C
H
C
2022
ANNUAL
REPORT
Charter Hall Group
Contents
Strategy ...............................................................4
FY22 performance highlights ........................6
Purpose ................................................................ 8
Chair message ................................................. 10
Managing Director &
Group CEO message ...................................... 14
Capital sources ............................................... 20
Industrial & Logistics .....................................22
Long WALE Retail .............................................24
Shopping Centre Retail .................................26
Office ..................................................................28
Social Infrastructure ...................................... 30
Charter Hall Direct ..........................................32
Sustainability ................................................... 34
Board of Directors .......................................... 40
Executive Committee ..................................... 41
Directors’ Report and Financial Report .... 44
Securityholder analysis ..............................144
Investor information ....................................146
Contact details ............................................... 148
Corporate directory ......................................150
Cover: Southern Cross Towers, Melbourne VIC
Above: Wesley Place, 130 Lonsdale Street, Melbourne VIC
Contents | 3
Acknowledgement of Country
Charter Hall is proud to work with our customers
and communities to invest in and create places
on lands across Australia. We pay our respects
to the Traditional Owners, their Elders past and
present, and value their care and custodianship
of these lands.
Charter Hall Group 2022 Annual Report Strategy
Our strategy remains focused on using our expertise to
access, deploy, manage and invest equity to create value
and generate superior returns for our investor customers.
Access
Accessing equity from listed, wholesale
and retail investors.
Deploy
Creating value through attractive
investment opportunities.
Manage
Managing funds and assets,
leasing and development services.
1 year
3 years
5 years
$4.7bn
Gross equity allotted
$15.1bn
Gross equity allotted
$20.2bn
Gross equity allotted
$7.0bn
Acquisitions
$1.6bn
Divestments
$22.2bn
Acquisitions
$4.7bn
Divestments
$28.9bn
Acquisitions
$6.5bn
Divestments
$5.4bn
$8.5bn
$17.5bn
$26.9bn
Net Acquisitions
Gross Transactions
Net Acquisitions
Gross Transactions
$22.4bn
Net Acquisitions
$35.4bn
Gross Transactions
$2.7bn
Development Capex
$79.9bn
Group FUM
↑ $27.6bn
$65.6bn
Property FUM
↑ $13.3bn
$5.7bn
Development Capex
$35.2bn
Property FUM growth
$11.7bn p.a.
$7.5bn
Development Capex
$45.8bn
Property FUM growth
$9.2bn p.a.
Invest
Investing alongside our capital partners.
$509bn
Increase in Pl
↑ 21.1%
23.2%
Total PI return2
$1.1bn
Increase in Pl
↑ 58.3%
15.6%
Total PI return
$1.4bn
Increase in Pl
↑ 88.7%
13.3%
Total PI return
1 Page refers to Property FUM as PIM partnership occurred part way through FY22.
2 Total Property Investment (PI) return is calculated as distributions received from Funds plus growth in investment value divided by the opening
investment value of the PI portfolio for the 12 months to 30 June 2022. This excludes investments in new vehicles held for less than a year.
4
Strategy | 5
Charter Hall Group 2022 Annual Report FY22 performance
highlights
Group Returns
Property Investments
Funds Management
Balance Sheet
Investment Capacity
Group investment
capacity7
$7.9bn
NTA
$6.26
↑27.5%
Credit
rating8
Baa1
Operating
earnings
$542.8m
Statutory
profit2
$911.1m
OEPS
115.6cps
89.5% ↑over FY21
Return on
Contributed Equity3
31.4%
Contributed Equity
per security of $3.92
Property Investment
portfolio
Group
FUM5
$2.9bn
↑$509m
$79.9bn
↑52.8%
Total Property
Investment return4
Property
FUM
23.2%
$65.6bn
↑25.5% or $13.3bn
Property Investment
yield
Gross property
transactions
5.6%
$8.5bn
Funds Management
yield6
16.1%
1 Figures and statistics throughout this report are for the 12 months to 30 June 2022 unless otherwise stated.
2 Attributable to stapled Securityholders.
3 Return on contributed equity is calculated as total operating earnings post-tax per security divided by the opening contributed equity per security for the
12 months to 30 June 2022.
5 Includes Paradice Investment Management (PIM) Partnership, with $14.3bn of FUM.
6 Funds Management (FM) yield is calculated as FM operating earnings post tax per security (includes 50%
allocation of net interest) divided by the opening NTA per security for the 12 months to 30 June 2022.
7 Investment capacity calculated as cash plus undrawn debt facilities for CHC and the funds management
4 Total Property Investment (PI) return is calculated as distributions received from Funds plus growth in investment value divided by the opening investment
platform. At 30 June 2022, platform cash was $1.3bn. Excludes committed and unallotted equity.
value of the PI portfolio for the 12 months to 30 June 2022. This excludes investments in new vehicles held for less than a year.
8 Charter Hall Group investment grade credit rating assigned by Moody’s.
6
FY22 performance highlights | 7
Charter Hall Group 2022 Annual Report
Purpose
Delivering in partnership
Everything we do has a single-minded purpose: to create
better futures by driving value and mutual success.
With partnership at the heart of our approach, we invest in people and places that help our customers and
communities thrive. As a property investment and funds management company, we work closely with our
tenant customers, investors, people and communities to unlock hidden value, provide superior returns and help
businesses and individuals succeed.
United by our values
Active partnership
We believe that if
everyone benefits,
we benefit.
Inventive spirit
We create with purpose
and discipline.
Genuine insight
We use expertise to
unlock resilient growth.
Powered by drive
We put our passion
into action.
Our tenant customers
We use our national reach and local market
expertise to deliver inventive, sustainable solutions
for businesses. As cross-sector specialists, we
think laterally to solve our tenant customers holistic
needs, working together to create solutions that fulfil
their requirements across office, retail, warehousing
and distribution. Our commitment to tenant customers
runs deep, and we continue to challenge ourselves to
go above and beyond in our service.
Our community
Our goal is to stimulate positive impacts for
communities. We foster meaningful employment
in order to help build better futures for vulnerable
young Australians and support healthier outcomes
for all. We continue to work closely with a range
of community partners through our long-standing
commitment to the Pledge 1% movement, supporting
organisations by investing our spaces, profits and our
people’s time.
Our investors
We have built a reputation for innovative investment
funds that enable investors to realise their aspirations.
We work hard to create stable investments with
greater potential to generate consistent, superior
returns. We invest alongside our capital partners
to achieve mutual success. Our focus on quality,
well-located assets with long-term leases delivers
stability, returns and growth through market cycles.
Our environment
We continue to deliver sustainable outcomes with
long-term impact, including making meaningful
progress toward our Pathway to Net Zero. We partner
with our customers, investors and capital partners
to actively seek out opportunities to create
environmental and social value, alongside financial
outcomes, driving us to make decisions that have wide
reaching benefits for our industry and the world.
Our people
As a people business, achieving more for our
customers and communities is dependent on the
talent we have. In the same way as we curate our
portfolio, we curate our teams by deliberately seeking
diverse and respectful contributors. To bring out the
best in our people we provide the right environment –
experience-based learning opportunities to accelerate
their growth, flexible workspaces to foster innovation,
and ways to connect them with the smarts of others
to drive performance and well-being.
Left: Midwest Logistics Hub, Laverton North VIC
8
Purpose | 9
Charter Hall Group 2022 Annual Report Chair message
The strong operational performance driven by our teams,
combined with our diversified portfolio and disciplined
approach to capital allocation, has seen the business
once again deliver for our customers, partners, people
and communities.
Dear Securityholder
In a year that saw a number of natural and
geo-political challenges and uncertainties, we
made progress in adjusting to COVID-19 and
supporting our communities transition to a new
normal of living with the virus.
The property sector provides spaces for people to
gather and connect in meaningful ways. With the
impacts of the pandemic still ongoing, we focused on
designing places and providing experiences that are
safe, welcoming and inclusive.
Against this backdrop, not only have we successfully
managed these challenges, but by taking a measured
and prudent approach, we have taken opportunities
to grow. Charter Hall ended the year with $79.9 billion
in funds under management (FUM), holding the largest
sector-diversified commercial property portfolio
in Australia at $65.6 billion.
I am proud of our partnership with our customers and
communities, and the resilience and drive that our
people have demonstrated to deliver an outstanding
set of results once again. This is the culmination of
talented, cohesive leadership and hard work over
many years to diversify the Group across asset
classes, customer types and equity sources.
We’ve ensured our portfolios are invested in high
quality assets leased to best-in-class tenants,
ensuring stability of income and valuation growth
through times of uncertainty. Importantly, our model
is one of partnership. It is the continued strength
of our customer relationships and our ability to
meet their evolving property needs that drives our
ongoing success.
Continuing our strong
track record
While this report measures our performance for the
year to 30 June 2022, we see long-term performance
as the true test of success. Over the past five years,
we’ve delivered Securityholders 26.4% post tax
growth in earnings per annum, and distribution growth
of 6% per annum.
We know to achieve ongoing outperformance we
need to both build on the strength of our customer
relationships, as well as harness the talent within
our business for mutual gain. We maintain a clear
focus on serving our customers’ needs, evolving our
cross-sector tenant and investor relationships and
investing alongside our partners.
Further, we also supported our people in their
well-being and provided a dynamic workplace
that fosters connection and performance.
The macro-environment saw competition for key
talent increase during the year. The Board knows our
ability to attract and retain our leadership team and
other key talent is critical to our long-term success.
Consequently, we took steps to respond to changing
expectations and remain competitive in the market,
looking closely at our remuneration structure, retention
plans and increasing the focus on providing dynamic
and attractive workplaces for our people.
Investing in a
sustainable future
Charter Hall’s platform-wide integration of
environmental, social and governance (ESG) is a
core driver of continued value for the Group. We are
active in partnering with our customers to create
environmental and social value, at the same time as
pursuing long-term, risk-adjusted returns that align
with stakeholder expectations.
During FY22, we have continued to engage with our
customers and evolved our sustainability framework
to respond to material topics and emerging trends
that will shape our future.
We introduced sustainable finance structures early
in 2021. By the end of FY22, sustainable loans reached
$2.5 billion, comprising approximately 10 per cent of
Charter Hall’s total debt.
10
Chair message | 11
Right: David Clarke
Charter Hall Group 2022 Annual Report We continued acting on our commitment to
Net Zero carbon in operation (Scope 1 and Scope
2) by 2030. A key achievement on this journey was
securing a long-term Power Purchase Agreement
(PPA) that will supply 100 per cent electricity from
renewable solar and wind sources across the Group’s
property portfolio. Our PPA is linked to new renewable
development projects and our investment will assist
Australia’s transition to a low carbon economy.
Further, this will accelerate the industry’s growth and
potential to secure new and improved renewable
technologies, benefiting generations to come.
We continued to advance the Sustainable
Development Goals as part of our commitment to
the United Nations Global Compact and embed its
principles in our strategy and culture. We were proud
to once again be recognised in the PRI Leaders Group
for our work in climate reporting.
This year, we also ranked eighth in the inaugural
edition of the 2022 Asia Pacific Climate Leaders list
(Statista/Financial Times/Nikkei). It’s fantastic to be
recognised on a global scale for our sustainability
approach and our collective efforts with our
customers and the broader community, to share
knowledge, data, analytics and technologies to drive
change, together.
We remain committed to building resilience in our
assets to support customers through resource
efficiency, carbon emission reduction and the
integration of physical and transitional risks and
opportunities of a changing climate to ensure we
deliver long term value.
Meaningful social impact
As a group, we want our communities, especially
those disadvantaged or left vulnerable, to
be successful. We pursue this outcome by looking
to improve access to learning, skills and job
opportunities, strengthening our social impact through
our supply chain partners and practices, and by
opening up our assets to support activities that lead to
economic uplift.
This commitment to social investment in communities
is driven largely through our Pledge 1% commitment.
This year we provided financial support to combat
the local impacts of COVID-19 and flooding, access
to vaccinations in the Asia Pacific and emergency
support for Ukrainian refugee families, contributing
$578,000 in crisis support. We also provided our
space, volunteered our time and donated $1.27 million
to social enterprises that are involved in our state-
based community partnership program, focused on
creating employment for vulnerable youths. We are
targeting 1,200 employment outcomes by 2030 as
part of this program.
We have also continued our approach to ensuring
robust governance underpins our operations and
upholding universal principles on human rights, labour,
the environment and anti-corruption. In December, our
second Modern Slavery Statement was completed,
outlining efforts to prevent occurrences of modern
slavery in our supply chain. Further, we completed
a diagnostic assessment of our response to human
rights and modern slavery and the findings will
inform the development of our a 3-5 year modern
slavery framework.
We looked to advance Indigenous reconciliation and
inclusion through our operations. The Group’s Stage
one: Reflect Reconciliation Action Plan was endorsed
by Reconciliation Australia and we are actively working
on building our relationships and capacity with First
Nations businesses.
Serving customers and
Securityholders
A core responsibility of the Board is providing clear
governance and oversight to assist management in
continuing to deliver against the Group’s strategy and
entrench ethics in all actions. We will continue to serve
you in this way.
This year we provided financial support to combat
the local impacts of COVID-19 and flooding, access
to vaccinations in the Asia Pacific and emergency
support for Ukrainian refugee families, contributing
$578,000 in crisis support
Our Board is comprised of a majority of independent
directors, in line with best practice. This composition
provides us with the right mix of talent and skills with
which to guide strategy and provide a strong overall
contribution to the success of the Group.
In November 2021, we announced that Phil Garling had
retired from the Board. Phil’s valuable contributions
over nearly nine years has helped guide the Group
to the successful business it is today. I wish him all
the best in the future and thank him for his service to
our Securityholders.
I encourage all our Securityholders to review the
Directors Report on page 44 to understand more
about the Board.
Looking forward
The outlook remains uncertain for many advanced
economies, with geopolitical challenges, potential
pandemic outbreaks, high inflationary pressures and
the continued likelihood of interest rate rises.
While we continue to work through and prepare for
challenges, we must also look forward, setting out
priorities that will deliver growth for Securityholders
into the future. We know that the way through is to
invest in our partnerships with our customers and
support and invest in our dedicated team.
Above: 6 Hassall Street, Parramatta NSW
Charter Hall will continue to focus on our strategy
of using our combined expertise to access, deploy,
manage and invest to create value and generate
superior returns for Securityholders.
I am confident the decisions we are making to build
the Group for the future, together with continued
strong operational performance and mutually
beneficial partnerships, will see us continue to create
value for our Securityholders and capital partners.
On behalf of the Board, I would like to thank our
tenant customers, investors and Securityholders
for your ongoing support. I extend gratitude to my
fellow Directors and the Executive Committee for your
dedication, and to all our people for their efforts, as
together we continue to build a sustainable business
we can be proud of.
David Clarke
Chair
12
Chair message | 13
Charter Hall Group 2022 Annual Report Managing Director
& Group CEO
message
Dear Securityholder
Financial year 2022 (FY22) presented a range
of challenges to economies around the world.
Charter Hall continued to grow and deliver strong
returns to Securityholders, despite significant
setbacks that impacted many parts of the Australian
economy. We harnessed our capacity to respond
to surprises and maintained our customer centric
strategy that enabled a continuation of long term
growth and resilience. FY22 saw the Group deliver a
record 115.6 cents per security of earnings, up 89.5%
on FY21, while we retained a very strong balance sheet
with no net debt providing “dry powder” for growth.
We continued to drive market leading transaction
volumes and outperform respective benchmarks
across most of our funds and partnerships. At the
same time, we maintained a razor-sharp focus on our
customers, as evidenced by continued success in
leasing and pre-leasing of developments, results from
our customer surveys and a leading volume of sale
and leaseback transactions with tenant customers.
Overall, property funds under management (FUM)
grew by $13.3 billion, or 25.5% in FY22 to $65.6 billion
as we focused on deploying capital for our
investors and generating FUM and earnings growth
for Securityholders.
Further, FY22 also saw the Group extend its fund
management capability into another asset class
with the 50% acquisition of the listed equities fund
manager Paradice Investment Management (PIM),
which invests on behalf of wholesale and retail
investors across domestic and global listed equities.
When Paradice funds are included, Group FUM grew
52.8% to $79.9 billion for the year.
After 17 years as a publicly listed Group, we are
pleased to be delivering consistently strong results
for our Securityholders, customers and our people.
Resilience in times of
uncertainty
Our track record of originating and completing private
transactions alongside our wholesale capital partners
led to the successful privatisation of ALE Property
Group by the Charter Hall Long WALE REIT and our
long term partner, Hostplus.
Similarly, we extended our partnership with Dutch
pension fund PGGM and were successful in privatising
the listed Irongate REIT. These two transactions,
totalling $3.2 billion in combined portfolio value,
demonstrate the Group’s ability to access large
portfolios and deploy capital in complex transactions,
providing opportunities for our investors to generate
attractive risk adjusted returns.
Our development and leasing activity remained
robust with growth in the Group's development
pipeline to $16 billion. We continued to enjoy strong
leasing success in our office projects like the
Amazon anchored 555 Collins Street development
in Melbourne's CBD. We firmly believe that modern
workplaces will continue to play a critical role for the
majority of businesses and the economy and we
continue to curate our portfolios to be responsive to
changing tenant needs.
Our industrial and logistics business also continued
to grow strongly as we looked to deliver new
facilities that meet the needs of tenant customers.
We delivered $685 million of new industrial and
logistics facilities through our development pipeline,
as well as secured $2.5 billion of new acquisitions
for our funds. Charter Hall remains well positioned
to capitalise on the accelerating demand for
modern, purpose-built, highly efficient facilities
and warehouses.
Our non-discretionary convenience retail portfolio
continued to provide strong returns, as we partnered
with our tenants to ensure our retail centres remained
open throughout the year. Similarly, the essential
nature of our social infrastructure portfolio and the
importance of these assets to the community and
the economy means these assets have a natural
resilience. We continued to see opportunities to grow
in this space and further our position as a market
leading social infrastructure partner.
Right: David Harrison
14
Managing Director & Group CEO message | 15
Charter Hall Group 2022 Annual Report Charter Hall Group
2022 Annual Report
Our property funds
management portfolio
is well-diversified
comprising 1,548
properties, with
a lettable area of
10.8 million square
metres and delivering
over $2.8 billion in net
rental income per year
The Group is progressing various developments
across our portfolios, creating modern investment
grade properties and adding significant value
through enhancing income yield and total returns.
Our development completions for FY22 have added
significant incremental stabilised income to our
portfolios. Our total development pipeline now stands
at $16 billion, with $6.1 billion committed and under
construction, providing for future portfolio curation
and FUM growth.
Our $5.9 billion industrial and logistics development
pipeline is predominantly pre-leased to high quality
tenants and will generate institutional quality
long-leased assets for our funds. It will also provide
attractive incremental FUM growth and enhance our
ability to attract capital.
Our office pipeline of $9.7 billion also continues to
deliver attractive development returns and new office
buildings. The Amazon anchored 555 Collins Street
development in Melbourne's CBD is well progressed
and has recently secured a 50% investment from
long-term partner GIC, with completion expected
in 2023.
Similarly, work has commenced and is progressing
on schedule at 480 Swan Street, Richmond which
will be the 32,000sqm Australia Post headquarters
in Melbourne.
Valued relationships with
our tenant customers
Strong relationships with our tenant customers
continue to be an essential strategic focus. We are
always looking for new ways to support our customers
and actively partner with them to provide inventive
solutions to meet their needs.
Our success with our tenants is reflected in the high
level of repeat business – in fact, 71% of our tenant
customers lease more than one tenancy across the
platform. We see these customers as partners that
often generate sale and leaseback opportunities.
We have looked to build resilience across all our
assets and portfolios. Evidence of this is that 23%
of all platform leases are triple-net. These assets
are incredibly capital efficient, with the tenants
responsible for all property related expenses and
capital works. Similarly, we have been conscious
to build portfolios that are positioned to benefit
from rising inflation. 21% of all platform leases have
inflation-linked annual rent escalations, providing
valuable exposure to elevated inflation.
Long term performance
Financially, we continue to be disciplined and
self-funded from a growth perspective via a
consistent 6% per annum distribution growth policy
that has facilitated retained cash earnings to reinvest
in the growth of the business.
Importantly, our growth in earnings comes after-tax.
On a post-tax basis, we delivered sector-leading
26.4% operating earnings per security (OEPS) growth
rate (CAGR) annually over the last five years. Tax paid
earnings also deliver valuable franking credits for
our Securityholders. Grossed-up for franking credits,
Securityholders received distributions worth 47.6cps
for FY22. The quantum of franking credits delivered by
Charter Hall to Securityholders makes us unique in the
Australian real estate investment trust sector.
Quality property funds
management portfolio
Our property funds management portfolio is
well-diversified comprising 1,548 properties, with a
lettable area of 10.8 million square metres delivering
over $2.8 billion in net rental income per year. Group
WALE remains strong at 8.6 years and the weighted
average capitalisation rate firmed to 4.37%, reflecting
the low risk profile and high-quality assets in our
funds and partnerships.
Active development
pipeline
Our development capex during FY22 continued to
make a meaningful contribution to both FUM growth
and portfolio curation, with $1.8 billion of development
completions during the year.
Left: GPO Exchange, Adelaide SA
16
Managing Director & Group CEO message | 17
Resilient Property
Investment portfolio
Our Property Investment portfolio provides a strong
alignment of interest with our investor customers,
while also ensuring that Securityholders benefit
from our property expertise. These earnings are
characterised by the high quality of our tenants, the
diversity of sectors, and the lack of concentration risk.
The portfolio has grown to $2.9 billion, or 21.1% over
the year, reflecting our strategy to invest alongside our
capital partners and the growth achieved in underlying
asset values. The portfolio has delivered an attractive
5.6% Property Investment yield, with further capacity
for new investments from retained earnings and
recycling of capital from co-investment stakes into
new growth opportunities.
Occupancy is broadly stable at 97.3%, and the
property investment portfolio WALE remains a
healthy 8.2 years. Our weighted average rent review
is relatively strong at 3.6%, boosted by our exposure
to CPI-linked leases. We believe the Group’s Property
Investment portfolio is a very defensive, well
diversified, core investment portfolio.
Culture is our bedrock
Our greatest asset is the people who work here, along
with the executives and non-executive directors that
represent investors on our various Boards of listed and
unlisted funds. We never underestimate the breadth
of experience and talent our sector-diverse business
provides to our customers.
Our culture has long been one of our key strengths.
I’m proud and inspired by the way our people continue
to respond dynamically to the challenges we face.
This culture is reflected in our employee engagement.
For FY22, our engagement scores were at the
highest performing level for global organisations
at 88% overall, with 93% of our people saying that
Charter Hall is a great place to work.
We continue to value and invest in diversity and
inclusion across the business, actively seeking to
attract and retain talented people from a wide range
of experiences, backgrounds and perspectives to
cultivate our inventive spirit. We recognise that the
importance of diversity and inclusion goes beyond
hiring diverse candidates. It must involve celebrating
diversity - ensuring a sense of belonging and creating
value for all our people. We were pleased to receive
an Employer of Choice for Gender Equality citation
by the Workplace Gender Equality Agency (WGEA).
These achievements are important to us, and we
will continue to prioritise making all our people feel
supported, valued and encouraged to see a future for
themselves at Charter Hall.
Outlook and guidance
Based on no material adverse change in current
market conditions, FY23 earnings guidance is for
post-tax operating earnings per security of no less
than 90 cents. FY23 distribution per security guidance
is for 6% growth over FY22.
My thanks, on behalf of the Executive Committee, to
all our people for their hard work this year. I would
also like to thank the Charter Hall Group Board for
their continued strategic guidance along with the
Independent Directors of our Fund Responsible
Entity Boards.
Our strategy of using our property expertise to create
value and generate superior returns for our investors
and customers underpins our success.
We are proud of what has been achieved over more
than three decades and continue to hold ambitious
goals for the future. Finally, thank you to all our
investors and tenants for continuing to be part of
our Charter Hall Group community.
David Harrison
Managing Director & Group CEO
Right: Midwest Logistics Hub, Laverton North VIC
18
Managing Director & Group CEO message | 19
Charter Hall Group 2022 Annual Report Capital sources
The diversity of our property portfolio and business
model means we offer a wide range of investment
options. Our approach to investment uses partnership
and financial discipline to deliver stability and
long-term growth.
Wholesale pooled
and partnerships
Listed
Charter Hall
Direct
FUM
$41.6bn
$13.5bn
$10.5bn
Occupancy
97.2%
99.3%
98.8%
Capitalisation rate
4.2%
4.7%
4.6%
Gearing
WALE
25.8%
27.7%
30.5%
8.0yrs
10.5yrs
8.2yrs
CHC investment
$1.6bn
$0.9bn
1
$0.5bn
1 Held at accounting value not market value.
Huntingwood Distribution Facility, Huntingwood NSW
20
Capital sources | 21
Charter Hall Group 2022 Annual Report $21.2bn
Total FUM
3.9%
Capitalisation rate
264
Properties
10.7yrs
WALE
$5.9bn
Development pipeline
Industrial &
Logistics
“With one of the largest national portfolios in the sector and a
multi-billion dollar development pipeline, we’re focused on both
established and key growth areas to support the changing
landscape of consumer shopping and supply chains.
The scale, volume and diversity of our industrial and logistics
assets leased to high quality tenant customers provides
flexibility for us to grow together and build value over time.
We actively source off-market opportunities and invest in large
fulfilment centres and facilities designed to meet growing
last mile needs. We continue to work closely with our tenant
customers to increase the productivity, sustainability and
supply chain resilience of their operations.”
Richard Stacker
Industrial & Logistics CEO
Port Wakefield Road Distribution Facility, Gepps Cross SA
22
Industrial & Logistics | 23
Charter Hall Group 2022 Annual Report Long WALE
Retail
“Through active management and portfolio curation, our
property portfolio provides investors with stable and secure
income and exposure to long WALE assets with strong
tenant covenants. Over the year, we continued to grow in a
measured way, enhancing our platform with asset and tenant
diversification, including the acquisition of the ALE Property
Group in partnership with Hostplus.”
Avi Anger
Fund Manager, Charter Hall Long WALE REIT
$9.9bn
Total FUM
4.1%
Capitalisation rate
733
Properties
11.5yrs
WALE
$0.2bn
Development pipeline
Villa Noosa Hotel, Noosaville QLD
24
Long WALE Retail | 25
Charter Hall Group 2022 Annual Report $4.4bn
Total FUM
5.4yrs
WALE
5.4%
Capitalisation rate
$0.1bn
Development pipeline
53
Properties
Shopping Centre
Retail
“We continue to be the leading owner and manager of
property for convenience retailers, with a portfolio dominated
by Australia’s major supermarkets and other tenants
providing essential goods and services to local communities.
Throughout the year, our strong focus on mutual success
and deep customer relationships underpinned our approach
and delivered resilient and growing income streams
for investors.”
Ben Ellis
Retail CEO
Brickworks Marketplace, Torrensville SA
26
Shopping Centre Retail | 27
Charter Hall Group 2022 Annual Report Office
“Our bespoke approach to partnerships and ability to unlock
potential underpin our growing $26 billion office portfolio.
Our strategy of investing in premium, magnetic workplaces in
prized locations has driven this year’s acquisition of Southern
Cross Towers in Melbourne and progressing our plans to
realise the development potential of Chifley Square in Sydney.
We create places where people feel healthy, connected
and inspired and, with the flight-to-quality more evident, we
continue to work closely with our tenant customers to provide
the best workplace environments for their people.”
Carmel Hourigan
Office CEO
$26.0bn
Total FUM
4.7%
Capitalisation rate
80
Properties
6.1yrs
WALE
$9.7bn
Development pipeline
1 Nicholson Street, Melbourne VIC
28
Office | 29
Charter Hall Group 2022 Annual Report Social
Infrastructure
“With Australia’s largest listed social infrastructure REIT
(ASX: CQE) as part of our portfolio, we support communities
with essential services and continue to deliver income and
capital growth for our investors. Our resilient portfolio has
strong covenants and long WALEs to customers including
government and Goodstart Early Learning.”
Travis Butcher
Fund Manager, Charter Hall Social Infrastructure REIT
$3.7bn
Total FUM
4.4%
Capitalisation rate
418
Properties
14.6yrs
WALE
$0.1bn
Development pipeline
Only About Children, Brighton East VIC
30
Social Infrastructure | 31
Charter Hall Group 2022 Annual Report Charter Hall
Direct
Direct funds net return since inception
Funds have returned an average of 14.6% p.a., outperforming their respective MSCI/IPD indices1 by 1.8x
14.8%
16.0%
15.9%
11.2%
8.9%
7.3%
8.9%
8.9%
20.4%
18.4%
12.6%
7.5%
11.5%
8.8%
7.1%
6.8%
10.8%
9.5%
“As one of Australia’s leading direct property fund managers,
Charter Hall Direct offers a growing, cross-sector portfolio,
aiming to deliver regular income with capital growth. With a
25-year track record of managing unlisted property funds,
we have consistently outperformed against the respective
benchmark and continue to attract investors seeking
diversification and sustainable investment returns.”
Steven Bennett
Direct CEO
DOF3
2014-2022
PFA3
2017-2022
Australian O�ce
DIF23
2012-2022
DIF33
2014-2022
Australian Industrial & Logistics
DIF4
2016-2022
BW Trust
2014-2022
LWF
2017-2022
Australian Diversified / Long WALE
WPS1
2020-2022
Maxim4
2012-2022
Australian
Diversified
Direct Fund (%p.a.)2
Benchmark (% p.a.)1
1
Benchmark refers to the headline MSCI/IPD Unlisted Core Wholesale Property Fund Index returns series as at June 2022, since the respective fund
inception dates. Years shown are indicative of inception year to 30 June 2022, though returns are as at exact inception date. Past performance is not
a reliable indicator of future performance.
2 DIF2, DIF3, DIF4, LWF, DOF – returns assume Bonus Units or Entitlement Offer as per the respective PDS.
3 Returns refer to the following unit classes; DIF2, DIF3 – Wholesale, PFA – Ordinary and DOF – Wholesale A.
4 Benchmark refers to S&P/ASX 300 A-REIT Accumulation Index. Charter Hall Maxim Property Securities Fund and Benchmark Index returns series as at
June 2022, over the past 10-year return period. Past performance is not a reliable indicator of future performance.
Prestons Logistics Facility, Prestons NSW
32
Charter Hall Direct | 33
Charter Hall Group 2022 Annual Report Sustainability
For more than 30 years, environmental, social and
governance (ESG) considerations have been part of
how we do business.
Each year, we go further in our ESG approach and objectives. Today, we leverage our platform-wide scale and
integration of ESG into our business and value chain as a core driver of value for the Group.
During FY22, we have continued to engage with our customers and evolved our sustainability framework to
respond to material topics and emerging trends that will shape our future. The framework focuses on delivering
environmental, social, governance and economic value. Our framework is aligned with the United Nations
Sustainable Development Goals (SDG) and our progress against the SDG indicators can be found on our
website. This approach reinforces our commitment to delivering environmental and social value at the same
time as pursuing long-term, risk adjusted returns that align with changing stakeholder expectations.
Our FY22 highlights
100%
renewable electricity
from long-term Power
Purchase Agreement
locked in from FY24
54%1
reduction in absolute
emissions2 against
baseline year FY17
60k+
tonnes of carbon abated
through renewables
procurement
$2.5bn
in sustainable finance
transactions (up from
$100m in FY21)
Climate
Leader
8th in 2022 FT/Nikkei Asia
Pacific Climate Leader
Employer
of Choice
Awarded WGEA
Employer of Choice
for Gender Equality
$1.27m
invested in social
enterprises and 191
employment outcomes
for vulnerable Australians
Winner
2022 Social Traders
Game Changer Awards
(NSW/ACT)
Reflect
Reconciliation Action Plan
launched
1
Emissions reduction has been calculated using a market-based approach.
Final assured non-financial data will be published in our FY22 Sustainability Report.
2 Scope 1 and Scope 2 emissions in operational control.
Willogoleche Wind Farm (ENGIE)
Progress against our sustainability targets
Environment
Creating resilience through meaningful climate action, rethinking our approach to resources
and restoring nature.
