixed remuneration may be
phased to market benchmark
for new appointments,
conditional on performance
Linked to the Corporate Plan
and achievement of personal
objectives established at the
start of the year
Equity based STI grants
awarded in Zero-price options
Rewards executives for their
contribution to the creation
of shareholder value over the
medium term
Vesting of Zero-price options
is dependent on a further one
year of service after the initial
performance period
)
”
R
T
“
(
n
o
i
t
a
r
e
n
u
m
e
r
l
a
t
o
T
LTIs
Equity based LTI grants
awarded in Performance
Rights
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
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 Remuneration and Nominations Committee).
The Remuneration and Nominations Committee also considers issues of succession planning, career
development and staff retention.
In FY2020, 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 company and aligned with market practice.
The approach is generally to position total remuneration between the median and upper quartile of its 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 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 in FY2020 introduced a deferred STI component to the MD’s
remuneration mix in addition to the equity based LTI plan.
The Remuneration and Nominations Committee will continue to review the level of fixed and ‘at risk’ pay
in FY2021 with the objective of ensuring that executive remuneration continues to meet the expectations
of shareholders and candidates in a market that is highly competitive for talent. In light of COVID-19, the
Committee has frozen KMP fixed remuneration and target STI and LTI opportunities at FY2020 levels.
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 FY2020 compared to FY2019 and demonstrate the
progress made this year in increasing the proportion of ‘at risk’ pay.
Managing
Director
COO
CFO
Company
Secretary
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
41%
10%
12%
37%
54%
55%
65%
64%
23%
23%
17%
28%
18%
17%
11%
25%
74%
13%
13%
81%
81%
19%
19%
Legend
Fixed Pay
Cash STI
Deferred STI
LTI
42
43
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
STI and LTI in the above graphs are based on 100% of the target opportunity when remuneration levels
are determined by the Remuneration and Nominations Committee. STI’s awarded may exceed the target
opportunity (refer to ‘STI Plan effective for FY2020’ below). LTI’s may be awarded up to the target opportunity.
Other executives
How is the STI
delivered?
Cash
iii. Details of incentive plans
Short-term incentives (STI)
Key features of the current STI plan are set out below.
Managing Director
How is the STI
delivered?
45% of the STI is delivered in cash and 55% of the STI is deferred by way of a grant of zero-price
options under the Deferred Short Term Incentive (DSTI) Plan.
What STI’s are
available and what
are the performance
conditions for FY2020?
The STI awarded is based on the Remuneration and Nominations Committee’s assessment of
the company’s overall performance using the Balanced Scorecard system referred to in section
r) Executive remuneration outcomes for FY2020 below.
Subject to board discretion, in order for any STI to be payable, the following hurdles (triggers)
must be achieved:
y NPAT trigger: NPAT to equal or exceed 90% of the budget
y Safety trigger: No reportable incident resulting in serious injury under the relevant
Occupational Health & Safety Act in CWP premises or sites as a result of failure of the
company’s Work, Health & Safety system.
A performance rating of up to 150% of the STI opportunity is available to reward personal
performance when it exceeds expectations, at the Board’s discretion.
Based on the Board’s determination of overall performance and exercising its discretion, the
MD received 40% of his STI opportunity in FY2020. For details refer to r) Executive remuneration
outcomes for FY2020 below.
How is performance
assessed?
On an annual basis, after consideration of performance against set balanced scorecard
objectives, the Chairman and Chair of the Remuneration and Nominations Committee
recommends to the Board the amount of STI to be paid to the MD.
What happens in the
event of change of
control?
If a Change of Control Event occurs prior to the vesting of an award, unless the Board
determines otherwise, a pro-rata number of the MD’s unvested awards will vest immediately
based on the proportion of the period that has passed at the time of the relevant change of
control event, and the extent to which any applicable performance conditions have been
satisfied (or are estimated to have been satisfied) at that time, unless the change of control
event occurs after the end of the performance period (the first year), in which case full vesting of
unvested awards will occur, to the extent to which any applicable performance conditions have
been satisfied (or are estimated to have been satisfied) at that time.
What STI’s are
available and what
are the performance
conditions for FY2020?
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
5. Exceeded Expectations
4. Overly Met Expectations
3. Met Expectations
2. Nearly Met Expectations
1. Below Expectations
Incentive
125% - 150%
100% - 125%
80% - 100%
50% - 80%
0%
Performance ratings of up to 150% of the personal component are available to encourage and
reward personal performance when it exceeds expectations.
b) Up to 25% of the cash incentive awarded based on the Remuneration and Nominations
Committee’s assessment of the company’s overall performance using the Balanced
Scorecard system referred to in section r) Executive remuneration outcomes for FY2020
below.
In order for any STI to be payable under the company component, the following hurdles
(triggers) must be achieved:
y NPAT trigger: NPAT to equal or exceed 90% of the budget
y Safety trigger: No reportable incident resulting in serious injury under the relevant
Occupational Health & Safety Act in CWP premises or sites as a result of failure of the
company’s Work, Health & Safety system.
Based on the Company’s and individuals’ performance in FY20, no executive received more
than 40% of their STI opportunity in FY2020.
The greater focus of the STI on personal performance was deemed appropriate to attract
and retain executives. However, in line with the general market, for FY2021 onwards, other
executives STI will be based 50% on company performance and 50% on personal performance.
How is performance
assessed?
On an annual basis, for senior executives, the Remuneration and Nominations Committee will
seek recommendations from the MD before making its determination.
What happens if an
Executive leaves Cedar
Woods?
Executives who resign prior to the end of the financial year generally forego their STI
entitlement. The Remuneration and Nominations Committee has discretion in this regard.
Do clawback
provisions apply to
STI’s?
The company has an incentive claw back policy in place. Under the policy, the Board may at its
absolute discretion claw back vested and unvested incentives in the case of an “inappropriate
benefit” arising.
44
45
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED Long-term incentives (LTI)
LTI plan effective up to 30 June 2019
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?
MD and other Executives. NEDs are not eligible to participate in the LTI plan.
What LTI’s are available?
Each participant has a maximum LTI opportunity depending on the accountabilities of
the role and impact on company performance.
How is the LTI delivered?
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.
How are the number of rights
determined for each LTI grant?
The number of performance rights allocated for each participant is calculated by
reference to the target LTI opportunity outlined in the prior section. For the LTI, the target
opportunity is the maximum opportunity.
When does the LTI vest?
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 financial
year. This fixes the maximum number of shares and the actual number will vest in
accordance with the performance conditions set out below.
The Board will determine the outcomes at the end of the three-year performance period,
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:
y
y
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.
Do participants receive
dividends on LTI grants?
Not prior to any vesting.
Can a participant deal with or
trade their performance rights
before 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.
Is performance retested if
performance hurdles are not
exceeded?
Do clawback provisions apply
to LTI’s?
No, there are no further retests of the performance conditions.
The company has an incentive claw back policy in place. 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).
Participants will only derive value from this component of the LTI if the company’s TSR
performance is equal to or 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
< Index
At the Index
Percentage of TSR-tested rights vesting
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:
Statutory net profit after tax
EPS =
Weighted number of shares on issue
Where:
Statutory net profit after tax:
Weighted number of shares on issue:
as reported by a company at the most recent
financial-year end preceding the calculation
date.
the weighted number of shares on issue for the
financial year.
The relevant inputs when setting the EPS target range are generally:
y The earnings and EPS targets contained in the company’s Corporate Plan, particularly
with reference to the most recent internal five-year forecasts;
y The level of stretch associated with those Corporate Plan targets;
y Any earnings guidance that has been provided to the market;
y 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%
46
47
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED LTI plan effective for FY2020 (from 1 July 2019)
As noted in section p) Remuneration Governance, the Remuneration and Nominations Committee reviewed
the remuneration framework with advice from external consultants and changes to the LTI Plan were made for
FY2020, as noted in the FY2019 remuneration report.
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 set at the commencement of the three year performance
period. The relevant inputs when setting the EPS target range will be:
y The earnings and EPS targets contained in the Corporate Plan, particularly with
reference to the most recent internal five-year forecasts;
y The level of stretch associated with those Corporate Plan targets;
y Any earnings guidance that has been provided to the market;
y Shareholder and analyst (individual and consensus) expectations;
y The rate of growth in the Australian economy and the performance of the property
sector.
At commencement of the plan, the Remuneration and Nominations Committee will
consider the appropriate EPS target range and the level of payout if targets are met.
This may include setting any maximum payout under the LTI plan and minimum levels of
performance to trigger payment of LTI. The EPS target range, once set, remains in place
for the three-year performance period.
The FY2020 plan vesting schedule is below:
EPS compound annual growth
rate
Percentage of EPS-tested rights
vesting
<3%
3%
Between 3% - 5%
> = 5%
Nil
50%
Pro-rata between 50% and 100%
100%
Changes were made to the LTI plan for the following reasons:
y 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.
y 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.
y It was deemed important that performance targets remain relevant, challenging and achievable in the current
economic and market conditions.
y 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 executives and aligns to current shareholder return
expectations.
r. Executive remuneration outcomes for FY2020 (including link to performance)
Performance against STI balanced scorecard objectives
The table below provides a summary of the FY2020 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.
Strategic
Priority &
Measure
Financial
Strength
Annual
performance
and balance
sheet strength
Total Metric
Outcome
Net Profit After Tax
(NPAT)
NPAT of $20.9m did not meet the Company’s
budget in FY2020.
Settlements
Total settlements did not meet budget.
50% Revenue
Reported revenue was below budget.
Return on Equity
Return on equity was 6%, below budget and below
company benchmark of 10%.
Return on Capital
Return on capital was 6%, below budget and
below company benchmark of 12%.
Performance
assessment
Not achieved
Not achieved
Not achieved
Not achieved
Not achieved
Borrowings – debt/
equity
Borrowings maintained within target debt/equity
range of 20 – 75%.
Achieved
Borrowings - terms
Finance facilities extended and maintained within
covenants.
Achieved
Cost reduction
program
Identified cost savings of over 1% achieved
against budgeted total costs.
Presales
Presales of $360m at 30 June exceed prior year
level of $330m.
20% New projects
The company successfully acquired 4 new
projects assisting the replenishment of the project
pipeline.
Achieved
Achieved
Achieved
Project cost overruns
Project development costs overruns were kept to
within 1% of total development costs.
Achieved
Strong customer net
promoter score
Based on surveys the Company exceeded its
customer net promoter score targets.
Investor perception
20%
Product quality
Based on post roadshow surveys and feedback
the Company is perceived well in the investor
community.
The company measures the quality in the supply
chain according to an in house rating system and
met internal benchmarks.
Achieved
Achieved
Achieved
Earnings
Growth
Measures of
future financial
health of the
Company
Operational
Excellence
Measures
of customer
and investor
satisfaction
and risk
management
Risk management
program
Risks managed under the company’s risk
management framework with some risks elevated
as a result of COVID-19.
Partially achieved
Compliance with
the work, health and
safety system
WHS risks monitored and there was no reportable
incident resulting in serious injury as a result of any
failure of the Company’s WHS system.
Achieved
Employee
engagement
Based on staff survey, 85% of staff are highly
engaged in their roles.