Focus areas
FY22 progress
Looking forward
Climate action
Achieve Net
Zero emissions
and strengthen
resilience to climate
related impacts
Carbon and climate action
– 54%1 reduction in absolute Scope 1 and 2 emissions
against FY17, including more than 60,000tCO2-e
avoided through procurement of renewable electricity
– Progress on Scope 3 emission target aligned to
science-based methodology by defining scope,
boundary and expansion of tenant data coverage
– Net Zero emissions by FY30
– Commence reporting on Scope 3
emissions aligned to science-based
target methodology in FY23
– Office developments to be Net Zero
by FY30
Clean energy
– Group wide renewable PPA executed to enable the
– 100% powered by renewables for assets
supply of 100% renewable electricity from offsite new
renewable projects from 2024
– 74%1 renewable electricity supply to assets in
operational control, including 100% renewable
electricity supply to office and I&L assets
– 47.2MW of solar and 6.5MW of batteries installed,
an increase of 6MW of solar since FY21
Energy efficiency
in operational control by FY25
– Target an additional 10MW of solar to be
installed in I&L assets during FY23
– Commence solar installation program at
select social infrastructure assets
– Achieved 5.1 star NABERS Energy for Office Portfolio
– Target 5.5 stars NABERS Energy for
rating, covering 96% of our office assets
Office Portfolio by FY25
– Achieved 4.5 stars NABERS Energy for Retail Portfolio
rating, covering 82% of our shopping centre assets
– Pilot Australia’s first industrial warehouse and cold
storage NABERS Energy rating
– Six of our funds included in the Top 10 NABERS
Energy Sustainable Portfolio Index
– Maintained Australia’s largest Green Star
Performance footprint covering over 5,200,000sqm
Resilience and adaptation
– Maintain 4.5 stars NABERS Energy
for Retail Portfolio and increase
rated coverage
– Target 6 Star Green Star buildings
for office developments and
redevelopments from FY26
– Target 5 Star Green Star buildings for I&L
developments by FY25
– Climate Change Adaptation Plan (CCAP) have been
completed for 98% of retail shopping centres, 85%
of office and 67% of industrial & logistics sectors
– Embed CCAP in decision making and
track decarbonisation and adaptation
planning in Strategic Asset Plans by FY25
– Refined consideration to Climate Change Risk
Exposure in decision-making for new acquisitions
– All developments will incorporate climate
change adaptation and resilience criteria
from FY23
Rethink
resources
Evaluate use of
resources as we
transition to a
circular economy
Restore nature
Protect and
restore natural
environments and
biodiversity to
transition towards a
regenerative future
Waste
– Achieved 28%1 diversion from landfill at
shopping centres where we manage waste
– Achieved 32%1 diversion from landfill at office
assets where we manage waste
Water
– Achieve 75% diversion from landfill at our
office and shopping centres where we
manage waste by FY30
– Progress waste strategy aligned to
circular economy principles
– Achieved 4.8 stars NABERS Water for Office Portfolio
rating, covering 89% of our office assets
– Achieved 4.1 stars NABERS Water for Retail Portfolio
rating, covering 58% of our shopping centre assets
– Rolled out water submeters in partnership with our
key I&L tenant customers to optimise water usage
– Maintain 5.0 stars NABERS Water for
Office Portfolio rating by FY25 and
target 4.5 stars for major developments
from FY25
– Maintain 4.0 stars NABERS Water for
Retail Portfolio rating by FY25; increase
coverage to assets >10,000sqm
34
Sustainability | 35
Charter Hall Group 2022 Annual Report
Social
Building strong communities through connection, inclusion and delivering healthy people and places.
Economic
Through shared economic prosperity and sustainable growth and mutual success.
Focus areas
High
performing
talent
Drive performance
and engagement
by leveraging
difference and
enabling potential
Deep
customer
partnerships
Long term value
creation through
cross-sector
partnership
Strong
communities
Support resilient
communities
through inclusion
and connected
places
Healthy places
Positive human
health, safety and
wellness outcomes
through better
workplace design
and management
FY22 progress
Employee
Looking forward
– Achieved the global high performing level of
– Sustain levels of engagement
engagement of 88% overall, with 93% of our people
saying that we are a great place to work
that align with being a global high
performing culture
– Improved our score in the Australian Workplace
Equality Index (AWEI) by 71% when compared
with FY21, granting us the recognition as a Bronze
Employer for LGBTQ+ inclusion
– Reimagined the way we work through refurbishment
of our Sydney office, providing spaces to think
differently and work in a variety of ways
Tenant customer engagement
– Recorded high customer satisfaction across all
– Create a benchmark to measure the
sectors with our Net Promoter Scores (NPS) and
satisfaction results maintained at 5-year highs in retail
and 3-year highs in industrial & logistics
cross-sector customer experience with
Charter Hall, considering all aspects of
how we partner with our customers
– Awarded the Frank Lowy Fellowship (an industry
innovation award) for the implementation of Autom8,
which is a custom built automated platform for the
collation of monthly retail sales data in our retail
shopping centres
Community resilience
– $578k (of total $1.27m donations to community
– Establish a spend target in FY23 in
organisations) supported communities impacted by
COVID-19, floods, international access to vaccinations
and emergency support for Ukrainian familieshanger
First Nations engagement
– Launched our Stage One: Reflect RAP, formalising our
commitment to taking meaningful and lasting steps
towards reconciliation
– Became a member of Supply Nation and created
spend dashboard for First Nations owned business
and social enterprise
Health safety and well-being
support of building capacity across our
value chain
– Refine our national community
partnership framework during FY23
– Measure and report spend with First
Nations businesses by FY23
– Cared for our customers through COVID-19 with rent
relief, hygiene initiatives, digital solutions and support
with returning to workplace
– Continue to support our tenants to
transition to the future of work following
COVID-19
– Increased coverage of NABERS Indoor Environment
rating in office sector by 10% to 1,200,000sqm and
maintained WELL Portfolio rating
– 100% of all office assets under
operational control to have a WELL
Portfolio rating by FY25
– Recorded a Lost Time Injury and Lost Time Injury
– Transition the WHS management system
Frequency Rate (LTIFR) of 0 and a Total Recordable
Injury Frequency Rate (TRIFR) of 3
from ISO12001 to the new standard
ISO45001 by FY23
Focus areas
Shared
success
Shared economic
success and
sustained
livelihoods for our
communities and
supply chain
Sustained
returns
Long-term risk
adjusted returns
for investors
FY22 progress
Pledge 1%
Looking forward
– Donated $1.27m to community organisations across
Australia and overseas
– Spent $1m in social procurement with social
enterprises. Includes partnership with Two Good Co
to provide soap for our office portfolio, which recently
won the 2022 Social Traders Game Changer Awards
(NSW/ACT)
– As part of our Pledge 1% commitment,
contribute 1% of our profits, space and
people’s time to community partners
each year to help them achieve positive
social impacts
– Implement a social impact measurement
tool by FY25
Employment opportunities
– Achieved 191 employment outcomes for vulnerable
– Deliver 100 employment outcomes per
youth through partnerships with Dismantle, Kickstart
and Green Collect, exceeding target by 91%
– Achieved $2.5bn to date in Sustainable Finance
transitions linked to green performance ratings
and indicators
year for vulnerable youth and 400 youth
employment outcomes by FY25 and
1,200 by FY30
– Leverage approach to ESG to support
future sustainable financing opportunities
Governance
Operating a responsible business and ensuring responsible and sustainable
supply chain engagement.
Focus areas
Ethics
Conduct business
activities in line with
the highest ethical
standards
Cyber security
Harnessing digital
technology and
actively protecting
customers privacy
Responsible
supply chain
Procure sustainably
and ethically
Transparency
& disclosure
Disclose ESG
information in
accordance with
best practice
FY22 progress
Looking forward
– All employees undertook training relating to business
ethics and management's approach to compliance
and ethical business practice and our social license to
operate
– Continue to embed values-based
decision making into everything we do
– Reported no major cyber security incidents for
the year. Cyber security strategy is modelled on
internationally recognised standard ISO27001 and
audited annually
– Work across our technology and
operational supply chain to increase
cyber awareness, maturity and readiness
by FY25
– Engaged our suppliers in the high-risk industries
of cleaning and security. The PCA pre-qualification
was sent to 33 cleaning and security suppliers,
representing 100% of our total cleaning and security
spend across our office, retail and I&L sectors
– Deliver a Sustainable Supply Chain
Framework that addresses modern
slavery, preferred materials and circular
economy principles by FY25
– 26 funds participated in GRESB assessment
– Actively monitor progress of International
– Published our second annual Modern Slavery
Statement
– Published our second TCFD Statement
– Participated in DJSI
Sustainability Standards Board and
future integration of environmental and
financial metrics
36
Sustainability | 37
Charter Hall Group 2022 Annual Report
Climate related risks and opportunities
In late 2021, the Inter-Governmental Panel on Climate Change (IPCC) released their sixth assessment report
(AR6), which included Shared Socioeconomic Pathways’ (SSP) and updates to global warming projections and
emissions pathways.
Below is a summary of measures Charter Hall Group has undertaken this year to align with the Task Force on
Climate-related Financial Disclosure (TCFD):
Governance
– Charter Hall Group Board continued to oversee
sustainability strategy and policies (including
approach to climate change and integrating
ESG) through the Audit Risk and Compliance
Committee (ARCC)
– Executive and Non-Executive Directors engaged
on Climate Change Scenario planning, specifically
adopting Socio-Economic Pathways and adjusting
to plausible Emissions Pathways as released by the
IPCC with Assessment Report 6 (AR6)
– Executive Committee continued to have strategic
oversight of ESG strategy and implementation,
led by the ESG Committee to drive platform-wide
alignment and implementation
– Cross-business engagement on Climate Change
continued including with Chief Financial Officer,
Chief Investment Officer, Chief Experience Officer,
General Counsel and Company Secretary, and
Group Head of Risk and Compliance
Strategy
– Updated Climate Scenarios
– 100% Renewable Electricity by 2025 for all
Charter Hall office locations and assets under
operational control
– Progress on Scope 3 emissions target aligned to
science-based methodology by defining scope
and boundary
Risk management
– Implemented our Climate and Carbon
Transaction Framework for acquisition and
investment strategies
– Continued to progress Physical Risk assessments
in office, retail and industrial & logistics portfolios
– Climate Change Adaptation Plans have been
completed for 98% of retail shopping centres,
85% of office and 67% of industrial &
logistics sectors
– Secured long term renewable supply linked to
new renewable development projects between
2024 and 2030
Metrics and targets
Target
– Established Net Zero Carbon Scope 1 and 2
by 2030
– 100% renewables by 2025
Achieved
– 54%1 reduction in absolute Scope 1 and 2
emissions against FY17, achieved through energy
efficiency and procurement of renewable electricity
– Increased our green financing from zero 18 months
ago to $2.5 billion at the end of this reporting
period linked to sustainability benchmarks
New developments
– Designing for Net Zero in operations at
480 Swan Street, Richmond VIC
– Focus on exploring methods to reduce
upfront (embodied) carbon
Charter Hall Climate Scenarios
Building on our existing scenario analysis which was based on Representative Concentration Pathway (RCP) 2.6
‘best case’ and RCP8.5 ‘business-as-usual’ (worst case) scenarios, in FY22 Charter Hall updated its scenario
planning to incorporate the socio-economic indicators of climate change. When coupled with RCPs, the SSPs
provide a more complete picture of risks and opportunities that arise across a range of plausible climate change
outcomes and societies response.
As a business, we acknowledge that there are global uncertainties which relate to both emissions pathways
and the pace of policy implementation, as well as the effectiveness of technology and pace of investment.
Our updated scenarios have been created to test future climate related risks and opportunities for the Group.
1
Scenario 1
Technology & Policy
Effectiveness
This scenario is a “middle of the
road scenario” which tests the
effectiveness of technology and
policy response to decarbonising
a growing economy. Continuing
current socio-economic
trends rely on technology and
policy effectiveness to limit
global warming.
Degree warming potential of 3.0°C
or assuming extreme mitigation
efforts are in place, well below a
2°C outcome.
SSP2
RCP6.0 to RCP2.6
2
Scenario 2
Equitable Well-being
This scenario tests demand side
enablers of rapid decarbonisation
driven by a unified desire to
create equitable well-being for
all. Well-being is likely to increase
global technology adoption and
policy effectiveness, therefore
reducing global warming beyond
current forecasts.
Degree warming potential of 2.5°C,
or assuming extreme mitigation
efforts are in place an opportunity
to achieve a 1.5°C outcome.
SSP2 shifting towards SSP1
RCP4.5 to RCP2.6
3
Scenario 3
Regional Rivalry
This scenario tests supply
side challenges to global
decarbonisation which are
expected to occur from increased
physical climate change impacts
which causes increased regional
rivalry and resource protectionism.
Scenario 3 is likely to see a
breakdown in international policy
collaboration and investment in
clean technology, causing higher
temperatures than forecast in
Scenario 1.
Degree warming potential of 3.5°C
or, assuming extreme mitigation
efforts are in place, an opportunity
to achieve a 2.5°C outcome.
SSP2 shifting towards SSP3
RCP7.0 to RCP3.4
1
Emissions reduction has been calculated using a market-based approach. Final assured non-financial data will be published
in our FY22 Sustainability Report.
38
Sustainability | 39
Charter Hall Group 2022 Annual Report Board of
Directors
Executive
Committee
From Left: Jacqueline Chow, Independent Non-Executive Director;
Karen Moses, Independent Non-Executive Director;
Philip Garling AM, Independent Non-Executive Director (retired);
David Clarke, Chair/Independent Non-Executive Director;
David Harrison, Managing Director & Group CEO;
David Ross, Independent Non-Executive Director;
Greg Paramor AO, Independent Non-Executive Director
See page 50-52 for information on the Directors.
From Left: Ben Ellis, Retail CEO;
Carmel Hourigan, Office CEO;
Steven Bennett, Direct CEO;
Sheridan Ware, Chief Information and Technology Officer;
David Harrison, Managing Director & Group CEO;
Russell Proutt, Chief Financial Officer;
Richard Stacker, Industrial & Logistics CEO;
Natalie Devlin, Chief Experience Officer;
Sean McMahon, Chief Investment Officer
40
Executive Committee | 41
Charter Hall Group 2022 Annual Report David Harrison
Managing Director & Group CEO
BBus (Land Economics), FAPI, GradDip Applied Finance
Steven Bennett
Direct CEO
BBA
See page 51.
Ben Ellis
Retail CEO
BAS (Property Economics)
After 23 years in the business, Ben leads our retail
sector with strong funds management experience and
excellent long-term relationships. Ben’s career with
Charter Hall underpins his detailed understanding of
every aspect of the retail portfolio including strong tenant
customer relationships.
Prior to becoming retail CEO, Ben held several roles with
Charter Hall including the Head of Capital Transactions
for 2.5 years, overseeing more than $25 billion of gross
transactions across all sectors. Ben was also Head of
Wholesale within the retail division, growing the Wholesale
(retail) platform to nearly $8 billion over a 5-year period.
Ben brings significant experience to the Charter Hall
retail platform, from leasing to asset and development
management, domestically and abroad.
Steven is CEO of the Direct Property business within
Charter Hall. In addition to overseeing more than $10 billion
of assets on behalf of self-managed super funds, high
net worth and direct investors, Steven manages a team of
property and funds management professionals who are
responsible for unlisted property funds across all the core
real estate sectors. His day-to-day responsibility includes
overseeing asset management and tenancy services,
managing the financial structure of the funds, stakeholder
communications and raising new equity capital.
Steven was elected President of the Property Funds
Association for a two-year period ending in April 2021 and
is a current member of the NSW PCA Divisional Council and
a Member of NSW PCA Diversity Committee.
Prior to joining Charter Hall, Steven worked for Macquarie
Bank for seven years in Sydney and London. Steven has
over 20 years' of experience in funds management, banking,
property, accounting and consultancy and is a member of
the Institute of Chartered Accountants in Australia
and New Zealand.
Ben is driven by his passion to foster strong and sustainable
relationships that add value for investors, tenant customers,
partners and communities.
Sheridan Ware
Chief Information and Technology Officer
BA, MBA
Carmel Hourigan
Office CEO
BBus (Land Economics), GradDip Finance and Investment
Carmel has over 30 years' industry experience,
spanning key senior leadership positions and roles in
funds management, research and advisory services.
Joining Charter Hall in 2020, Carmel leads the $26 billion
office sector from end to end including funds management,
asset management, development and property
management teams. She helps develop the overall strategy
and objectives for the office funds in conjunction with
Charter Hall Fund Managers and investors, and guides the
portfolio management, capital transactions, treasury and
property trust management teams to execute strategy.
Prior to joining Charter Hall, Carmel held the position of
Global Head of Real Estate at AMP Capital, in addition to
overseeing their strategic global real estate partnerships
and real estate investment committees. Prior to AMP
Capital, Carmel held senior positions at GPT Group, Lend
Lease and Challenger Financial Services Group.
Carmel formerly sat on the Property Council of Australia
Board of Directors and was Vice President. She also served
as Special Advisor to the Property Male Champions of
Change group.
Sheridan joined Charter Hall in 2019 with 22 years’
experience helping companies drive commercial value
and increased customer engagement through cultural and
digital transformation. She has worked across a wide range
of industries including commercial real estate, government
and not-for-profit across multiple global markets.
Sheridan is responsible for all strategic and operational
aspects of technology at Charter Hall, is Vice Chair of the
Property Council of Australia’s Cyber Security Roundtable
and an Adjunct Associate Professor and Industry
Advisory Committee member for the property economics
undergraduate programs at UTS.
Prior to joining Charter Hall, Sheridan spent 11 years at
Cushman & Wakefield in a variety of roles covering strategy,
business transformation and technology; most recently as
Chief Information Officer of their Asia Pacific business. She
has won multiple awards for her contributions to thought
leadership in the commercial real estate field.
Russell Proutt
Chief Financial Officer
BCom (Hons), CA, CBV
Russell joined Charter Hall in 2017 and brings over 32 years’
finance experience to the Group, including property and
infrastructure investment management in North America,
Australia and broader Asia, as well as extensive M&A and
financing capability across global markets.
Prior to joining Charter Hall, Russell was with Brookfield
Asset Management for 12 years as a Managing Partner
based in Canada and, most recently, Australia where he
worked in property and infrastructure sectors throughout
the Asian region. Prior to joining Brookfield, Russell spent
15 years in investment banking and the financial services
sector in North America.
He has a breadth of knowledge across commercial property
markets and broad experience across infrastructure and
private equity investments, mergers and acquisitions,
transactions and finance functions.
Richard Stacker
Industrial & Logistics CEO
BBA (Accounting and Finance)
Richard has over 30 years of experience in real estate funds
management, real estate finance, accounting and risk
management. With experience across all sectors, he has
led the establishment, structuring and management of new
funds, overseeing the transactional, development, asset and
property management.
In 2018, Richard became CEO of Charter Hall’s industrial &
logistics real estate business following his role as Head of
Global Investor Relations. In this role, Richard leads a team
of 60 industrial & logistics property specialists, including
investment management, development, asset and property
management professionals. Richard is also a Board
member of Charter Hall’s unlisted retail investor business,
Charter Hall Direct, having previously headed this business.
Richard represents Charter Hall on the Board of Advisers for
the Property Industry Foundation.
Prior to joining Charter Hall, Richard held the roles of
Division Director of Macquarie Group and CEO of Macquarie
Direct Property Management Limited; General Manager
with Lendlease Corporation; and senior manager with
PricewaterhouseCoopers. He is a member of the Institute
of Chartered Accountants in Australia.
Natalie Devlin
Chief Experience Officer
BA, Postgrad Dip in MR Management
Natalie has over 20 years' of experience across Asia Pacific,
leading and implementing organisational development and
transformational change. In her 10 years at Charter Hall,
she has focused on defining and bringing to life its unique
market proposition, built upon a philosophy of “better
futures and mutual success” for customers, employees
and communities. Using the levers of capability, brand,
culture and workplace, Natalie is integral to how we scale
and transform the Group, driving cross sector connectivity
and ensuring we retain our inventive spirit as we grow.
She has driven the Group’s ESG strategy, including its
ongoing commitment to creating strong local communities
and tangible outcomes for vulnerable Australians using the
Pledge 1% framework, as well as the development of our
Pathway to Net Zero by 2030.
Passionate about continuous improvement, Natalie’s
previous roles include Head of People and Development at
Valad Property Group, where she established the human
resources function during its rapid growth period, and Head
of HR, Asia Pacific for a multinational publishing company,
where she transformed its operating model.
Sean McMahon
Chief Investment Officer
BBus (Property)
Sean has over 30 years of property, construction, finance
and investment banking experience in the real estate sector
and across listed, wholesale and direct capital markets. He
is responsible for the Group’s strategy and balance sheet
investments, mergers and acquisitions, with oversight
for multi-sector property transactions and corporate
development. Sean is also responsible for the diversified
sector and related development activities, while overseeing
the wholesale investor relations, legal and CoSec teams.
Sean brings a wealth of experience across investment
markets and diversified sectors, driving the development
of corporate and fund strategies, capital allocation and
reinvestment programs. Across his career, Sean has played
key roles in over $100 billion of transactional activity across
domestic and international markets.
Prior to joining Charter Hall, Sean worked at diversified
property group Australand (now known as Frasers) as
Chief Investment Officer and was responsible for the
Group’s investment in office, industrial, residential and retail
property developments. Before this, Sean was a senior
executive in the Property Investment Banking division at
Macquarie Bank.
42
Executive Committee | 43
Charter Hall Group 2022 Annual Report Directors’ Report
and Financial
Report
For the year ended 30 June 2022
Contents
Directors' Report ............................................ 45
Auditor’s independence declaration .........83
Consolidated statements of
comprehensive income ................................ 84
Consolidated balance sheet ....................... 86
Consolidated statement of
changes in equity - Charter Hall Group ....87
Consolidated statement of
changes in equity - Charter Hall
Property Trust Group .................................... 88
Consolidated cash flow statement ........... 89
Notes to the consolidated
financial statements ...................................... 90
Directors' declaration to
Securityholders ............................................. 136
Independent auditor’s report ..................... 137
Directors' Report
Directors' Report
Directors’ report
For the year ended 30 June 2022
Charter Hall Group Directors' Report 2022
The Directors of Charter Hall Limited and the Directors of Charter Hall Funds Management Limited, the Responsible Entity (RE) of
Charter Hall Property Trust, present their report together with the consolidated financial report of the Charter Hall Group (Group or
CHC) and the consolidated financial report of the Charter Hall Property Trust Group (CHPT) for the year ended 30 June 2022, and the
independent auditor’s report thereon. The financial report of the Group comprises Charter Hall Limited (Company or CHL) and its
controlled entities, which include Charter Hall Funds Management Limited as the RE of Charter Hall Property Trust (Trust) and CHPT
and its controlled entities. The financial report of the Charter Hall Property Trust Group comprises the Trust and its controlled entities.
Charter Hall Limited and Charter Hall Funds Management Limited have identical Boards of Directors. The term Board hereafter should
be read as a reference to both these Boards.
The units in the Trust are ‘stapled’ to the shares in the Company. A stapled security comprises one Company share and one Trust unit.
The stapled securities cannot be traded or dealt with separately.
Directors
The following persons were Directors of the Group during the year and up to the date of this report.
Jacqueline Chow
Philip Garling AM
(cid:3013) David Clarke
(cid:3013)
(cid:3013)
(cid:3013) David Harrison
(cid:3013)
Karen Moses
(cid:3013) Greg Paramor AO
(cid:3013) David Ross
Independent Non-Executive Director
Independent Non-Executive Director (retired 11 November 2021)
(cid:3013) Chair and Independent Non-Executive Director
(cid:3013)
(cid:3013)
(cid:3013) Managing Director and Group CEO
Independent Non-Executive Director
(cid:3013)
Independent Non-Executive Director
(cid:3013)
Independent Non-Executive Director
(cid:3013)
Distributions/Dividends – Charter Hall Group
Distributions/dividends paid/payable to stapled securityholders during the year were as follows:
Final ordinary distribution of 11.27 cents and ordinary dividend of 9.2 cents per stapled security for the
six months ended 30 June 2022 payable on 31 August 2022
Interim ordinary distribution of 11.33 cents and interim ordinary dividend of 8.33 cents per stapled
security for the six months ended 31 December 2021 paid on 28 February 2022
Total Distributions/Dividends paid and payable to stapled securityholders
2022
$'m
96.8
91.6
188.4
Operating and financial review
The Group recorded a statutory profit after tax attributable to stapled securityholders for the year to 30 June 2022 of $911.1 million
compared to a profit of $476.8 million for the year ended 30 June 2021.
Operating earnings amounted to $542.8 million for the year to 30 June 2022, compared to $284.3 million for the year ended 30 June
2021, an increase of 90.9%. Operating earnings is a financial measure which represents statutory profit after tax adjusted for the items
in the table below. Operating earnings is used by the Board to make strategic decisions and as a guide to assessing an appropriate
distribution to declare.
Operating earnings attributable to stapled securityholders
Add: Net fair value movements from investment properties on equity accounted
investments1
Add: Net gain/(loss) on disposal of property investments1
Less: Non-operating income tax benefit/(expense)
Less: Realised and unrealised net gains/(losses) on derivatives1
Less: Impairment of equity accounted investments
Less: Performance fees expense1
Less: Non-operating pursuit recoveries/(costs)
Less: Amortisation of intangibles
Less: Other1
Statutory profit after tax attributable to stapled securityholders
1 Includes the Group's proportionate share of non-operating items of equity accounted investments on a look through basis.
2022
$'m
542.8
355.9
0.3
(13.1)
70.1
(18.5)
(14.4)
1.4
(0.7)
(12.7)
911.1
2021
$'m
284.3
228.0
0.5
(1.5)
7.2
(6.9)
(15.9)
(4.6)
(1.5)
(12.8)
476.8
44
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Directors’ Report and Financial Report | 45
Charter Hall Group 2022 Annual Report
Charter Hall Group Directors' Report 2022
Charter Hall Group Directors' Report 2022
Directors’ report
For the year ended 30 June 2022
Directors’ report
For the year ended 30 June 2022
Directors' Report
Operating and financial review continued
The 30 June 2022 financial results with comparatives are summarised as follows:
Revenue ($ million)1
Statutory profit after tax for stapled securityholders ($ million)
Statutory earnings per stapled security (EPS) (cents)
Operating earnings for stapled securityholders ($ million)
Operating earnings per stapled security (cents)
Distribution/dividend per stapled security (cents)
Property investment segment earnings ($ million)2
Development investment segment earnings ($ million)2
Funds management segment revenue ($ million)2
Total assets ($ million)
Total liabilities ($ million)
Total net assets ($ million)
Net assets attributable to non-controlling interest ($ million)3
Net assets attributable to stapled securityholders ($ million)
Stapled securities on issue (million)
Net assets per stapled security ($)
Net tangible assets (NTA) attributable to stapled securityholders
($ million)4
NTA per stapled security ($)4
Balance sheet gearing5
Funds under management (FUM) ($ million)6
Property funds under management ($million)
Charter Hall Group
2022
1,098.3
911.1
194.1
542.8
115.6
40.1
142.9
35.5
703.0
4,192.6
902.9
3,289.7
43.2
3,246.5
473.0
6.86
2021
668.0
476.8
102.4
284.3
61.0
37.9
123.0
34.2
319.5
3,284.7
773.6
2,511.1
137.5
2,373.6
465.8
5.10
Charter Hall Property
Trust Group
2022
28.1
503.8
107.3
n/a
n/a
22.6
n/a
n/a
n/a
3,024.1
560.0
2,464.1
43.2
2,420.9
473.0
5.12
2021
26.7
310.5
66.7
n/a
n/a
22.7
n/a
n/a
n/a
2,658.5
615.2
2,043.3
137.5
1,905.8
465.8
4.09
2,960.3
6.26
0.0%
79,930.1
65,639.1
2,288.8
4.91
5.0%
52,288.9
52,288.9
2,420.9
5.12
n/a
n/a
n/a
1,905.8
4.09
n/a
n/a
n/a
1 Gross revenue does not include the Group’s share of net profits of associates and joint ventures of $544.9 million (2021: $314.0 million).
2 Segment earnings and revenue is used by the Board in assessing the performance and allocating of resources to its operating segments.
3 Represents 54.9% non-controlling interest share of Charter Hall Wholesale Property Series No.2 (WPS2) (2021: represented 67.7% non-controlling interest share of the
Charter Hall Direct Long WALE Fund (DLWF). Interest in DLWF was disposed of during the year and resulted in deconsolidation.)
4 NTA attributable to stapled securityholders and NTA per stapled security ($) are calculated using assets less liabilities, net of intangible assets (including goodwill
recorded in the carrying value of equity accounted investments and share purchase option derivatives) and related deferred tax and non-controlling interests in NCI not
related to CHPT. NTA includes right of use assets.
5 Gearing is calculated as interest-bearing debt drawn (excluding hedged foreign exchange movements subsequent to the related debt drawing) net of cash, divided by
total assets net of cash and derivative assets.
Includes 100% of Paradice Investment Management Funds Management Portfolio ($14.3bn), of which the Group owns 50%.
6
Operating and financial review continued
Property investment
Property investment provides the Group with yields from its co-investments in Group funds. During the year property investment
contributed $142.9 million (30 June 2021: $123.0 million) in segment earnings to the Group.
Industrial & Logistics;
The Group’s property investments are classified into the following real estate sectors:
(cid:3013)
(cid:3013) Long WALE Retail;
(cid:3013) Office;
(cid:3013) Social Infrastructure;
(cid:3013) Shopping Centre Retail; and
(cid:3013) Diversified.
The following table summarises the key metrics for the property investments of the Group:
Ownership
stake
(%)
Industrial & Logistics
Charter Hall Prime Industrial Fund (CPIF)
Core Logistics Partnership Trust (CLP)
Charter Hall PGGM Industrial Partnership (CHPIP)
Long WALE Retail
Long WALE Hardware Partnership (LWHP)
CH DJ Trust (CHDJT)
Other Long WALE Retail investments
Office
Charter Hall Prime Office Fund (CPOF)
Charter Hall Office Trust (CHOT)
Charter Hall Direct PFA Fund (PFA)
Charter Hall Direct Office Fund (DOF)
Brisbane Square Wholesale Fund (BSWF)
Other Office investments
Social infrastructure
Charter Hall Social Infrastructure REIT (ASX: CQE)
Charter Hall Exchange Wholesale Trust (CHEWT)
Shopping Centre Retail
Charter Hall Retail REIT (ASX: CQR)
Other Shopping Centre Retail investments
Diversified
Charter Hall Long WALE REIT (ASX: CLW)
Charter Hall DVP Fund (DVP)
1.4
3.6
12.0
15.7
43.2
5.1
15.7
12.2
8.7
16.8
8.7
4.5
10.7
10.7
10.0
average
FY2022 Weighted Weighted Weighted Weighted
average
average
lease market cap discount
rate
expiry
(%)
(years)
FY2022
average Charter Hall
investment
yield2
(%)
Charter Hall
investment
income1
($m)
rental
reviews
(%)
rate
(%)
Charter Hall
investment
($m)
120.3
65.3
45.9
239.9
80.4
37.8
325.6
311.2
205.5
183.7
126.7
104.9
126.4
24.8
300.6
0.4
470.7
49.8
4.8
3.3
1.2
7.4
4.4
3.3
12.7
16.6
10.9
8.9
9.0
5.5
5.5
1.8
17.6
–
22.8
2.2
10.7
8.7
8.4
7.3
18.7
n/a
6.4
6.2
6.7
7.0
7.4
n/a
14.3
18.1
7.4
n/a
12.0
5.9
n/a
8.2
3.8
3.8
4.2
4.1
4.3
n/a
4.6
4.4
4.9
4.7
4.9
n/a
4.8
3.7
5.2
n/a
4.3
4.6
n/a
4.6
5.4
5.5
5.7
5.4
6.8
n/a
5.7
5.6
5.9
5.8
6.0
n/a
n/a
5.1
5.9
n/a
5.6
6.0
n/a
5.8
3.2
3.1
3.6
3.0
2.5
n/a
3.7
3.6
3.4
3.8
3.9
n/a
3.5
3.6
3.2
n/a
4.6
3.2
n/a
3.6
4.1
4.6
4.1
4.5
6.2
n/a
4.4
6.1
5.9
5.6
8.4
n/a
5.6
5.3
7.2
n/a
5.8
4.7
n/a
5.6
Other investments
Property Investment Total
98.2
2,918.1
5.0
142.9
1 Charter Hall Group property investment segment earnings per segment information in Note 1(b) of the financial report.
2 Yield = Operating earnings divided by investment value at start of the year adjusted for investments/divestments during the year. Excludes MTM movements in NTA
during the year.
46
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Directors’ Report and Financial Report | 47
Charter Hall Group 2022 Annual Report
Charter Hall Group Directors' Report 2022
Charter Hall Group Directors' Report 2022
Directors' Report
Directors’ report
For the year ended 30 June 2022
Operating and financial review continued
Development investment
Development investment provides the Group with development profits and interest income from its development assets held directly on
balance sheet and through co-investments in development ventures. During the year, development investment contributed $35.5
million (30 June 2021: $34.2 million) in segment earnings to the Group.
Funds Management
The funds management business provides investment management, asset management, property management, development
management and leasing and transaction services to the Group’s $65.6 billion property funds management portfolio. On 22 December
2021, the Group announced a strategic partnership comprising a 50% investment in Paradice Investment Management, a fund
manager with $14.3 billion in funds under management invested in Australian and global listed equities.
The use of an integrated property services model, which earns fees from providing these services to the managed portfolio, enhances
the Group’s returns from capital invested. The Group also provides services to segregated mandates looking to capitalise on its
property and funds management expertise. During the year, the funds management business contributed $703.0 million (30 June 2021:
$319.5 million) in segment revenue to the Group.
Significant changes in the state of affairs
The Group has assessed the ongoing impact of the COVID-19 pandemic in preparing its financial statements, considering critical
estimates and judgements applied in the measurement of the Group’s assets and liabilities, and impacts on its business operations.
The Group’s strategic focus on resilient property investments and funds management revenue streams has contributed to the COVID-
19 pandemic continuing to have no identifiable material adverse impact on the Group’s financial result.
Further disclosure is included in the following notes:
(cid:16)
Investment in associates Note 2(b);
(cid:16) Revenue Note 4(a);
(cid:16)
Intangibles Note 11(b);
(cid:16) Fair value measurement Note 22(d).
Directors’ report
For the year ended 30 June 2022
Principal activities
During the year, the principal activities of the Group consisted of:
(a) Investment in property funds;
(b) Development investment; and
(c) Funds management.
Matters subsequent to the end of the period
In July 2022, Charter Hall Group and PGGM entered into a
partnership (CHPIP2) to acquire all stapled securities in Irongate
Group (ASX:IAP) for $1.90 per IAP stapled security totalling
$1,287.4m. Charter Hall Group will own 12% of CHPIP2.
No other matter or circumstance has arisen since 30 June 2022
that has significantly affected, or may significantly affect:
(a) The Group’s operations in future financial years; or
(b) The results of those operations in future financial years; or
(c) The Group’s state of affairs in future financial years.
Likely developments and expected results of
operations
Business strategy and prospects
The Group’s strategy is to use its specialist property expertise to
access, deploy and manage equity invested in office, industrial,
retail, diversified and social infrastructure property portfolios.
Charter Hall Group invests alongside equity partners to create
value and provide superior returns for clients and the Group’s
securityholders. Growth is driven by a strong development
capability that adds value for fund/partnership investors, whilst
deployment through acquisitions complements the development
capability to deploy the equity raised from investors in line with
each property’s strategy.
Charter Hall is well positioned to benefit from further capital
inflows from investors seeking property investments driven by the
positive spread between property returns and long-term interest
rates. During the last 12 months, the Group has seen positive
equity flows across all sectors from listed, wholesale and retail
investors.
Various risks could impact the Group’s financial performance, and
the potential nature and impact of these risks can change over
time. The Group actively manages risks in line with the Group’s
Corporate Governance Framework and the Risk Management
Policy. In addition to the business risks referenced below, key
strategic and operational risks include breaches of cyber security
and privacy, work, health and safety, as well as environmental
(including climate change), social, governance and regulatory
risks. The Group continues to progress its alignment with the
Taskforce for Climate-related Financial Disclosures (TCFD)
recommendations, and in the reporting period management has
maintained a dedicated ESG Committee to drive platform wide
alignment and implementation against the TCFD. These
frameworks and policies can be found at www.charterhall.com.au.
Property investment portfolio
The property investment portfolio of the Group is primarily
composed of co-investments in funds and partnerships where,
typically, between 5-20% of the equity in a fund is contributed by
Charter Hall. The percentage stake may be higher than the long-
term target at origination of the fund or partnership but will fall
toward the long-term target over time with external equity flows.
The Group regularly reviews the performance of its property
investment portfolio and may reduce its investment in funds to
reinvest into new partnerships or funds to align with new partners.
Sector diversification, industry diversification and earnings growth
of each fund/partnership co-investment together with associated
funds management earnings derived from each fund/partnership
combine to provide a matrix to which the balance sheet capital is
allocated. The material business risks faced by the property
investment portfolio that may have an effect on financial
performance of the Group include interest rate risk, refinancing
risk, lease defaults or extended vacancies, portfolio concentration
risks, development risk, joint venture risk and changes in
economic or industry factors impacting tenants, property values
or the ability to source suitable investment opportunities.
Development investment portfolio
The development investment portfolio comprises development
assets held directly on balance sheet and co-investments in
development associates and joint ventures. Primarily,
development investments will provide stabilised investment
opportunities made available to our funds.
The Group regularly reviews the performance of its development
investments and relevant economic drivers to actively manage
performance of each development.
The business risks faced by the development investment portfolio
that may have an effect on financial performance of the Group
include interest rate risk, refinancing risk, development risk,
construction risk, leasing risk, joint venture risk and changes in
economic or industry factors impacting customers, property
values or the ability to source suitable investment opportunities.
Funds management platform
The Group manages primarily property investments on behalf of
listed, wholesale and direct investors and has strict policies in
place to ensure appropriate governance procedures are in place
to meet fiduciary responsibilities and manage any conflicts of
interest. Charter Hall provides a suite of services including
investment management, asset management, property
management, transaction services, development services,
treasury, finance, legal and custodian services based on each
fund’s individual requirements.
The Group regularly reviews investor requirements and
preferences for an investment partner in the Australian core real
estate sectors and transaction structures that would meet their
requirements.
The material business risks faced by the funds management
platform that may have an effect on the financial performance of
the Group include not delivering on investor expectations or
organisational conduct leading to loss of FUM or management
rights, loss of key personnel impacting service delivery, economic
factors impacting fee streams or property valuations,
development risk and access to capital.
48
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Directors’ Report and Financial Report | 49
Charter Hall Group 2022 Annual Report
Charter Hall Group Directors' Report 2022
Charter Hall Group Directors' Report 2022
Directors' Report
Special responsibilities as at 30 June 2022
Member of the Audit, Risk and Compliance Committee
Interests in securities
5,500 stapled securities in Charter Hall Group
Philip Garling AM
Independent Non-Executive Director
Experience and expertise
Philip joined the Board of the Charter Hall Group on 25 February
2013.
Philip has over 35 years' experience in property and
infrastructure, development, operations and asset and investment
management. His executive career included nine years as Global
Head of Infrastructure at AMP Capital Investors and 22 years at
Lendlease Corporation, including five years as CEO of Lendlease
Capital Services.
Philip holds a Bachelor of Building from the University of NSW,
and has completed the Advanced Management Program at the
Australian Institute of Management and the Advanced Diploma at
the Australian Institute of Company Directors. He is a Fellow of
the Australian Institute of Company Directors, Australian Institute
of Building and Institution of Engineers, Australia.
Philip retired from the Board on 11 November 2021.
Other current listed company directorships
Downer EDI Limited
Former listed company directorships in last three years
Nil
Special responsibilities as at 30 June 2022
N/A
Interests in securities
N/A
Directors’ report
For the year ended 30 June 2022
Information on Directors
David Clarke
Chair/Independent Non-Executive Director
Experience and expertise
David joined the Board of the Charter Hall Group on 10 April 2014
and was appointed Chair of the Board on 12 November 2014.
David has over 35 years’ experience in investment banking, funds
management, property finance and retail banking. David was
Chief Executive Officer of Investec Bank (Australia) Limited from
2009 to 2013.
Prior to joining Investec Bank, David was the CEO of Allco
Finance Group and a Director of AMP Limited, following five
years at Westpac Banking Corporation where he held a number
of senior roles including Chief Executive of the Wealth
Management Business, BT Financial Group. David was also
previously an Executive Director at Lendlease Corporation
Limited, Chief Executive of MLC Limited, and prior to this was
Chief Executive Officer of Lloyds Merchant Bank in London.
David holds a Bachelor of Laws degree.
Other current listed company directorships
AUB Group Limited
Former listed company directorships in last three years
Nil
Special responsibilities as at 30 June 2022
Chair of the Nominations Committee
Member of the Audit, Risk and Compliance Committee
Member of the Investment Committee
Interests in securities
49,875 stapled securities in Charter Hall Group via an indirect
interest
Jacqueline Chow
Independent Non-Executive Director
Experience and expertise
An experienced Non-Executive Director, Jacqueline is currently a
Non-Executive Director of Coles Group, nib Holdings Limited and
Boral Limited and previously held the role of Senior Advisor with
McKinsey in their Transformation Group. Prior to commencing her
Non-Executive career, Ms Chow held senior positions at
Accenture, the Kellogg Company, Campbell’s and most recently,
as the Chief Operating Officer, Global Consumer and Food
Service for Fonterra.
Jacqueline holds a Bachelor of Science (Hons) from the
University of NSW and holds a Master of Business Administration
(Dean’s Distinguished Service Award) from the Kellogg School of
Management at Northwestern University.
Jacqueline joined the Board on 17 February 2021.
Other current listed company directorships
Coles Group Limited
nib Holdings Limited
Boral Limited
Directors’ report
For the year ended 30 June 2022
Information on Directors continued
David Harrison
Managing Director and Group CEO
Experience and expertise
David has over 30 years’ property market experience across
office, retail and industrial sectors in multiple geographies
globally. As Charter Hall’s Managing Director and Group CEO,
David is responsible for all aspects of the Charter Hall business,
with specific focus on strategy and continuing the momentum of
building an Investment Manager recognised as a multi-core
sector market leader. David is an executive member of various
Fund Boards and Partnership Investment Committees, and Chair
of the Executive Property Valuation Committee and Executive
Leadership Committee.
David has overseen the growth of the Charter Hall Group from
$500 million to $79.9 billion of assets under management in 15
years.
David holds a Bachelor of Business Degree (Land Economy)
from the University of Western Sydney, is a Fellow of the
Australian Property Institute (FAPI) and holds a Graduate
Diploma in Applied Finance from the Securities Institute of
Australia.
David is the National President of the Property Council of
Australia and chair of the Nominations and Financial
Management Committees.
David is also a member of the Property Council Australia
Champions of Change Coalition.
Other current listed company directorships
Charter Hall Retail REIT
Charter Hall Long WALE REIT
Charter Hall Social Infrastructure REIT (Alternative Director)
Former listed company directorships in last three years
Nil
Special responsibilities as at 30 June 2022
Member of the Investment Committee
Interests in securities
581,264 stapled securities in Charter Hall Group via direct
interests and 841,773 stapled securities in Charter Hall Group via
indirect interests.
David also holds 711,742 performance rights, 905,776
performance rights (ROP), 91,845 service rights in the Charter
Hall Performance Rights and Options Plan, as well as 176,181
STI Service Rights.
Karen Moses
Independent Non-Executive Director
Experience and expertise
Karen joined the Board of Charter Hall Group on 1 September
2016 and was appointed Chair of the Audit, Risk and Compliance
Committee on 9 November 2016. Karen has over 30 years’
corporate experience in the energy industry spanning oil, gas,
electricity and coal commodities, gaining her experience both
within Australia and overseas. During her executive career, Karen
was a senior executive at Origin Energy in roles including
Executive Director, Finance and Strategy and Chief Operating
Officer.
Karen holds a Bachelor of Economics and a Diploma of
Education from the University of Sydney.
Other current listed company directorships
Orica Ltd
Boral Limited
Former listed company directorships in last three years
Nil
Special responsibilities as at 30 June 2022
Chair of the Audit, Risk and Compliance Committee
Member of the Nominations Committee
Member of the Remuneration and Human Resources Committee
Interests in securities
23,137 stapled securities in Charter Hall Group via indirect
interests
Greg Paramor AO
Independent Non-Executive Director
Experience and expertise
Greg joined the Board of the Charter Hall Group on 30 November
2018.
Greg has been involved in the real estate and funds management
industry for more than 40 years, and was the co-founder of Equity
Real Estate Partners, Growth Equities Mutual, Paladin Australia
and the James Fielding Group.
Greg was the CEO of Mirvac Group between 2004 and 2008.
Greg is a past president of the Property Council of Australia and
past president of Investment Funds Association, a Fellow of the
Australian Property Institute and The Royal Institute of Chartered
Surveyors. Greg is a board member of the Sydney Swans, the
Sydney Swans Foundation and Eureka Group Holdings Limited.
Greg was awarded an Officer in the General Division (AO) of the
Order of Australia in January 2015 for his distinguished service to
the community through executive roles in a range of fields,
including breast cancer research, the not-for-profit sector and real
estate and property investment industries.
Other current listed company directorships
Eureka Group Holdings Limited
Former listed company directorships in last three years
Folkestone Limited
Special responsibilities as at 30 June 2022
Chair of the Investment Committee
Member of the Nominations Committee
Member of the Remuneration and Human Resources Committee
Interests in securities
14,300 stapled securities in Charter Hall Group via indirect
interests
50
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Charter Hall Group Directors' Report 2022
Directors' Report
Directors’ report
For the year ended 30 June 2022
Information on Directors continued
David Ross
Independent Non-Executive Director
Experience and expertise
David joined the Board of the Charter Hall Group on 20
December 2016.
David has over 30 years’ corporate experience in the property
industry and has gained his experience both within Australia and
overseas, including a total of eight years as Chief Executive
Officer of GPT and Global Chief Executive Officer, Real Estate
Investments for Lendlease.
David is the Chair of Arena REIT, which owns, manages and
develops property in the childcare and healthcare sectors.
Previously, David held executive positions at GPT, Lendlease
and Babcock & Brown. Prior board appointments include a non-
executive directorship with Sydney Swans Foundation Limited.
David holds a Bachelor of Commerce from the University of
Western Australia and an Associate Diploma in Valuation from
Curtin University in Western Australia.
Other current listed company directorships
Arena REIT
Former listed company directorships in last three years
Nil
Special responsibilities as at 30 June 2022
Chair of the Remuneration and Human Resources
Member of the Investment Committee
Member of the Audit, Risk and Compliance Committee
Interests in securities
10,000 stapled securities in Charter Hall Group via indirect
interests
Company Secretary
Mark Bryant was appointed as Company Secretary on 24 August 2015.
Mark holds a Bachelor of Business (Accounting), a Bachelor of Laws (Hons), a Graduate Certificate in Legal Practice, and is admitted
as a lawyer of the Supreme Court of NSW. Mark has over 15 years’ experience as a lawyer, including advising on listed company
governance, securities law, funds management, real estate and general corporate law.
Mark is the General Counsel and Company Secretary for the Charter Hall Group.
Meetings of Directors
The number of meetings of the Group’s Board of Directors and of each Committee of the Board held during the year ended 30 June
2022, and the number of meetings attended by each Director were:
Full meetings of the
Board of Directors
A
8
8
2
8
8
7
8
B
8
8
2
8
8
8
8
Audit, Risk and
Compliance
Committee
A
5
5
*
*
5
*
5
B
5
5
*
*
5
*
5
Investment
Committee
A
1
*
-
1
*
1
1
B
1
*
-
1
*
1
1
Nomination
Committee
A
-
*
-
*
-
-
*
B
-
*
-
*
-
-
*
Remuneration and
HR Committee
B
*
*
2
*
6
6
6
A
*
*
2
*
6
5
6
D Clarke
J Chow
P Garling1
D Harrison
K Moses
G Paramor
D Ross
* Not a member of the stated Committee.
A = Number of meetings attended.
B = Number of meetings held during the time the Director held office or was a member of the stated Committee during the year.
1 Phil Garling AM retired 11 November 2021.
Directors’ report
For the year ended 30 June 2022
Remuneration Report
Dear Securityholders,
On behalf of the Board, we are pleased to present this Remuneration Report for Charter Hall. The report focuses on the Group’s
executive remuneration strategy and outcomes, aligned to Charter Hall's operating performance, as well as our people and culture
highlights for the financial year ended 30 June 2022 (FY2022).
Throughout the year, global economies and businesses continued to be challenged and people have experienced significant
instability. Charter Hall maintained a focus on serving our investor and tenant customers, while supporting our people on their
wellbeing and providing a dynamic workplace that fosters connection and performance. The macro-environment led to competition for
key talent increasing during the year. Charter Hall’s ability to attract and retain key talent is critical to future-proofing our long-term
success and consequently, we have taken steps to respond to changing expectations and remain competitive in the market.
Further detail on our operating conditions and business achievements are provided in the Chair and Managing Director & Group CEO
(Managing Director) messages in the FY2022 Annual Report.
In FY2022 the Group outperformed its Group Operating Earnings Per Security (OEPS) target and shared this success with all
employees through the Short Term Incentive (STI). Assessment of individual performance scorecards has resulted in 146% of the
total target STI amount being awarded to eligible employees across the Group, including the three Reported Executives who have
been awarded the maximum STI payout at 150% of the target.
In addition, the first tranche of the FY2020 Long Term Incentive (LTI) reached the end of its three-year performance period on 30
June 2022 and will fully vest on 31 August 2022 (the second tranche of the FY2020 LTI is subject to a four-year performance period
and will be assessed for vesting on 30 June 2023) due to:
(cid:3013)
(cid:3013)
the aggregate OEPS over the performance period equivalent to a 37.3% pa compound average growth rate (CAGR) exceeding
the upper end of the required aggregate OEPS performance measure; and;
the Relative Total Shareholder Return (TSR) measure achieving the fifth rank of the 17 REITs in the comparator group from the
S&P/ASX200 A-REIT Accumulation Index with a TSR of 12.45% (an equivalent CAGR of 4.0%) over the three year
performance period.
Our people continued to show extraordinary resilience through a challenging year, and we maintained our focus on improving
wellbeing and building a culture of connection and belonging. This is reflected in our people and culture highlights for the year:
(cid:3013) 88% Engagement result with a 96% participation rate
(cid:3013) 93% of our people say ‘they would recommend Charter Hall as a good place to work”
(cid:3013) Ranked 8th in the inaugural Climate Leaders Asia-Pacific 2022 List of 200 companies, for our integration of sustainability in our
decision-making and strategy, as we find new ways to lower our emissions
(cid:3013) Awarded ‘Firm of the Year: Australia’ by Private Equity Real Estate (PERE) 2021 Global Awards
(cid:3013) Delivered our Reconciliation Action Plan (RAP) to take meaningful action and partner with First Nation business and
communities
(cid:3013) Awarded Best Health and Wellbeing Program at the Australian HR Awards 2021 (September 2021)
(cid:3013) Recognised as a Bronze Employer for LGBTQ+ inclusion in the Australian Workplace Equality Index (AWEI) Index 2022
We also recorded high customer satisfaction across all property sectors. Net Promoter Scores and satisfaction results were
maintained at 5-year highs in Retail and 3-year highs in Industrial & Logistics.
Changes to FY2022 Remuneration
As per the FY2021 Remuneration Report, changes were introduced in FY2022 both in terms of quantum and mix of the fixed and
variable remuneration components for the Managing Director and Other Reported Executives. These changes were introduced
following a comprehensive review undertaken by Ferguson Partners of the Group’s remuneration framework and quantum for each
role, taking into consideration the significant growth experienced where the Group’s Funds Under Management (FUM) increased by
72% from $30.4 billion (as at 30 June 2019) to $52.3 billion (as at 30 June 2021) and its market capitalisation increased by 43% from
$5.04 billion (as at 30 June 2019) to $7.23 billion (as at 30 June 2021).
Remuneration increases considered the nature of Charter Hall’s business model and extensive funds management growth trajectory.
Charter Hall has the largest and most diversified Australian property funds management business of all ASX listed REITs in Australia.
The Board believes that oversight and management of a diversified property funds management business is more complex and
intensive than for REITs which are primarily owners and managers of property assets on their balance sheet. Part of Charter Hall’s
success to date has been the focus on developing the strategy to be a leading diversified property funds manager. This strategy has
delivered investment opportunities and superior performance for many global and Australian property investors and in turn strong
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Charter Hall Group Directors' Report 2022
Charter Hall Group Directors' Report 2022
Directors' Report
Directors’ report
For the year ended 30 June 2022
operating and TSR performance for Charter Hall securityholders. Accordingly, it is critical that remuneration is competitive to retain,
attract and motivate our employees to continue to deliver for our investors and security holders.
While the increases in remuneration for the Managing Director and Other Reported Executives were material, they reflect the growth
and current position of the Group and were necessary to bring remuneration into line with market. The increase for the Managing
Director was all in ‘at risk’ components and for the Other Reported Executives on average 88% was in ‘at risk’ components. Further
details of these changes and the rationale for the increases are provided in section 6.2 of this Remuneration Report.
As was noted in the FY2021 Remuneration Report, the Board also considered the leadership, expertise, and experience critical to the
ongoing outperformance of Charter Hall as the Group embarks on the next period of growth. While the Board and the Committee
believed that the current executive remuneration framework was sound based upon market comparators, continuity of leadership and
retaining a high performing team as well as allowing for orderly succession planning were considered as critical in what was and still
is a highly competitive landscape for executive leadership and talent.
As a result, a Retention and Outperformance Plan (ROP) was introduced and the grant to the Managing Director was approved by
securityholders at the 2021 AGM. The ROP was designed to complement the current annual remuneration framework by providing an
additional retention mechanism with reward for outperformance. This plan intends to enable meaningful participation in
outperformance of returns to security holders, through Performance Rights earned over a 5-year period. Rewards will only be earned
if the Group TSR over the five-year performance period (from 1 July 2021 to 30 June 2026) strongly outperforms on a Relative TSR
basis and achieves a minimum Absolute TSR. Additionally, these Performance Rights vest for each participant only if they meet
individual non-financial performance expectations and behaviour consistent with the Group’s purpose and values, to the satisfaction
of the Board. The FY2022 ROP is a one-off award in addition to the regular annual total target remuneration for FY2022 only.
In designing this ROP the Board considered its desire for the Managing Director to continue his successful long-term leadership of
Charter Hall and to retain and incentivise the high performing team of other key senior management roles critical to continuing to:
(cid:3013) partner with our tenant customers and communities to achieve their business objectives;
(cid:3013) provide investment opportunities and competitive investment returns to our investors; and
(cid:3013) deliver strong and competitive TSR outperformance for our Group securityholders.
While the grant of ROP Performance Rights to the Managing Director was approved by securityholders at the 2021 AGM, the Board
acknowledges that some securityholders had concerns including the one-off nature of the ROP and the face value of the grant to the
Managing Director. Further details, including the rationale for the Retention and Outperformance Plan are provided in section 6.9 of
the Remuneration Report.
As also advised in the FY2021 Remuneration Report, Non-Executive Directors (NED) fees were last independently reviewed relative
to market four years earlier. Due to the growth of Charter Hall since then, EY were engaged in FY2021 to provide market
benchmarking data in relation to NED Board and Committee fees to assist with a review which took effect in FY2022. An increase in
the maximum aggregate NED fee pool to $2.0 million was also approved by securityholders at the 2021 AGM. A summary of the
changes is included in sections 2 and 8 of the Remuneration Report.
We invite you to read Charter Hall’s Remuneration Report on the following pages which clearly articulates the alignment between the
Group’s strategy, performance, and executive remuneration outcomes. The Board will continue to monitor Charter Hall’s performance
and remuneration policies and framework to ensure they remain fit for purpose, drive the right behaviours, deliver on the intended
strategy and meet securityholder expectations. We welcome your feedback on Charter Hall’s remuneration framework and practices
and look forward to your continued support at our 2022 Annual General Meeting.
David Clarke
Chair - Board
David Ross
Chair – Remuneration and Human Resources Committee
Directors’ report
For the year ended 30 June 2022
1. Key Management Personnel
This Report outlines the remuneration policies and practices that apply to Charter Hall’s Key Management Personnel (KMP) for the
year ended 30 June 2022. The KMP include the Non-Executive Directors, Managing Director and Other Reported Executives.
Name
Non-Executive Directors
David Clarke
Philip Garling AM
Karen Moses
David Ross
Greg Paramor AO
Jacqueline Chow
Managing Director
David Harrison
Other Reported Executives
Sean McMahon
Russell Proutt
Role
Chair
Director
Director
Director
Director
Director
Term as KMP
Full Year
Part Year - retired 11 November 2021
Full Year
Full Year
Full Year
Full Year
Managing Director and Group CEO
Full Year
Chief Investment Officer
Chief Financial Officer
Full Year
Full Year
The Report has been prepared and audited in accordance with the requirements of the Corporations Act 2001 (Cth) (Act).
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Charter Hall Group Directors' Report 2022
Directors’ report
For the year ended 30 June 2022
Directors’ report
For the year ended 30 June 2022
2. FY2022 Remuneration outcome summary and framework changes at a glance
3. FY2022 Actual remuneration received
Charter Hall Limited is pleased to present its Remuneration Report for the year ended 30 June 2022 (FY2022). The table below
outlines the FY2022 outcomes and key remuneration framework changes also foreshadowed in FY2021.
The following table presents the actual remuneration that was received by Reported Executives during the financial year ended 30
June 2022. This voluntary disclosure is provided to increase transparency and includes:
Component
Section Outcomes/Remuneration Framework Changes
Total Target
Remuneration (TTR)
6.2
The Managing Director received a 28.6% increase to his TTR in FY2022, all of which was in ‘at
risk’ components.
(cid:3013)
fixed pay and other benefits for FY2022;
(cid:3013) 2021 cash STI paid during FY2022; and
(cid:3013)
the value of any LTI and STI award that vested during FY2022.
The Other Reported Executives received on average a 21.8% increase to their TTR in FY2022
and on average 88% of that increase has been in the ‘at risk’ components.
TTR increases and remuneration mix for each of the Reported Executives are disclosed further
in section 6.2 along with the rationale for these increases.
The actual remuneration presented in the table below is distinct from the disclosed remuneration (as required by section 308(C) of the
Corporations Act 2001 (Cth) (Act)) in section 7.1 of this Report, which is calculated in accordance with statutory obligations and
accounting standards. The numbers in section 7.1 include accounting values for current and prior years’ LTI grants which have not
been (or may not be) received, as they are dependent on performance hurdles and service conditions being met.
Directors' Report
Fixed Annual
Remuneration (FAR)
6.3
There was no increase to the Managing Director’s FAR in FY2022.
Increases to the Chief Investment Officer’s (CIO) and Chief Financial Officer’s (CFO) FAR in
FY2022 coincided with a restructuring of their Total Target Remuneration (TTR), with this now
consisting of one-third FAR, one-third STI and one-third LTI.
Short Term Incentive
(STI)
6.4
Group OEPS was 115.6 cents, which was approximately 51% above target FY2022 OEPS.
Assessment of individual performance scorecards has resulted in 146% of the aggregate target
STI at Group level to be awarded to eligible employees across the Group. For all Group
Executives (including the Reported Executives), STI is delivered in the form of cash (67%) and
deferred service rights (33%).
Long Term Incentive
(LTI)
6.8
The FY2019 grant vested in full on 31 August 2021 as a result of performance exceeding
absolute and Relative TSR hurdles over the three years to 30 June 2021.
The first tranche of the FY2020 LTI grant reached the end of its three-year performance period
on 30 June 2022 and as a result of performance exceeding Relative TSR and aggregate OEPS
hurdles over the three years to 30 June 2022 will vest at 100% on 31 August 2022.
With the introduction of the four-year vesting period for the LTI award, transition arrangements
were implemented for the FY2020 LTI, where performance rights are due to vest in two equal
tranches at the end of year 3 (50%) and year 4 (50%). The second tranche of the FY2020 LTI
grant will be due for testing on 30 June 2023.
Retention and
Outperformance Plan
(ROP)
6.9
The ROP was introduced as a one-off award and as an additional retention mechanism to
reward participants if Group TSR over the five-year performance period from 1 July 2021 to 30
June 2026 strongly outperforms on a Relative TSR basis and achieves a minimum Absolute
TSR. This award vests, for each participant, only if they meet individual non-financial
performance expectations and behaviours consistent with the Group’s purpose and values, to
the satisfaction of the Board.
NED Fees and
Maximum Aggregate
NED Fee Pool
8
NED Board base and Committee fees were increased in FY2022. The Maximum aggregate
NED fee pool was increased to $2.0 million following approval by the securityholders at the
2021 AGM. Details and the rationale for these increases are provided in section 8 of this
Remuneration Report.
Deferred STI
Allocation
Methodology
6.4
Following a review undertaken by the Board, effective FY2022, the methodology for
determining the number of mandatorily deferred STI service rights and rights for any voluntarily
deferred component of cash STI, allocated under the Charter Hall Performance and Options
Plan (PROP) will be on a face value basis, calculated on the Volume Weighted Average Price
(VWAP) for the month of June prior to the grant date. A cash payment equivalent to cash
distributions declared to the securityholders during the performance period, will be paid to the
participants. This will only be payable on the rights that vest at the end of the relevant vesting
period.
This is regarded as providing alignment with securityholders.
Name
Managing Director
D Harrison
Other Reported Executives
S McMahon
R Proutt
Totals
Salary
and other
benefits1
$
Short Term
Incentive2
$
Value of
securities
vested3
$
% of
remuneration
consisting of
vested rights
%
Total
$
1,500,691
1,500,000
6,814,669
9,815,360
927,191
539,305
2,372,651
3,839,147
865,691
3,293,573
-
2,039,305
2,420,179
11,607,499
3,285,870
16,940,377
69.4
61.8
73.7
68.5
1 Other benefits include superannuation and non-monetary benefits.
2 Values relate to STI paid in FY2022 in cash for FY2021 performance S McMahon elected to voluntarily defer 25% of the cash component of his FY2021 STI into rights
and R Proutt elected to voluntarily defer 100% of the cash component of his FY2021 STI into rights.
3 Values calculated using the two-day VWAP of $17.99 up until the vesting date applied to the number of rights that vested for the FY19 LTI performance rights, the FY19
STI T2 deferred service rights and the FY20 STI T1 deferred service rights. The value at the vesting date includes the increase in the price of Charter Hall securities
since the grant of the rights which were based upon independent valuations at the time.
4. FY2023 Remuneration framework changes at a glance
Following table outlined the remuneration framework changes to be introduced effective FY2023.
Component
Rights Allocation
Methodology
Section
6.5
Minimum Charter Hall
Securityholding
Requirements
6.1 and
8
Changes
Following a review undertaken by the Board in FY2022, effective FY2023, the
methodology for determining the number of LTI performance rights allocated under
PROP will be on a face value basis, calculated on the VWAP for the month of June
prior to the grant date. A cash payment equivalent to cash distributions declared to
the securityholders during the performance period, will be paid to the participants.
This will only be payable on the rights that vest at the end of the relevant
performance period.
This is regarded as providing alignment with securityholders.
Effective FY2023, the Managing Director is required to hold a minimum of 150% of
FAR (up from 100%) in CHC securities, within five years of appointment in the role or
from the date of adoption of this policy, whichever is later and maintain it on an on-
going basis.
Other Executives are required to hold a minimum of 100% of FAR (no change) in
CHC securities or CH fund securities, provided a majority of the minimum
securityholding requirement is held in CHC securities, within five years of being
appointed to an Executive role or from the date of this policy, whichever is the later
and maintain it on an on-going basis.
Effective FY2023, the NEDs are required to hold a minimum of 100% of annual base
fees, excluding Committee membership fees, in CHC securities (up from the current
$90,000), within three years of appointment as a NED or from the date of this policy,
whichever is the later and maintain it on an on-going basis.
The value of securities for determining compliance is the higher of acquisition cost or
market value.
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Charter Hall Group Directors' Report 2022
Directors' Report
Directors’ report
For the year ended 30 June 2022
5. Remuneration governance
Charter Hall’s Board and the Remuneration and Human Resources Committee (the Committee) are responsible for overseeing
remuneration policy for the Group.
The following diagram illustrates Charter Hall’s remuneration governance framework.
SECURITYHOLDERS
BOARD
The Board reviews, challenges and approves the recommendations of the Committee around policy, performance, the
remuneration arrangements for the Managing Director and the Executive Committee members (together ‘Executives’)
and Non-Executive Directors (NEDs) and the remuneration policies and processes for the wider Group.
Risk Management
The Committee has access to
the Group’s personnel
including those in the Risk,
Finance and People teams.