Achieved
10%
Retention of
executives and senior
management
Achieved an annual retention rate of 86%.
Partly achieved
Gender and diversity
target
Gender diversity meets target overall however the
Company is seeking to improve gender diversity in
senior positions.
Partly achieved
High
Performance
Culture
Manage
leadership
pool and strive
for strong staff
engagement
and team
improvements
48
49
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED The following table outlines the proportion of maximum STI earned and forfeited by executives in relation to
Terms and conditions of the share-based payment arrangements
FY2020 and the maximum STI that was available.
The terms and conditions of each grant of zero price options affecting remuneration in the current or a future
Proportion of maximum STI earned and forfeited in FY2020
reporting period are as follows:
CFO
Company Secretary
Incentive
Plan
Grant
date
Performance
period
Service
period
Vesting
date
Value at
start of
performance
period
Performance
hurdle
Value per
option at
grant date
%
Vested
Total earned of target %
Total earned of target $
Total forfeited of target %
Total forfeited of target $
Target STI opportunity
Maximum STI opportunity
MD
40%
$168,520
60%
$252,780
$421,300
$631,950
COO
40%
$52,000
60%
$78,000
$130,000
$178,750
40%
$22,000
60%
$33,000
$55,000
$75,625
40%
$16,000
60%
$24,000
$40,000
$55,000
For the Managing Director, 45% of the STI earned is payable in cash ($75,834) and 55% of the STI earned
($92,686) was deferred into zero price options under the DSTI plan. For the other executives the STI is payable
in cash.
Board discretion applied to the FY2020 STIs
While the company failed to meet its FY2020 settlements and revenue targets, and as a consequence did not
achieve the net profit hurdle in the balanced scorecard, the Board exercised discretion provided for under the
STI plan to award modest short term incentives to the executive team, taking into account the following:
y In FY20 the company significantly outperformed both the market and peer group as measured by Total
Shareholder Return. The Company’s TSR of -2.4% outperformed the All Ordinaries (-7.2%), Small Ordinaries
(-5.7%), Small Industrials (-7.4%), S&P ASX 300 (-7.6%) and the S&P ASX 300 industrials (-7.7%).
y Prior to the onset of COVID-19 the company was on track to achieve its budget.
y Significant settlements targeted for June 2020 were delayed because of mandatory social distancing measures
at construction sites. The settlements were largely achieved in July 2020, representing a deferral rather than a
loss of income.
y Strong personal performance of the executives during the year, and in managing and limiting the impact of
COVID-19 on the company.
y The good performance of the company on the majority of metrics generally, as shown by the balanced scorecard.
y The company remains in a strong financial position with significant headroom under its finance facilities and
significant presales at 30 June 2020 ($360m) compared to the same time last year ($330m).
y The STIs awarded are significantly lower than the target opportunities (27% of maximum), and the STIs awarded
in the previous year.
y The need to retain executives in a market and industry (property) where quality talent with sufficient and relevant
experience is in short supply nationally.
FY2020 –
Managing
Director
TBA
1/7/19 to
30/6/20
1/7/19 to
30/6/21
30/8/21
TBA
Balanced
scorecard
score
$TBA
N/A
The first grant of options to the Managing Director under the DSTI is subject to shareholder approval at the
2020 AGM.
Performance against LTI objectives
The equity based LTI plan for the MD and executives 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 FY2020.
Value granted (max LTI opportunity)
$689,400
$212,100
$120,000
The LTI awards earned vest on 31 August 2022 subject to the two vesting conditions.
LTI awards in FY2020
MD
COO
CFO
50
51
2020 ANNUAL REPORTCEDAR 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
The following table shows how many share rights were granted, vested and forfeited during the year for KMP.
period are as follows:
Incentive
Plan
Grant
date
Performance
period
Vesting
date
Value at
start of
performance
period
Performance
hurdle
Value per
share right at
grant date
Performance
achieved
%
Vested
FY2017 –
Award 1
(Executives)
FY2017 –
Award 2
(MD)
FY2018 –
Award 1
(Executives)
FY2018 –
Award 2
(MD)
FY2019 –
Award 1
(Executives)
FY2019 –
Award 2
(MD)
FY2020 –
Award 1
(Executives)
FY2020 –
Award 2
(MD)
25/08/2016
10/11/2016
25/08/2017
9/11/2017
14/09/2018
13/11/2018
24/09/2019
6/11/2019
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
1/7/19 to
30/6/22
1/7/19 to
30/6/22
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
31/08/2022
$5.71
31/08/2022
$5.71
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
$4.29
$2.75
$4.15
$2.87
$4.62
$2.68
$4.92
$2.81
$5.21
$3.01
$4.62
$2.59
$6.17
$4.45
$6.18
$4.51
No
Yes
No
Yes
No
Partial
No
Partial
50%
50%
30%
30%
to be determined
n/a
to be determined
n/a
to be determined
n/a
to be determined
n/a
The number of share rights granted to key management personnel under the LTI scheme during FY2020 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
FY2020 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 FY2020 ($5.71).
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 FY2018 LTI plan will be issued in FY2021.
The fair value of the rights has been determined using the amount of the grant date fair value.
Name &
grant dates
Balance
at start
of year
Number
Granted
during year
Number
Executive director
N J Blackburne
Vested
Number
Vested
%
Forfeited
Number
Forfeited
%
Balance at
end of year
(unvested)
Number
Max. value
yet to vest *
6 Nov 2019**
-
120,735
13 Nov 2018**
46,875
-
22 Aug 2017**
36,434
-
-
-
-
-
-
-
-
-
-
25 Aug 2016
29,885
-
14,942
50
14,943
Senior executives
P Archer
24 Sep 2019
-
37,145
14 Sep 2018
17,270
-
22 Aug 2017
16,473
-
-
-
-
-
-
-
-
-
-
25 Aug 2016
18,391
-
9,195
50
9,196
L M Hanrahan
24 Sep 2019
-
21,015
14 Sep 2018
22 Aug 2017
8,224
3,488
25 Aug 2016
2,759
P S Freedman
22 Aug 2017
7,752
25 Aug 2016
9,195
-
-
-
-
-
-
-
-
1,379
-
4,597
-
-
-
50
-
50
-
-
-
1,380
-
4,598
-
-
-
50
-
-
-
50
-
-
-
50
-
50
120,735
$272,257
46,875
$60,703
36,434
$51,190
-
-
37,145
$82,648
17,270
$25,991
16,473
$22,074
-
-
21,015
$46,758
8,224
$12,377
3,488
$4,674
-
-
7,752
$10,388
-
-
* The LTI awards granted in FY2020 vest on 31 August 2022 subject to the two vesting conditions. The maximum value of the
deferred shares yet to vest has been determined based on the grant date fair value of the rights, adjusted to the anticipated
vesting outcomes.
** Approval for the issue of share rights to NJ Blackburne was obtained from shareholders under Australian Securities
Exchange Listing Rule 10.14.
52
53
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED Performance of shareholder return metrics
In FY2020, the company delivered a profit of $20.9 million, a decrease of 57.0 per cent over the prior year.
The returns to shareholders of Cedar Woods over the last 1, 3 and 5 years are detailed in the table below:
Returns to shareholders over 1, 3 and 5 years (%)
1 year
3 years
5 years
EPS growth
Share price growth
Dividend growth
CWP TSR (change in share price and dividends)
S&P Small Industrials Index (XSIAI) TSR
(57.3)
(8.1)
(39.7)
(2.4)
(7.4)
(23.3)
0.2
(12.6)
6.2
5.2
(13.7)
(0.1)
(7.1)
5.9
4.7
The total shareholder return in FY2020 was -2.4 per cent which outperformed the S&P Small Industrials Index
total return of -7.4 per cent over the same period. The returns over 1, 3 & 5 years compare favourably to the
returns of the S&P Small Industrials Index. Returns over 1, 3 & 5 years also compare favourably to listed peers in
the property sector, noting the sector has faced challenging conditions nationally.
Management is focused on delivering consistent earnings per share and dividend growth. The company’s
share price is subject to market factors that are beyond the company’s control. The measures of the company’s
financial performance over the last five years as required by the Corporations Act 2001 are shown in the table
below. However, these are not necessarily consistent with the measures used in determining the variable
amounts of remuneration awarded to KMP, the basis for which is outlined above. As a consequence, there
may not always be a direct correlation between the statutory key performance measures and the variable
remuneration awarded.
2020
2019
2018
2017
2016
Profit for the year ($’000)
20,899
48,644
42,603
45,445
43,602
Basic earnings per share (cents)
Dividends per share (cents)
Increase (decrease) in share price (%)
26.0
19.0
(8.1)
60.9
31.5
(1.0)
53.9
30.0
10.6
57.6
30.0
19.8
55.3
28.5
(17.3)
Executive remuneration for the years ended 30 June 2020 and 30 June 2019
When determining the remuneration mix for executives, the Remuneration and Nominations committee used
the target STI and LTI opportunities contained in the tables on pages 50 and 51, 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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2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
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s. Executive contracts
Remuneration and other terms of employment for executives are formalised in employment agreements.
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 FY2020 was as follows:
y Fixed remuneration of $766,000 per annum
y Target STI opportunity of $421,300, Maximum STI opportunity of $631,950 (45% in cash, 55% in DSTI)
y Target & Maximum LTI opportunity $689,400.
The target STI and LTI opportunity represent 22% and 37% respectively of the total target remuneration.
The maximum STI opportunity represents 30% 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 Remuneration and Nominations Committee for
each KMP and details are as follows:
Contract term
Notice required to
terminate contract
Termination benefit*
Executive director
N J Blackburne
No fixed term
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 Remuneration
and Nominations 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 FY2020 was $638,000. The Board will not seek
any increase for the NED maximum aggregate fee pool at the 2020 AGM.
Fee policy
NEDs’ annual fees were last reviewed from FY2020 (effective date: 1 July 2019). The annual fees (inclusive of
superannuation) for FY2020 and FY2019 are set out in the table below:
Chair
Deputy Chair
Other NEDs
Committee Chair
Committee member
2020
$
174,000
137,000
94,000
15,000
Nil
2019
$
164,000
126,500
88,700
13,200
Nil
57
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
NED remuneration for the years ended 30 June 2020 and 30 June 2019
The table below outlines fees paid to NEDs for FY2020 and FY2019 in accordance with statutory rules and
applicable accounting standards.
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
$
Total
$
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
158,904
149,772
138,813
115,525
70,302
104,601
99,543
81,005
99,543
81,005
567,105
531,908
15,096
14,228
13,187
10,975
23,698
23,699
9,457
7,695
9,457
7,695
70,895
64,292
174,000
164,000
152,000
126,500
94,000
128,300
109,000
88,700
109,000
88,700
638,000
596,200
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
42,870
20,277
11,398
107,583
230
-
-
488
325
4,465
24
-
1,000
10,343,550
7,985,584
167,859
15,785
10,523
47,335
20,301
11,398
108,583
* Includes 2,014,439 (2019 – 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
Aggregate amounts of other transactions with key management personnel of Cedar Woods or their related
entities:
2020
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
10,343,550
7,985,584
167,859
15,785
10,523
5,148
(163,951)
-
-
211
10,348,698
7,821,633
167,859
15,785
10,734
Amounts recognised as expense
Architectural fees
Creative design services
Settlement fees
Sponsorships
47,335
25,566
72,901
Architectural fees
Amounts recognised as inventory/ investment property
2020
$
2019
$
6,000
-
196,658
-
-
30,908
189,616
3,182
202,658
223,706
127,755
127,755
221,993
221,993
20,301
11,398
108,583
9,787
1,379
(35,721)
30,088
12,777
72,862
Total amounts recognised in year
330,413
445,699
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
123,155
4,600
219,718
2,275
127,755
221,993
58
59
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED 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.