The Committee considers
updates from these teams,
External and Internal Audit and
other Board Committees , on
relevant risk matters, including
remuneration outcomes,
adjustments, and alignment of
remuneration with our strategy,
values, risk appetite and
expected standards of conduct.
Risk is also managed at
various points in the executive
remuneration framework
including throughout the
performance management
process and ultimately through
Board and Committee
intervention as and when
required.
Remuneration and Human Resources
Committee
Members
- David Ross (Chair)
- Philip Garling AM1
- Karen Moses
- Greg Paramor AO
Role
Oversees our remuneration philosophy
while considering strategic objectives,
culture and values, risk management
framework and long-term financial
sustainability.
Reviews and provides guidance and, as
appropriate, endorses management
recommendations on remuneration
matters (including FAR, STI,LTI and
termination arrangements for Executives),
fees for the NEDs (of both Group and the
Fund Boards) and submits these for
Board approval.
Charter
Specific responsibilities are detailed in the
Committee’s Charter and reviewed
annually.
External Advisors
The Board and the Committee
may seek advice from
independent experts and
advisors.
The Committee independently
appoints its remuneration
consultants and external
advisors and engages with
them in a manner which
ensures that any information
provided is not subject to
undue influence by
management.
The Committee did not seek or
receive any remuneration
recommendations from
external advisors in FY2022.
Managing Director and Management
The Managing Director makes recommendations to the Committee regarding Executives’ remuneration. These
recommendations take into account performance, culture and values.
The Managing Director’s remuneration is considered separately to manage conflicts of interest.
Directors’ report
For the year ended 30 June 2022
6. Executive remuneration framework
Charter Hall’s remuneration framework is designed to attract and retain talented people by rewarding them for achieving performance
outcomes that are aligned with our purpose, culture and values, business strategy, risk appetite and the long-term interests of our
investors, customers and securityholders.
6.1 Executive remuneration strategy
The below diagram illustrates the remuneration framework that applied to the Managing Director and Other Reported Executives in
FY2022. It also outlines the link between Charter Hall’s business and remuneration framework.
OUR PURPOSE
We create better futures by bringing aspirations to life.
OUR VALUES
Active Partnership
We believe that
if everyone benefits, we benefit
Genuine Insight
We use expertise to
unlock resilient growth
Inventive Spirit
We create with
purpose and discipline
Powered by Drive
We put our passion
into action
We use our expertise to access, deploy, manage and invest equity to create value and generate superior returns for our
investor customers through:
-
-
-
optimising total return on invested capital;
growing sustainable earnings and maintaining resilience via long WALE portfolios and through strong customer relationships;
developing a scalable and efficient platform; and recruiting, retaining and motivating a high performing team.
OUR BUSINESS STRATEGY
OUR REMUNERATION PRINCIPLES
Deliver long term results
for securityholders
Attract, retain and
motivate top talent
Be simple, transparent
and consistent
Drive appropriate risk culture
and employee conduct
Component
Delivery
Current Year
Year 1
Year 2
Year 3
Year 4
FAR
STI
LTI
Fixed Annual Remuneration comprises of cash
base salary, statutory superannuation contributions
and other nominated benefits.
‘At risk’ and subject to performance outcomes
against financial and non-financial KPIs including
evidence of behaviour in line with values.
67% STI
delivered
as cash
33% STI deferred as
service rights vesting
in 2 equal tranches
over 2 years
‘At risk’ equity awards that are subject to long-term
performance conditions.
100% is delivered as performance rights.
Vesting after 4 years, equal measures of
Relative TSR and OEPS growth
Mandatory
Securityholding
Requirement1
CEO and other Executives must accumulate Charter Hall securities equal to 100% of pre-tax FAR over a four-year
period from the date of adoption of this requirement or from the date of appointment as an Executive, as applicable
and maintain it on an on-going basis.
FY2022 RETENTION AND OUTPERFORMANCE PLAN (One-off)
Performance
Period
Vesting
Period and
Holding Lock
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
5-year performance period commencing 1 July 2021 and ending 30 June 2026.
Vesting is subject to meeting the:
- Financial – gateway Relative TSR and Absolute TSR performance measures
- Non-financial – gateway individual performance expectations and behaviour
consistent with the Group’s purpose and values, to the Board’s satisfaction
Securities allocated on
vesting remain subject to
a 2-year holding lock until
30 June 2028
1 Phil Garling AM retired from the Board and the Remuneration and Human Resources Committee effective 11 November 2021.
1 These requirements have changed effective FY2023, details are outlined in the FY2023 Remuneration Framework changes at a glance section above.
Specific responsibilities of the Board and the Committee are detailed in their respective Charters which are available on the Group
website at www.charterhall.com.au.
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Charter Hall Group Directors' Report 2022
Directors' Report
Directors’ report
For the year ended 30 June 2022
Remuneration Report
6.2 Remuneration mix
Executive remuneration is structured as a mixture of fixed and variable ‘at-risk’ STI and LTI components. While fixed annual
remuneration is designed to provide a base level of remuneration, the ‘at-risk’ STI and LTI components reward executives when pre-
agreed performance measures are met or exceeded.
FY2022 Total Target Remuneration (TTR)
The FY2022 remuneration increases for the Managing Director and Other Reported Executives, were disclosed in the 2021
Remuneration Report.
These changes were introduced following a comprehensive review undertaken by Ferguson Partners with regard to the remuneration
framework and quantum for each Executive role. This benchmarking analysis highlighted that whilst the FUM and operational intensity
of these roles exceeds that of many peers, it was not reflected in their current remuneration. The FY2022 increases take into account
the significant growth experienced by the Group where the Group’s Funds Under Management (FUM) increased by 72% from $30.4
billion (as at 30 June 2019) to $52.3 billion (as at 30 June 2021) and Charter Hall’s market capitalisation increased by 43% from $5.04
billion (as at 30 June 2019) to $7.23 billion (as at 30 June 2021), resulting in a significant increase in the scale and responsibilities of
the Executive roles.
The remuneration increases for the Managing Director and other Reported Executives effective 1 July 2021 considered the position of
the Charter Hall business at the time relative to its comparator group peers. At the time Charter Hall managed the largest portfolio by
value of property in Australia, with 1,388 properties, generating more than $2.4 billion annually in net rental income for its investors
from more than 3,600 tenants and had an $8.8 billion development pipeline. Charter Hall managed $40 billion of equity invested in
unlisted wholesale funds and partnerships, listed REITs and un-listed retail property funds. The scale of Institutional investors
partnering with Charter Hall in un-listed property funds and partnerships invested in Australia is market leading. These investors expect
competitive investment returns and quality service from their managers. The increased remuneration of the Managing Director and
other Reported Executives recognises the skill and experience required to manage and retain an equity platform of this scale. It is
noted that the size and scale of the business has grown further during FY2022. The Managing Director’s TTR is targeted at the upper
quartile of comparable companies and roles in the ASX listed REIT sector consistent with Charter Hall’s competitive market position.
Name
Managing Director
David Harrison
2022
2021
Chief Investment Officer
Sean McMahon
2022
2021
Chief Financial Officer
Russell Proutt
2022
2021
Fixed Annual
Remuneration
(FAR)
$
Short Term
Incentive (STI)
Long Term
Incentive (LTI)
$
$
Total Target
Remuneration
(TTR)
$
% of TTR in ‘at
risk’
components
1,500,000
1,500,000
2,250,000
1,500,000
3,000,000
2,250,000
6,750,000
5,250,000
925,000
850,000
925,000
719,070
925,000
671,132
2,775,000
2,240,202
865,000
820,000
865,000
641,000
865,000
705,100
2,595,000
2,166,100
77.8%
71.4%
66.7%
62.1%
66.7%
62.1%
Directors’ report
For the year ended 30 June 2022
Remuneration Report
The figures below for all Reported Executives show the percentage mix of fixed versus ‘at-risk’ remuneration components on target that
apply for FY2022. All Reported Executives have the potential to earn up to 150% of target STI.
6.3 Fixed Annual Remuneration
Composition
FAR comprises cash base salary, statutory superannuation contributions and other nominated benefits.
Benchmarking and
Review
The positioning of FAR for Executives (including Reported Executives) takes into account Charter Hall’s
FUM relative to the entities in the S&P/ASX 200 Australian Real Estate and Investment Trust (A-REIT)
industry group. Whilst market capitalisation relative to these companies is also considered, an
individual’s broad range of skills and experience are recognised given the complexity of Charter Hall’s
business.
FAR is reviewed regularly and benchmarked against equivalent roles in the market recognising:
(cid:3)(cid:3)(cid:3)(cid:16) (cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)individual performance; and
(cid:3)(cid:3)(cid:3)(cid:16)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)the market environment for each individual’s skills and capabilities.
Comparator Group
The entities in the S&P/ASX 200 Australian Real Estate and Investment Trust (A-REIT) industry group
are included in the comparator Group used to determine the Reported Executives’ remuneration.
Charter Hall Managing
Director outcome
Other Reported
Executives
The Managing Director’s FAR remained unchanged at $1,500,000 in FY2022.
FAR for the CFO and the CIO increased to $865,000 (up 5%) and $925,000 (up 9%) respectively in
FY2022 due to a comprehensive remuneration benchmarking exercise conducted at the start of the
year. This took into account Charter Hall’s growth over the last two years both in terms of FUM and
market capitalisation and its subsequent impact on the size of these roles
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Directors' Report
Directors’ report
For the year ended 30 June 2022
Remuneration Report
Features
Approach
Voluntary Deferral
of Cash Component
of STI
Under the FY2022 STI Plan Executives and certain senior managers had an option to elect to receive up
to 100% of their cash STI payment in the form of rights to acquire CHC securities. These rights will vest
based on the employee’s elected deferral period of 2, 3, 4, 5, 6 or 7 years from the date of grant. These
rights will be subject to Charter Hall’s Performance Rights and Options Plan (PROP) however, will not be
subject to performance conditions or forfeiture on termination of employment.
Rights Allocation
Methodology
Cessation of
Employment
Preventing
Inappropriate
Benefits
The methodology to determine the number of mandatorily deferred STI service rights and rights for
voluntarily deferred component of cash STI, allocated under the PROP plan will be on a face value basis,
calculated on the VWAP for the month of June 2022. A cash payment equivalent to cash distributions
declared to the securityholders during the performance period, will be paid to the participants on vesting.
This will only be payable on the rights that vest at the end of the relevant vesting period.
In the event of resignation (other than genuine retirement) or termination for cause or for poor
performance (as determined by the Board), all unvested mandatorily deferred STI in service rights will
lapse, unless the Board determines otherwise. In any other circumstances unless the Board determines
otherwise, the rights will continue to remain on foot and, subject to the original terms of the offer, as
though the Executive had not ceased employment.
For the mandatorily deferred STI component, the Board has discretion to reduce, including to nil,
unvested rights in certain circumstances to ensure Executives do not obtain an inappropriate benefit. The
circumstances in which the Board may exercise this discretion include, for example, where the Board
determines that an Executive has acted fraudulently, dishonestly, or has engaged in gross misconduct or
has acted in a manner which brings the Group into disrepute.
Directors’ report
For the year ended 30 June 2022
Remuneration Report
6.4 Short Term Incentive
FY2022 STI award – key features
Features
Purpose
Approach
STI is an ‘at-risk’ incentive awarded annually, subject to performance against agreed financial and non-
financial Key Performance Indicators (KPIs) including evidence of behaviour in line with values.
Participants
Executives
Gateway for STI
Determining and
assessing
achievement of STI
Target
Individual
Opportunity
Performance
Targets
Determining and
Assessing
Performance
Group: A financial gateway of 95% of target OEPS must be met before any STI entitlement is available,
with the Board retaining overall discretion on performance achievement.
Individual: To help us maintain an effective risk management culture, all Executives must complete risk
and compliance training during the performance year (including Code of Conduct training) to ensure they
fully understand their role and comply with relevant legislative requirements.
Both gateways need to be met for any STI to be awarded.
The percentage achievement of STI Target is determined by the Board, upon advice from the Committee,
based on actual OEPS achieved relative to an OEPS target. The Board retains the discretion to increase
or decrease the percentage of overall STI Target achieved, based on its assessment of the overall
performance throughout the year.
The maximum STI potential for all employees is 150% of their STI target, enabling recognition for
outperformance.
Individual STI outcomes are determined on the basis of Group and individual performance through a
Balanced Scorecard. The Scorecard is split into three elements: Financial; Customer; and
Culture/Leadership/Collaboration with 50% financial and 50% non-financial. For each of these elements
there are KPIs aligned to our core strategic objectives of Growth and Resilience.
The Board believes that having a mix of financial and non-financial KPIs provides measurable
performance criteria strongly linked to year-on-year securityholder returns and encourages the
achievement of individual goals consistent with the Group’s overall objectives. The scorecard elements of
financial, customer and culture, leadership and collaboration have been chosen as KPI categories
because they represent important elements of Charter Hall’s core strategic objectives. Each of these
categories has measures of ‘Growth’ and ‘Resilience’.
Role
Financial/Securityholder
Customer
Managing Director
CFO
CIO
50%
50%
50%
30%
30%
25%
Culture, Leadership and
Collaboration
20%
20%
25%
In consultation with the Committee, the Board assesses the Group’s financial performance and the
performance of all Reported Executives against agreed KPIs.
The Board applies the following general principles when determining and measuring performance goals
and any STI incentive for the Executives:
-
-
-
STI outcomes should always align with the market reported results, with any adjustments being
consistent with business performance and behaviour aligned to Group values;
‘on target’ performance aligns with the Board approved target for the financial year; and
payout above Gateway for STI is up to a maximum (150% of STI target).
These principles for assessing performance were chosen because they are, as far as practicable,
objective and fair and the most appropriate way to assess the Executives’ individual contribution and
determine remuneration outcomes in alignment with the financial performance of the Group.
Board Discretion
Once the Balanced Scorecard has been assessed and performance against KPIs has been determined,
the outcome is subject to Board discretion. The Board may modify the performance outcomes upwards or
downwards taking into account risk related matters, behaviour in line with values and expected standards
of conduct.
Delivery
62
For all Executives, STI is delivered in the form of cash (67%) and deferred service rights (33%).
Service rights are deferred over two years, with 50% vesting at the end of year one and 50% at the end of
year two.
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Directors’ report
For the year ended 30 June 2022
Remuneration Report
Directors’ report
For the year ended 30 June 2022
Remuneration Report
KPI Performance and STI Outcome for Financial Year Ending 30 June 2022 – Managing Director
Group Gateway
A financial gateway of 95% of budget OEPS (76.6 cps) which supported the initial
FY22 guidance to the market, must be met before any STI entitlement is available,
with the Board retaining overall discretion on performance achievement.
Fully met and
exceeded
Individual Gateway
Completion of risk and compliance training during the performance year (including
Code of Conduct training) to ensure they fully understand their role and comply
with relevant legislative requirements.
Fully met
Strategy & Customer (30%)
Effective delivery of strategic initiatives drives longer term securityholder returns.
Progressing decarbonisation, enhancing our responsible investment processes and progressing our reconciliation with First Nations
people aligns with Charter Hall’s long term sustainability goals, with ESG being an extricable part of ‘how’ we do business.
Satisfied customers who receive above expectation service from the Group are most likely to become repeat business customers.
G/R
KPI (Financial & Risk)
Weighting
Scorecard
result
Outcome
Directors' Report
Financial & Risk (50%)
Operating Earnings is a key measure of the financial performance of the Group in a financial year.
Equity allotted is a measure of the funds’ inflow raised from investors in funds and partnerships and drives capacity to grow
portfolios.
Fund and partnership property portfolio performance during the financial year compared to relevant benchmark measures, where
fund investors are satisfied that their property portfolio investment performance meets or exceeds expectations, measured either
against the funds return objective or relevant benchmarks.
Treasury Risk Management – diversification and growth of the managed fund debt platform aligns with equity flows and provides
capacity for growth.
G/R
KPI (Financial & Risk)
Weighting Scorecard
Outcome
result
h
t
w
o
r
G
e
c
n
e
i
l
i
s
e
R
Group OEPS
Group OEPS (Target: 76.6 cps)
Growth from FY21 Group OEPS
after tax excluding Performance
Fees and STI
37.5%
Outstanding
Group OEPS of 115.6 cps which was 51% above
target OEPS.
Group OEPS after tax excluding Performance Fees
and STI was 13.3% above FY21.
Targeted Gross Equity Allotment
Gross equity flows of $4.7(cid:3)bn exceed Target.
12.5%
Outstanding
Performance of Funds &
Partnerships relative to agreed
benchmarks
Treasury Risk Management
Targeted growth, maturity
extensions and diversification of
lenders to the Group’s debt platform
90% of funds and partnerships that CHC co-invests in,
weighted by value, met/exceeded their agreed
benchmarks.
25% growth in debt platform, with further
diversification of debt providers. The weighted
average debt maturity increased to 4.6 years. Further,
$15.6 bn of total debt transactions were completed
during the year. Of significance, $2.5 bn of total debt
transactions were sustainability linked loans.
Key Group Growth Strategy
Initiatives Progress
Progress the growth strategy and
key initiatives.
t
h
w
o
r
G
10%
Exceeds
Expectations
20%
Exceeds/
Outstanding
Key ESG Initiatives Progress
Progress decarbonisation of the
group
Target: 50% intensity reduction of
GHG (based off a 2017 baseline)
and installation of an additional
5MW of onsite solar PV by the end
of FY22.
e
c
n
e
i
l
i
s
e
R
Lead reconciliation with First
Nations
Target: launch a Stage One Reflect
RAP
Excellence in Investor & Tenant
Customer Relationships
Increase investor and tenant
customer confidence and
advocacy
Target: maintain strong survey
results from investor and tenant
customer surveys.
Scale tenant customer relationship
model
Target: Key customers have key
account managers and active
account plans in place.
Growth and diversification of Wholesale and Direct
investor customers, evidenced by inflows, additional
Wholesale investors and growth in the active number
of financial advisers supporting the Direct business.
The expansion of our Corporate Sale and Leaseback
Programme with existing customers and partners.
The Group has achieved a 5(cid:23)% reduction of GHG
emissions against the FY17 baseline in absolute
terms. Charter Hall has executed a 7 year PPA with
Engie, supporting 100% renewables by 2025 and
linked to new solar and wind projects in Australia.
Charter Hall installed an additional 6 MW of solar PV
taking the Group to 47.2MW. In addition, 6.5 MW of
battery storage has been installed on Charter Hall's
Retail assets. Also, 7 active tenant solar partnerships
have been agreed in FY22 to install a forecast 10 MW
of solar PV in FY23 to mitigate scope-3 emissions.
A stage one Reflect RAP has been launched, with
cultural awareness training rolled out across the
Group commencing with the CHC Board, EXCO and
Divisional Leadership Teams; Traditional owners
have been identified across all assets to inform
symbols and protocols to acknowledge First Nations
histories and engage in meaningful relationships.
CHC has commissioned listed and wholesale investor
surveys for 10 years. These surveys continue to
evidence strong investor engagement and are
considered to be top decile results. Tenant customer
surveys across Retail, Office and Industrial
maintained strong results with top decile net promotor
scores.
The Top 20 key tenant customers all have Account
Management Teams servicing their needs.
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For the year ended 30 June 2022
Remuneration Report
Leadership, Culture & Collaboration (20%)
Developing key people in business critical roles improves individual and team performance and helps ensure business continuity and
supports succession planning for long term success.
Diversity and inclusion at all levels in the organisation, with emphasis on greater female representation in Senior Leadership is expected
to provide optimal business performance.
High levels of employee engagement and wellbeing drives higher retention and productivity, resulting in better business
performance.
G/R
KPI (Leadership, Culture &
Collaboration)
Weighting
Scorecard
result
Outcome
Leadership Capability for Growth
and Scale
h
t
w
o
r
G
Sponsorship, implementation, and
engagement in tailored Executive
Development Programme and
agreed succession plans
Promote the profile of Charter Hall
in the marketplace.
Deep, Diverse and Engaged
Talent Pipeline
e
c
n
e
i
l
i
s
e
R
Sustain improvements in diversity,
engagement, and wellbeing
Improve gender diversity in Senior
Management.
Employee Engagement and
Wellbeing Survey results above
76%.
Final Scorecard Outcome
15%
Meets/
Exceeds
Expectations
5%
Meets/
Exceeds
Expectations
Senior Executive Development Programme, with
personal development plans in place for all
Executives to support their growth thereby
strengthening leadership and succession.
Continued profile as President of the Property
Council of Australia (cid:68)(cid:86)(cid:3)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:68)(cid:86)(cid:3)involvement of other
executives in various market forums elevated the
bench strength and profile of the Group.
Female representation at Senior Management
increased in FY22 to 31.4% as at 30 June 2022,
and is on track to meet target of >=35% by the end
of 2022 CY.
Employee Engagement was 88% and Employee
Wellbeing was 83%.
After consideration of the performance of the Group and the Managing Director’s KPI performance outcomes, the Board awarded a
maximum STI equivalent to 150% of STI target.
KPI performance and STI outcome for financial year ending 30 June 2022 – Other Reported Executives
KPIs for other Reported Executives are aligned to that of the Managing Director. These are focused on growth and resilience measures
in individual areas of accountability.
Scorecard
KPI
Financial
Customer and Strategy
Including Group and Divisional financials and
investment earnings; growth in funds under
management; and divisional specific financial
initiatives.
Including customer experience, service and
satisfaction measures for funds and tenants.
Sean McMahon
Performance Rating
Russell Proutt
Performance Rating
Outstanding
Outstanding
Outstanding
Exceeds/Outstanding
Culture, Leadership and
Collaboration
Including leadership contribution, succession, talent,
diversity and engagement.
Exceeds/Outstanding Exceeds/Outstanding
Final Scorecard Outcome for Other Reported Executives
After consideration of the performance of the Group and the Other Reported Executives’ KPI performance outcomes, the Board
awarded a maximum STI equivalent to 150% of STI target.
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24
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For the year ended 30 June 2022
Remuneration Report
Group FY2022 performance outcomes
In FY2022, Charter Hall’s OEPS was 115.6 cents, which was 89.5% above the FY2021 OEPS. The table below shows Charter Hall’s
OEPS (cps) over a five-year period:
1
1
No CHOT Performance Fee recognised in FY2021 and FY2022
FY2022 STI outcomes
The outperformance of more than 20% above target FY2022 OEPS in FY2022 allows for up to 150%
of the total target STI amount to be awarded. Assessment of individual performance scorecards has
resulted in 146% of the aggregate target STI at Group level to be awarded, in September 2022, to
eligible employees across the Group.
The below table shows the STI outcomes for Reported Executives for 2022.
All three Reported Executives received an outcome of 150% of STI target for FY2022. This is based
on individual achievement against KPIs including evidence of behaviour in line with values and
overall leadership team contribution to the Group.
Name
Managing Director
D Harrison2
Other Reported Executives
S McMahon
R Proutt3
STI earned Paid in cash1
$
$
Voluntary
deferral into
rights
$
Mandatory
deferral
Target STI earned STI earned
into service STI as % of compared to compared to
maximum
%
fixed pay
%
target
%
rights
$
3,375,000
–
2,250,000
1,125,000
150%
150%
100%
1,387,500
1,297,500
925,000
432,500
–
432,500
462,500
432,500
100%
100%
150%
150%
100%
100%
1 To be paid on 15 September 2022
2 D Harrison has elected to voluntarily defer 50% of the cash component of his FY2022 STI into rights for a 2-year period and 50% into rights for a 3-year period.
3 R Proutt has elected to voluntarily defer 50% of the cash component of his FY2022 STI into rights for a 3-year period
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Directors' Report
Directors’ report
For the year ended 30 June 2022
Remuneration Report
6.5 Long Term Incentive
FY2022 LTI plan – key features
Features
Purpose
Approach
LTI is ‘at risk’ and aligns with the long-term interests of securityholders and business performance. It also
plays an important role in employee retention.
Participants
Executives
Type of equity
awarded
The LTI is governed by the Performance Rights and Options Plan (PROP), under which rights to stapled
securities are granted to participants. Each performance right entitles the participant to one stapled security in
the Charter Hall Group for nil consideration at the time of vesting, subject to meeting the performance hurdles
outlined below.
Performance
Period
Performance Rights are subject to a four-year performance period commencing on 1 July 2021 and ending on
30 June 2025.
Performance
Rights Allocation
Methodology
Vesting
Conditions
OEPS Growth
Performance
Measure (50% of
LTI Allocation)
The number of rights granted to a participant in FY2022 and in prior years was determined based on an
independent value calculation prepared by Deloitte using the Black-Scholes-Merton valuation method, which
discounted for dividends/distributions forgone during the performance period. There was no discount for
market risk.
The allocation methodology has changed for all future LTI grants effective FY2023 as outlined in section 4 of
this Remuneration Report.
Performance Rights will vest subject to the satisfaction of the following performance conditions measured over
the performance period:
-
50% of Performance Rights are subject to an aggregate operating earnings per security (OEPS) growth
hurdle; and
50% of Performance Rights are subject to a relative total securityholder return (TSR) hurdle.
-
The OEPS growth performance measure involves setting an aggregate total value of OEPS to be earned over
the entire performance period (i.e. for a 4-year performance period, the aggregate total value of OEPS will be
year one OEPS, plus year two OEPS, plus year three OEPS, plus year four OEPS). The aggregate OEPS
performance measure has a minimum and stretch hurdle set by growing the commencement year OEPS (i.e.
the actual OEPS for the financial year end prior to the performance period) by the OEPS growth rates of 5%
per annum compound for the minimum aggregate OEPS hurdle and 7% per annum compound for the stretch
aggregate OEPS hurdle. For the FY2022 LTI, the Board set the commencement OEPS as the FY2021 actual
OEPS result of 61.0 cps (after tax).
If the aggregate OEPS achieved over the four-year
performance period is:
Less than an aggregate OEPS (after tax) of 276.06
cps (based on a 5% CAGR)
Equal to aggregate OEPS (after tax) of 276.06 cps
(based on a 5% CAGR)
More than an aggregate OEPS (after tax) of 276.06
cps (based on a 5% CAGR) but less than an
aggregate OEPS (after tax) of 289.80 cps (based on a
7% CAGR)
Equal to or more than an aggregate OEPS (after tax)
of 289.80 cps (based on a 7% CAGR)
Percentage of Performance Rights subject to
the aggregate OEPS performance measure
which may vest
0%
50%
Pro rata straight line vesting between 50% -
100%
100%
Directors’ report
For the year ended 30 June 2022
Remuneration Report
Performance is determined based on the Group’s total ASX shareholder return (assuming distributions are
reinvested) ranking against the members of the comparator group over the performance measurement period.
The Board determines who is included in that comparator group and how the companies in that group are to
be treated.
The Board has determined the following comparator group for the FY2022 LTI:
Abacus Property Group (ABP)
BWP Trust (BWP)
Centuria Capital Group (CNI)
Centuria Industrial REIT (CIP)
Charter Hall Long Wale REIT (CLW)
Charter Hall Retail REIT (CQR)
Cromwell Property Group (CMW)
Dexus Property Group (DXS)
Goodman Group (GMG)
GPT Group (GPT)
Relative TSR
Performance
Measure (50% of
LTI Allocation)
Growthpoint Properties Australia (GOZ)
Ingenia Community Stapled Securities (INA)
Mirvac Group (MGR)
National Storage REIT (NSR)
Scentre Group (SCG)
Shopping Centres Australasia Property Group
(SCP)
Stockland (SGP)
Vicinity Centres (VCX))
Waypoint REIT (WPR)
If, over the relevant performance period the Charter
Hall Group relative TSR when ranked to a
comparator group of the S&P/ASX 200 A-REIT
Accumulation Index is:
Less than the comparator group 50th percentile
Equal to the comparator group 50th percentile
More than the comparator group 50th percentile
and less than 75th percentile
Percentage of Performance Rights subject to the
relative TSR performance measure which may vest
0%
50%
Pro rata straight line vesting between 50% - 100%
Exceeds the comparator group 75th percentile
100%
During 2018, the Board reviewed the LTI performance measures to ensure they continue to align with
securityholder expectations and with Charter Hall’s current strategy. Following the review, the Board
determined in FY2019 to retain the Relative TSR performance measure and replace the Absolute TSR
performance measure with an aggregate OEPS performance measure.
For FY2020, FY2021 and FY2022, the Board agreed the same performance hurdles for Relative TSR and
OEPS growth would apply.
OEPS growth performance measure rationale
The aggregate OEPS performance measure was selected because it is within the Executive’s ability to
influence and is a key driver of securityholder returns and therefore aligns performance with returns to
securityholders. The Board excluded the CHOT performance fee from the aggregate OEPS hurdles and
actual OEPS performance in the FY2019, FY2020 and FY2021 LTI Plans, however, all other performance
fees were included. With the CHOT performance fee paid out in full in FY2021 it was not required to be
excluded in the FY2022 LTI Plan aggregate OEPS performance measure.
The OEPS growth rates used to set the aggregate OEPS performance hurdles of 5% per annum compound
for the minimum aggregate OEPS hurdle and 7% per annum compound for the stretch aggregate OEPS
hurdle applied for the FY2019, FY2020, FY2021 and FY2022 LTI plans and is regarded by the Board as a
competitive growth rate “through the cycle” when compared to other REITs in the ASX200 A-REIT
Accumulation Index.
The average OEPS growth for REITs in the ASX200 A-REIT Accumulation Index to 30 June 2021 was as
follows:
(cid:120) Over 3 years to 30 June 2021, approximately -1% CAGR;
(cid:120) Over 5 years to 30 June 2021, approximately 1% CAGR;
(cid:120) Over 10 years to 30 June 2021, approximately 3.5% CAGR.
The median OEPS growth rates over the same periods were at similar levels as the average growth rates.
Analyst consensus forecasts for comparator group average and median OEPS growth over all performance
periods to 30 June 2022 are all still less than a 5% CAGR.
An OEPS CAGR hurdle of at least 5% over a four-year period requires top quartile performance based on
historic OEPS growth within the comparator group.
Rationale for
Performance
Measures
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For the year ended 30 June 2022
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Directors' Report
Charter Hall has delivered aggregate OEPS growth well in excess of the 5-7% CAGR range in recent years,
this has been achieved as a consequence of a strategy to build a property funds management business which
has been well executed by management. The Board believes that management should be rewarded for
delivering an OEPS CAGR in excess of the majority of its peers which the team has been regularly achieving.
The Board does not believe that because the business is performing well that the OEPS CAGR hurdle ranges
should be increased rather that management should continue to be motivated and incentivised to outperform
its peers. As the OEPS CAGR hurdle range is “through the cycle” there may be periods when achieving the
hurdle growth rates is more difficult.
The aggregate OEPS performance measure was selected because Charter Hall’s OEPS can fluctuate due to
performance and transaction fee income, and the Board believes that aggregate OEPS allows for OEPS to be
considered over the entire four-year performance period.
Relative TSR performance measure rationale
TSR measures the overall returns that a company has provided for its securityholders, reflecting share price
movements and reinvestment of dividends over a specified period. Relative TSR is the most widely used LTI
performance measure used in Australia. It ensures that value is only delivered to participants if the investment
return received by CHC securityholders is sufficiently high relative to the investment returns provided by the
comparator group over the same period.
The comparator group for determining the relative TSR performance for the FY22 LTI Relative TSR measure
is comprised of the REITs included in the S&P/ASX 200 A-REIT Accumulation Index as at 1 July 2021
however, including Centuria Capital Group (which was added to the S&P/ASX 200 A-REIT Accumulation
Index on 16 July 2021 and excluding Uniball-Rodamco-Westfield SE). This comparator group is regarded as
sufficiently large enough and the most relevant comparator group as it represents all the major REITs listed
and categorised as REITs on the ASX.
At the time of rights allocation, Executives can make an upfront election to apply a voluntary restricted period
of 3, 4, 5, 6 or 7 years from the vesting date for 25%, 50%, 75% or 100% of stapled securities allocated to
them on vesting of the Performance Rights. Following vesting of the Performance Rights, the restricted
stapled securities allocated to participants will not be subject to forfeiture upon termination and participants
will be entitled to receive declared distributions during the restricted period.
Distributions are not provided on FY2022 Performance Rights as the number of rights allocated to each
participant takes into account distributions foregone during the performance period.
The allocation methodology has changed for all future LTI grants effective FY2023 and impacts the treatment
of distributions as outlined in section 4 of this Remuneration Report.
In the event of resignation (other than genuine retirement) or termination for cause or termination for poor
performance, all unvested Performance Rights will lapse, unless the Board determines otherwise. In any other
circumstances unless the Board determines otherwise, the Performance Rights will continue to remain on foot
and, subject to the original terms of the offer, as though the Executive had not ceased employment.
The Board has discretion to reduce, including to nil, unvested rights in certain circumstances to ensure
Executives do not obtain an inappropriate benefit. The circumstances in which the Board may exercise this
discretion include for example, if the Board determines that an Executive has acted fraudulently or dishonestly
or engaged in gross misconduct or has acted in a manner which brings the Group into disrepute.
Voluntary
Restriction Period
Distributions
Cessation of
Employment
Preventing
Inappropriate
Benefits
6.6 Deferred STI and LTI Rights awarded – additional terms and conditions
Deferred STI and LTI Awards are subject to some additional terms and conditions as per below:
Change of control
provisions
The Board, in its absolute discretion, may determine the manner in which the rights will be dealt with.
Hedging and margin
lending prohibitions
In accordance with the Corporations Act 2001, all participants are prohibited from hedging or otherwise
protecting the value of unvested stapled securities.
6.7 FY2022 Group performance summary
The table below provides information on Charter Hall’s performance against key metrics over the last five years.
Key performance metrics
Statutory profit after tax for stapled securityholders ($m)
Statutory earnings per stapled security (EPS) (cents)
Operating earnings for stapled securityholders ($m)
Operating earnings per stapled security (cents)
Growth in OEPS %
Operating earnings per stapled security (ex CHOT performance fee)
(cents)1
Growth in OEPS (ex CHOT performance fee) %
Distribution per stapled security (cents)
Stapled security price at 30 June ($)2
CHC total securityholder return – Jul to Jun (%)
Total Funds Under Management ($bn)
Property Funds Under Management ($bn)3
1 No CHOT performance fee was recognised in FY21 and FY22.
2 The opening share price at 2 July 2018 was $6.59.
3 Excluding Paradice Investment Management (PIM)
TSR for Charter Hall versus comparable indices is outlined below
2018
250.2
53.7
175.8
37.7
5.0
33.8
(6.0)
31.8
6.52
24.6
23.2
23.2
2019
235.3
50.5
220.7
47.4
25.5
39.4
16.6
33.7
10.83
72.4
30.4
30.4
2020
345.9
74.3
322.8
69.3
46.3
53.9
36.8
35.7
9.69
(7.4)
40.5
40.5
2021
476.8
102.4
284.3
61.0
(12.0)
61.0
13.2
37.9
15.52
64.1
52.3
52.3
2022
911.1
194.1
542.8
115.6
89.5
115.6
89.5
40.1
10.83
(28.3)
79.9
65.6
Charter Hall has outperformed its peer group over the longer term. The following table compares the total securityholder return for
Charter Hall against various indices and the time periods.
Annualised TSR (p.a. compound)
CHC1
S&P ASX 100
S&P ASX 200 A-REIT
MSCI World REITs
1 Year
(28.3%)
(5.0%)
(12.3%)
(10.8%)
1 Source UBS. Annualised TSR of 4% for LTI purposes is calculated using June VWAP as opening and closing prices
5 Years
18.5%
7.2%
4.4%
4.6%
3 Years
2.9%
3.9%
(2.8%)
2.0%
10 Years
22.3%
9.6%
9.2%
6.6%
6.8 Group LTI performance outcomes
OEPS (FY2019 LTI) – The Group delivered aggregate OEPS of 154.4 cents (excluding Charter Hall Office Trust performance fees)
over the three years to 30 June 2021 (FY2019 LTI performance period) equivalent to a 22.5% CAGR exceeding the upper end of the
performance hurdle aggregate OEPS of 116.4 cents based upon a 7% CAGR over the three-year performance period.
Relative TSR (FY2019 LTI) – The TSR for the three-year performance period was 155.9% equivalent to a 36.8% CAGR achieving the
top rank of the 17 REITs in the comparator group from the S&P/ASX200 A-REIT Accumulation Index.
OEPS (FY2020 LTI Tranche 1) – The Group delivered aggregate OEPS of 230.5 cents (excluding Charter Hall Office Trust
performance fees) over the three years to 30 June 2022 (FY2020 LTI performance period) equivalent to a 37.3% CAGR exceeding the
upper end of the performance hurdle aggregate OEPS of 135.6 cents based upon a 7% CAGR over the three-year performance period.
Relative TSR (FY2020 LTI Tranche 1) – The TSR for the three-year performance period to 30 June 2022 was 12.5% equivalent to a
4% CAGR achieving the 5th ranking of the 17 REITs in the comparator group from the S&P/ASX200 A-REIT Accumulation Index.
The following graphs illustrate the Group’s TSR compared with the comparator group’s 50th and 75th percentile throughout the FY2019
and FY2020 LTI performance periods.
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Charter Hall Group Directors' Report 2022
Directors' Report
Directors’ report
For the year ended 30 June 2022
Remuneration Report
FY2019 LTI performance period
FY2020 LTI - Tranche 1 performance period
Outcomes
(cid:3013)
(cid:3013)
The FY2019 LTI had a vesting date of 31 August 2021. As a result of the TSR performance
and aggregate OEPS achieved over the three years to 30 June 2021, the relative TSR
performance hurdles and aggregate OEPS hurdles were exceeded and 100% of the
performance rights vested and was subject to a further one-year holding lock.
In FY2020, with the introduction of the four-year vesting period for LTI, transition
arrangements are in place for FY2020 LTI, where performance rights are due to vest in two
equal tranches at the end of year 3 (50%) and year 4 (50%). The first tranche of FY2020 LTI
has a vesting date of 31 August 2022. As a result of the TSR performance and aggregate
OEPS achieved over the three years to 30 June 2022, the relative TSR performance hurdles
and aggregate OEPS hurdles were exceeded and 100% of the performance rights will vest
on 31 August 2022. The second tranche of the FY2020 LTI grant will be due for testing on 30
June 2023.
(cid:3013)
Further details of the terms of these awards are set out in the relevant prior year
remuneration reports.
Directors’ report
For the year ended 30 June 2022
Remuneration Report
6.9 One-Off Retention and Outperformance Plan (ROP) Award Granted in FY2022
Purpose of the Plan
As was outlined in the FY2021 Remuneration Report, the Board considered the leadership, expertise and experience critical to the
ongoing outperformance of Charter Hall, as the Group embarked on the next period of growth. The Board and the Committee believed
that the current executive remuneration framework was sound based upon market comparators. However, other factors including,
continuity of leadership, retaining a high performing team and allowing for orderly succession planning, were considered as critical in
the highly competitive executive leadership talent landscape. Given the success of the Group, competition for key executives has been
strong from private equity and other listed real estate groups, keen to grow their property funds management operations. The Board
wanted to retain (and reduce the risk of losing) the key executives who have been responsible for the Group’s significant success and
growth in prior years.
The ROP is designed to complement the current annual remuneration framework by providing an additional retention mechanism with
reward for outperformance. The ROP is long-term in nature with a five-year performance period and intentionally longer than the LTI
Plan period and the 2-year holding lock is designed to act as an additional retention mechanism with participants having additional
Charter Hall equity ownership.
In all, 28 participants were offered the ROP Performance Rights across the Charter Hall business and across multiple business lines. It
will take 7 years before management can access the potential rewards, ensuring long-term alignment of interests and, subject to
achieving challenging performance hurdles, an award of significant quantum to incentivise these key executives to maintain
employment with Charter Hall Group.
Rewards will only be earned if Group TSR performance over five years from 1 July 2021 to 30 June 2026 strongly outperforms on a
Relative TSR basis and achieves a minimum Absolute TSR and then vests for each Participant only if they meet individual
performance expectations and behaviours consistent with the Group’s purpose and values, to the satisfaction of the Board.
The grant of Performance Rights for the Managing Director under the ROP was approved by securityholders at the 2021 AGM.
What is the average annual issue of Charter Hall securities under the ROP and the LTI Plan?
Under the FY2022 ROP a maximum of 1.06% of securities on issue are issued at full vesting at the end of the 5-year performance
period (or equivalent to 0.21% pa) and approximately 0.18% of securities on issue are currently issued at full vesting under the LTI
Plan each year. This means on average approx. 0.39% of securities on issue are issued each year at 100% vesting across both plans.
Financial performance measures
The first performance measure is a relative performance gateway and requires a top-3 ranking in terms of TSR over the performance
period against the comparator group. A top-3 position would be equivalent to an 89th percentile position. If this is not achieved the ROP
Performance Rights do not vest. Across the peer group, for those REITs that have a Relative TSR measure in their LTI plans, 100%
vesting typically occurs at a 75th percentile Relative TSR performance. The measure in this plan serves to ensure that the Absolute
TSR performance (second measure) is sufficient on a Relative TSR performance basis.
If the first measure is achieved, the second performance measure has an Absolute TSR performance gateway measure equivalent
to a 12% CAGR over the performance period. At this gateway threshold, 40% of the performance rights would vest (subject to the 2-
year holding lock period) with up to 100% vesting if the TSR over the performance period is equivalent to a 15% CAGR or greater; with
vesting prorated between these performance hurdles based on actual TSR achieved.
The 12%-15% CAGR range for the TSR measure has been selected as it represents strong absolute performance and requires
significant ongoing OEPS growth over the 5-year performance period, particularly in circumstances where there is no increase in
Charter Hall’s price earnings (PE) multiple. While Charter Hall achieved a higher TSR over the five years to 30 June 2021 this was as a
result of both strong OEPS growth and a significant increase in its price earnings multiple in an environment of declining interest rates
and real asset appreciation and is also reflective of the continued expectation of operating earnings per security growth. If there are
price earnings multiple increases that contribute materially to the TSR performance of Charter Hall then the relative TSR performance
gateway measure will establish whether Charter Hall’s Absolute TSR is in the top three of the S&P/ASX 200 A-REIT Index constituents
to qualify for vesting.
The two financial performance measures are designed to ensure that the absolute TSR performance is challenging and at the end of
the performance period sufficient on a relative TSR performance basis. When considered in combination with the Relative TSR
measure, the structure requires both sector leading performance and absolute returns in excess of long-term market averages as
measured by the S&P/ASX200 A-REIT Index.
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Charter Hall Group Directors' Report 2022
Directors' Report
Directors’ report
For the year ended 30 June 2022
Remuneration Report
In addition to meeting the financial performance hurdles, vesting for individual participants in the Plan only occurs if they meet
individual non-financial performance expectations and behaviour consistent with the Group’s purpose and values, to the satisfaction of
the Board.
How were the ROP individual allocations and total potential quantum determined?
The ROP total potential quantum was established by reference to the total target remuneration (TTR) of each of the executives in the
plan with the objective of providing an incentive to retain participants and a meaningful reward for delivering strong outperformance to
securityholders.
Individual Allocations
The individual allocation of ROP Performance Rights to the 28 participants assuming a face value (not adjusted for the risk of vesting)
based on the Charter Hall price at the time of Board consideration represented an average of approximately two times FY2022 total
target remuneration (TTR) to be potentially earned over 5 years accessible in 7 years. On this measure the annualised amortised face
value of ROP Performance Rights represents less than half one year’s total annual target remuneration and is only realised if
challenging performance hurdles are achieved for the benefit of securityholders. A proportion of TTR rather than FAR was regarded as
the fairer allocation basis between participants and a reasonable basis to assess the additional benefit to be potentially earned if
outperformance is achieved. The actual value to participants if vesting occurred was seen as being of sufficient quantum to retain plan
participants and incentivise them to deliver outperformance, while also being an impediment to plan participants being approached by
other organisations.
Total Potential Quantum
If the 5-year TSR equivalent to a 12% CAGR is achieved, Charter Hall’s market capitalisation will likely have increased by
approximately $4 billion (based on current DPS policy and no change in securities issued from the start of FY2022), or 55% growth
from the market capitalisation at the start of FY2022. Of that increase in market capitalisation, participants in the plan could earn
through vesting of performance rights securities equivalent to 1.2% of the market capitalisation increase. At a TSR equivalent to a 15%
CAGR, the increase in market capitalisation would be approximately $5.6 billion or 79% growth from the market capitalisation at the
start of FY2022. At that level, participants in the plan would earn through vesting of performance rights securities equivalent to 2.4% of
the increase in market capitalisation.
The Board felt that if the Company delivered the challenging levels of TSR performance for securityholders the value of the incentive
for employee participants in the ROP would be meaningful to them and represent a modest sharing in the total growth in value of
Charter Hall thereby providing a strong alignment for management with securityholders.
Directors’ report
For the year ended 30 June 2022
Remuneration Report
FY2022 Retention and Outperformance Plan Terms
Performance
Rights Pool
Participants
Performance
Period
5.0 million Performance Rights
Represents approximately 1% of issued and outstanding
securities (465.8 million total securities outstanding as at 1
July 2021)
Managing Director, Other Reported Executives and other senior executives across the Group
5-year period commencing 1 July 2021 and ending 30 June 2026
Financial Performance Measures
1. Gateway Relative TSR performance measure: Top three TSR rank against the comparator group
over the performance period. The comparator group consists of the S&P/ASX 200 A-REIT
Accumulation Index constituents as at 1 July 2021 however, including Centuria Capital Group
(which was added to the S&P/ASX 200 A-REIT Accumulation Index on 16 July 2021 and excluding
Uniball-Rodamco-Westfield SE). This is the same comparator group as for the FY2022 LTI Plan.
Performance
Measures
2. Absolute TSR performance measure: TSR performance range from a minimum TSR equivalent to a
12% CAGR to a TSR equivalent to a 15% CAGR over the performance period, with 40% vesting at
a TSR equivalent to a 12% CAGR prorated straight-line to 100% vesting at a TSR equivalent to a
15% CAGR.
For example
TSR % Achieved (5-year CAGR)
Award % Achieved
Non-Financial Performance Measures
12%
40%
13%
60%
14%
80%
15%
100%
Gateway Non-Financial performance measure: for each participant vesting only occurs if they meet
individual non-financial performance expectations and behaviour consistent with the Group’s purpose
and values, to the satisfaction of the Board.
$15.21 representing the VWAP for the month of June 2021.
Subject to meeting the performance conditions (as noted above), the Performance Rights will vest
following 30 June 2026, however, any securities allocated will remain subject to a holding lock for two
years until 30 June 2028.
The allocated Performance Rights will not have any rights to vote or receive any distributions during the
performance period.
During the two-year holding lock period between 30 June 2026 and 30 June 2028, Plan participants will
receive declared distributions on securities allocated to the participant on vesting of their Performance
Rights.
In the event of resignation (other than genuine retirement) or termination for cause or termination for poor
performance (as determined by the Board), prior to the end of the vesting period, all unvested rights and
prior to the end of the holding lock period, restricted securities (if the rights have vested) will lapse,
unless the Board determines otherwise. In any other circumstances unless the Board determines
otherwise, a pro rata portion of rights (calculated based on the portion of the performance period that has
elapsed up until the date of termination) and all restricted securities will continue to remain on foot and,
subject to the original terms of the offer, as though the Executive had not ceased employment.
The Board has discretion to reduce, including to nil, unvested rights in certain circumstances to ensure
participants do not obtain any inappropriate benefit. The circumstances in which the Board may exercise
this discretion include, for example, where the Board determines that an Executive has acted
fraudulently, dishonestly, or has engaged in gross misconduct or has acted in a manner which brings the
Group into disrepute.
In accordance with the Corporations Act 2001, all participants are prohibited from hedging or otherwise
protecting the value of unvested stapled securities.
The Board, in its absolute discretion, may determine the manner in which the rights will be dealt with.
Initial Price for
determining TSR
Vesting
Distribution and
Voting Rights
Cessation of
Employment
Preventing
Inappropriate
Benefits
Hedging
Change of
Control
Provisions
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Charter Hall Group Directors' Report 2022
Directors' Report
Directors’ report
For the year ended 30 June 2022
7. Executive remuneration in detail
7.1 Total remuneration of Reported Executives
The following table details the total remuneration of the Reported Executives of the Group for FY2021 and FY2022.
Short-term benefits
Post-
employ-
ment
benefits
Security-based
payments
Non-
Annual monetary
leave1
$
Super-
benefits2 annuation
$
$
Voluntarily
deferred
short-term
incentive7
$
Mandatory
security-
based
short-term
incentive7
$
Securities
options
and
perform-
ance
rights
$
Cash
short-term
incentive
$
Other
long-term
benefits
Long
service
leave1
$
% of total
remun-
eration
consisting
Total of rights6
%
$
Salary
$
Name
Managing Director
D Harrison3
2022
2021
Other Reported Executives
S McMahon4
2022
2021
R Proutt5
2022
2021
Total 2022
Total 2021
902,932
828,306
1,476,432
–
1,478,306 1,500,000
78,750
(30,413)
691
1,373
23,568 2,467,088 1,233,538 3,186,109
750,000 1,681,249
21,694
–
26,251
26,251
8,492,427
5,428,460
74,824
(3,458)
691
1,373
23,568
21,694
–
179,768
507,103
359,535
985,853
516,163
22,583
14,876
3,442,554
2,457,559
925,000
539,303
841,432
798,306
432,500
–
4,940
(19,879)
3,220,796 1,357,500 158,514
(53,750)
3,104,918 2,039,303
691
1,373
2,073
4,119
474,221
641,000
963,321
23,568
21,694
545,050
70,704 2,941,309 2,214,849 5,135,283
820,768 1,430,035 2,742,462
65,082
474,208
320,500
18,250
14,351
67,084
55,478
3,233,131
2,322,395
15,168,112
10,208,414
81
45
43
43
59
65
68
49
1 Shows the movement in leave accruals for the year.
2 Non-monetary benefits for FY2022 is salary continuance insurance.
3 D Harrison has elected to voluntarily defer 50% of the cash component of his FY2022 STI into rights for a 2-year period and 50% into rights for a 3-year period.
4 S McMahon had elected to voluntarily defer 25% of the cash component of his FY2021 STI into rights for a 3-year period.
5 R Proutt has elected to voluntarily defer 50% of the cash component of his FY2022 STI into rights for a 3-year period; in FY2021 he had elected to defer 100% of the cash
component of his FY2021 STI into rights for a 3-year period
6 Includes voluntarily deferred cash STI, mandatory security based STI and Securities options and performance rights.
7 The amounts included in the table above reflect the fair value of the mandatory deferred and voluntary deferred STI awards at the respective grant dates rather than the
June VWAP (‘face value’) used for allocation purposes. Total STI awards in FY22, based on allocation date, for each reported executive was: D. Harrison $3,375,000, S.
McMahon $1,387,500, R. Proutt $1,297,500.
7.2 Key terms of employment
The remuneration and other terms of employment for Reported Executives are formalised in employment contracts. Each of these
contracts provides for participation in the Group’s STI and LTI programs and payment of other benefits.
All Reported Executives’ contracts are ongoing in duration. The notice period for the Managing Director and Other Reported Executives
are summarised below:
Position
Name
Managing Director
David Harrison2
Other Reported Executives
Sean McMahon
Russell Proutt
Chief Investment Officer
Chief Financial Officer
Managing Director and Group CEO
Minimum Notice Period1
Employee Charter Hall
6 months
12 months
6 months
6 months
6 months
6 months
Directors’ report
For the year ended 30 June 2022
8. Non-Executive Director Remuneration
Policy
The Committee makes recommendations to the Board on the total level of remuneration of the Chair and
other Non-Executive Directors, including any additional fees payable to Directors for membership of Board
committees.
Benchmarking
Fees are set by reference to the following considerations:
(cid:3013)
(cid:3013)
(cid:3013)
(cid:3013)
industry practice and best principles of corporate governance;
responsibilities and risks attaching to the role of NEDs;
the time commitment expected of NEDs on Group matters; and
reference to fees paid to NEDs of other comparable companies.
NED fees are periodically reviewed and benchmarked against the market to ensure they remain in line with
general industry practice and reflect proper compensation for duties undertaken.
Fee framework
NED fees, including committee fees, are set by the Board within the aggregate amount of $2.0 million per
annum as approved by securityholders at the AGM in November 2021.
Under the current framework, NEDs, other than the Chair receive (inclusive of superannuation):
(cid:3013) Board base fee; and
(cid:3013) Committee fees.
The Chair receives an all-inclusive fee.
NEDs are also entitled to be reimbursed for all business-related expenses, including travel on Charter Hall
business, incurred in the discharge of their duties in accordance with Charter Hall’s Constitution.
In accordance with principles of good corporate governance, NEDs do not receive any benefits upon
retirement under any retirement benefits schemes (other than statutory superannuation) and NEDs are not
eligible to participate in any of Charter Hall’s employee incentive schemes.
Remuneration
outcomes
The Chair ,member and committee fees were increased in FY2022. Further details are outlined in section
8.1 below.
Minimum
shareholding
requirement
During FY2022, the Board reviewed the Minimum Charter Hall Securityholding Requirements for Non-
Executive Directors.
NEDs are now required to hold a minimum of 100% of annual base director fees, excluding Committee
membership fees (up from $90,000 and approximately 50% of annual Director fees) in CHC securities within
three years of appointment as a NED or from the date of this policy, whichever is the later and maintain it on
an on-going basis.
The value of securities for determining compliance is the higher of cost or market value.
1 No notice period is required for termination by the Company for serious or wilful misconduct by the employee.
2 Where the Managing Director gives notice of his cessation of employment, he is entitled to a restraint payment of a maximum of six month equivalent fixed remuneration
so long as he complies with the terms of his employment agreement for the period of six months following his cessation.
Other than as described above, the Reported Executives’ contracts do not provide for any termination benefits aside from payment in
lieu of notice (where applicable).
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Charter Hall Group Directors' Report 2022
Directors' Report
Directors’ report
For the year ended 30 June 2022
8.1 Changes to NED Fees and Maximum Aggregate NED Fee Pool
As was outlined in the FY2021 Remuneration Report, NED fees were last independently reviewed relative to market five years ago.
Since then Charter Hall’s market capitalisation had increased by 182% from $2.56 billion (as at 30 June 2017) to $7.23 billion (as at 30
June 2021) and the Group’s FUM had increased by 164% from $19.8 billion (as at 30 June 2017) to $52.3 billion (as at 30 June 2021).
This growth increased the operational intensity, accountability (both legal and financial) and the responsibilities of Board members
towards securityholders. Accordingly, EY were engaged to provide current market benchmarking data in relation to NED Board and
Committee fees to assist with a review to align NED fees with market for comparable companies. This review took into account the
Group’s current market capitalisation, FUM, business complexity and intensity.
A summary of the NED fees in FY2021 and the increased fees in FY2022 based upon the independent market benchmarking data
review undertaken are set out below.
2022
$
2021
$
393,600
157,590
465,000
175,000
Summary of fee framework per annum
Board
Chair
Member
Audit Risk and Compliance Committee
Chair
Member
Remuneration and Human Resources Committee
Chair
Member
Nomination Committee
Chair
Member
Investment Committee
Chair
Member
Again, as was noted in the FY2021 Remuneration Report, a review of the maximum aggregate NED fee pool was undertaken relative
to comparable companies. The maximum aggregate NED fee pool approved by securityholders at the 2017 AGM was $1.7 million. Due
to the increase in NED fees to take effect in FY2022 and to allow for future increases and the potential for an additional NED, it was
recommended that the maximum aggregate NED fee pool of $1.7 million be increased to $2.0 million. Securityholders approved this
increase at the 2021 AGM.
42,025
21,010
31,515
15,755
15,755
10,505
3,150
3,150
55,000
25,000
40,000
18,500
17,000
12,000
5,000
5,000
8.2 Statutory NED Remuneration for FY2022
Non-Executive Director remuneration
Non-Executive Directors
D Clarke
A Brennan1
P Garling AM2
K Moses
D Ross
G Paramor AO3
J Chow
Total
2022 fees
2021 fees
$ $
465,000
–
79,180
253,500
252,000
208,682
200,000
1,458,362
393,600
189,998
192,250
203,554
196,421
187,791
65,454
1,429,068
1
2
3
Anne Brennan retired from the Board effective 31 May 2021.
Philip Garling AM retired from the Board effective 11 November 2021.
Greg Paramor AO was appointed to the Nomination Committee effective 11 November 2021 in addition to his current Committee memberships.
Directors’ report
For the year ended 30 June 2022
9. Additional Disclosures
9.1 Securityholdings
Key management personnel securityholdings
Name
Directors of Charter Hall Limited
Ordinary stapled securities
D Clarke
P Garling AM1
K Moses
D Ross
G Paramor AO
J Chow
Managing Director
D Harrison
Other Reported Executives
S McMahon
R Proutt
Opening
balance at
1 Jul 2021
Stapled
securities
acquired
Rights and
options
exercised
Stapled
securities
sold
Closing
balance at
30 Jun 2022
45,875
18,351
23,137
10,000
14,300
500
4,000
–
–
–
–
5,000
–
–
–
–
–
–
–
–
–
–
–
–
49,875
–
23,137
10,000
14,300
5,500
1,413,463
–
378,679
(369,105)
1,423,037
312,293
178,160
100,763
–
131,844
134,485
(83,557)
(137,977)
461,343
174,668
1 Philip Garling AM retired from the Board effective 11 November 2021
9.2 Performance Rights and Option Plan details
Performance rights and service rights outstanding under the PROP
Performance rights
Financial year of grant
2020
2021
2022
2022
Total performance rights outstanding
Securities
660,969
795,147
753,826
5,000,000
7,209,942
Exercise price
Nil
Nil
Nil
Nil
Vesting conditions
OEPS and relative performance criteria
OEPS and relative performance criteria
OEPS and relative performance criteria
Performance conditions
Service rights
Financial year of grant
2020
2021
2021
2021
2022
2022
Total service rights issued
10. Appendix
Securities
320,000
109,928
672,282
100,000
156,280
319,650
1,678,140
Exercise price
Nil
Nil
Nil
Nil
Nil
Nil
Vesting conditions
Service Conditions
Service conditions - Deferred STI
Voluntary Deferred STI
Service Conditions
Service conditions - Deferred STI
Voluntary Deferred STI
Valuation model
The Black-Scholes-Merton methodology which discounts for dividends/distributions foregone (there is no discount for market risk) is
used for allocation purposes for all rights and accounting purposes for non-market based performance rights. The Monte Carlo method
is used for accounting purposes for market based performance rights. The accounting value determined using a Monte Carlo
simulation valuation is in accordance with AASB 2.
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Directors' Report
Directors’ report
For the year ended 30 June 2022
10. Appendix
Reported Executive rights – details by plan
Rights
Rights vested and
exercised
during
the year
granted
during
the year
Rights held
at 1 July
2021
Rights
forfeited Rights held
at 30 June
2022
during
the year
Fair value
per right
at grant
date ($)
Grant
date
Vesting
date
Fair value
to be
expensed
in future
years ($)1
304,238
113,706
113,705
265,737
-
-
-
-
- 905,776
- 218,594
-
-
-
-
-
25,692
25,692
33,980
40,461
40,461
84,918
91,263
-
-
98,287
33,917
33,916
79,264
-
-
-
-
- 372,374
67,400
-
-
14,161
-
19,396
-
19,396
-
40,708
12,781
-
12,316
-
12,316
-
104,689
-
35,633
-
35,633
-
83,276
-
63,028
-
- 348,220
-
-
-
-
-
45,574
10,979
10,979
12,506
17,290
17,290
36,288
38,999
-
-
-
304,238
-
-
-
-
-
33,980
40,461
-
-
-
-
-
98,287
-
-
-
-
-
14,161
19,396
-
-
-
-
-
104,689
-
-
-
-
-
12,506
17,290
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 28-Nov-18
25-Nov-19
25-Nov-19
26-Nov-20
11-Nov-21
14-Dec-21
01-Jul-19
01-Jul-20
01-Jul-20
01-Jul-20
01-Jul-20
27-Jul-21
27-Jul-21
113,706
113,705
265,737
905,776
218,594
-
-
40,461
84,918
91,263
25,692
25,692
- 28-Nov-18
25-Nov-19
25-Nov-19
26-Nov-20
11-Sep-21
14-Dec-21
01-Jul-19
01-Jul-20
01-Jul-20
01-Jul-20
27-Jul-21
27-Jul-21
27-Jul-21
33,917
33,916
79,264
372,374
67,400
-
-
19,396
40,708
12,781
12,316
12,316
- 28-Nov-18
25-Nov-19
25-Nov-19
26-Nov-20
14-Dec-21
11-Sep-21
01-Jul-19
01-Jul-20
01-Jul-20
01-Jul-20
01-Jul-20
27-Jul-21
27-Jul-21
27-Jul-21
35,633
35,633
83,276
63,028
348,220
-
-
17,290
36,288
38,999
45,574
10,979
10,979
5.09
7.10
7.01
10.33
5.86
18.52
10.36
9.44
9.10
8.83
8.22
15.63
15.27
5.09
7.10
7.01
10.33
4.58
18.52
10.36
9.44
9.10
8.83
14.91
15.63
15.27
5.09
7.10
7.01
10.33
18.52
4.58
10.36
9.44
9.10
8.83
8.22
14.91
15.63
15.27
31-Aug-21
42,530
31-Aug-22
31-Aug-23
222,807
31-Aug-24 1,426,815
31-Aug-26 4,278,890
31-Aug-25 3,074,814
-
31-Aug-21
-
31-Aug-21
-
31-Aug-22
-
31-Aug-23
-
31-Aug-25
-
31-Aug-22
-
31-Aug-23
31-Aug-21
12,686
31-Aug-22
66,459
31-Aug-23
425,590
31-Aug-24
31-Aug-26 1,374,857
948,070
31-Aug-25
-
31-Aug-21
-
31-Aug-21
-
31-Aug-22
-
31-Aug-23
-
31-Aug-24
-
31-Aug-22
-
31-Aug-23
31-Aug-21
31-Aug-22
13,328
31-Aug-23
69,824
31-Aug-24
447,131
886,572
31-Aug-25
31-Aug-26 1,285,677
-
31-Aug-21
-
31-Aug-21
-
31-Aug-22
-
31-Aug-23
-
31-Aug-25
-
31-Aug-24
-
31-Aug-22
-
31-Aug-23
Type of equity
Managing Director
D Harrison
LTI Performance Rights
LTI Performance Rights
LTI Performance Rights
LTI Performance Rights
ROP Performance Rights
LTI Performance Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
Other Reported Executives
S McMahon
LTI Performance Rights
LTI Performance Rights
LTI Performance Rights
LTI Performance Rights
ROP Performance Rights
LTI Performance Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
R Proutt
LTI Performance Rights
LTI Performance Rights
LTI Performance Rights
LTI Performance Rights
LTI Performance Rights
ROP Performance Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
STI Deferred Service Rights
Directors’ report
For the year ended 30 June 2022
Directors’ report – continued
Indemnification and insurance of directors, officers and auditor
During the year, the Charter Hall Group contributed to the premium for a contract insuring all directors, secretaries, executive officers
and officers of the Charter Hall Group and of each related body corporate of the Group, with the balance of the premium paid by funds
managed by members of the Charter Hall Group. The insurance does not provide any cover for the independent auditor of the Charter
Hall Group or of a related party of the Charter Hall Group. In accordance with usual commercial practice, the insurance contract
prohibits disclosure of details of the nature of the liabilities covered by the insurance, the limit of indemnity and the amount of the
premium paid under the contract.
So long as the officers of the Responsible Entity act in accordance with the Charter Hall Property Trust’s constitution and the
Corporations Act 2001, the officers are indemnified out of the assets of the Charter Hall Property Trust against losses incurred while
acting on behalf of the Charter Hall Property Trust. The Charter Hall Group indemnifies the auditor (PricewaterhouseCoopers Australia)
against any liability (including legal costs) for third party claims arising from a breach by the Charter Hall Group of the auditor’s
engagement terms, except where prohibited by the Corporations Act 2001.
Non-audit services
The Company may decide to employ the auditor on assignments additional to its statutory audit duties where the auditor's expertise
and experience with the Group are important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for non-audit services provided during the year are set
out below.