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 FY2020 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.
In 2019 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.
In 2019 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.
There are no aggregate amounts payable to directors of Cedar Woods at balance date. An amount of $4,560 was
payable to related entities (Hames Sharley) at balance date. There are no other amounts payable to related entities
at balance date relating to the above types of other transactions.
v.
Independent audit of remuneration report
The remuneration report has been audited by PricewaterhouseCoopers (PwC). See page 129 of this annual report
for PwC’s report on the remuneration report.
w. Retirement, election and continuation in office of directors
Mr R Packer and Mrs J M Muirsmith retire by rotation at the forthcoming Annual General Meeting. Mrs J M
Muirsmith, being eligible, will offer herself 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 39 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 62.
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 report including the remuneration report is signed in accordance with a resolution of the directors of
Cedar Woods.
N J Blackburne
Managing Director
26 August 2020
60
61
2020 ANNUAL REPORTCEDAR 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 2020, 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
26 August 2020
F
I
N
A
N
C
I
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S
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A
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S
FINANCIAL
STATEMENTS
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the Year Ended 30 June 2020 ............................64
Consolidated Balance Sheet
As at 30 June 2020 ..................................................65
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2020 ............................67
Consolidated Cash Flow Statement
For the Year Ended 30 June 2020 ............................68
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 31.
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 26 August 2020. The directors have the
power to amend and reissue the financial statements.
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.
62
63
FINANCIAL STATEMENTS2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
For the Year Ended 30 June 2020
Continuing operations
Revenue
Cost of sale of land and buildings
Cost of providing development services
Gross profit
Project operating costs
Administration expenses
Other expenses
Other income
Operating profit
Finance costs
Share of net (loss) 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
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
2020
$’000
2019
$’000
1
260,660
375,149
(184,083)
(254,142)
(1,628)
(6,433)
74,949
114,574
(23,067)
(24,027)
(20,312)
(20,561)
(455)
1,520
(364)
2,370
32,635
71,992
(2,245)
(3,072)
(174)
30,216
(9,317)
20,899
20,899
22
68,942
(20,298)
48,644
48,644
20,899
48,644
2
32(iii)
3
24
4
4
26.0 cents
60.9 cents
25.8 cents
60.6 cents
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
CONSOLIDATED BALANCE SHEET
As at 30 June 2020
Note
2020
$’000
2019
$’000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Deferred development costs
Current tax asset
Total current assets
Non-current assets
Receivables
Inventories
Deferred development costs
Investments accounted for using the equity method
Property, plant and equipment
Intangible assets
Right-of-use assets
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
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Other financial liabilities
Lease liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
5
6
1
7
8
6
7
8
9
10
11
12
13
14
15
17
18
1(ii)
19
20
16
17
18
19
20
21
2,691
8,478
3,329
157,836
3,523
787
176,644
2,123
401,314
11,010
1,576
7,151
3,241
1,906
40,701
1,076
470,098
646,742
26,022
-
32,075
-
3,894
815
1,310
64,116
145,362
144
49,592
1,436
210
7,197
203,941
268,057
378,685
13,442
7,759
2,144
144,778
2,921
-
171,044
2
337,065
8,317
2,725
7,264
2,428
-
41,642
1,224
400,667
571,711
30,881
230
9,338
3,822
5,813
-
4,094
54,178
118,756
31
16,849
-
125
5,242
141,003
195,181
376,530
64
65
FINANCIAL STATEMENTSFINANCIAL STATEMENTSCEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORT CONSOLIDATED BALANCE SHEET (CONTINUED)
As at 30 June 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Year Ended 30 June 2020
EQUITY
Contributed equity
Reserves
Retained profits
Total equity
Note
22
23
24
2020
$’000
127,781
568
250,336
378,685
2019
$’000
125,979
427
250,124
376,530
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Contributed
equity
$’000
Note
Reserves
$’000
Retained
profits
$’000
Total
$’000
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 scheme
Balance at 30 June 2019
Change in accounting policy
22
30
23
42
-
-
2,961
-
-
-
2,961
125,979
-
-
-
-
-
-
(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
2
2
Restated total equity at 1 July 2019
125,979
427
250,126
376,532
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 scheme
22
30
23
-
-
1,632
-
-
170
1,802
-
-
-
(11)
-
152
141
20,899
20,899
20,899
20,899
-
11
1,632
-
(20,709)
(20,709)
9
331
(20,689)
(18,746)
Balance at 30 June 2020
127,781
568
250,336
378,685
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
66
67
FINANCIAL STATEMENTSFINANCIAL STATEMENTSCEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORT CONSOLIDATED CASH FLOW STATEMENT
For the Year Ended 30 June 2020
NOTES TO THE FINANCIAL STATEMENTS
These are the consolidated financial statements of Cedar Woods Properties Limited and its subsidiaries. A list
Note
2020
$’000
2019
$’000
Cash flows from operating activities
Receipts from customers (incl. GST)
Other income
Payments to suppliers and employees (incl. GST)
Payments for land and development
Interest received
Borrowing costs paid
Income taxes paid
Net cash (outflows) inflows from operating activities
26
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Proceeds from capital return from joint venture
Payments for investment properties
Payments for property, plant and equipment
Payments for intangible assets
Net cash outflows from investing activities
Cash flows from financing activities
Proceeds from (repayment of) borrowings
Principal elements of lease payments
Dividends paid
Net cash inflows (outflows) from financing activities
Net decrease 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
30
5
280,459
830
(70,439)
(208,952)
389
(5,865)
(11,913)
(15,491)
10
975
(361)
(911)
(1,587)
(1,874)
26,345
(660)
(19,071)
6,614
(10,751)
13,442
2,691
403,651
-
(84,556)
(245,814)
737
(8,601)
(32,329)
33,089
-
325
(309)
(1,944)
(1,832)
(3,760)
(14,246)
-
(25,335)
(39,581)
(10,250)
23,692
13,442
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
of major subsidiaries is included in note 31.
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.
68
69
FINANCIAL STATEMENTSFINANCIAL STATEMENTSCEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORT 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
(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
2020
$’000
2019
$’000
252,153
361,571
2,583
7,351
5,925
6,227
2020
$’000
3,329
3,329
2019
$’000
2,144
2,144
Profit or Loss Information .......................... 71
14. Lease incentives ...........................................79
Costs to fulfil a contract that were included in the contract asset
balance at the beginning of the period
15. Trade and other payables .............................79
16. Borrowings ....................................................80
Commissions relating to property sales
1,503
2,030
Sales commissions incurred to fulfill a property sale contract are classified as contract assets in the balance
17. Derivative financial instruments .................... 81
sheet when incurred and are expensed when associated revenue is recognised.
1. Revenue ........................................................ 71
2. Expense items...............................................72
3.
Income tax ....................................................73
4. Earnings per share ........................................ 74
Balance Sheet Information ......................... 75
18. Other financial liabilities ................................82
19. Lease liabilities .............................................82
20. Provisions .....................................................83
5. Cash and cash equivalents ...........................75
21. Deferred tax ..................................................84
6. Trade and other receivables .........................75
22. Equity ............................................................86
7.
Inventories .................................................... 76
23. Reserves .......................................................87
8. Deferred development costs ......................... 76
24. Retained profits .............................................87
9.
Investments accounted for using
the equity method .........................................77
25. Categories of financial assets
and financial liabilities ...................................88
10. Property, plant and equipment ......................77
11. Intangible assets ...........................................77
12. Right-of-use assets .......................................78
13. Investment properties ...................................78
Cash Flow information ............................... 89
26. Cash Flow Information ...................................89
Current contract liabilities
Customer rebates
Total contract liabilities
2020
$’000
3,894
3,894
2019
$’000
5,813
5,813
Revenue recognised that was included in the contract liability
balance at the beginning of the period
Customer rebates
4,424
4,483
(iii) Transaction price allocated to remaining performance obligations
The transaction price allocated to partially unsatisfied performance obligations at 30 June 2020 is set out below:
Within one year
More than one year
Total
2020
$’000
256,559
113,504
370,063
2019
$’000
229,615
109,206
338,821
70
71
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTKEY NUMBERSKEY NUMBERS
2. Expense items
3.
Income tax
Profit before income tax expense includes the following specific expenses:
This note provides an analysis of the group’s income tax expense and how the tax expense is affected by non-
Finance costs
Interest and finance charges
Interest - leases
Interest – other financial liabilities
Unrealised financial instrument (gains) losses
Less: amount capitalised
Finance costs expensed
Note
2020
$’000
2019
$’000
6,028
91
2,578
(116)
(6,336)
2,245
8,511
-
579
76
(6,094)
3,072
(i)
(i) Capitalised borrowing costs
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 2.0% (2019 – 2.8%) 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
Loss allowance of trade receivables
Employee benefits expense
Superannuation
Depreciation of property, plant and equipment
Depreciation of investment properties
Depreciation of right-of-use assets
Amortisation of intangible assets
Other lease expenses
Expense relating to short-term leases
Expense relating to leases of low value assets that are not shown
above as short-term leases
Note
6
10
13
12
11
(ii)
(ii)
2020
$’000
186
19
12,380
1,110
898
990
823
715
23
6
2019
$’000
280
(302)
12,007
1,093
875
1,029
-
371
-
-
(ii) Lease costs included in profit before income tax
Depreciation of right-of-use assets is presented within Administration expenses and Project operating costs on
the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Expenses relating to short-term
leases and low value assets are presented within Project operating costs on the Consolidated Statement of
Profit or Loss and Other Comprehensive Income.
assessable and non-deductible items.
(i) Income tax expense
Current tax
Deferred tax
Adjustments for current tax of prior periods
Note
2020
$’000
7,303
2,014
-
2019
$’000
19,699
671
(72)
Income tax expense attributable to profit
9,317
20,298
Deferred income tax (revenue) expense included in income tax expense
comprises:
Decrease in deferred tax assets
Increase (decrease) in deferred tax liabilities
(ii) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax
21
21
982
1,032
2,014
1,130
(459)
671
2020
$’000
2019
$’000
30,216
68,942
Tax at the Australian tax rate of 30% (2019 – 30%)
9,065
20,683
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
- Subsidiary company loss (profit)
- Interest revenue
- Employee share scheme
- Share of net loss (profit) of joint venture
- Permanent differences arising from capital gains
- Sundry items
Adjustments for current tax of prior periods:
- Research and development
Income tax expense
9
37
97
52
40
17
(477)
149
(4)
(7)
-
21
252
(318)
-
-
(67)
(67)
9,317
20,298
72
73
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTKEY NUMBERSKEY NUMBERS 4. Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
2020
26.0
25.8
2019
60.9
60.6
Net profit attributable to the ordinary owners of the company ($’000)
20,899
48,644
Weighted average number of ordinary shares used as the denominator
in the calculation of earnings per share
Weighted average number of ordinary shares used as the denominator
in the calculation of diluted earnings per share
80,352,925
79,925,054
80,873,241
80,332,583
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
2020
$’000
2,691
2019
$’000
13,442
2,691
13,442
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 1.55% (2019 - 0 to 1.8%) per annum depending on the balances.