The Board of Directors has considered the position and, in accordance with the advice received from the Audit, Risk and Compliance
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, as set out
below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
(cid:3013) all non-audit services have been reviewed by the Audit, Risk and Compliance Committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
(cid:3013) none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
During the year, the following fees were paid for non-audit services provided by the auditor and its related practices by the Charter Hall
Group and Charter Hall Property Trust Group:
PricewaterhouseCoopers – Australian Firm
Taxation services
PricewaterhouseCoopers – New Zealand Firm
Taxation services for DLWF
Total remuneration for taxation services
Other services
PricewaterhouseCoopers – Australian Firm
Other assurance services
Total remuneration for other services
Total remuneration for non-audit services
Charter Hall Group
2022
$
2021
$
Charter Hall Property
Trust Group
2022
$
2021
$
144,800
9,300
6,569
151,369
1,472
10,772
18,150
18,150
169,519
–
–
10,772
–
6,569
6,569
–
–
6,569
–
1,472
1,472
–
–
1,472
1 The maximum value of the grants yet to vest is the fair value amount at the grant date yet to be reflected in the Group's consolidated income statement. The minimum
future value is $nil as the future performance and service conditions may not be met.
11. Other Transactions with KMP
There were no loans made, guaranteed or secured, directly or indirectly, by the Company and any of its subsidiaries to KMP or their
related parties during the year. There were no other transactions between the Company or any of its subsidiaries and any KMP or their
related parties during the year.
80
38
39
Directors’ Report and Financial Report | 81
Charter Hall Group 2022 Annual Report
Charter Hall Group Directors' Report 2022
Charter Hall Group Financial Report 2022
Auditor’s independence declaration
Auditor’s independence declaration
Directors’ report
For the year ended 30 June 2022
Environmental regulation
The Charter Hall Group recognises that sustainability is more
than protecting the natural environment; it is about responding to
the needs of our customers, achieving our long-term commercial
goals and working in partnership with our stakeholders to improve
environmental and social outcomes.
The Board has oversight of our sustainability strategy, policies,
risks and opportunities, including our approach to climate change
and the integration of ESG into our systems. Our Group
Sustainability Policy outlines our commitments to achieving a
sustainable future and can be found at:
https://www.charterhall.com.au/About-Us/corporate-
governance/corporate-governance-charter-hall-group.
The Group has processes in place to comply with applicable
environmental standards and regulations. The Group reports its
greenhouse gas emissions and energy use on an annual basis
under the National Greenhouse and Energy Reporting Act 2007.
The Group is actively addressing and managing environmental
impacts to achieve the following commitments:
(cid:16) Net Zero Scope 1 and 2 emissions by 2030
(cid:16)
100% Renewable Electricity by 2025
(cid:16)
50% diversion of waste from landfill by 2025
(cid:16)
4.5 Star National Australian Built Environment Rating System
(NABERS) Water weighted average portfolio rating for Office
and Retail by 2030
5 Star NABERS Energy weighted average portfolio rating for
Office by 2025
4.5 Star NABERS Energy weighted average portfolio rating
for Retail by 2025
(cid:16)
(cid:16)
Charter Hall has a demonstrated track record in using
independent rating tools to benchmark and measure operational
performance of its property portfolios, including Green Star,
NABERS and WELL.
Charter Hall voluntarily reports annually to international
organisations, such as the United Nations Principles for
Responsible Investment (PRI), Dow Jones Sustainability Index
(DJSI), and Global Real Estate Sustainability Benchmark
(GRESB). This year, the Group responded to the DJSI Reports
for the CHC and GRESB Real Estate Asset Reports for CQR,
RP1, RP2, RP6, CPRF, CPOF, DOF, CHOT, PFA, BSWF,
CHAIT, CCT, DIF4, DVP, 201E, CTT, 1BT, CLW, CHPIP, CPIF,
CPRF, CLP, DLWF and LWHP and GRESB Public Disclosure
Statements for CLW, CQR, CHC, and CQE.
Labour practices
Charter Hall Group became a signatory to the UN Global
Compact on 8 March 2019. Charter Hall’s Human Rights Policy
and Supplier Code of Conduct can be found at
https://www.charterhall.com.au/About-Us/corporate-
governance/corporate-governance-charter-hall-group. These
documents outline our commitment to manage our operations in
line with the UN Guiding Principles, the UN Global Compact and
international and Australian Modern Slavery legislation, reflecting
82
Auditor’s independence declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Charter Hall Limited and its controlled entities and Charter Hall
Property Trust and its controlled entities (together “Charter Hall Group”) and Charter Hall Property
Trust and its controlled entities (together “Charter Hall Property Trust Group”) for the year ended 30
June 2022, 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 Charter Hall Limited and its controlled entities and Charter Hall
Property Trust and its controlled entities (together “Charter Hall Group”) and Charter Hall Property
Trust and its controlled entities (together “Charter Hall Property Trust Group”) and the entities it
controlled during the period.
E A Barron
Partner
PricewaterhouseCoopers
Sydney
25 August 2022
both our business needs and the expectations of our customers
and key stakeholders.
Tax Governance Statement
Charter Hall Group has adopted the Board of Taxation's Tax
Transparency Code (TTC) at 30 June 2017. As part of the TTC,
Charter Hall has published a Tax Governance Statement (TGS)
which details Charter Hall Group’s corporate structure and tax
corporate governance systems. Charter Hall Group’s TGS can be
found on our website at https://www.charterhall.com.au/about-
us/corporate-governance/corporate-governance-charter-hall-
group.
Proceedings on behalf of the Company
Section 237 of the Corporations Act 2001 allows for a person to
apply to the Court to bring proceedings on behalf of the
Company, or to intervene in any proceedings to which the
Company is a party, in certain circumstances.
No person has made such an application and no proceedings
have been brought or intervened in on behalf of the Company
with the Court.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required
under section 307C of the Corporations Act 2001 is set out on
page 83.
Rounding of amounts
The Company and the Trust is of a kind referred to in ASIC
Corporations Instrument (Rounding in Financial/Directors’
Reports) 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 that instrument to the nearest
hundred thousand dollars, or in certain cases, to the nearest
dollar.
Directors’ authorisation
The Directors’ Report is made in accordance with a resolution of
the Directors. The Financial Statements were authorised for issue
by the Directors on 25 August 2022. The Directors have the
power to amend and re-issue the Financial Statements.
David Clarke
Chair
Sydney
25 August 2022
40
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000, GPO BOX 2650 Sydney NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
41
Directors’ Report and Financial Report | 83
Charter Hall Group 2022 Annual Report Consolidated statements of comprehensive income
Consolidated statements of comprehensive income
For the year ended 30 June 2022
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Consolidated statements of comprehensive income continued
For the year ended 30 June 2022
Consolidated statements of comprehensive income
Income
Revenue
Share of net profit from equity accounted investments
method
Net gain on sale of investments
Other net fair value adjustments
Total income
Expenses
Employee costs
Development costs
Administration and other expenses
Finance costs
Depreciation, amortisation and impairment
Net loss on sale of investments
Other net losses
Total expenses
Profit before tax
Income tax expense
Profit for the year
Profit for the year attributable to:
Equity holders of Charter Hall Limited
Equity holders of Charter Hall Property Trust
(non-controlling interest)
Profit attributable to stapled securityholders of
Charter Hall Group
Net profit attributable to other non-controlling interests
Profit for the year
Charter Hall Group
2022
$'m
2021
$'m
Note
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
4
1,098.3
668.0
28.1
26.7
2,3
5
5
5
6
18
544.9
0.3
23.2
1,666.7
(181.5)
(299.0)
(37.2)
(15.0)
(27.6)
–
–
(560.3)
1,106.4
(179.4)
927.0
407.3
503.8
911.1
15.9
927.0
314.0
0.4
29.0
1,011.4
(148.0)
(245.5)
(31.0)
(9.9)
(16.2)
–
(2.6)
(453.2)
558.2
(62.6)
495.6
166.3
310.5
476.8
18.8
495.6
509.2
–
4.6
541.9
–
–
(6.8)
(13.8)
–
(1.6)
–
(22.2)
519.7
–
519.7
–
503.8
503.8
15.9
519.7
297.1
0.4
29.0
353.2
–
–
(7.4)
(9.6)
(6.9)
–
–
(23.9)
329.3
–
329.3
–
310.5
310.5
18.8
329.3
Profit for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Changes in the fair value of cash flow hedges
Other comprehensive income/(loss) for the year
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Equity holders of Charter Hall Limited
Equity holders of Charter Hall Property Trust
(non-controlling interest)
Total comprehensive income attributable to stapled
securityholders of Charter Hall Group
Total comprehensive income attributable to other non-controlling
interests
Total comprehensive income for the year
Basic earnings per security (cents) attributable to:
Equity holders of Charter Hall Limited
Equity holders of Charter Hall Property Trust
(non-controlling interest)
Basic earnings per stapled security (cents) attributable to
stapled securityholders of Charter Hall Group
Diluted earnings per security (cents) attributable to:
Equity holders of Charter Hall Limited
Equity holders of Charter Hall Property Trust
(non-controlling interest)
Diluted earnings per stapled security (cents) attributable to
stapled securityholders of Charter Hall Group
Charter Hall Group
Note
18
2022
$'m
927.0
(0.5)
5.1
4.6
931.6
407.3
508.4
915.7
15.9
931.6
86.8
107.3
Charter Hall Property
Trust Group
2022
$'m
519.7
2021
$'m
329.3
(0.5)
5.1
4.6
524.3
0.1
(4.4)
(4.3)
325.0
–
–
2021
$'m
495.6
0.1
(4.4)
(4.3)
491.3
166.3
306.2
508.4
306.2
472.5
508.4
306.2
18.8
491.3
15.9
524.3
18.8
325.0
35.7
n/a
66.7
107.3
n/a
n/a
n/a
66.7
n/a
n/a
8(a)
194.1
102.4
35.4
85.4
105.6
66.1
105.6
66.1
8(b)
191.0
101.5
n/a
n/a
The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.
84
42
43
Directors’ Report and Financial Report | 85
Charter Hall Group 2022 Annual Report
Consolidated balance sheet
Consolidated balance sheets
As at 30 June 2022
Charter Hall Group Financial Report 2022
Consolidated statement of changes in equity - Charter Hall Group
Consolidated statement of changes in equity – Charter Hall Group
For the year ended 30 June 2022
Charter Hall Group Financial Report 2022
Consolidated statement of changes in equity - Charter Hall Group
Assets
Current assets
Cash and cash equivalents
Receivables and other assets
Development assets
Derivative financial instruments
Assets classified as held for sale
Total current assets
Non-current assets
Receivables and other assets
Derivative financial instruments
Financial assets at fair value through profit or loss
Investments in associates at fair value through profit or loss
Development assets
Investments accounted for using the equity method
Investment properties
Intangible assets
Property, plant and equipment
Right-of-use assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other liabilities
Development liabilities
Current tax liabilities
Lease liabilities
Total current liabilities
Non-current liabilities
Trade and other liabilities
Derivative financial instruments
Borrowings
Development liabilities
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Equity holders of Charter Hall Limited
Contributed equity
Reserves
Accumulated profit
Parent entity interest
Equity holders of Charter Hall Property Trust
Contributed equity
Reserves
Accumulated profit
Equity holders of Charter Hall Property Trust
(non-controlling interest)
Other non-controlling interests
Total equity
Charter Hall Group
Note
9
15
9
15
2
2,3
10
11
13
13
15
14
12
16(a)
17
16(a)
17
18
2022
$'m
594.7
115.4
35.0
4.2
79.0
828.3
3.4
41.9
20.0
42.4
73.6
3,033.1
–
114.0
15.1
20.8
3,364.3
4,192.6
257.4
5.1
71.2
6.9
340.6
4.7
40.0
453.9
15.9
19.5
28.3
562.3
902.9
3,289.7
314.8
(13.3)
524.1
825.6
1,538.0
3.1
879.8
2,420.9
43.2
3,289.7
2021
$'m
351.9
119.3
0.4
4.4
23.1
499.1
5.9
30.5
–
46.2
49.8
2,321.6
193.2
114.7
14.4
9.3
2,785.6
3,284.7
168.1
1.4
17.6
4.5
191.6
3.8
–
549.2
–
10.7
18.3
582.0
773.6
2,511.1
290.8
(22.1)
199.1
467.8
1,426.0
(1.5)
481.3
1,905.8
137.5
2,511.1
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
53.4
53.1
–
4.2
79.0
189.7
–
21.9
20.0
42.4
–
2,750.1
–
–
–
–
2,834.4
3,024.1
66.1
–
–
–
66.1
–
40.0
453.9
–
–
–
493.9
560.0
2,464.1
–
–
–
–
1,538.0
3.1
879.8
2,420.9
43.2
2,464.1
71.3
42.9
–
4.4
23.1
141.7
12.3
30.5
–
46.2
–
2,234.6
193.2
–
–
–
2,516.8
2,658.5
66.0
–
–
–
66.0
–
–
549.2
–
–
–
549.2
615.2
2,043.3
–
–
–
–
1,426.0
(1.5)
481.3
1,905.8
137.5
2,043.3
The above consolidated balance sheets should be read in conjunction with the accompanying notes.
Note
Balance at 1 July 2020
Change in accounting policy
Adjusted balance at 1 July 2020
Profit for the year
Other comprehensive loss
Total comprehensive income
Transactions with equity holders in their
capacity as equity holders:
Contributions of equity, net of issue costs
Buyback and issuance of securities for
exercised performance rights
Tax recognised direct to equity
Transfer due to deferred compensation payable
in service rights
Security-based benefit expense
Dividend/distribution provided for or paid
Transactions with non-controlling interests
Balance at 30 June 2021
Balance at 1 July 2021
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with equity holders in their
capacity as equity holders:
Contributions of equity, net of issue costs
Buyback and issuance of securities for
exercised performance rights
Tax recognised direct to equity
Transfer due to deferred compensation payable
in service rights
Security-based benefit expense
Dividend/distribution provided for or paid
Transactions with non-controlling interests
Loss of control of subsidiary
Balance at 30 June 2022
6(c)
7
6(c)
7
18
Attributable to the owners of
Charter Hall Limited
Charter Hall
Group
Contributed
Accumulated
equity Reserves profit/(losses)
$'m
$'m
108.2
(33.3)
(4.8)
–
103.4
(33.3)
166.3
–
–
–
166.3
–
$'m
289.1
–
289.1
–
–
–
–
(2.3)
4.0
–
–
–
–
1.7
290.8
–
(7.3)
1.2
10.3
7.0
–
–
11.2
(22.1)
–
–
–
–
–
(70.6)
–
(70.6)
199.1
Non-
controlling
interest
$'m
1,781.7
–
1,781.7
329.3
(4.3)
325.0
58.6
(10.8)
–
–
–
(110.8)
(0.4)
(63.4)
2,043.3
Total
$'m
364.0
(4.8)
359.2
166.3
–
166.3
–
(9.6)
5.2
10.3
7.0
(70.6)
–
(57.7)
467.8
Total
equity
$'m
2,145.7
(4.8)
2,140.9
495.6
(4.3)
491.3
58.6
(20.4)
5.2
10.3
7.0
(181.4)
(0.4)
(121.1)
2,511.1
290.8
(22.1)
199.1
467.8
2,043.3
2,511.1
–
–
–
22.1
(3.7)
5.6
–
–
–
–
–
24.0
314.8
–
–
–
–
(9.5)
(2.3)
8.2
12.4
–
–
–
8.8
(13.3)
407.3
–
407.3
407.3
–
407.3
519.7
4.6
524.3
927.0
4.6
931.6
–
–
–
–
–
(82.3)
–
–
(82.3)
524.1
22.1
273.2
295.3
(13.2)
3.3
8.2
12.4
(82.3)
–
–
(49.5)
825.6
(15.2)
–
–
–
(111.1)
(0.9)
(249.5)
(103.5)
2,464.1
(28.4)
3.3
8.2
12.4
(193.4)
(0.9)
(249.5)
(153.0)
3,289.7
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
86
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Directors’ Report and Financial Report | 87
Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Consolidated statement of changes in equity - Charter Hall Property Trust Group
Consolidated statement of changes in equity – Charter Hall Property Trust Group
For the year ended 30 June 2022
Consolidated cash flow statement
Consolidated cash flow statements
For the year ended 30 June 2022
Charter Hall Group Financial Report 2022
Consolidated cash flow statement
Attributable to the owners of the
Charter Hall Property Trust Group
Note
Contributed
Accumulated
equity Reserves profit/(losses)
$'m
$'m
276.6
2.8
310.5
–
–
(4.3)
310.5
(4.3)
$'m
1,436.8
–
–
–
Non-
controlling
interest
$'m
65.5
18.8
–
18.8
Total
$'m
1,716.2
310.5
(4.3)
306.2
Total
equity
$'m
1,781.7
329.3
(4.3)
325.0
–
(10.8)
–
–
(10.8)
1,426.0
1,426.0
–
–
–
127.2
(15.2)
–
–
–
112.0
1,538.0
7
7
18
–
–
–
–
–
(1.5)
(1.5)
–
4.6
4.6
–
–
–
–
–
–
3.1
–
–
58.6
58.6
–
(105.8)
–
(105.8)
481.3
481.3
503.8
–
503.8
(10.8)
(105.8)
–
(116.6)
1,905.8
1,905.8
503.8
4.6
508.4
–
(5.0)
(0.4)
53.2
137.5
137.5
15.9
–
15.9
(10.8)
(110.8)
(0.4)
(63.4)
2,043.3
2,043.3
519.7
4.6
524.3
–
127.2
146.0
273.2
–
(106.1)
–
0.8
(105.3)
879.8
(15.2)
(106.1)
–
0.8
6.7
2,420.9
–
(5.0)
(0.9)
(250.3)
(110.2)
43.2
(15.2)
(111.1)
(0.9)
(249.5)
(103.5)
2,464.1
Balance at 1 July 2020
Profit for the year
Other comprehensive loss
Total comprehensive income/(loss)
Transactions with equity holders in their
capacity as equity holders:
Contributions of equity, net of issue costs
Buyback and issuance of securities for
exercised performance rights
Dividend/distribution provided for or paid
Transactions with non-controlling interests
Balance at 30 June 2021
Balance at 1 July 2021
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with equity holders in their
capacity as equity holders:
Contributions of equity, net of issue costs
Buyback and issuance of securities for
exercised performance rights
Dividend/distribution provided for or paid
Transactions with non-controlling interests
Loss of control of subsidiary
Balance at 30 June 2022
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Note
20
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Tax paid
Interest received
Interest paid
Distributions and dividends from investments
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment (net of lease
incentive received)
Proceeds on disposal of investment properties
Payments for investment properties
Investments in associates, joint ventures and financial assets
Proceeds on disposal and return of capital from
investments in associates and joint ventures
Loans to associates, joint ventures and related parties
Repayments of loans from associates, joint ventures and related
parties
Proceeds from sale of DLWF net of cash
Net cash outflow from investing activities
Buy back of stapled securities
Borrowing costs paid
Proceeds from borrowings (net of borrowing costs)
Repayment of borrowings
Payment for settlement of derivatives
Principal elements of lease payments
Proceeds on disposal of partial interest in a subsidiary that does
not involve loss of control
Distributions to non-controlling interests
Dividends/distributions paid to stapled securityholders
Net cash inflow/(outflow) from financing activities
Net increase/(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
Charter Hall Group
2022
$'m
1,186.2
(571.6)
(112.7)
1.8
(12.3)
112.4
603.8
(11.1)
21.3
(154.3)
(407.5)
143.8
–
–
49.3
(358.5)
–
(1.2)
126.2
(82.0)
–
(4.4)
145.2
(4.8)
(181.5)
(2.5)
242.8
351.9
594.7
2021
$'m
700.5
(497.1)
(75.1)
1.0
(7.8)
104.1
225.6
(5.6)
–
(22.7)
(557.7)
401.5
(1.7)
5.9
–
(180.3)
(20.5)
(1.7)
269.0
(45.5)
(8.3)
(3.3)
54.3
(5.0)
(171.3)
67.7
113.0
238.9
351.9
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
10.7
(4.1)
–
1.0
(11.9)
99.5
95.2
–
21.3
(154.3)
(360.7)
133.2
(143.1)
265.6
49.3
(188.7)
–
(2.2)
126.2
(82.0)
–
–
145.2
(4.8)
(106.8)
75.6
(17.9)
71.3
53.4
28.5
(10.9)
0.4
0.1
(7.1)
98.7
109.7
–
–
(22.7)
(553.2)
391.7
(612.5)
587.3
–
(209.4)
(16.7)
(1.7)
269.0
(45.5)
(8.3)
(0.1)
54.3
(5.0)
(87.7)
158.3
58.6
12.7
71.3
The above consolidated cash flow statements should be read in conjunction with the accompanying notes.
88
46
47
Directors’ Report and Financial Report | 89
Charter Hall Group 2022 Annual Report
Notes to the consolidated financial statements
Notes to the consolidated financial statements
For the year ended 30 June 2022
Charter Hall Group Financial Report 2022
The notes to these consolidated financial statements include additional information to assist the reader in understanding the
operations, performance and financial position of the Charter Hall Group and the Charter Hall Property Trust Group.
Critical accounting estimates and judgements
The preparation of the consolidated financial statements in conformity with Australian Accounting Standards requires the use of certain
critical accounting estimates and judgements in the process of applying accounting policies.
Estimates and judgements are continually evaluated and are based on experience and other factors, including expectations of future
events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. The estimates or
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are described
in their respective notes:
(cid:3013) Note 2
(cid:3013) Note 3
(cid:3013) Note 4
(cid:3013) Note 11
(cid:3013) Note 22(d)
(cid:3013) Note 24
Investments in associates
Investments in joint ventures
Revenue
Intangible assets
Valuation techniques used to derive Level 3 fair values
Controlled entities
The Group has assessed the ongoing impact of the COVID-19 pandemic in preparing its financial statements, considering critical
estimates and judgements applied in the measurement of the Group’s assets and liabilities, and impacts on its business operations.
The Group’s strategic focus on resilient property investments and funds management revenue streams has contributed to the COVID-
19 pandemic continuing to have no identifiable material adverse impact on the Group’s financial result.
Further disclosure is included in the following notes;
Investments in associates Note 2(b);
(cid:3013)
(cid:3013) Revenue Note 4(a);
(cid:3013)
(cid:3013) Fair value measurement Note 22(d).
Intangibles Note 11(b); and
1 Segment information
(a) Description of segments
Charter Hall Group
The operating segments disclosed are based on the reports reviewed by the Board to make strategic decisions. The Board is
responsible for allocating resources and assessing performance of the operating segments.
Operating earnings is a financial measure which represents statutory profit after tax adjusted for the items in Note 1(c). Operating
earnings is the primary measure of the Group’s underlying and recurring earnings. Operating earnings is used by the Board to make
strategic decisions and as a guide to assessing an appropriate distribution to declare.
Net operating expenses excluding costs of sales are primarily related to the Funds Management segment.
The Board has identified the following three reportable segments, the performance of which it monitors separately.
Property investments
This segment comprises investments in property funds.
Development investments
This segment comprises investments in developments.
Funds management
This segment comprises investment management services and property management services.
Charter Hall Property Trust Group
The Board allocates resources and assesses the performance of operating segments for the entire Charter Hall Group. Results are not
separately identified and reported according to the legal structure of the Charter Hall Group and therefore segment information for
CHPT is not prepared or provided to the Board.
Notes to the consolidated financial statements
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
1 Segment information continued
(b) Operating segments
The operating segments reported to the Board for the year ended 30 June 2022 are as follows:
Property investment segment earnings
Development Investment
Development investment revenue
Development costs
Other
Total development investment segment earnings
Funds management
Investment management revenue
Property services revenue
Total funds management segment revenue
Total segment income
Net operating expenses
Corporate expenses
EBITDA
Depreciation
Net interest expense
Operating earnings before tax
Income tax expense
Operating earnings attributable to stapled securityholders
Basic weighted average number of securities ('m)
Operating earnings per stapled security (cents)
2022
$'m
142.9
326.3
(299.0)
8.2
35.5
627.2
75.8
703.0
881.4
(109.8)
(41.1)
730.5
(8.8)
(12.7)
709.0
(166.2)
542.8
469.4
115.6
2021
$'m
123.0
275.2
(245.5)
4.5
34.2
254.6
64.9
319.5
476.7
(85.3)
(29.8)
361.6
(7.8)
(8.4)
345.4
(61.1)
284.3
465.8
61.0
Refer to Note 8 for statutory earnings per stapled security figures.
(c) The reconciliation of operating earnings to statutory profit after tax attributable to stapled securityholders is shown
below:
Operating earnings attributable to stapled securityholders
Add: Net fair value movements from investment properties on equity accounted
investments1
Add: Net gain/(loss) on disposal of property investments1
Less: Non-operating income tax benefit/(expense)
Less: Realised and unrealised net gains/(losses) on derivatives1
Less: Impairment of equity accounted investments
Less: Performance fees expense1
Less: Non-operating pursuit recoveries/(costs)
Less: Amortisation of intangibles
Less: Other1
Statutory profit after tax attributable to stapled securityholders
1 Includes the Group's proportionate share of non-operating items of equity accounted investments on a look through basis.
2022
$'m
542.8
355.9
0.3
(13.1)
70.1
(18.5)
(14.4)
1.4
(0.7)
(12.7)
911.1
2021
$'m
284.3
228.0
0.5
(1.5)
7.2
(6.9)
(15.9)
(4.6)
(1.5)
(12.8)
476.8
90
48
49
Directors’ Report and Financial Report | 91
Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
Notes to the consolidated financial statements
For the year ended 30 June 2022
1 Segment information continued
(d) Reconciliation of earnings from the property and development investment segments to the share of net profit of
equity accounted investments
Segment earnings – property investments
Segment earnings – development investments
Segment earnings - funds management
Add: Non-operating equity accounted profit
Less: Development profit
Less: Net rental income
Less: Interest income on development investments
Less: Distributions in operating income
Share of net profit of investments accounted for using the equity method
2022
$'m
142.9
35.5
13.3
191.7
385.9
(27.3)
(1.6)
(0.7)
(3.1)
544.9
2021
$'m
123.0
34.2
–
157.2
191.9
(29.7)
(3.5)
(1.0)
(0.9)
314.0
(e) Reconciliation of funds management earnings stated above to revenue per the statement of comprehensive income
2021
$'m
254.6
64.9
319.5
57.5
275.2
12.9
2.0
0.9
–
668.0
Investment management revenue
Property services revenue
Segment revenue – funds management
Add: recovery of property and fund-related expenses
Add: development revenue
Add: rental income
Add: interest income
Add: distributions received for investments accounted for at fair value
Less: share of associates equity accounted profit
Revenue per statement of comprehensive income
2022
$'m
627.2
75.8
703.0
67.6
326.3
9.7
1.7
3.3
(13.3)
1,098.3
Geographical segments are immaterial as the vast majority of the Group’s income is from Australian sources. Assets and liabilities
have not been reported on a segmented basis as the Board is focused on the consolidated balance sheet.
Notes to the consolidated financial statements
For the year ended 30 June 2022
Investment in associates
2
(a) Carrying amounts
All associates are incorporated and operate in Australia. Refer to Note 32(c) for accounting policy information relating to associates.
Charter Hall Group
Name of entity
Accounted for at fair value through
profit or loss:1
Unlisted
Charter Hall Maxim Property Securities Fund
CH Deep Value AREIT Partnership Trust
Other associates
Equity accounted
Unlisted
Charter Hall Prime Office Fund
Charter Hall Office Trust2
Charter Hall Prime Industrial Fund
Core Logistics Partnership
Charter Hall Exchange Wholesale Trust
Charter Hall AP Fund
Deep Value Partnership
Charter Hall Direct PFA Fund
Charter Hall Direct Office Fund
Other associates
Listed
Charter Hall Retail REIT3
Charter Hall Long WALE REIT4
Charter Hall Social Infrastructure REIT5
Total investments in associates
Principal activity
Ownership interest
Carrying amount
2022
%
2021
%
2022
$'m
2021
$'m
Property investment
Property investment
12.0
13.9
12.5
9.0
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
5.1
15.7
1.4
3.6
4.5
–
10.0
12.2
8.7
10.7
10.7
8.7
5.1
15.7
1.8
4.8
13.9
5.0
11.5
7.9
7.7
10.6
11.3
8.8
23.6
16.4
2.4
42.4
325.6
311.2
120.3
65.3
24.8
–
49.8
205.5
183.7
57.7
27.3
18.5
0.4
46.2
270.6
270.8
118.8
76.2
59.4
39.7
49.0
104.0
141.1
63.2
300.6
470.7
126.4
2,241.6
2,284.0
238.5
369.7
98.9
1,899.9
1,946.1
1 These investments comprise units in certain unlisted Charter Hall managed funds which have been designated at fair value through profit or loss. Changes in fair values
of investments in associates at fair value through profit or loss are recorded in fair value adjustments in the consolidated statement of comprehensive income. Information
about the Charter Hall Group’s material exposure to share and unit price risk is provided in Note 21.
2 The entity has a 31 December balance date.
3 Fair value at the ASX closing price as at 30 June 2022 was $234.1 million (30 June 2021: $230.3 million).
4 Fair value at the ASX closing price as at 30 June 2022 was $329.6 million (30 June 2021: $335.8 million).
5 Fair value at the ASX closing price as at 30 June 2022 was $108.0 million (30 June 2021: $111.2 million).
92
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Directors’ Report and Financial Report | 93
Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
2
Investment in associates continued
2
Investment in associates continued
Notes to the consolidated financial statements
Charter Hall Property Trust Group
Name of entity
Accounted for at fair value through
profit or loss:1
Unlisted
Charter Hall Maxim Property Securities Fund
CH Deep Value AREIT Partnership Trust
Other associates
Equity accounted
Unlisted
Charter Hall Prime Office Fund
Charter Hall Office Trust2
Core Logistics Partnership
Charter Hall Exchange Wholesale Trust
Charter Hall AP Fund
Charter Hall Prime Industrial Fund
Deep Value Partnership
Charter Hall Direct PFA Fund
Charter Hall Direct Office Fund
Other associates
Listed
Charter Hall Retail REIT3
Charter Hall Long WALE REIT4
Charter Hall Social Infrastructure REIT5
Total investments in associates
Principal activity
Ownership interest
Carrying amount
2022
%
2021
%
2022
$'m
2021
$'m
Property investment
Property investment
12.0
13.9
12.5
9.0
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
5.1
15.7
3.6
4.5
–
0.3
10.0
12.2
8.7
10.7
10.7
8.7
4.8
15.7
4.8
13.9
5.0
0.6
11.5
7.9
7.7
10.6
11.3
8.8
23.6
16.4
2.4
42.4
325.6
311.2
65.3
24.8
–
24.9
49.8
205.5
183.7
67.5
27.3
18.5
0.4
46.2
254.0
270.8
76.2
59.4
39.7
37.3
49.0
104.0
141.1
67.4
300.6
470.7
151.3
2,180.9
2,223.3
238.5
369.7
123.8
1,830.9
1,877.1
1 These investments comprise units in certain unlisted Charter Hall managed funds which have been designated at fair value through profit or loss. Changes in fair values
of investments in associates at fair value through profit or loss are recorded in fair value adjustments in the consolidated statement of comprehensive income. Information
about the Charter Hall Property Trust Group’s material exposure to share and unit price risk is provided in Note 21.
2 The entity has a 31 December balance date.
3 Fair value at the ASX closing price as at 30 June 2022 was $234.1 million (30 June 2021: $230.3 million).
4 Fair value at the ASX closing price as at 30 June 2022 was $329.6 million (30 June 2021: $335.8 million).
5 Fair value at the ASX closing price as at 30 June 2022 was $108.0 million (30 June 2021: $111.2 million).
(b) Critical judgements
Investments in associates are accounted for at either fair value through profit or loss or by using the equity method. The Group
designates investments in associates as fair value through profit or loss or equity accounted on a case by case basis taking the
investment strategy into consideration.
Management regularly reviews equity accounted investments for impairment and remeasures investments carried at fair value through
profit or loss by reference to changes in circumstances or contractual arrangements, external independent property valuations and
market conditions, using generally accepted market practices. When a recoverable amount is estimated through a value in use
calculation, critical judgements and estimates are made regarding future cash flows and an appropriate discount rate. When a fair
value is estimated through an earnings valuation, critical judgements and estimates are made in relation to the earnings measure and
appropriate multiple.
Due to the difference in the fair value and carrying amounts, the recoverable amounts for the Charter Hall Long WALE REIT (CLW),
Charter Hall Retail REIT (CQR) and Charter Hall Social Infrastructure REIT (CQE) investments were estimated through a value in use
calculation. This calculation was performed using the share of the present value of the estimated future cash flows expected to be
generated by the associate and used the following assumptions:
(cid:16)
base case cash flow projections covering a 10 year period based on executed lease agreements, CPI estimates and
estimated net market rents;
(cid:16) weighted average investment property discount rates of 5.7% - 6.4%; and
(cid:16)
investment property terminal values calculated using capitalisation rates of 4.6% - 5.7%.
External valuation support for the Investment Property carrying values of underlying listed funds was obtained for more than 94% of the
gross asset values on a look-through basis.
As a result of these estimates, no impairment was recorded.
94
52
If the terminal capitalisation rate assumptions were to increase by 50bps, value in use would decrease by 5-8%.
If the terminal capitalisation rate assumptions were to decrease by 50bps, value in use would increase by 6-9%.
With the potential and uncertain economic impacts of COVID-19, future equity accounted investment values are sensitive to future
property valuations of the underlying investment properties, and could be adversely impacted. The impacts of the estimates and
assumptions for investments in associates are outlined in Note 22(d).
(c) Summarised movements in carrying amounts of associates accounted for at fair value through profit or loss
Opening balance
Investment
Net gain/(loss) on investment in associates at fair value
Return of capital
Closing balance
Charter Hall Group
2022
$'m
46.2
20.6
(9.8)
(14.6)
42.4
2021
$'m
25.9
10.0
10.3
–
46.2
Charter Hall Property
Trust Group
2022
$'m
46.2
20.6
(9.8)
(14.6)
42.4
2021
$'m
25.9
10.0
10.3
–
46.2
(d) Summarised movements in carrying amounts of equity accounted associates
Opening balance
Investment
Share of profit after income tax
Distributions received/receivable
Share of movement in reserves
Impairment of carrying amount
Divestments
Return of Capital
Closing balance
Charter Hall Group
2022
$'m
1,899.9
311.0
419.1
(108.9)
–
–
(279.5)
–
2,241.6
2021
$'m
1,548.6
404.2
263.8
(92.0)
(0.6)
(6.9)
(183.8)
(33.4)
1,899.9
Charter Hall Property
Trust Group
2022
$'m
1,830.9
311.0
404.7
(104.5)
–
–
(261.2)
–
2,180.9
2021
$'m
1,486.9
404.2
249.1
(85.3)
(0.6)
(6.9)
(183.1)
(33.4)
1,830.9
53
Directors’ Report and Financial Report | 95
Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
2
Investment in associates continued
2
Investment in associates continued
Notes to the consolidated financial statements
(e) Summarised financial information for material associates
The tables below provide summarised financial information for the associates that are material to CHC and CHPT. Materiality is
assessed on the investments’ contribution to Group income and net assets. The information presented reflects the amounts in the
financial statements of the associates, not the Group’s proportionate share.
Charter Hall Charter Hall
Charter Hall Charter Hall Prime Office Long WALE
REIT
Office Trust
$'m
$'m
Retail REIT
$'m
Fund
$'m
2022
Summarised balance sheet:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Summarised statement of comprehensive income:
Revenue
Profit for the year from continuing operations
Other comprehensive income/(loss)
Total comprehensive income
2021
Summarised balance sheet:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Summarised statement of comprehensive income:
Revenue
Profit for the year from continuing operations
Other comprehensive loss
Total comprehensive income
34.5
3,841.8
73.9
1,818.2
1,984.2
90.5
339.5
–
339.5
50.6
3,409.0
51.0
1,688.9
1,719.7
100.0
151.8
–
151.8
60.6
3,984.5
121.2
1,069.3
2,854.6
215.7
663.6
1.1
664.7
46.9
3,294.1
113.8
922.0
2,305.2
1,126.5
6,672.2
120.5
1,251.9
6,426.3
336.9
715.9
6.3
722.2
419.7
6,537.4
117.2
1,504.0
5,335.9
191.6
291.2
(5.9)
285.3
345.4
527.8
(4.6)
523.2
50.5
6,431.5
86.1
1,937.7
4,458.2
219.7
911.9
(5.5)
906.4
113.2
4,574.2
71.4
1,336.9
3,279.1
154.6
618.3
(0.4)
617.9
(f) Reconciliation of net assets of associates to carrying amounts of equity accounted investments
Charter Hall Group
2022
Net assets of associate
Group's share in %
Group's share in $
Other movements not accounted for under the equity
method1
Carrying amount
Movements in carrying amounts:
Opening balance
Investment
Share of profit after income tax
Other comprehensive income/(loss)
Distributions received/receivable
Divestment
Closing balance
2021
Net assets of associate
Group's share in %
Group's share in $
Other movements not accounted for under the equity
method1
Carrying amount
Movements in carrying amounts:
Opening balance
Investment
Share of profit after income tax
Other comprehensive income/(loss)
Impairment of carrying amount
Distributions received/receivable
Divestment
Return of capital
Closing balance
Charter Hall Charter Hall
Charter Hall Charter Hall Prime Office Long WALE
REIT
Office Trust
$'m
$'m
Retail REIT
$'m
Fund
$'m
1,984.2
15.7%
311.5
2,854.6
10.7%
305.4
6,426.3
5.1%
327.7
4,458.2
10.7%
477.0
(0.3)
311.2
270.8
–
53.5
–
(13.1)
–
311.2
(4.8)
300.6
238.5
5.7
71.1
(0.2)
(14.5)
–
300.6
(2.1)
325.6
270.6
65.9
38.4
0.1
(12.9)
(36.5)
325.6
(6.3)
470.7
369.7
37.0
100.9
(0.6)
(22.9)
(13.4)
470.7
1,719.7
15.7%
270.0
2,305.2
10.6%
244.4
5,335.9
5.1%
272.1
3,279.1
11.3%
370.5
0.8
270.8
293.5
–
23.8
–
–
(13.1)
–
(33.4)
270.8
(5.9)
238.5
207.9
15.1
29.8
(0.4)
–
(13.8)
(0.1)
–
238.5
(1.5)
270.6
312.9
9.8
29.1
(0.3)
–
(14.4)
(66.5)
–
270.6
(0.8)
369.7
271.4
53.6
70.8
0.1
(6.9)
(18.8)
(0.5)
–
369.7
1 Other movements are primarily due to the funds issuing new units to external investors at a price above or below the underlying net assets of the fund, or where the
Group has acquired units on-market at a price different to the fund's NTA (for listed investments), or where the Group has recorded an impairment to the investment in
associate.
96
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Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
Notes to the consolidated financial statements
For the year ended 30 June 2022
2
Investment in associates continued
Charter Hall Property Trust Group
2022
Net assets of associate
Group's share in %
Group's share in $
Other movements not accounted for under the equity
method1
Carrying amount
Movements in carrying amounts:
Opening balance
Investment
Share of profit after income tax
Other comprehensive income/(loss)
Distributions received/receivable
Divestment
Closing balance
2021
Net assets of associate
Group's share in %
Group's share in $
Other movements not accounted for under the equity
method1
Carrying amount
Movements in carrying amounts:
Opening balance
Investment
Share of profit after income tax
Other comprehensive income/(loss)
Impairment of carrying amount
Distributions received/receivable
Divestment
Return of capital
Closing balance
Charter Hall Charter Hall
Charter Hall Charter Hall Prime Office Long WALE
REIT
Office Trust
$'m
$'m
Retail REIT
$'m
Fund
$'m
1,984.2
15.7%
311.5
2,854.6
10.7%
305.4
6,426.3
5.1%
327.7
4,458.2
10.7%
477.0
(0.3)
311.2
270.8
–
53.5
–
(13.1)
–
311.2
(4.8)
300.6
238.5
5.7
71.1
(0.2)
(14.5)
–
300.6
(2.1)
325.6
254.0
65.9
38.3
0.1
(12.8)
(19.9)
325.6
(6.3)
470.7
369.7
37.0
100.9
(0.6)
(22.9)
(13.4)
470.7
1,719.7
15.7%
270.0
2,305.2
10.6%
244.4
5,335.9
4.8%
256.1
3,279.1
11.3%
370.5
0.8
270.8
293.5
–
23.8
–
–
(13.1)
–
(33.4)
270.8
(5.9)
238.5
207.9
15.1
29.8
(0.4)
–
(13.8)
(0.1)
–
238.5
(2.1)
254.0
297.1
9.8
27.4
(0.2)
–
(13.6)
–
(66.5)
254.0
(0.8)
369.7
271.4
53.6
70.8
0.1
(6.9)
(18.8)
(0.5)
–
369.7
1 Other movements are primarily due to the funds issuing new units to external investors at a price above or below the underlying net assets of the fund, or where the
Group has acquired units on-market at a price different to the fund's NTA (for listed investments), or where the Group has recorded an impairment to the investment in
associate.
(g) Commitments and contingent liabilities of associates
Below are commitments and contingent liabilities of associates material to the Group’s balance sheet.
Charter Hall Prime Office Fund’s capital expenditure contracted for at the reporting date but not recognised as liabilities was $807.9
million (2021: $602.6 million) relating to investment properties and development commitments.
Charter Hall Office Trust’s (CHOT) capital expenditure contracted for at the reporting date but not recognised as liabilities was $54.3
million (2021: $187.9 million) relating to investment properties and development commitments.
Notes to the consolidated financial statements
For the year ended 30 June 2022
Investments in joint ventures
3
(a) Carrying amounts
All joint ventures are incorporated and operate in Australia. Refer to Note 32(c) for accounting policy information relating to joint
ventures.
Unless otherwise noted all joint ventures have a 30 June year end.
Ownership interest
Carrying amount
Charter Hall Group
Name of entity
Equity accounted
Unlisted
Brisbane Square Wholesale Fund
Long WALE Hardware Partnership1
Charter Hall PGGM Industrial Partnership
CH DJ Trust
Paradice Investment Management
Other joint ventures
Total investments in joint ventures
Principal activity
Property investment
Property investment
Property investment
Property investment
Funds management
2022
%
16.8
15.7
12.0
43.2
50.0
2021
%
16.8
14.1
12.0
50.0
–
2022
$'m
126.7
239.9
45.9
80.4
206.2
92.4
791.5
791.5
2021
$'m
102.4
167.4
25.7
73.6
–
52.6
421.7
421.7
1 Ownership interest is calculated as the weighted average holding of BP Fund 1 and BP Fund 2.
Charter Hall Property Trust Group
Name of entity
Equity accounted
Unlisted
Brisbane Square Wholesale Fund
Long WALE Hardware Partnership1
Charter Hall PGGM Industrial Partnership
CH DJ Trust
Other joint ventures
Total investments in joint ventures
Ownership interest
Carrying amount
Principal activity
Property investment
Property investment
Property investment
Property investment
2022
%
16.8
15.7
12.0
43.2
2021
%
16.8
14.1
12.0
50.0
2022
$'m
126.7
239.9
45.9
80.4
76.3
569.2
569.2
2021
$'m
102.4
167.4
25.7
73.6
34.6
403.7
403.7
1 Ownership interest is calculated as the weighted average holding of BP Fund 1 and BP Fund 2.
(b) Critical judgements
Investments in joint ventures are accounted for at either fair value through profit or loss or by using the equity method. The Group
designates investments in joint ventures as fair value through profit or loss or equity accounted on a case by case basis taking the
investment strategy into consideration.
Management regularly reviews equity accounted investments for impairment and remeasures investments carried at fair value through
profit or loss by reference to changes in circumstances or contractual arrangements, external independent property valuations and
market conditions, using generally accepted market practices. When a recoverable amount is estimated through a value in use
calculation, critical judgements and estimates are made regarding future cash flows and an appropriate discount rate. When a fair
value is estimated through an earnings valuation, critical judgements and estimates are made in relation to the earnings measure and
appropriate multiple.
The recoverable amount for the Paradice Investment Management (PIM) investment was estimated through a value in use calculation
with the following critical judgements and estimates:
(cid:16)
(cid:16)
(cid:16)
base case cash flow projections covering a 5 year period based on the current value of funds under management, current fee
agreements and long term growth rates;
pre-tax discount rate of 15.3%; and
growth after 5 years of 2.5% per annum.
As a result of these estimates, impairment of $18.5m was recorded for Paradice Investment Management in FY22.
If the discount rate was to increase/decrease by 50bp, value in use would decrease/increase by 4%.
98
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Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
Notes to the consolidated financial statements
For the year ended 30 June 2022
3
Investments in joint ventures continued
(c) Summarised financial information and movements in carrying amounts
Movements in aggregate carrying amount:
Opening balance
Investment
Share of profit after income tax
Distributions received/receivable
Impairment of carrying amount
Return of capital
Closing balance
Charter Hall Group
Charter Hall Property
Trust Group
2022
$'m
421.7
316.3
125.8
(30.5)
(18.5)
(23.3)
791.5
2021
$'m
326.8
148.6
50.2
(22.9)
–
(81.0)
421.7
2022
$'m
403.7
106.6
104.5
(22.5)
–
(23.1)
569.2
2021
$'m
306.6
145.6
48.0
(22.9)
–
(73.6)
403.7
(d) Commitments and contingent liabilities of joint ventures
There are no commitments and contingent liabilities of joint ventures material to the Group's balance sheet.
Notes to the consolidated financial statements
For the year ended 30 June 2022
4 Revenue
Investment management revenue1
Property services revenue1
Development revenue2
Gross rental income
Charter Hall Group
2022
$'m
613.9
75.8
326.3
9.7
1,025.7
2021
$'m
254.6
64.9
275.2
12.9
607.6
Charter Hall Property
Trust Group
2022
$'m
–
–
–
9.6
9.6
2021
$'m
–
0.1
–
12.9
13.0
Other revenue
Recovery of property and fund-related expenses
–
Interest
2.0
Distributions/Dividends3
1.0
Other investment-related revenue
10.7
Total other revenue
13.7
Total revenue4
26.7
1 Revenue from the Group’s property and funds management business is categorised into the two main lines of operations being investment management and property
67.6
1.7
3.3
–
72.6
1,098.3
57.5
2.0
0.9
–
60.4
668.0
–
0.2
3.3
15.0
18.5
28.1
services.
2 Revenue from the Group’s development investments forms part of the development segment earnings.
3 Represents the distribution of income from investments accounted for at fair value by the Group and Charter Hall Property Trust Group.
4 Revenue excludes share of net profits of equity accounted associates and joint ventures.
(a) Critical judgements
Critical judgements and estimates are made by the Group in respect of recognising performance fee revenue. Detailed calculations and
an assessment of the risks associated with the recognition of the fee are completed to inform the assessment of the appropriate
revenue to recognise. Key risks include the period remaining from balance sheet date to performance fee crystallisation date and the
degree of probability that any potential fee may unwind during that period. Key drivers of performance fees are assessed based on
historic data and prevailing economic conditions to inform judgements on the extent to which the fee can be reliably estimated.
Critical judgements are also made by the Group in respect of recognising development revenue. Detailed forecasts of total
development costs are inputs that are used to estimate the satisfaction of the development performance obligation over time.
5 Expenses
Profit before income tax includes the following specific
expenses:
Employee costs
Employee benefit expenses
Security-based benefits expense
Payroll tax
Total employee costs
Administration and other expenses
Advertising, marketing and promotion
Occupancy costs
Accounting, professional and other costs
Communication and IT expenses
Administration expenses
Total administration and other expenses
Depreciation, amortisation and impairment
Depreciation
Amortisation
Impairment
Total depreciation, amortisation and impairment
Charter Hall Group
2022
$'m
2021
$'m
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
160.2
12.4
8.9
181.5
6.4
2.0
8.2
11.6
9.0
37.2
8.4
0.7
18.5
27.6
133.7
6.8
7.5
148.0
3.7
2.0
10.7
8.9
5.7
31.0
7.8
1.5
6.9
16.2
–
–
–
–
–
–
4.9
–
1.9
6.8
–
–
–
–
–
–
–
–
–
–
4.8
–
2.6
7.4
–
–
6.9
6.9
100
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Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
6
Income tax expense
6
Income tax expense continued
Notes to the consolidated financial statements
(a) Income tax expense
Current tax expense
Deferred income tax expense
Over/(under)-provided in prior years
Deferred income tax expense
(Increase)/decrease in deferred tax assets for the tax
consolidated group
Increase in deferred tax liabilities for the tax consolidated group
Decrease in deferred tax assets for entities outside the tax
consolidated group
Note
Charter Hall Group
2022
$'m
171.7
7.5
0.2
179.4
(1.5)
9.0
–
7.5
2021
$'m
57.8
4.9
(0.1)
62.6
(2.1)
5.5
1.5
4.9
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(b) Reconciliation of income tax expense to prima facie tax
payable
Profit before income tax expense
Prima facie tax expense at the Australian tax rate of 30%
Tax effect of amounts which are not deductible/(taxable)
in calculating taxable income:
Charter Hall Property Trust profit
Recognition of previously unrecognised tax losses
Other adjustments
Income tax expense
(c) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting
period and not recognised in net profit or loss or other
comprehensive income but directly debited or credited to equity:
Current tax: Deduction for rights vesting in excess of the
cumulative fair value expense
Deferred tax: Estimated future deduction for rights vesting, in
excess of the cumulative fair value expense
1,106.4
331.9
558.2
167.5
519.7
155.9
329.3
98.8
(155.9)
–
3.4
179.4
(98.8)
(7.7)
1.6
62.6
(155.9)
–
–
–
(98.8)
–
–
–
(5.6)
2.3
(3.3)
(4.0)
(1.2)
(5.2)
–
–
–
–
–
–
(d) Tax consolidation legislation
Charter Hall Limited and its wholly owned Australian controlled entities have implemented the tax consolidation legislation with effect
from 1 July 2003. The accounting policy in relation to this legislation is set out below in Note 6(g).
On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement which,
in the opinion of the Directors, limits the joint and several liability of the wholly owned entities in the case of a default by the head entity,
Charter Hall Limited.
The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate Charter Hall
Limited for any current tax payable assumed and are compensated by Charter Hall Limited for any current tax receivable and deferred
tax assets relating to unused tax losses or unused tax credits that are transferred to Charter Hall Limited under the tax consolidation
legislation. The funding amounts are determined by reference to the amounts recognised in the wholly owned entities’ financial
statements.
(e) Charter Hall Property Trust
Under current Australian income tax legislation, the Trust is not liable for income tax on its taxable income (including any assessable
component of capital gains) provided that the unitholders are presently entitled to the income of the Trust.
(f) Tax losses – Charter Hall Group
At 30 June 2022, the Group has approximately $18.9 million (2021: $22.9 million) of tax effected unrecognised capital tax losses.
Income tax
(g)
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is
subject to interpretation and establishes provision, where appropriate, on the basis of amounts expected to be paid to the tax
authorities.
Deferred tax assets and liabilities are recognised for temporary differences at 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 for each jurisdiction. The
relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax
asset or liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction,
other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
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 liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it
is probable that the differences will not reverse in the foreseeable future.
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. Current tax assets and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or 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.
7 Distributions/Dividends paid and payable
Ordinary stapled securities
Final ordinary distribution of 11.27 cents and ordinary dividend of
9.2 cents per stapled security for the six months ended 30 June
2022 payable on 31 August 2022
Interim ordinary distribution of 11.33 cents and interim ordinary
dividend of 8.33 cents per stapled security for the six months
ended 31 December 2021 paid on 28 February 2022
Final ordinary distribution of 11.61 cents and ordinary dividend of
7.7 cents per stapled security for the six months ended 30 June
2021 paid on 31 August 2021
Interim ordinary distribution of 11.1 cents and interim ordinary
dividend of 7.45 cents per stapled security for the six months
ended 31 December 2020 paid on 26 February 2021
Total Distributions/Dividends paid and payable to stapled
securityholders
Charter Hall Group
2022
$'m
2021
$'m
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
96.8
91.6
–
–
–
–
90.0
86.4
53.3
52.8
–
–
–
–
54.1
51.7
188.4
176.4
106.1
105.8
Distributions paid and payable to other non-controlling interests
5.0
110.8
Total Distributions/Dividends paid and payable
A liability is recognised for the amount of any distribution/dividend declared by the Group on or before the end of the reporting period
but not paid at balance date.
5.0
181.4
5.0
193.4
5.0
111.1
Franking credits available in the parent entity (Charter Hall Limited) for dividends payable in subsequent financial years based on a tax
rate of 30% (2021: 30%) are $256.1 million (2021: $137.1 million). These amounts are calculated from the balance of the franking
account as at the end of the reporting period, adjusted for franking credits and debits that will arise from the settlement of liabilities or
receivables for income tax and dividends after the end of the year.
102
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Charter Hall Group 2022 Annual Report
Notes to the consolidated financial statements
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
8 Earnings per stapled security
9 Receivables and other assets
(a) Basic earnings per security attributable to:
Equity holders of Charter Hall Limited
Equity holders of Charter Hall Property Trust (non-controlling
interest)
Stapled securityholders of Charter Hall Group
(b) Diluted earnings per security attributable to:
Equity holders of Charter Hall Limited
Equity holders of Charter Hall Property Trust (non-controlling
interest)
Stapled securityholders of Charter Hall Group
Charter Hall Group
2022
Cents
86.8
107.3
194.1
85.4
105.6
191.0
2021
Cents
35.7
66.7
102.4
35.4
66.1
101.5
Charter Hall Property
Trust Group
2022
Cents
2021
Cents
n/a
107.3
n/a
n/a
105.6
n/a
n/a
66.7
n/a
n/a
66.1
n/a
Basic earnings per stapled security is determined by dividing profit attributable to the stapled security holders by the weighted
number of ordinary stapled securities on issue during the year.
Diluted earnings per stapled security is determined by dividing profit attributable to the stapled securityholders by the weighted average
number of ordinary stapled securities and dilutive potential ordinary stapled securities on issue during the year.
(c) Reconciliations of earnings used in calculating earnings
per stapled security
Equity holders of Charter Hall Limited
Profit attributable to the ordinary stapled securityholders of the
Group used in calculating basic and diluted earnings per stapled
security
(d) Weighted average number of stapled securities
used as the denominator
Weighted average number of ordinary stapled securities used
as the denominator in calculating basic earnings per stapled
security
Adjustments for calculation of diluted earnings per stapled
security:
Performance rights
Service rights
Weighted average number of ordinary stapled securities and
potential ordinary stapled securities used as the denominator in
calculating diluted earnings per stapled security
2022
$'m
2021
$'m
2022
$'m
2021
$'m
407.3
166.3
n/a
n/a
911.1
476.8
503.8
310.5
2022
Number
2021
Number
2022
Number
2021
Number
469,397,056 465,777,131
469,397,056 465,777,131
6,104,168
1,561,476
2,313,656
1,683,436
6,104,168
1,561,476
2,313,656
1,683,436
477,062,700 469,774,223
477,062,700 469,774,223
Information concerning the classification of securities
(e)
Performance rights, service rights issued under the Charter Hall Performance Rights and Options Plan
The performance and service rights are unquoted securities. Conversion to stapled securities and vesting to executives is subject to
performance and/or service conditions.
Stapled securities issued under the General Employee Securities Plan (GESP)
Stapled securities issued under the GESP are purchased on market on behalf of eligible employees but held in trust until the earlier of
the completion of three years’ service or termination. No adjustment to diluted earnings per stapled security is required under the
GESP.
Current
Trade receivables
Contract assets
Loans to associates and joint ventures
Distributions receivable
Other receivables and assets
Non-current
Loans to associates and joint ventures
Loan receivable from Charter Hall Limited
Other receivables and assets
Note
23(e)
23(e)
23(e)
Charter Hall Group
2022
$'m
61.2
7.9
–
36.2
10.1
115.4
3.4
–
–
3.4
2021
$'m
59.4
6.7
4.3
35.4
13.5
119.3
5.8
–
0.1
5.9
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
17.7
–
–
35.4
–
53.1
–
–
–
–
6.6
–
–
34.1
2.2
42.9
–
12.3
–
12.3
(a) Bad and doubtful trade receivables
During the year, the Charter Hall Group and Charter Hall Property Trust Group incurred $nil expense (2021: $nil) in respect of
provisions for expected credit losses.
(b) Fair values
Receivables are carried at amounts that approximate their fair value.
(c) Credit risk
There is a limited concentration of credit risk as the majority of current and non-current receivables are due from related parties of
Charter Hall Group and Charter Hall Property Trust Group. Refer to Note 21 for more information on the risk management policy of the
Charter Hall Group and Charter Hall Property Trust Group.
The ageing of trade receivables at the reporting date was as follows:
Current
1 to 3 months
3 to 6 months
More than 6 months
Charter Hall Group
2022
$'m
61.0
0.2
–
–
61.2
2021
$'m
58.4
1.0
–
–
59.4
Charter Hall Property
Trust Group
2022
$'m
17.7
–
–
–
17.7
2021
$'m
6.6
–
–
–
6.6
As at 30 June 2022, Charter Hall Group had trade receivables of $nil (2021: $nil) past due but not impaired. Charter Hall Property Trust
Group had $nil (2021: $nil) receivables past due but not impaired.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off in the year
in which they are identified. A provision for expected credit losses is processed based on historical default percentages and current
observable data including forecasts of economic conditions. The amount of the provision is the difference between the carrying amount
and estimated future cash flows. Cash flows relating to current receivables are not discounted.
Investment properties
10
(a) Carrying amounts
During the year, the Group disposed of its investment in Charter Hall Direct Long WALE Fund (DLWF), which had a portfolio of
investment properties which were consolidated into the Group’s balance sheet.
104
62
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Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
A reconciliation of the carrying amount of investment properties at the beginning and end of the year is set out below:
Notes to the consolidated financial statements
For the year ended 30 June 2022
12 Deferred tax assets and liabilities
Notes to the consolidated financial statements
Deferred tax assets comprises temporary differences attributable
to:
Employee benefits
Other
Deferred tax liabilities comprises temporary differences
attributable to:
Intangible assets
Investment in associates
Share purchase option
Other
Net deferred tax liabilities
13 Trade and other liabilities
Current
Trade and other liabilities
Long service leave provision
Dividend/Distribution payable
Employee benefits liability
Non-current
Long service leave provision
Lease incentive liability
Charter Hall Group
2022
$'m
22.7
7.2
29.9
29.7
18.5
6.0
4.0
58.2
(28.3)
2021
$'m
24.8
6.0
30.8
29.9
16.4
–
2.8
49.1
(18.3)
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Charter Hall Group
2022
$'m
108.4
3.3
96.8
48.9
257.4
3.0
1.7
4.7
2021
$'m
35.1
2.7
90.0
40.3
168.1
2.5
1.3
3.8
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
12.7
0.1
53.3
–
66.1
–
–
–
11.9
–
54.1
–
66.0
–
–
–
Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Group. The
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 or expected to be settled 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.
Opening balance
Additions including acquisition costs
Fair value and other adjustments
Reclass to assets held for sale
Derecognition on disposal of DLWF
Closing balance
11
Intangible assets
Indefinite life intangibles – management rights
Charter Hall Retail REIT
Charter Hall Social Infrastructure REIT
Other indefinite life intangibles
Disposals
Total closing indefinite life intangibles
Finite life intangibles – management rights
Opening balance
Amortisation charge
Closing balance
At balance date – finite life intangibles
Cost
Accumulated amortisation
Total finite life intangibles
Goodwill
Opening and closing balance
Total intangible assets
Charter Hall Group
2022
$'m
193.2
154.4
12.7
–
(360.3)
–
2021
$'m
173.8
22.1
20.4
(23.1)
–
193.2
Charter Hall Property
Trust Group
2022
$'m
193.2
154.4
12.7
–
(360.3)
–
2021
$'m
173.8
22.1
20.4
(23.1)
–
193.2
Charter Hall Group
2022
$'m
42.3
46.4
12.6
–
101.3
3.5
(0.7)
2.8
58.5
(55.7)
2.8
9.9
114.0
2021
$'m
42.3
46.4
15.3
(2.7)
101.3
5.0
(1.5)
3.5
58.5
(55.0)
3.5
9.9
114.7
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(a) Critical judgements
Critical judgements and estimates are made by the Group in assessing the recoverable amount of intangibles acquired, where the
funds to which those intangibles relate have an indefinite life. Intangibles are considered to have an indefinite useful life if there is no
foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group.
Intangibles – indefinite life assets
(b)
Intangibles with no fixed life are not amortised as they have an indefinite life. Intangibles with an indefinite life are tested for impairment
annually, or more frequently if events or changes in circumstances indicate that they might be impaired; and are carried at cost less
accumulated impairment losses. Intangibles are allocated to cash generating units for the purpose of impairment testing.
All indefinite life intangible assets recognised on the consolidated balance sheet are subject to an annual impairment assessment. The
impairment assessments support the carrying values and the methodology applied is an assessment of value in use based on
discounted cash flows.
Key assumptions used for the indefinite life intangible impairment calculations are as follows:
cash flow projections were used; applying probability weightings based on historical market guidance accuracy;
(cid:16)
(cid:16) base case cash flow projections covering a 5 year period based on financial budgets approved by management. Cash flows
beyond the 5 year period are extrapolated using estimated growth rates appropriate for the business;
(cid:16) pre-tax discount rate of 12.5% (2021: 12.5%);
(cid:16) growth after three years of 2.0% (2021: 2.0%) per annum; and
(cid:16)
terminal value multiple of 10 times earnings (2021: 10 times).
With the potential and uncertain economic impacts of COVID-19, future property valuations, cash flow projections, and estimates of
recoverable amounts could be adversely impacted.
(c) Management Rights – finite life assets
Management rights with a fixed life are amortised using the straight line method over their useful life ranging from one to ten years.
106
64
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Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
14 Borrowings
14 Borrowings continued
Notes to the consolidated financial statements
Non-current liabilities
US Private Placement Notes
Borrowings (DLWF)
Medium term notes
Less: unamortised transaction costs
(a) Borrowings
Charter Hall Group
The Group’s debt platform includes the following:
Charter Hall Group
2022
$'m
250.4
–
206.5
(3.0)
453.9
2021
$'m
259.3
40.0
253.5
(3.6)
549.2
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
250.4
–
206.5
(3.0)
453.9
259.3
40.0
253.5
(3.6)
549.2
(cid:3013) An unsecured $200.0 million (2021: $200.0 million) borrowings plus an additional $30.0 million (2021: $30.0 million) unsecured
facility to support the issuance of bank guarantees with maturity in May 2026. At 30 June 2022, drawn borrowings of $nil (2021:
$nil) and issuance of bank guarantees of $23.3 million (2021: $22.6 million) had been utilised under these facilities, which under
the terms of the agreements reduce the available facilities. No liability is recognised for bank guarantees.
(cid:3013) US$175 million (A$231.5 million at issue date) unsecured notes issued through a US Private Placement which was fully funded in
August 2018 and matures in August 2028.
(cid:3013) The Group has entered into A$/US$ cross currency interest rate swap agreements that hedge the Group’s exposure to
foreign currency. The swap agreements entitle the Group to repay the notes at A$231.5 million in August 2028. At 30 June
2022, the carrying amount of the notes at the prevailing spot rate was A$250.4 million (2021: A$259.3 million) including a fair
value adjustment of A$18.9 million (2021: A$25.9 million). The movement in the carrying amount since issuance is offset by
the fair value of the swap A$21.9 million (2021: A$27.9 million).
(cid:3013) The swap agreements also entitle the Group to receive interest, at semi-annual intervals, at a fixed rate on a notional
principal amount of US$175.0 million and oblige it to pay, at quarterly intervals, at a floating rate on a notional principal
amount of A$231.5 million. The swap agreements mature in August 2028.
(cid:3013) A$250 million fixed rate unsecured medium term notes (MTN) issued in April 2021, maturing in April 2031.
(cid:3013) The Group has entered into an interest rate swap agreement to swap the fixed interest rate exposure of the notes to a
floating exposure over BBSW. At 30 June 2022, the carrying amount of the notes was A$206.5 million (2021: A$253.5
million), including a fair value adjustment of A$43.5 million (2021: A$3.5 million). The movement in the carrying amount
since issuance is offset by the fair value of the swap liability A$40.0 million (2021: A$2.2 million asset).
(b) Gearing
Gearing is a measure used to monitor levels of debt capital used by the business to fund its operations. This ratio is calculated as
interest bearing debt drawn (excluding hedged foreign exchange and interest rate movements subsequent to the related debt drawing
date) net of cash, divided by total assets net of cash and derivative assets.
The gearing ratio of the Charter Hall Group at 30 June 2022 was 0.0% (30 June 2021: 5.0%). Debt covenants are monitored regularly
to ensure compliance and reported to the debt provider on a six-monthly basis. The Group Treasurer is responsible for negotiating new
debt facilities and monitoring compliance with covenants.
(c) Net debt reconciliation
This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.