The Group’s exposure to interest rate risk is discussed in note 28 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
Prepayments
Non-Current
Other receivables
Loans – employee share scheme (discontinued)
Notes
(ii)
(i), (ii)
(ii)
(iii)
40
2020
$’000
6,418
(149)
796
1,413
8,478
2,120
3
2,123
2019
$’000
4,786
(130)
1,310
1,793
7,759
-
2
2
(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 41(h).
(iii) Other non-current receivables
Other non-current receivables comprise refundable deposits paid on conditional contracts.
74
75
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTKEY NUMBERSKEY 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)
2020
$’000
2019
$’000
157,836
144,778
401,314
337,065
559,150
481,843
2020
$’000
2019
$’000
31,716
32,666
56
29
126,064
112,083
157,836
144,778
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
2020
$’000
2019
$’000
275,541
229,175
19
62
120,462
102,577
5,292
5,251
401,314
337,065
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 16 for information on current assets pledged as security by the parent entity or its controlled
entities.
(ii) Accounting for inventory
Refer to note 41(i) for the recognition and classification of inventory.
8. Deferred development costs
Current
Deferred development costs
Non-Current
Deferred development costs
2020
$’000
2019
$’000
3,523
3,523
11,010
11,010
2,921
2,921
8,317
8,317
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
Notes
(i)
2020
$’000
2019
$’000
1,576
1,576
2,725
2,725
(i) Cedar Woods Wellard Limited
The consolidated entity owns a 32.5% (2019: 32.5%) interest in Cedar Woods Wellard Limited, a property
development company incorporated in Australia. Refer to note 32.
10. Property, plant and equipment
Plant and Equipment at Cost
At start of the year
Additions
Disposals
At end of the year
Accumulated depreciation on Plant and Equipment
At start of the year
Disposals
Charge for the year
At end of the year
Net book value
2020
$’000
2019
$’000
9,410
981
(366)
10,025
2,146
(170)
898
2,874
7,151
8,732
1,960
(1,282)
9,410
2,055
(784)
875
2,146
7,264
(i) Non-current assets pledged as security
Refer to note 16 for information on non-current assets pledged as security by the parent entity or its controlled
entities.
11. Intangible assets
IT Development and Software at Cost
At start of the year
Additions
Disposals
At end of the year
Accumulated amortisation on IT Development and Software
At start of the year
Disposals
Charge for the year
At end of the year
Net book value
2020
$’000
2019
$’000
3,478
1,587
(102)
4,963
1,050
(43)
715
1,722
3,241
1,690
1,832
(44)
3,478
679
-
371
1,050
2,428
76
77
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTKEY NUMBERSKEY NUMBERS 12. Right-of-use assets
Buildings
At start of the year
Recognised on 1 July 2019
Effect of exercising extension options
Additions
Depreciation
At end of the year
Equipment
At start of the year
Recognised on 1 July 2019
Depreciation
At end of the year
Notes
2020
$’000
2019
$’000
-
2,405
209
36
(784)
1,866
-
79
(39)
40
1,906
-
-
-
-
-
-
-
-
-
(i)
(ii)
(i)
(ii)
(i) Depreciation expense on leases is included in Administration expenses in the Consolidated Statement of
Profit or Loss and Other Comprehensive Income.
(ii)
In 2019 the group did not have any leases classified as finance leases under AASB 117 Leases. Right-of-
use assets were recognised on 1 July 2019 upon adoption of AASB 16 Leases.
13. 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:
Note
2020
$’000
2019
$’000
41,642
42,561
66
(990)
(17)
127
(1,029)
(17)
40,701
41,642
Completed investment property
(i),(ii),(iii),(iv)
40,701
41,642
Closing balance at the end of the year
40,701
41,642
(i) Amounts recognised in profit or loss for investment properties
Rental income
Direct operating expenses from property that generated rental income
Impairment of lease incentives and capitalised lease costs
Bad debts recovered
2020
$’000
2019
$’000
5,277
5,417
(3,224)
(3,870)
(54)
8
(98)
-
(ii) Fair value of investment property
The fair value of the Williams Landing Shopping Centre which makes up completed investment property at
30 June 2020 is $68.5m, based on a management valuation (2019 - $72.0m). The investment property includes
land surrounding the shopping centre for future development which is on the same title. The management
valuation applies a market capitalisation rate to the net rent for the shopping centre and a market rate per
square metre to the area of the future development land.
(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
2020
$’000
4,476
18,550
19,103
2019
$’000
4,387
19,064
21,826
42,129
45,277
(iv) Non-current assets pledged as security
Refer to note 16 for information on non-current assets pledged as security by the parent entity or its controlled
entities.
14. Lease incentives
Lease incentives
Amortisation of lease incentives
Impairment of lease incentives
2020
$’000
2,805
(1,106)
(623)
1,076
2019
$’000
2,626
(816)
(586)
1,224
(i) Non-current assets pledged as security
Refer to note 16 for information on non-current assets pledged as security by the parent entity or its controlled
entities.
15. Trade and other payables
Trade payables
Accruals
GST payable
Other payables
2020
$’000
9,526
2019
$’000
8,751
16,075
19,057
-
421
2,849
224
26,022
30,881
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.
78
79
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTKEY NUMBERSKEY NUMBERS 16. Borrowings
Non-Current
Bank loans – secured (Corporate facilities)
Bank loan – secured (Williams Landing Shopping Centre facility)
Facility fees capitalised (amortised over the period of facility)
Amortisation of facility fees
2020
$’000
2019
$’000
116,750
29,193
(842)
261
89,800
29,193
(414)
177
145,362
118,756
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 $116,750,000 provided by three major banks (2019 - $89,800,000 provided by two major
banks) 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 13.
(ii) Financing arrangements
The group had access to the following lines of credit at balance date:
Corporate facilities
Total facilities (loan and guarantees)
Used at balance date (loan and guarantees)
Unused at balance date
Williams Landing Shopping Centre facility
Total facility
Used at balance date
Unused at balance date
Total Facilities
Used at balance date
Unused at balance date
2020
$’000
2019
$’000
205,000
205,000
137,106
104,579
67,894
100,421
30,000
29,193
807
30,000
29,193
807
235,000
235,000
166,299
133,772
68,701
101,228
The consolidated entity has total corporate finance facilities of $205,000,000 (2019 - $205,000,000), with
$82,000,000 each provided by two major banks and $41,000,000 provided by a third major bank (2019 -
$102,500,000 each provided by two major banks). The consolidated entity amended and extended the its
corporate facility in July 2019 and further extended the facility again in February 2020 following its annual
review.
80
The changes included longer facility tenure, with the previous three-year facility now comprising:
y $165,000,000 (approximately 80%) of the facility expiring January 2023; and
y $40,000,000 (approximately 20%) of the facility expiring January 2025.
The conditions of the facilities impose certain covenants including interest cover, loan-to-valuation ratio and
leverage ratio (net debt to EBITDA). The interest on the corporate loan facilities is variable and at 30 June 2020
was an average rate of 1.59% (2019 – 2.73%) per annum. The corporate facilities include bank guarantee
facilities of $25,000,000 (2019 - $20,000,000) subject to similar terms and conditions, which were drawn to a
total amount of $20,356,000 at 30 June 2020 (2019 -$14,779,000).
The consolidated entity has a facility of $30,000,000 (2019 - $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. During the financial year the facility was extended to June 2023.
The interest on the Williams Landing Shopping Centre loan facility is variable and at 30 June 2020 was an
average rate of 1.74% (2019 – 2.95%) per annum.
Details of the group’s exposure to risk arising from current and non-current borrowings are set out in note 28.
Financial risk management.
17. Derivative financial instruments
Current liabilities
Interest rate hedge contracts
Non-current liabilities
Interest rate hedge contracts
2020
$’000
2019
$’000
-
230
144
144
31
261
(i) 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 group’s policy is 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 2020 to 30 June 2023. 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
2.07% per annum (2019 – 2.07% to 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 1.00% - 1.95% (2019 – 1.50%
to 1.95%). 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% (2019 – 1.50% and apply a floor to interest
rates of 0.87%).
Interest rate hedge contracts currently in place cover approximately 38% (2019 – 46%) of the variable loans
outstanding at balance date, with terms expiring in 2021, 2022 and 2023. 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.
81
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTKEY NUMBERSKEY NUMBERS 18. 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
Notes
2020
$’000
2019
$’000
(i)
31,570
504
32,075
8,957
381
9,338
49,592
16,849
49,592
16,849
20. Provisions
Current
Employee benefits
Site remediation
Non-current
Employee benefits
(i) Fair value adjustment
During the period the group re-assessed its cash flows associated with the other payables, resulting in a fair
(i) Movements in current employee benefits
value adjustment through profit or loss.
19. Lease liabilities
Lease liabilities
At start of the year
Recognised on 1 July 2019
Effect of exercising extension options
Additions
Interest
Principal and interest repayments
At the end of the year
Comprising:
Current lease liabilities
Non-current lease liabilities
2020
$’000
2019
$’000
-
2,666
209
36
91
(751)
2,251
2020
$’000
815
1,436
2,251
-
-
-
-
-
-
-
2019
$’000
-
-
-
The total cash outflow for leases in 2020 was $751,000 excluding GST. As at 30 June 2020, potential future cash
outflows of $3,395,000 (undiscounted) have not been included in the lease liability because it is not reasonably
certain that the leases will be extended (or not terminated).
Notes
(i)
(ii)
2020
$’000
2019
$’000
1,310
-
1,310
210
210
2020
$’000
1,073
850
(613)
1,073
3,021
4,094
125
125
2019
$’000
1,024
731
(682)
Carrying amount at start of year
Provided during the period
Payments
Carrying amount at end of year
1,310
1,073
Current leave obligations expected to be settled after 12 months
624
555
(ii) Movements in site remediation provisions
Carrying amount at start of year
Capitalised to inventory
Payments
Carrying amount at end of year
Site remediation provision related to obligations under a land acquisition contract.
21. Deferred tax
(i) Assets
The balance comprises temporary differences attributable to:
Inventory
Special Unit in the BCM Apartment Trust
Provision for customer rebates
Provision for employee benefits
2020
$’000
3,021
-
(3,021)
-
2019
$’000
-
3,400
(379)
3,021
2020
$’000
2019
$’000
2,196
1,858
1,168
682
5,904
2,572
1,858
1,744
744
6,918
82
83
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTKEY NUMBERSKEY NUMBERS (i) Assets (continued)
Other
Derivative financial instruments
Borrowing costs
Right-of-use assets
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
Increase in deferred tax assets (credited) to equity
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
Special Unit
in the BCM
Apartment
Trust
$’000
Provision
for
customer
rebates
$’000
Provision
for
employee
benefits
$’000
Inventory
$’000
3,414
1,858
1,949
(842)
2,572
-
-
1,858
-
(205)
1,744
-
2,572
1,858
1,744
(376)
-
2,196
(690)
-
1,168
114
-
1,858
504
240
744
-
744
(62)
-
682
Movements
At 1 July 2018
(Charged)/credited
- to profit or loss
At 30 June 2019
Adjustment on
adoption of AASB16
At 1 July 2019
(Charged)/credited
- to profit or loss
- directly to equity
At 30 June 2020
Notes
2020
$’000
2019
$’000
Notes
2020
$’000
2019
$’000
(ii) Liabilities
43
49
107
45
6
94
344
6,248
(6,248)
-
7,171
(982)
59
6,248
3,739
2,509
6,248
Other
$’000
576
(323)
253
57
310
32
2
344
75
58
-
39
5
73
253
7,171
(7,171)
-
8,301
(1,130)
-
7,171
3,175
3,996
7,171
Total
$’000
8,301
(1,130)
7,171
57
7,228
(982)
2
6,248
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
Total deferred tax liabilities
Set off of deferred tax assets pursuant to set-off provisions
Net deferred tax liabilities
7,622
3,923
1,134
430
7,671
3,371
647
324
13,109
12,013
323
16
(3)
336
13,445
(6,248)
7,197
367
21
12
400
12,413
(7,171)
5,242
Deferred tax liabilities at the start of the year
12,413
12,872
(Decrease) increase in deferred tax liabilities (credited) debited to
income tax expense
3
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
Movements
Inventory
$’000
Deferred
development
costs
$’000
Prepayments
$’000
Investment
Property
$’000
At 1 July 2018
8,266
3,130
Charged/(credited)
- to profit or loss
At 30 June 2019
Charged/(credited)
(595)
7,671
- to profit or loss
(49)
At 30 June 2020
7,622
241
3,371
552
3,923
656
(9)
647
487
1,134
348
(24)
324
106
430
1,032
13,445
5,320
8,125
(459)
12,413
6,284
6,129
13,445
12,413
Other
$’000
472
(72)
400
(64)
336
Total
$’000
12,872
(459)
12,413
1,032
13,445
84
85
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTKEY NUMBERSKEY NUMBERS 22. Equity
23. Reserves
2020
Shares
2019
Shares
2020
$’000
2019
$’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.
Movement in ordinary share capital
Start of the year
80,117,767
79,516,567
125,979
123,018
Shares issued pursuant to the dividend
reinvestment plan:
Ordinary shares issued on 25 October 2019 at $6.73
243,401
-
1,638
Ordinary shares issued on 26 October 2018 at $5.64
-
526,554
Shares issued pursuant to the bonus share plan:
Ordinary shares issued on 25 October 2019
25,398
Ordinary shares issued on 26 October 2018
Transaction costs arising on share issues
-
-
Shares issued under employee share scheme:
Ordinary shares issued on 28 August 2019
61,260
-
74,646
-
-
-
-
-
(6)
170
-
2,970
-
-
(9)
-
End of the year
80,447,826
80,117,767
127,781
125,979
330,059
601,200
1,802
2,961
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 shareholder meeting in person or by proxy, is entitled to one vote, and upon a poll each share is
entitled to one vote.
Holders of performance rights or zero-price options under executive or employee share plans are not entitled to
participate in dividends or any winding up of the company, nor are they entitled to vote at shareholder meetings.
(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 2020 financial year and in
operation for the 2019 final dividend and suspended for the 2020 interim dividend.
(iii) Employee share scheme
Details of the company’s employee share scheme can be found in note 40 and in the remuneration report on
pages 44 and 46 to 48 of this financial report.
Composition
a) Asset revaluation reserve (pre-1992)
b) Employee share plan reserve
Balance at the end of the year
Movements
a) Asset revaluation reserve
Balance at the beginning of the year
Transfer to retained profits
Balance at the end of the year
b) Employee share plan reserve
Balance at the beginning of the year
Share-based payments expense
Transfer to retained profits
Balance at the end of the year
Notes
2020
$’000
2019
$’000
24
38
530
568
49
(11)
38
378
161
(9)
530
49
378
427
49
-
49
393
(15)
-
378
The asset revaluation reserve was used until 1992 to record increments and decrements on the revaluation of
non-current assets. Refer to note 41(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 40.
24. Retained profits
Retained profits at the start of the year
Change in accounting policy
Net profit attributable to members of Cedar Woods
Transfers from reserves
Dividends provided for or paid
Employee share scheme
Retained profits at the end of the year
Notes
42
23
30
23
2020
$’000
2019
$’000
250,124
229,726
2
-
20,899
48,644
11
67
(20,709)
(28,313)
9
-
250,336
250,124
86
87
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTKEY NUMBERSKEY NUMBERS 25. Categories of financial assets and financial liabilities
Notes 5, 6, 15, 16, 17, 18 and 19 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
Notes
2020
Cash and cash equivalents
Trade and other receivables*
Total
2019
Cash and cash equivalents
Trade and other receivables*
Total
5
6
5
6
*Excluding prepayments and contract assets
Financial Liabilities
Notes
2020
Trade and other payables
Borrowings
Derivative financial instruments
Other financial liabilities
Lease liabilities
Total
2019
Trade and other payables
Borrowings
Derivative financial instruments
Other financial liabilities
Total
15
16
17
18
19
15
16
17
18
Financial
assets at
amortised cost
$’000
2,691
9,188
Total
$’000
2,691
9,188
11,879
11,879
13,422
5,968
19,410
13,442
5,968
19,410
Derivatives
used for
hedging
$’000
Liabilities at
amortised cost
$’000
-
-
144
-
-
26,022
145,362
-
81,667
2,251
Total
$’000
26,022
145,362
144
81,667
2,251
144
255,302
255,446
-
-
261
-
261
30,881
118,756
-
26,187
30,881
118,756
261
26,187
175,824
176,085
CASH FLOW INFORMATION
26. Cash Flow information
(i) Reconciliation of profit after income tax to net cash (outflows) inflows from operating activities
Profit after income tax
Depreciation and amortisation
Amortisation of lease incentives and legal fees
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 (gain) loss on derivative financial instrument
Non-cash share-based payments expense (reversal)
Share of loss (profit) in equity accounted investment
Changes in operating assets and liabilities
Increase in provisions for employee benefits
(Decrease) in contract liabilities
(Decrease) increase in provisions
(Increase) decrease in inventories
(Increase) decrease in other deferred development costs
Decrease in deferred tax assets
(Decrease) in current income tax payable
Increase (decrease) in deferred tax liability
Decrease in capitalised borrowing costs
(Increase) decrease in trade receivables
(Increase) in contract assets
(Decrease) in trade creditors
Increase (decrease) in other financial liabilities
Net cash (outflows) inflows from operating activities
2020
$’000
2019
$’000
20,899
48,644
3,412
2,275
373
46
286
186
123
(117)
322
174
322
(1,918)
(3,021)
(77,307)
(3,295)
982
263
98
271
280
(843)
77
(15)
(22)
97
(1,266)
3,021
15,996
253
1,130
(4,614)
(12,694)
1,032
261
(2,840)
(1,185)
(459)
176
4,022
(176)
(4,968)
(15,391)
55,356
(12,648)
(15,491)
33,089
88
89
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTKEY NUMBERSKEY 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.
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
2020
$’000
2,691
-
2019
$’000
13,442
-
(145,362)
(118,756)
(142,671)
(105,314)
2,691
13,442
-
-
(145,362)
(118,756)
(142,671)
(105,314)
Other Assets
Liabilities from financing activities
Cash
$’000
23,692
(10,250)
-
13,442
(10,751)
-
2,691
Borrowings due
within 1 year
$’000
Borrowings
due after 1 year
$’000
Total
$’000
-
-
-
-
-
-
-
(132,826)
(109,134)
14,246
(176)
3,996
(176)
(118,756)
(105,314)
(26,345)
(37,096)
(261)
(261)
(145,362)
(142,671)
Net debt as at 1 July 2018
Cash flows
Other non-cash movements
Net debt as at 30 June 2019
Cash flows
Other non-cash movements
Net debt as at 30 June 2020
SECTION B:
FINANCIAL RISKS
This section of the notes discusses the group’s exposure to various
risks and shows how these could affect the group’s financial position and
performance.
27. Significant estimates and judgements ..........92
28. Financial Risk Management .........................93
29. Capital management objectives
and gearing .................................................97
30. Dividends.....................................................98
90
91
2020 ANNUAL REPORTFINANCIAL RISKSCEDAR WOODS PROPERTIES LIMITEDKEY NUMBERS
SIGNIFICANT ESTIMATES AND JUDGEMENTS
FINANCIAL RISK MANAGEMENT
The preparation of financial statements requires the use of accounting estimates which, by definition, will
This note explains the group’s exposure to financial risks and how these risks could affect the group’s future
seldom equal the actual results. Management also needs to exercise judgement in applying the group’s
financial performance. Current year profit and loss information has been included where relevant to add
accounting policies.
further context.
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.
27. 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.
Inventory - classification
a)
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 executed sales contracts at year end and management’s
settlement forecasts.
Inventory - valuation
b)
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 planning and development approvals. Other items of estimation within project cash flow models
utilised for assessing the recoverable amount of inventory can include future sales rate, sales prices, further
development costs required to complete the inventory for settlement and in some cases escalation of revenues
and costs and total project yield.
Management make informed estimates drawing on historical and recent experience, expert advice from
consultants, third party valuations and economic and property market forecasts. In the current period,
estimates have considered the impact of the COVID-19 pandemic, in particular on customer demand and its
effect on future sales rates and prices.
If approvals are not received when anticipated or forecasts of project yield, sale prices or future costs are
significantly inaccurate, the recoverable amount of inventory may be significantly impaired. Refer also to
note 41(i).
There were no critical judgements other than those involving estimates referred to above, that management
made in applying the group’s accounting policies.
28. Financial Risk Management
The group’s activities expose it to a variety of financial risks:
Risk
Exposure arising from
Measurement
Management
Market risk – interest rate risk
Long term borrowings at
variable rates
Cash flow forecasting
Sensitivity analysis
Interest rate swaps
Credit risk
Cash and cash
equivalents, trade and
other receivables and
derivative financial
instruments
Ageing analysis
Credit ratings
Management of deposits
Ongoing checks by
management
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
Lease liabilities
Derivative financial instruments
a) Market risk
2020
$’000
2019
$’000
2,691
10,598
13,442
7,759
13,289
21,201
26,022
81,667
30,881
26,187
145,362
118,756
2,251
144
-
260
255,446
176,084
i. Price risk
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.
92
93
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTFINANCIAL RISKSFINANCIAL RISKS Interest rate risk arises from exposures to long term borrowings, where those borrowings are issued at variable
An analysis by maturity is provided in 28(c)i. below.
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
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
economic conditions. Accordingly, the consolidated entity has entered into interest rate swap, cap and collar
information on the impact of changes in interest rates upon the group.
contracts under which a part of the consolidated entity’s projected borrowings are protected for the period from
1 July 2020 to 30 June 2023.
There is an indirect exposure to interest rate changes caused by the impact of these changes upon the
property market. The group addresses this risk by virtue of managing its pricing, product offer and planned
development programs.
iii. Instruments used by the group
Interest rate swaps effectively fix interest rates applicable to bank bills issued with duration of 1 month (BBSY
Bid) at 2.07% per annum (2019 – 2.07% - 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 1.00% - 1.95%
(2019 – 1.50% - 1.95%). 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% (2019 – 1.50% and apply a
floor to interest rates of 0.87%).
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. Hedge contracts currently in place cover 38%
(2019 - 46%) of the variable loan outstanding at balance date of $145,943,000 (2019 - $118,993,000), with terms
expiring in 2021, 2022 and 2023.
The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate for
receivables and borrowings is set out below.
Interest
bearing
- variable
$’000
2020
Non-
interest
bearing
$’000
Interest
bearing
- variable
$’000
Total
$’000
-
-
-
10,598
10,598
3
3
10,601
10,601
-
-
-
2020
Interest
bearing
- variable
$’000
Interest
bearing
- fixed
$’000
Interest
bearing
- fixed
$’000
Total
$’000
2019
Non-
interest
bearing
$’000
7,759
2
7,761
2019
Interest
bearing
- variable
$’000
Total
$’000
7,759
2
7,761
Total
$’000
-
145,943
145,943
-
118,993
118,993
Receivables
Other receivables
Employee share loans
Interest bearing
liabilities
Bank loans
Other financial liabilities
81,162
-
81,162
25,806
-
25,806
81,162
145,943
227,105
25,806
118,993
144,799
The weighted average interest rate at year end is 1.59% (2019: 2.73%)
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. During the year
forecasts included numerous scenario modelling including downside cases that considered potential significant
impacts of the COVID-19 pandemic and government response. 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 2020 the group had undrawn committed facilities of $68,701,000 (2019 - $101,228,000) and cash
of $2,691,000 (2019 - $13,442,000) to cover short term funding requirements. Refer to 16(ii) for details. The
Company continued to operate within all of its facility covenants throughout FY2020.
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 2020
Non-derivatives
Non-interest bearing
Fixed rate
Variable rate
Derivatives
Total
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
26,526
31,994
-
-
-
16,334
122,798
136
-
37,774
30,717
8
26,526
86,102
26,526
81,162
153,515
145,362
144
144
58,520
139,268
68,499
266,287
253,194
94
95
B.
RISK
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTFINANCIAL RISKSFINANCIAL RISKS Group – at 30 June 2019
Non-derivatives
Non-interest bearing
Fixed rate
Variable rate
Derivatives
Total
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
31,262
9,941
-
-
-
16,925
125,479
230
41,203
142,634
-
-
-
31
31
31,262
26,866
31,262
25,806
125,479
118,756
261
261
183,868
176,085
d) Fair value measurement
This note provides information on the judgements and estimates made by the group in determining the fair
values of the financial instruments.
i. Fair value hierarchy
To provide an indication 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.
The following table presents the group’s financial liabilities measured and recognised at fair value at 30 June
2020 and 30 June 2019:
As at 30 June 2020
Notes
Liabilities
Derivatives used for hedging
17
Total liabilities
As at 30 June 2019
Notes
Liabilities
Derivatives used for hedging
17
Total liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
144
144
-
-
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
261
261
-
-
Total
$’000
144
144
Total
$’000
261
261
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.
CAPITAL MANAGEMENT
29. 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:
y raising or reducing borrowings
y adjusting the dividend policy
y issue of new securities
y return of capital to shareholders
y sale of assets.
Gearing is a measure used to monitor the levels of debt used in the business to fund operations. The primary
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
16
5
2020
$’000
2019
$’000
145,362
118,756
(2,691)
(13,442)
142,671
105,314
378,685
376,530
37.7%
28.0%
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. The group operated comfortably within the target range during
the income year.
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 16 and include requirements in relation to a maximum
loan to valuation ratio, a maximum leverage ratio (net debt to EBITDA) and minimum interest cover ratio.
96
97
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTFINANCIAL RISKSFINANCIAL RISKS 30. Dividends
a) Ordinary shares
Fully franked based on tax paid at 30%
Final dividend for the year ended 30 June 2019 of 13.5 cents (2018 – 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 2020 of 12.5 cents (2019 – 18.0 cents) per fully
paid share
- Paid in cash
- Applied to the employee share loans
Total
2020
$’000
2019
$’000
9,015
1,638
-
10,918
2,970
4
10,056
14,417
-
4
20,709
28,313
b) Dividends not recognised at the year end
In addition to the above dividends, since year end the directors have recommended the payment of a final
dividend of 6.5 cents per fully paid ordinary share (2019 – 13.5 cents), fully franked based on the tax paid at
30%. The aggregate amount of the proposed dividend expected to be paid on 30 October 2020 out of retained
profits at 30 June 2020, but not recognised as a liability at year end is below:
Dividends not recognised at year end
2020
$’000
2019
$’000
5,229
10,816
c) Franked Dividends
The franked portions of the final dividend proposed at 30 June 2020 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% (2019 – 30%)
2020
$’000
2019
$’000
94,245
96,261
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 $2,241,000
(2019 - $4,635,000).
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.
31. Subsidiaries ................................................ 100
32. Interests in joint arrangements .................... 101
33. Deed of cross guarantee............................. 102
34. Parent entity financial information ............... 105
98
99
2020 ANNUAL REPORTGROUP STRUCTURECEDAR WOODS PROPERTIES LIMITEDFINANCIAL RISKS
GROUP STRUCTURE
31. Subsidiaries
The group’s operating subsidiaries at 30 June 2020 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 principal activities of all subsidiary entities are property development and/or
investment.
The consolidated financial statements incorporate the assets, liabilities and results in accordance with the
accounting policy described in note 41(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
2020
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%
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%
a. The forecast profits of BCM Apartment Trust are 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.
32. Interests in joint arrangements
Set out below are the joint ventures of the group as at 30 June 2020. The principal place of business and
country of incorporation (or origin) is Australia for all entities.
Name of entity
% of ownership
interest
Nature of
relationship
Measurement
method
Cedar Woods Wellard Limited
2020
%
32.5
2019
%
32.5
Joint Venture
Equity method
Carrying amount
2020
$’000
1,576
2019
$’000
2,725
The consolidated entity owns a 32.5% (2019 – 32.5%) interest in Cedar Woods Wellard Limited, a property
development company incorporated in Australia. Cedar Woods Wellard Limited is developing the Emerald Park
residential estate at Wellard, WA. 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.
The carrying amount represents the amount attributable to the group.
(i) Commitments and contingent liabilities in respect of the joint ventures
Cedar Woods Wellard Limited has no commitments for expenditure at 30 June 2020 (2019 - Nil) and has no
contingent liabilities (2019 - Nil).
(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 liabilities
Net assets
Group’s share in %
Group’s share in $
2020
$’000
480
3,661
4,141
2,801
6,942
107
107
6,835
32.5%
2,221
2019
$’000
1,599
4,200
5,799
4,803
10,601
229
229
10,372
32.5%
3,371
100
101
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTGROUP STRUCTUREGROUP STRUCTURE (iii) Movements in carrying amounts – Cedar Woods Wellard Limited
At start of the year
Share of (loss) profit after income tax
Capital return
At end of the year
Share of (loss) profit before income tax
Share of (loss) profit after income tax
Share of joint venture’s revenue, assets, liabilities and contingent liabilities
Revenue
Assets
Liabilities
2020
$’000
2,725
(174)
(975)
1,576
(174)
(174)
448
2,256
(35)
2019
$’000
3,028
22
(325)
2,725
22
22
1,042
3,445
(74)
33. Deed of Cross Guarantee
Cedar Woods Properties Limited and all subsidiaries listed at note 31 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 for the year ended 30 June, and
summary of movements in consolidated retained profits
Revenue from continuing operations
Cost of sales of land and buildings
Cost of providing development services
Other expenses from ordinary activities:
Other Income
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 profits
Retained profits at the beginning of the financial year
Profit for the period
Transfers from reserves
Dividends provided for or paid
Retained profits at the end of the financial year
2020
$’000
2019
$’000
258,282
367,593
(181,894)
(246,851)
(1,628)
(6,433)
(43,605)
(44,725)
1,631
819
(2,245)
(3,072)
(174)
22
30,367
67,353
(9,317)
(20,298)
21,050
47,055
21,050
47,055
2020
$’000
2019
$’000
249,920
231,111
21,050
47,055
20
67
(20,709)
(28,313)
250,281
249,920
102
103
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTGROUP STRUCTUREGROUP STRUCTURE c) Consolidated balance sheet as at 30 June
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Deferred development costs
Current tax asset
Total current assets
Non-current assets
Receivables
Inventories
Deferred development costs
Investments accounted for using the equity method
Property, plant and equipment
Intangible assets
Right-of-use assets
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
Lease liabilities
Provisions
Total current liabilities
2020
$’000
2019
*Restated
$’000
2,640
8,468
3,329
157,003
3,523
787
13,277
7,692
2,144
141,892
2,921
-
175,750
167,926
2,469
401,314
11,010
1,576
7,117
3,241
1,906
40,701
1,076
470,410
646,160
2,517
337,065
8,317
2,725
7,212
2,428
-
41,642
1,224
403,130
571,056
26,000
30,811
-
31,570
-
3,894
815
1,310
63,589
230
8,957
3,822
5,813
-
4,094
53,727
Non-current liabilities
Borrowings
Derivative financial instruments
Other financial liabilities
Lease liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained profits
Total equity
2020
$’000
2019
*Restated
$’000
145,362
118,756
144
49,592
1,436
210
7,197
203,941
267,530
378,630
31
16,849
-
125
5,242
141,003
194,730
376,326
127,781
125,979
568
427
250,281
249,920
378,630
376,326
* The prior period has been restated to include a non-current receivable of $2,515,000 from a consolidated subsidiary
outside of the closed group.
34. 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:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholders’ equity
Issued capital
Reserves
Retained profits
Profit for the year
Total comprehensive income
2020
$’000
2019
$’000
33,555
411,774
56,448
397,735
(38,542)
(49,050)
(156,519)
(138,991)
255,255
258,744
127,781
125,979
530
379
126,944
132,386
255,255
258,744
9,178
9,178
23,363
23,363
104
105
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTGROUP STRUCTUREGROUP STRUCTURE
Investments in subsidiaries and joint venture entities
i.
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.
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.
35. Contingent Liabilities ................................... 108
36. Commitments .............................................. 108
37. Events occurring after the reporting
period ......................................................... 108
106
107
2020 ANNUAL REPORTUNRECOGNISED ITEMSCEDAR WOODS PROPERTIES LIMITEDGROUP STRUCTURE
UNRECOGNISED ITEMS
35. Contingent liabilities
a) Bank guarantees
At 30 June 2020 bank guarantees totalling $20,356,000 (2019 - $14,779,000) 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. The contractor lodged a counterclaim for
unspecified damages against Cedar Woods, however the counterclaim was dismissed. It is not practicable to
estimate the potential effect of Cedar Woods’ claim.
36. Commitments
a) Non-cancellable operating leases
Commitments for minimum lease payments in relation to non-cancellable operating leases contracted for at the
reporting date but not recognised as liabilities are payable as follows:
Within 1 year
Later than 1 year but not later than 5 years
Consolidated
2020
$’000
10
-
10
2019
$’000
936
2,287
3,222
The group leases various corporate offices, IT equipment and land for sales centres or marketing signage
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.
From 1 July 2019, the group has recognised right-of-use assets for these leases, except for short-term and low
value leases. See note 42 for further information.
b) Capital commitments
At 30 June 2020 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 $6,577,000 (2019 - $11,994,000), for building
construction was $63,945,000 (2019 - $92,381,000) and for landscaping construction was $1,481,000 (2019 -
$2,425,000). This work will be substantially completed in the next 12 months.
37. Events occurring after the reporting period
Refer to note 30(b) for details of the final dividend recommended by the directors, to be paid on 30
October 2020.
No other matters or circumstances have arisen since 30 June 2020 that have significantly affected or may
significantly affect:
y the consolidated entity’s operations in future financial years; or
y the results of those operations in future financial years; or
y the consolidated entity’s state of affairs in future financial years.
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.
38. Related Party Transactions.......................... 110
39. Remuneration of Auditors ............................ 111
40. Employee Share Scheme ............................ 112
41. Summary of Accounting Policies ................. 112
42. Changes in Accounting Policies .................. 120
43. Segment Information ................................... 121
108
109
2020 ANNUAL REPORTFURTHER INFORMATIONCEDAR WOODS PROPERTIES LIMITEDUNRECOGNISED ITEMS
38. 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:
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Consolidated
2020
$
2019
$
2,365,161
2,561,165
165,577
154,052
208,077
24,694
2,738,815
2,739,911
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 31.
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 Pty Ltd derived management
and selling fees totalling $115,485 (2019 - $284,427) 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.
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 FY2020 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.
In 2019 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.
In 2019 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
Architectural fees
Creative design services
Settlement fees
Sponsorships
Amounts recognised as inventory/ investment property
Architectural fees
2020
$
2019
$
6,000
-
-
30,908
196,658
189,616
-
3,182
202,658
223,706
127,755
221,993
127,755
221,993
Total amounts recognised in year
330,413
445,699
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
123,155
219,718
4,600
2,275
127,755
221,993
There are no aggregate amounts payable to directors of Cedar Woods at balance date.
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
A balance of $4,560 was payable to a related entity (Hames Sharley) at balance date (2019 - Nil).
39. 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
2020
$
2019
$
- Audit and review of the financial statements
268,091
215,457
Non-audit services
- Taxation advice and reviews
- Accounting advice
Total fees for non-audit services
Total assurance and non-audit services
26,520
-
26,520
48,960
10,896
59,856
294,611
275,313
110
111
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTFURTHER INFORMATIONFURTHER INFORMATION 40. Employee Share Scheme
The current Long Term Incentive (LTI) plans effective from 1 July 2017 for FY2018, from 1 July 2018 for FY2019
and from 1 July 2019 for FY2020 will continue in FY2021.
The current LTI plan for the MD and executives 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.
Full details of the operation of the current LTI plan are set out in the remuneration report on pages 46 to 48 of this
annual report.
The MD receives 45% of the STI in cash, with 55% deferred by way of a grant of zero-price options under the
Deferred Short Term Incentive (DSTI) Plan. The STI including the DSTI is awarded based on the Remuneration
and Nominations Committee’s assessment of the company’s overall performance using the Balanced Scorecard.
Full details of the operation of the current DSTI plan are set out in the remuneration report on page 44 of this
annual report.
41. 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:
y AASB 16 Leases
y AASB 2017-6 Amendments to Australian Accounting Standards - Prepayment Features with Negative
Compensation
y AASB 2017-7 Amendments to Australian Accounting Standards - Long-term Interests in Associates and
Joint Ventures
y AASB 2018-1 Amendments to Australian Accounting Standards - Annual Improvements 2015-2017 Cycle
y AASB 2018-2 Amendments to Australian Accounting Standards - Plan Amendment, Curtailment or Settlement
y Interpretation 23 Uncertainty over Income Tax Treatments
The group changed its accounting policies as a result of adopting AASB 16 Leases. The impact of the adoption
of the new accounting policies are disclosed in notes 41(s) and 42. The other amendments listed above did not
have any impact on the amounts recognised in prior periods and are not expected to significantly affect the
current or future periods.
iv. New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June
2020 reporting periods and have not been early adopted by the group.
These standards are not 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 2020 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.
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 32.
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.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy
described in note 41(q).
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 and other income
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.
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CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTFURTHER INFORMATIONFURTHER INFORMATION 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.
v. Government grants
Grants from the government are recognised as other income at their fair value where there is a reasonable
assurance that the grant will be received and the group will comply with all attached conditions.
Income tax
f)
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 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.
Deferred development costs
j)
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.
Property, plant and equipment
l)
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 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:
y Plant and equipment – 3 to 15 years (straight line and diminishing value methods)
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CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTFURTHER INFORMATIONFURTHER INFORMATION 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.
Intangible assets
m)
Costs associated with maintaining software are recognised as an expense as incurred. Development costs that
are directly attributable to the design and testing of identifiable and unique software products controlled by the
group are recognised as intangible assets where the following criteria are met:
y it is technically feasible to complete the software so that it will be available for use
y management intends to complete the software and use it
y there is an ability to use the software
y it can be demonstrated how the software will generate probable future economic benefits
y adequate technical, financial and other resources to complete the development and to use the software are
available, and
y the expenditure attributable to the software during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software include contractor and employee costs.
The group does not apportion overheads to capitalised intangible assets.
Intangible assets and amortised from the point at which the asset is ready for use using the straight-line method
over the expected useful lives as follows:
y IT development and software – 3 to 5 years
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.
n)
Investments and other financial assets
i. Classification
The group classifies its financial assets in the following categories:
y those to be measured at fair value through profit or loss; and
y 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.
iii. Impairment
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.
Investment property
o)
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.
Lease incentives
p)
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.
Impairment of assets
q)
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.
Trade and other payables
r)
Trade payables 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 days
of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12
months after the reporting period. They are recognised initially at their fair value and subsequently measured at
amortised cost using the effective interest method.
s)
Leases
i. Group as a lessee
The group leases corporate offices, IT equipment and land for sales centres or marketing signage. Rental
contracts vary in periods and may have extension options as described below. Lease terms are negotiated on
an individual basis and contain a wide range of different terms and conditions. The lease agreements do not
impose any covenants, but leased assets may not be used as security for borrowing purposes.
Prior to 1 July 2019, leases of property, plant and equipment were classified as either finance or operating
leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to
profit or loss on a straight-line basis over the period of the lease.
From 1 July 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at
which the leased asset is available for use by the group. Each lease payment is allocated between the liability
and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
y fixed payments (including in-substance fixed payments), less any lease incentives receivable
y variable lease payments that are based on an index or a rate
y amounts expected to be payable by the lessee under residual value guarantees
y the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
y payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined,
the group’s incremental borrowing rate is used, being the rate that the group would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and
conditions. This reflects the group’s weighted average interest rate.
Right-of-use assets are measured at cost comprising the following:
y the amount of the initial measurement of lease liability
y any lease payments made at or before the commencement date less any lease incentives received
y any initial direct costs, and
y restoration costs.
Right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-
line basis.
116
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CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTFURTHER INFORMATIONFURTHER INFORMATION Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line
basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
Extension and termination options are included in a number of property and equipment leases across the
group. These terms are used to maximise operational flexibility in terms of managing contracts. The majority of
extension and termination options held are exercisable only by the group and not by the respective lessor.
Critical judgements in determining the lease term
In determining the lease term, management considers all facts and circumstances that create an incentive
to exercise an extension option, or not exercise a termination option. Extension options (or periods after
termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not
terminated).
Most extension options in offices and equipment leases have not been included in the lease liability, because
the group could replace the assets without significant cost or business disruption.
The lease term is reassessed if an option is exercised (or not exercised) or the group becomes obliged to
exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a
significant change in circumstances occurs, which affects this assessment, and that is within the control of
the lessee.
ii. Group as a lessor
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.
Borrowings and borrowing costs
t)
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.
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.
u) 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.
v) 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.
w) 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.
x) 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.
y) 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.
z) 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.
aa) Share based payments
Share based compensation benefits are provided to employees via the Deferred STI and LTI plans. Information
relating to these schemes is set out in the remuneration report on pages 44 and 46 to 48.
The value of Performance Rights granted under the Deferred STI and LTI plans is recognised as an employee
benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by
reference to the fair value of the Performance Rights granted:
y Including any market performance conditions (e.g. the entity’s share price); and
y Excluding the impact of any service and non-market performance vesting conditions (e.g. profitability and
remaining an employee of the group over a specified time period)
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each reporting period, the group revises its estimates of the number of
Performance Rights that are expected to vest based on the non-market vesting and service conditions. The impact of
the revision to original estimates is recognised, if any, in profit or loss with a corresponding adjustment to equity.
ab) 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.
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CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTFURTHER INFORMATIONFURTHER INFORMATION ac) 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.
ad) 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.
42. Changes in Accounting Policies
This note discloses the impact of the adoption of AASB 16 Leases on the group’s financial statements and
discloses the new accounting policies that have been applied from 1 July 2019.
The group has adopted AASB 16 retrospectively from 1 July 2019, but has not restated comparatives for
the 2019 reporting period, as permitted under the specific transitional provisions in the standard. The
reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening
balance sheet on 1 July 2019.
a) Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, the group recognised lease liabilities in relation to leases which had previously been
classified as ‘operating leases’ under the principles of AASB117 Leases. These liabilities were measured at the
present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of
1 July 2019. The weighted average incremental borrowing rate applied to the lease liabilities on 1 July 2019 was
3.64%.
Operating lease commitments disclosed as at 30 June 2019
Less: Non-lease components previously included in lease commitments
Operating lease commitments as at 30 June 2019
Discounted using the lessee’s incremental borrowing rate of at the date of initial application
Less: low value leases recognised on a straight-line basis as expense
Less: short-term leases recognised on a straight-line basis as expense
Lease liability recognised at 1 July 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
$’000
3,222
(308)
2,914
2,673
(3)
(4)
2,666
643
2,023
2,666
The associated right-of-use assets for leases were measured on a retrospective basis as if the new rules had
always been applied. The group did not restate comparative information, instead, the cumulative effect of
initially applying AASB16 was recognised as an adjustment to the opening balance of retained earnings at the
date of initial application. There were no onerous lease contracts that would have required an adjustment to the
right-of-use assets at the date of initial application.
The recognised right-of-use assets relate to the following types of assets:
- Properties
- Equipment
Total right-of-use assets
The change in accounting policy affected the following items in the balance sheet on 1 July 2019:
y Right-of-use assets – increase by $2,484,000
y Deferred tax assets – increase by $57,000
y Lease liabilities – increase by $2,666,000
y Other payables – decrease by $127,000
1 July
2019
$’000
2,405
79
2,484
The net impact on retained earnings on 1 July 2019 was an increase of $2,000.
i. Practical expedients applied
In applying AASB 16 for the first time, the group has used the following practical expedients permitted by the
standard:
y the use of a single discount rate to a portfolio of leases with reasonably similar characteristics
y the accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as
short-term leases
y reliance on previous assessments on whether leases are onerous
y the use of hindsight in determining the lease term where the contract contains options to extend or terminate
the lease
y the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application
The group has also elected not to reassess whether a contract is, or contains a lease at the date of initial
application. Instead, for contracts entered into before the transition date the group relied on its assessment
made applying AASB 117 and Interpretation 4 Determining whether an Arrangement contains a Lease.
The group did not need to make any adjustments to the accounting for assets held as lessor under operating
leases as a result of the adoption of AASB 16.
43. 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.
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.
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CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTFURTHER INFORMATIONFURTHER INFORMATION
DECLARATION AND
INDEPENDENT AUDITOR’S REPORT
Directors’ Declaration ....................................... 123
Independent Auditor’s Report .......................... 124
DIRECTORS’ DECLARATION
In the directors’ opinion:
a)
the financial statements and notes set out on pages 63 to 121 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 2020 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 31 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 33.
Note 41(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
26 August 2020
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123
CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTDECLARATION & AUDIT REPORTDECLARATION & 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 2020 and of its
financial performance for the year then ended, and
(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 2020
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, and
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 (including Independence
Standards) (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.
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.
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.
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 are located in Western Australia, Victoria,
Queensland and South Australia.
Materiality
Audit scope
Key audit matters
• Amongst other relevant
topics, we communicated the
following key audit matter to
the Audit and Risk
Management Committee:
−− Valuation of inventory
•
This is further described in
the Key audit matters
section of our report.
• Our audit focused on where
the 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
development site visits
being performed across the
year.
•
For the purpose of our audit
we used overall Group
materiality of $1.5 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 LIMITED2020 ANNUAL REPORTDECLARATION & 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
Valuation of inventory
(Refer to note 7, 27(b) and 41(i))
As of 30 June 2020, the Group recognised total
inventory of property held for sale of $559m, split
between current inventory of $137m and non-
current inventory of $422m.
Inventory is stated at the lower of cost and net
realisable value for each development project, as
assessed at each reporting date.
The cost of the inventory is calculated as the sum
of land acquisition costs, development costs and
borrowing costs capitalised for eligible projects.
The Group’s estimate of net realisable value is
calculated based on the estimated selling price of
the inventory, less the estimated costs of
completion and selling costs. Each of these factors
is impacted by assumptions about future market
and economic conditions which inherently are
subject to the risk of change, with increased
uncertainty due to the impact of COVID-19. These
assumptions include future sales prices, future
sales rates, forecast development costs for
completion, and in some cases escalation rates of
sales and costs and total project yield.
This was a key audit matter given the relative size
of the inventory balance in the Consolidated
Balance Sheet and the inherent subjectivity and
significant judgements involved in the key
assumptions and estimates used to calculate net
realisable value.
How our audit addressed the key audit
matter
We performed the following procedures, amongst
others:
• We obtained an understanding and evaluated
the design of relevant controls in relation to
inventory valuation,
• We traced a sample of additions to the cost of
projects (for e.g. land acquisition and
development costs) to supporting
documentation and assessed whether they
were capitalised appropriately,
• We recalculated a sample of the capitalisation
of borrowing costs into inventory and
assessed whether the borrowing costs were
capitalised appropriately, and
• We applied a risk-based assessment to
determine those development projects where
there was a greater risk that the carrying value
of the inventory may be in excess of net
realisable value. Our risk-based selection
criteria incorporated our knowledge of the life
cycle of each project from current and prior
years, site visits and our understanding of
current economic conditions relevant to
individual project locations as informed by
publicly available property market reports. In
addition to these risk conditions, we focussed
on specific projects which are large
contributors to revenue and profit in the year.
Key audit matter
How our audit addressed the key audit
matter
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 and/or State
manager, including factors such as the key
project risks, strategy, construction progress,
market conditions during the year and the
outlook going forward, and sales revenue
expected over the life of the project,
• Where available for a project, we obtained
the external third-party 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 the net realisable value
assessment and cash flow analysis
performed by management and assessed the
key assumptions, including:
o
o
o
o
comparing forecast sales value for each
project to actual sales values known
from the current period and comparable
projects,
comparing forecast costs of the project
to the relevant construction contracts
(if applicable) or the construction
contract proposal,
comparing management’s forecast sales
volumes, sales prices and cost
escalation factors to internal and
external data, and
assessing the mathematical accuracy of
the cash flow analysis for a sample of
calculations.
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CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTDECLARATION & AUDIT REPORTDECLARATION & AUDIT REPORT Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 40 to 60 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the remuneration report of Cedar Woods Properties Limited for the year ended 30
June 2020 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.
PricewaterhouseCoopers
Helen Bathurst
Partner
Perth
26 August 2020
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 2020, 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 About Cedar Woods, Letter from the Chairman, Letter from the
Managing Director, Financial Performance Highlights, Our Business, Financial and Operating Review,
ESG Report, Director's Report and Corporate Directory. 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.
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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
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CEDAR WOODS PROPERTIES LIMITED2020 ANNUAL REPORTDECLARATION & 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 .......................................... 131
Shareholder Information .................................... 132
Five Year Financial Performance ....................... 134
INVESTORS’ SUMMARY
Dividend and dividend policy
The final dividend for the 2020 financial year is 6.5 cents per share, fully franked. The dividend will be paid
on 30 October 2020. The Company’s dividend policy is to distribute approximately 50% of the full year net
profit after tax. The Board has elected to temporarily depart from this policy for FY2020, with the total FY2020
dividends representing a payout ratio of 73%. This acknowledges the lower earnings result in FY2020 and the
current outlook for strong growth in FY2021.
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:
y 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;
y 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;
y 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
y 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 2020 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
27 August 2020
1 October 2020
30 October 2020
October 2020
4 November 2020
February 2021
April 2021
May 2021
August 2021
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131
2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable at 31 August 2020.
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
1,314
1,400
439
461
47
503,040
3,773,522
3,269,342
11,329,301
61,605,997
3,661
80,481,202
c. Substantial shareholders of ordinary shares
As disclosed in substantial shareholder notices lodged with the ASX at 31 August 2020.
Name
William George Hames and related entities
Robert Stanley Brown and related entities
AustralianSuper Pty Ltd
1 Percentage of issued capital held as at the date notice provided.
d. Voting rights
The voting rights attaching to each class of equity securities are set out below:
Ordinary shares
Number
of shares
Percentage
of shares1
9,314,668
7,818,633
5,427,695
12.90
9.75
6.75
There were 369 holders of less than a marketable parcel of 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.
Performance rights and zero-price options
Holders of performance rights or zero-price options under executive or employee share plans are not entitled to
vote at shareholder meetings.
b. Twenty largest shareholders of ordinary shares as disclosed in the share register
Name
JP Morgan Nominees Australia Pty Ltd
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Ltd
Hamsha Nominees Pty Ltd (The Nowra Projects Unit Fund A/C)
Westland Group Holdings Pty Ltd
National Nominees Limited
Beach Corporation Pty Ltd
Zero Nominees Pty Ltd
Helen Kaye Poynton
Joia Holdings Pty Ltd
BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C)
Mr Paul Stephen Sadleir
Dr A Gerraty & Mrs P Gerraty (A & P Gerraty S/F A/C)
BNP Paribas Noms Pty Ltd (DRP)
Leblon Holdings Pty Ltd (William Hames Super Fund A/C)
Mr JH Tucker & Mrs KJ Tucker (Tucker Family Super Fund A/C)
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd (DRP A/C)
Sandhurst Trustees Ltd (Endeavor Asset Mgmt MDA A/C)
Gold Plaza Pty Ltd
Gorn Super Pty Ltd (Gorn Pension Super Fund A/C)
Number
of shares
12,443,443
10,288,851
Percentage
of shares
15.46
12.78
5,433,013
5,040,216
4,433,029
3,403,757
3,382,604
2,321,322
1,677,095
1,533,867
1,132,467
1,127,283
600,000
516,442
508,342
475,002
427,452
418,506
395,762
393,537
6.75
6.26
5.51
4.23
4.20
2.88
2.08
1.91
1.41
1.40
0.75
0.64
0.63
0.59
0.53
0.52
0.49
0.49
55,951,990
69.51
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2020 ANNUAL REPORTCEDAR WOODS PROPERTIES LIMITED FIVE YEAR
FINANCIAL PERFORMANCE
All figures in $’000 except where stated
Financial Year
Financial Performance
Revenue from operations
2020
2019
2018
2017
2016
260,660
375,149
239,661
222,269
175,159
Earnings before interest and tax
32,461
72,014
65,168
67,446
65,587
Finance costs
2,245
3,072
4,020
2,947
3,755
Operating profit before tax
30,216
68,942
61,148
64,499
61,832
Income tax expense
Net profit after tax
Financial Position
Total assets
Total liabilities
9,317
20,298
18,545
19,054
18,230
20,899
48,644
42,603
45,445
43,602
646,742
571,711
601,516
505,624
452,729
268,057
195,181
248,330
175,390
145,541
Shareholders’ equity
378,685
376,530
353,186
330,234
307,188
Number of shares on issue – end of year (‘000)
80,448
80,118
79,517
78,892
78,892
Basic earnings per share (cents)
26.0
60.9
53.9
57.6
55.3
Key Performance Measures
Dividend per share, fully franked (cents)
19.0
31.5
30.0
30.0
28.5
EBIT Margin
Interest cover (times)
Return on Equity
12.5%
19.2%
27.2%
30.3%
37.4%
6.1
8.6
8.5
13.9
16.6
5.5%
12.9%
12.1%
13.8%
14.2%
Investment in inventory during year
208,952
245,814
191,633
161,588
112,887
Net tangible assets backing per share ($)
4.67
4.67
4.44
4.19
3.89
Net bank debt
Net bank debt to equity
142,671
105,314
109,134
78,940
50,344
37.7%
28.0%
30.9%
23.9%
16.4%
Share price – end of year ($)
5.24
5.70
5.76
5.21
4.35
Stock Market capitalisation at 30 June
421,547
456,671
458,015
411,026
343,179
Number of employees at 30 June
91
95
90
79
67
Returns to shareholders over 1, 3, & 5 years
1 Year
3 Year
5 Year
Earnings per share growth %
Share price growth %
Dividend growth %
Total shareholder return %
(57.3)
(8.1)
(39.7)
(2.4)
(23.3)
0.2
(12.6)
6.2
(13.7)
(0.1)
(7.1)
5.9
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CEDAR WOODS PROPERTIES LIMITED
CORPORATE
DIRECTORY
A.B.N. 47 009 259 081
DIRECTORS
William George Hames, BArch (Hons) MCU
(Harvard) LFRAIA, MPIA, FAPI (Econ) – Chairman
Robert Stanley Brown, MAICD, AIFS –
Deputy Chairman
Ronald Packer, BCom (UWA), FAICD, Solicitor
Supreme Court of England & Wales
Valerie Anne Davies, FAICD
Jane Mary Muirsmith, BCom (Hons), FCA,
GAICD
Nathan John Blackburne, BB, AMP, GAID –
Managing Director
COMPANY SECRE TARY
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
Date: Wednesday 4 November 2020
Time: 10:00am WST