Charter Hall Group
2022
Borrowings
Derivative financial instruments hedging debt
Borrowing costs
Cash
2021
Borrowings
Loans - related parties
Derivative financial instruments hedging debt
Borrowing costs
Cash
Charter Hall Property Trust Group
2022
Borrowings
Derivative financial instruments hedging debt
Borrowing costs
Funding received from Charter Hall Limited
Cash
2021
Borrowings
Derivative financial instruments hedging debt
Borrowing costs
Funding received from/(paid to) Charter Hall
Limited
Cash
Opening
balance
$'m
552.8
(34.9)
(3.6)
(351.9)
162.4
366.7
15.9
(65.8)
(2.5)
(238.9)
75.4
552.8
(34.9)
(3.6)
(12.3)
(71.3)
430.7
366.7
(65.8)
(2.5)
20.6
(12.7)
306.3
Movement Movement
in fair in borrowing Movement
in cash
costs
values
$'m
$'m
$'m
Derecognition
on disposal
of DLWF
$'m
(55.9)
47.6
–
–
(8.3)
(37.4)
–
30.9
–
–
(6.5)
(55.9)
47.6
–
–
–
(8.3)
(37.4)
30.9
–
–
–
(6.5)
–
–
(1.8)
–
(1.8)
–
–
–
(1.1)
–
(1.1)
–
–
(1.8)
–
–
(1.8)
–
–
(1.1)
–
–
(1.1)
44.2
–
–
(263.3)
(219.1)
223.5
(15.9)
–
–
(113.0)
94.6
44.2
–
–
12.3
(2.6)
53.9
223.5
–
–
(32.9)
(58.6)
132.0
(84.2)
1.2
2.4
20.5
(60.1)
–
–
–
–
–
–
(84.2)
1.2
2.4
–
20.5
(60.1)
–
–
–
–
–
–
Closing
balance
$'m
456.9
13.9
(3.0)
(594.7)
(126.9)
552.8
–
(34.9)
(3.6)
(351.9)
162.4
456.9
13.9
(3.0)
–
(53.4)
414.4
552.8
(34.9)
(3.6)
(12.3)
(71.3)
430.7
108
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Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
15 Derivative financial instruments
17 Reserves
Notes to the consolidated financial statements
Current assets
Cross currency interest rate swaps - cash flow hedge and fair
value hedge
Interest rate swaps - fair value hedge
Non-current assets
Cross currency interest rate swaps - cash flow hedge and fair
value hedge
Interest rate swaps - fair value hedge
Share purchase option - fair value through profit and loss1
Non-current liabilities
Interest rate swaps - fair value hedge
Charter Hall Group
2022
$'m
2021
$'m
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
3.4
0.8
4.2
21.9
–
20.0
41.9
40.0
40.0
3.3
1.1
4.4
27.9
2.6
–
30.5
–
–
3.4
0.8
4.2
21.9
–
–
21.9
40.0
40.0
3.3
1.1
4.4
27.9
2.6
–
30.5
–
–
1 Share purchase option to call remaining 50% of shares in Paradice Investment Management not presently owned by the Group.
Key valuation assumptions used in the determination of the fair value of derivative financial instruments and the Group’s valuation
policy are disclosed note 22(c) and 22(d).
16 Contributed equity
(a) Movements in ordinary stapled security capital
Details
Opening balance at 1 July 2020
Buyback and issuance of securities for exercised
performance and service rights1
Tax recognised directly in equity
Closing balance at 30 June 2021
Closing balance per accounts at 30 June 2021
Buyback and issuance of securities for exercised
performance and service rights2
Tax recognised directly in equity
Issuance of stapled securities
Closing balance at 30 June 2022
Closing balance per accounts at 30 June 2022
Number of
securities
465,777,131
–
–
465,777,131
465,777,131
–
–
7,220,068
472,997,199
472,997,199
Weighted
issue price
average Charter Hall
Limited
$'m
289.1
Charter Hall
Property
Trust
$'m
1,436.8
$4.63
$5.99
$20.68
(2.3)
4.0
290.8
290.8
(3.7)
5.6
22.1
314.8
314.8
(10.8)
–
1,426.0
1,426.0
(15.2)
–
127.2
1,538.0
1,538.0
Total
$'m
1,725.9
(13.1)
4.0
1,716.8
1,716.8
(18.9)
5.6
149.3
1,852.8
1,852.8
1
2
1,549,587 stapled securities bought on-market at an average value of $13.11, offset by the exercise of 821,840 performance rights with a fair value of $2.65 and 727,747
service rights with an average value of $6.85.
1,566,318 stapled securities bought on-market at an average value of $18.0, offset by the exercise of 979,346 performance rights with a fair value of $5.09 and 586,972
service rights with an average value of $7.50.
(b) Ordinary stapled securities
Ordinary stapled securities are classified as equity. Incremental costs directly attributable to the issue of new stapled securities or
options are shown in equity as a deduction, net of tax, from the proceeds.
Ordinary stapled securities entitle the holder to participate in Distributions/Dividends and the proceeds on winding up of the
Company/Trust in proportion to the number of and amounts paid on the stapled securities held.
On a show of hands, every holder of ordinary stapled securities present at a meeting in person or by proxy is entitled to one vote and
upon a poll, each holder is entitled to one vote per security that they hold.
(c) Distribution Re-investment Plan
The Group has established a Distribution Re-investment Plan (DRP) under which holders of ordinary stapled securities may elect to
have all or part of their distribution satisfied by the issue of new ordinary stapled securities rather than by being paid in cash. The DRP
was suspended for the distribution paid on 25 August 2016 and subsequent distributions.
Business combination reserve
Security-based benefits reserve
Cash flow hedge reserve
Foreign currency basis reserve
Transactions with non-controlling interests
Other reserves
Charter Hall Limited
Charter Hall Property Trust
Charter Hall Group
2022
$'m
(52.0)
37.2
4.0
0.5
0.4
(0.3)
(10.2)
(13.3)
3.1
(10.2)
2021
$'m
(52.0)
26.3
0.8
(1.4)
0.3
2.4
(23.6)
(22.1)
(1.5)
(23.6)
Charter Hall Property
Trust Group
2022
$'m
–
–
4.0
0.5
0.4
(1.8)
3.1
–
3.1
3.1
2021
$'m
–
–
0.8
(1.4)
0.3
(1.2)
(1.5)
–
(1.5)
(1.5)
(a) Business combination reserve
This reserve relates to the reverse acquisition at the initial public offering (IPO) in 2005. This is the amount that relates to the
investment in CHH that is not eliminated by paid-in capital. No goodwill is recognised as this transaction is the result of a reverse
acquisition.
(b) Security-based benefits reserve
The security based benefits reserve is used to recognise the fair value of rights and options issued under the PROP.
18 Non-controlling interests
During the year the Group disposed of all units held in Charter Hall Direct Long WALE Fund (2021: 32.3% ownership). As a result, the
Group derecognised the assets and liabilities of its former subsidiary, and any related NCI and other components of equity.
During the year the Group also acquired a 100% interest in Charter Hall Wholesale Property Series No.2 (WPS2), and then partially
disposed its interest. The Group holds an interest of 45.1% as at 30 June 2022. This investment is classified as Held for Sale.
The table below is the summarised financial information of non-controlling interests included in the Group result.
Summarised balance sheet
Current assets
Current liabilities
Current net assets
Non-current assets
Non-current liabilities
Non-current net assets
Net assets
Accumulated non-controlling interest
Summarised statement of comprehensive income
Revenue
Profit for the period
Other comprehensive income
Total comprehensive income
Comprehensive income allocated to non-controlling
Charter Hall Group
2022
$'m
1.2
0.9
0.3
78.6
–
78.6
78.9
43.2
2022
$'m
10.8
21.5
0.1
21.6
15.9
2021
$'m
36.9
4.0
32.9
209.9
39.7
170.2
203.1
137.5
2021
$'m
13.6
30.1
–
30.1
18.8
Charter Hall Property
Trust Group
2022
$'m
1.2
0.9
0.3
78.6
–
78.6
78.9
43.2
2021
$'m
36.9
4.0
32.9
209.9
39.7
170.2
203.1
137.5
2022
$'m
21.5
0.1
21.6
15.9
2021
$'m
13.6
30.1
–
30.1
18.8
110
68
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Directors’ Report and Financial Report | 111
Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
21 Capital and financial risk management
(a) Capital risk management
The key capital risk management objective of the Group and CHPT is to optimise returns through the mix of available capital sources
whilst complying with statutory and constitutional capital requirements and complying with the covenant requirements of the finance
facilities. The capital management approach is regularly reviewed by management and the Board as part of the overall strategy. The
capital mix can be altered by issuing new units, electing to have the DRP underwritten, adjusting the amount of distributions paid,
activating a stapled security buyback program or selling assets.
(b) Financial risk management
Both the Group and CHPT activities expose it to a variety of financial risks: market risk (price risk, interest rate risk and foreign
exchange risk), credit risk and liquidity risk. The Group’s overall risk management framework focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group. From time to time, the Group uses
derivative financial instruments such as interest rate swaps and option contracts to hedge certain risk exposures.
Risk management is carried out by the Group Treasurer, the Chief Financial Officer and the Managing Director and Group CEO in
consultation with senior management, the Audit, Risk and Compliance Committee and the Board of Directors. The Group Treasurer
identifies, evaluates and hedges financial risks in close co-operation with the Chief Financial Officer. The Board provides guidance for
overall risk management, as well as covering specific areas, such as mitigating price, interest rate and credit risks, the use of derivative
financial instruments and investing excess liquidity.
(i) Market risk
Unlisted unit price risk
The Group is exposed to unlisted unit price risk. This arises from investments in unlisted property funds managed by the Group. These
funds invest in direct property. Charter Hall manages all the funds that the Group invests in and its executives have a sound
understanding of the underlying property values and trends that give rise to price risk. The carrying value of investments in associates
at fair value through profit or loss is measured with reference to the funds’ unit prices which are determined in accordance with the
funds’ respective constitutions. The key determinant of the unit price is the underlying property values which are approved by the
respective fund board or investment committee and the Executive Property Valuation Committee.
19 Remuneration of auditors
During the year, the following fees were paid for services provided by the auditors of the Charter Hall Group and Charter Hall Property
Trust Group, their related practices and non-related audit firms:
(a) Audit services
PricewaterhouseCoopers – Australian Firm
Audit and review of financial reports
Audit and review of financial reports for DLWF
Other assurance services
Total remuneration for audit services
(b) Taxation services
PricewaterhouseCoopers – Australian Firm
Taxation services
PricewaterhouseCoopers – New Zealand Firm
Taxation services for DLWF
Total remuneration for taxation services
(c) Other services
PricewaterhouseCoopers – Australian Firm
Other assurance services
Total remuneration for other services
Charter Hall Group
2022
$
2021
$
Charter Hall Property
Trust Group
2022
$
2021
$
563,778
26,019
13,178
602,975
457,970
48,153
12,550
518,673
31,448
26,019
13,178
70,645
11,310
48,153
–
59,463
144,800
9,300
–
–
6,569
151,369
1,472
10,772
6,569
6,569
1,472
1,472
18,150
18,150
–
–
–
–
–
–
20 Reconciliation of profit after tax to net cash inflow from operating activities
Profit after tax for the year
Non-cash items:
Amortisation of intangibles
Impairment of associates
Depreciation and amortisation
Non-cash security-based benefits expense
Net gain on sale of investments, property and derivatives
Fair value adjustments
Unrealised net (gains)/ loss on derivative financial instruments
Foreign exchange movements
Change in assets and liabilities, net of effects from purchase of
controlled entity:
(Increase)/decrease in trade debtors and other receivables
Increase in trade creditors and accruals
Increase in development assets
Share of net profits from equity accounted investments in associates
and joint ventures
(Increase)/decrease for net deferred income tax
Net cash inflow from operating activities
Charter Hall Group
2022
$'m
927.0
0.7
18.5
9.2
12.4
(0.3)
1.0
(24.3)
0.1
1.6
63.2
(31.5)
(434.8)
61.0
603.8
2021
$'m
495.6
1.5
6.9
7.8
7.0
(0.4)
(30.9)
2.0
–
(16.6)
26.2
(42.8)
(211.2)
(19.5)
225.6
Charter Hall Property
Trust Group
2022
$'m
519.7
2021
$'m
329.3
–
–
0.8
–
1.6
(0.4)
(4.3)
0.1
(11.3)
1.0
–
(412.0)
–
95.2
–
6.9
1.5
–
(0.4)
(30.9)
2.0
(0.9)
0.2
1.0
–
(199.0)
–
109.7
Distributions and interest income received on investments has been classified as cash flow from operating activities.
112
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Directors’ Report and Financial Report | 113
Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
21 Capital and financial risk management continued
21 Capital and financial risk management continued
Notes to the consolidated financial statements
The following table illustrates the potential impact a change in unlisted unit prices by +/–10% would have on the Group and CHPT’s
profit. The movement in the price variable has been determined based on management’s best estimate, having regard to a number of
factors, including historical levels of price movement, historical correlation of the Group’s investments with the relevant benchmark and
market volatility. However, actual movements in the price may be greater or less than anticipated due to a number of factors. As a
result, historic price variations are not a definitive indicator of future price variations.
Charter Hall Group
2022
Assets – Charter Hall Group
Investments in associates at fair value through profit or loss
Assets held for sale
2021
Assets – Charter Hall Group
Investments in associates at fair value through profit or loss
Investments in financial assets at fair value through profit or loss
Charter Hall Property Trust Group
2022
Assets – Charter Hall Property Trust Group
Investments in associates at fair value through profit or loss
Assets held for sale
2021
Assets – Charter Hall Property Trust Group
Investments in associates at fair value through profit or loss
Investments in financial assets at fair value through profit or loss
The impact of a -10% change is the reverse of the impact shown for a +10% change.
Carrying
amount
$'m
10%
Impact on
Profit
$'m
42.4
79.0
46.2
–
42.4
79.0
46.2
–
4.2
7.9
4.6
–
4.2
7.9
4.6
–
Cash flow and fair value interest rate risk
The Group has long-term interest-bearing assets from unsecured loans receivable from development partners of $3.4 million. This
exposure is not considered to be material to the Group.
The Group’s and CHPT’s external interest rate risk arises from the debt facilities disclosed in Note 14. Borrowings drawn at variable
rates expose both the Group and CHPT to cash flow interest rate risk. Borrowings drawn at fixed rates expose both the Group and
CHPT to fair value interest rate risk. The Group and CHPT monitor interest rate risk regularly and in accordance with the Charter Hall
Treasury Risk Management Policy and perform associated stress testing. Core borrowings are defined as being the level of borrowings
that are expected to be held for a period of more than two years.
Interest rate risk exposure
(ii)
The Group’s and CHPT’s external interest rate risk arises from the debt facilities and associated derivatives disclosed in Note 14
bearing a variable interest rate.
Interest rate sensitivity analysis
The following tables illustrate the potential impact a change in interest rates of +/–1% would have on the Group and CHPT’s profit, with
all other variables remaining constant.
Charter Hall Group
2022
Financial assets
Cash and cash equivalents
Financial liabilities
Borrowings
Total increase/(decrease)
2021
Financial assets
Cash and cash equivalents
Financial liabilities
Borrowings
Total increase/(decrease)
Charter Hall Property Trust Group
2022
Financial assets
Cash and cash equivalents
Financial liabilities
Borrowings
Total increase/(decrease)
2021
Financial assets
Cash and cash equivalents
Loan receivable from Charter Hall Ltd
Financial liabilities
Borrowings
Total increase/(decrease)
Effective
interest rate
Fair value
$'m
Carrying
amount
$'m
+/-1%
Impact on
Profit
$'m
0.2%
1.9%
594.7
594.7
5.9/(5.9)
450.3
456.9
137.8
(5.3)/5.5
0.6/(0.4)
0.1%
351.9
351.9
3.5/(3.5)
1.3%
552.8
552.8
(210.9)
(5.0)/5.0
(1.5)/1.5
0.2%
53.4
53.4
0.5/(0.5)
1.9%
450.3
456.9
(403.5)
(5.3)/5.5
(4.8)/5.0
0.1%
4.4%
71.3
12.3
71.3
12.3
0.7/(0.7)
0.1/(0.1)
1.3%
552.8
552.8
–
(5.0)/5.0
(4.2)/4.2
The fair value of interest-bearing liabilities is inclusive of costs which would be incurred on settlement of a liability, and is based upon
market prices, where a market exists, or by discounting the expected future cash flows by the current interest rates for liabilities with
similar risk profiles.
The effect of changes in interest rates on the Group’s and CHPT’s profit shown in the table above is mainly impacted by a change in
interest payable on floating rate interest, offset by changes in the fair value of derivative financial instruments hedging this exposure.
(iii) Foreign exchange risk
The Group and CHPT’s principal exposure to foreign exchange risk arises from its investments in foreign subsidiaries and exposure to
bond issuances denominated in US dollars. The major asset held by foreign subsidiaries is cash in foreign denominated bank
accounts. Cross currency swaps are used to convert US dollar borrowings into Australian dollar exposure.
114
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Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
21 Capital and financial risk management continued
21 Capital and financial risk management continued
Notes to the consolidated financial statements
(iv) Hedge accounting of derivatives
Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument
and the hedged item. See Note 15 for derivatives held by the Group.
The Group’s accounting policy for its fair value and cash flow hedges is set out in Note 32(m).
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness
assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
The Group hedges 100% of its foreign denominated debt and fixed rate medium term note. The Group enters into cross currency
interest rate swaps and interest rate swaps that have critical terms that match the hedged item, such as payment dates, maturities and
notional amount. The Group uses the hypothetical derivative method to assess effectiveness. Hedge ineffectiveness may occur due to
credit/debit value adjustments and differences in critical terms between the hedging instrument and the hedged item.
Hedging instruments used by the Group
Cross currency interest rate swaps currently in place cover 100% (2021: 100%) of the foreign denominated debt outstanding. The
variable AUD interest rate payable under the swaps is 2.0% (2021: 2.0%) above the 90-day bank bill swap rate which at the end of the
reporting period was 1.8% (2021: 0.1%) and the receivable USD fixed rate aligns with the foreign denominated debt at 4.6% (2021:
4.6%).
Interest rate swaps currently in place for the medium term notes cover 100% (2021: 100%) of the debt outstanding. The receivable
fixed rate of the swaps is 3.1% (2021: 3.1%) and the payable is the 90-day bank bill swap rate plus 1.5% (2021: 1.5%).
See Note 14(a) for further details of swaps held by the Group.
Effects of hedge accounting on the financial position and performance
The effects of the cross currency interest rate swaps and interest rate swaps on the Group’s financial position and performance are as
follows:
Charter Hall Group
2022
2021
Charter Hall Property
Trust Group
2022
2021
Cross currency interest rate swaps
Carrying amount
Notional amount
Maturity date
Hedge ratio¹
Change in fair value of outstanding hedging instruments since 1 July
Change in value of hedged item used to determine hedge effectiveness
Interest rate swaps
Carrying amount
Notional amount
Maturity date
Hedge ratio¹
Change in fair value of outstanding hedging instruments since 1 July
Change in value of hedged item used to determine hedge effectiveness
25.3
231.5
31.2
231.5
31.2
231.5
August-2028 August-2028 August-2028 August-2028
1:1
(42.4)
41.0
1:1
(42.4)
41.0
1:1
(5.9)
8.8
1:1
(5.9)
8.8
25.3
231.5
(39.2)
250.0
April-2031
1:1
(42.9)
47.0
3.7
250.0
April-2031
1:1
3.7
(3.5)
(39.2)
250.0
April-2031
1:1
(42.9)
47.0
3.7
250.0
April-2031
1:1
3.7
(3.5)
(c) Credit risk
The Group and CHPT have policies in place to ensure that sales of services are made to customers with appropriate credit histories to
minimise risk of default. A default is when the counterparty fails to fulfil its obligations under the terms of the financial asset causing
financial loss to the Group and CHPT.
The Group derives 65.0% of its income from management fees, development revenue, transaction and other fees from related parties.
A further 32.9% of the Group’s income is derived from equity accounted investments in property funds and distributions from
investments in property funds held at fair value through the profit and loss.
CHPT derives 94.6% of its income from equity accounted investments in property funds and distributions from investments in property
funds held at fair value through profit and loss.
Where appropriate, tenants in the underlying property funds for the Group and CHPT are assessed for creditworthiness, taking into
account their financial position, past experience and other factors. Refer to Note 9(c) for more information on credit risk.
Derivative counterparties and cash transactions are limited to high credit quality financial institutions. The Group and CHPT have
policies that limit the amount of credit exposure to any one financial institution.
The Group and CHPT applies the AASB 9 simplified approach to measuring expected credit losses which involves a lifetime expected
loss allowance for all trade and other financial assets. The Group considers its financial asset balances to be low risk and thus the
methodology has not resulted in the recognition of an impairment of any financial assets.
The loss allowances for trade and other financial assets are based on assumptions about risk of default and expected loss rates. The
Group uses judgement in making these assumptions, based on the Group’s history, existing market conditions and forward looking
estimates at the end of each reporting period.
(d) Liquidity risk
Prudent liquidity risk management involves maintaining sufficient cash and undrawn debt funding to meet all funding commitments.
Maturities of financial liabilities
The following table provides the contractual maturity of the Group’s and CHPT’s financial liabilities. The amounts presented represent
the future contractual undiscounted principal and interest cash flows and therefore do not equate to the value shown in the balance
sheet. Repayments which are subject to notice are treated as if notice were given immediately.
1 The underlying rate on the swaps is the same as the rate exposure on the debt, therefore the hedge ratio is 1:1.
116
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Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
21 Capital and financial risk management continued
22 Fair value measurement continued
Notes to the consolidated financial statements
Charter Hall Group
2022
Trade and other payables
Borrowings
Derivative financial instruments
Net contractual amounts payable/(receivable)
Total financial liabilities
2021
Trade and other payables
Borrowings
Total financial liabilities
Charter Hall Property Trust Group
2022
Trade and other payables
Borrowings
Derivative financial instruments
Net contractual amounts payable/(receivable)
Total financial liabilities
2021
Trade and other payables
Borrowings
Total financial liabilities
Carrying
amount
$'m
Less than
one year
$'m
Between
one and
five years
$'m
Over
five years
$'m
Total cash
flows
$'m
262.1
456.9
40.0
759.0
171.9
552.8
724.7
66.1
456.9
40.0
563.0
66.0
552.8
618.8
257.4
–
2.8
260.2
168.1
–
168.1
66.1
–
2.8
68.9
66.0
–
66.0
1.3
–
22.4
23.7
0.2
40.0
40.2
–
–
22.4
22.4
–
40.0
40.0
3.4
456.9
24.1
484.4
3.6
512.8
516.4
–
456.9
24.1
481.0
–
512.8
512.8
262.1
456.9
49.3
768.3
171.9
552.8
724.7
66.1
456.9
49.3
572.3
66.0
552.8
618.8
Offsetting financial assets and liabilities
The Group is a party to a master agreement as published by International Swaps and Derivative Associates, Inc. (ISDA) which allows
the Group’s counterparties, under certain conditions (i.e. event of default), to set off the position owing/receivable under a derivative
contract to a net position outstanding. As at 30 June 2022, there was a gross liability position of $13.9 million (2021: $nil) with no
amounts subject to offset.
As the Group does not have a legally enforceable right to set off, none of the financial assets or financial liabilities are offset on the
balance sheet of the Group.
22 Fair value measurement
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
A fair value measurement of a non-financial asset takes into account the Group’s ability to generate economic benefits by using the
asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The fair value of financial instruments traded in active markets is determined using quoted market prices at the balance date. The
quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted market price for
financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Group uses
a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Other techniques,
such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.
(a) Recognised fair value measurement
The Charter Hall Group and the Charter Hall Property Trust Group measure and recognise the following assets and liabilities at fair
value on a recurring basis:
Investments in associates at fair value through profit and loss (Note 2)
(cid:3013)
(cid:3013) Derivatives (Note 15)
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;
(i)
(ii) Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices); and
(iii) Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following table presents the Charter Hall Group’s and Charter Hall Property Trust Group’s assets and liabilities measured and
recognised at fair value:
Level 1
$'m
Level 2
$'m
Level 3
$'m
Total
$'m
Charter Hall Group
2022
Investments in financial assets at fair value through profit
and loss
Investments in associates at fair value through profit and
loss
Derivative financial instruments
Assets classified as held for sale
Total assets
Derivative financial instruments
Total liabilities
2021
Investments in associates at fair value through profit and
loss
Investment properties
Derivative financial instruments
Assets classified as held for sale
Total assets
Charter Hall Property Trust Group
2022
Investments in financial assets at fair value through profit
and loss
Investments in associates at fair value through profit and
loss
Derivative financial instruments
Assets classified as held for sale
Total assets
Derivative financial instruments
Total liabilities
2021
Investments in associates at fair value through profit and
loss
Investment properties
Derivative financial instruments
Assets classified as held for sale
Total assets
20.0
–
–
–
20.0
–
–
–
–
–
–
–
20.0
–
–
–
20.0
–
–
–
–
–
–
–
–
–
26.1
–
26.1
(40.0)
(40.0)
–
–
34.9
–
34.9
–
–
26.1
–
26.1
(40.0)
(40.0)
–
–
34.9
–
34.9
–
20.0
42.4
20.0
79.0
141.4
–
–
46.2
193.2
–
23.1
262.5
42.4
46.1
79.0
187.5
(40.0)
(40.0)
46.2
193.2
34.9
23.1
297.4
–
20.0
42.4
–
79.0
121.4
–
–
46.2
193.2
–
23.1
262.5
42.4
26.1
79.0
167.5
(40.0)
(40.0)
46.2
193.2
34.9
23.1
297.4
There have been no transfers between Level 1, Level 2 and Level 3 during the period.
(b) Disclosed fair values
The carrying amounts of current trade receivables and payables approximate their fair values due to their short-term nature. The fair
value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market
interest rate that is available to the Charter Hall Group and Charter Hall Property Trust Group for similar financial instruments. The fair
value of current borrowings approximates the carrying amount, as the impact of discounting is not significant.
118
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Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
Notes to the consolidated financial statements
For the year ended 30 June 2022
22 Fair value measurement continued
(c) Valuation techniques used to derive Level 2 fair values
Derivatives
Derivatives are classified as Level 2 on the fair value hierarchy as the inputs used to determine fair value are observable market data
but not quoted prices.
The fair value of cross currency interest rate swaps is determined using forward foreign exchange market rates and the present value
of the estimated future cash flows at the balance date.
The fair value of interest rate swaps is determined using forward interest rates and the present value of the estimated future cash flows
at the balance date.
Credit value adjustments are calculated based on the counterparty’s credit risk using the counterparty’s credit default swap curve as a
benchmark. Debit value adjustments are calculated based on the Group’s credit risk using debt financing available to the Group as a
benchmark.
(d) Valuation techniques used to derive Level 3 fair values
Investments in associates
Certain unlisted property securities have been designated on initial recognition to be treated at fair value through profit or loss.
Movements in fair value during the period have been recognised in the consolidated statement of comprehensive income. These
assets have been acquired with the intention of being long-term investments. Where the assets in this category are expected to be sold
within 12 months, they are classified as current assets; otherwise they are classified as non-current.
The fair value of investments in associates held at fair value through profit and loss, which are investments in unlisted securities, are
determined by giving consideration to the unit prices and net assets of the underlying funds. The unit prices and net asset values are
largely driven by the fair values of investment properties and derivatives held by the funds. Recent arm’s length transactions, if any, are
also taken into consideration.
The fair value of investments in associates at fair value through profit or loss is impacted by the price per security of the investment. An
increase to the price per security results in an increase to the fair value of the investment.
Derivatives
The level 3 derivative relates to a share purchase option to call the remaining 50% of Paradice Investment Management (PIM) shares
not yet acquired by the Group. The PIM share purchase option is designated on initial recognition to be treated at fair value through
profit or loss. Movements in fair value during the period have been recognised in the consolidated statement of comprehensive income.
The fair value of the PIM share purchase option is determined using the Black-Scholes methodology.
The Group cannot sell the PIM share purchase option and should the option not be exercised or the Group otherwise elect to forfeit this
right, 100% of the carrying value will be written off as a loss on derecognition in the statement of comprehensive income.
Look-through Investment property
The use of independent external valuers is on a rotational basis at least once every 12 months, or earlier, where the Responsible Entity
deems it appropriate or believes there may be a material change in the carrying value of the property. Independent external valuations
were conducted on 99.1% of Investment Property as at 30 June 2022 on a look-through basis.
Movements in the inputs are likely to have an impact on the fair value of investment properties. An increase in gross market rent will
likely lead to an increase in fair value. A decrease in adopted capitalisation rate, adopted terminal yield or adopted discount rate will
likely lead to an increase in fair value.
With the potential and uncertain economic impacts of COVID-19, future property valuations could be adversely impacted.
Where an independent valuation is not obtained, the fair value is determined using discounted cash flow and income capitalisation
methods.
Notes to the consolidated financial statements
For the year ended 30 June 2022
23 Related parties
(a) Parent entity
The parent entity of the Charter Hall Group is Charter Hall Limited. The parent entity of the Charter Hall Property Trust Group is the
Charter Hall Property Trust.
(b) Controlled entities
Interests in controlled entities are set out in Note 24.
(c) Key management personnel
Below are the aggregate amounts paid or payable to key management personnel (including Non-Executive Directors):
Salary and fees
Non-Executive Director remuneration
Short-term incentives
Superannuation
PROP accounting fair value expense
Non-monetary benefits
Charter Hall Group
2022
$'000
3,221
1,458
6,060
71
5,135
2
15,947
2021
$'000
3,105
1,429
4,290
65
2,743
4
11,636
Charter Hall Property
Trust Group
2022
$'000
–
–
–
–
–
–
–
2021
$'000
–
–
–
–
–
–
–
Detailed remuneration disclosures are provided in the Remuneration Report on pages 53 to 85.
(d) Transactions with related parties
The following income was earned from related parties during the year:
Associates
Accounting cost recoveries
Marketing cost recoveries
Transaction and performance fees
Management and development fees
Property management fees and cost recoveries
Development revenue
Joint ventures
Accounting cost recoveries
Marketing cost recoveries
Transaction and performance fees
Management and development fees
Property management fees and cost recoveries
Development revenue
Other
Accounting cost recoveries
Marketing cost recoveries
Transaction and performance fees
Management and development fees
Property management fees and cost recoveries
Investment-related revenue
Charter Hall Group
2022
$'000
2021
$'000
Charter Hall Property
Trust Group
2022
$'000
2021
$'000
14,303
4,540
247,730
222,768
76,816
260,720
1,324
435
104,575
33,532
14,141
65,621
1,216
81
19,708
10,163
1,972
–
1,079,645
12,524
3,251
49,174
172,871
68,775
155,551
920
244
3,103
29,448
10,104
119,691
1,232
60
14,585
8,277
2,497
–
652,307
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14,952
14,952
–
–
–
–
–
10,742
10,742
During the year, the Group sold holdings in related party entities to other related parties totalling $116.9m (2021: $198.3m).
120
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Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
Notes to the consolidated financial statements
For the year ended 30 June 2022
23 Related parties continued
The following balances arising through the normal course of business were due from related parties at balance date:
Associates
Management fee receivables
Other receivables
Joint ventures
Management fee receivables
Other receivables
Other
Management fee receivables
Other receivables
(e) Loans to/(from) related parties
Loans to joint ventures
Opening balances
Loans advanced
Loan repayments received
Interest received/receivable
Closing balance
Loans to other related parties
Opening balances
Loans advanced
Loan repayments received
Interest received/receivable
Closing balance
Loans from other related parties
Opening balances
Loans advanced
Loan repayments made
Interest paid/payable
Closing balance
Loans to/(from) Charter Hall Limited
Opening balances
Loans advanced
Loan repayments received
Interest received/receivable
Closing balance
Charter Hall Group
2022
$'000
23,576
13,181
7,756
7,743
1,559
8,210
62,025
2021
$'000
19,600
23,852
6,354
2,399
1,168
8,082
61,455
Charter Hall Group
2021
$'000
4,397
–
(1,376)
239
3,260
13,168
7,320
(14,286)
747
6,949
15,948
–
(15,948)
–
–
2022
$'000
3,260
1,583
(1,694)
259
3,408
6,949
–
(7,318)
369
–
–
11,000
–
1,278
12,278
–
–
–
–
–
Charter Hall Property
Trust Group
2022
$'000
2021
$'000
–
–
–
–
–
–
-
–
–
–
–
–
–
-
Charter Hall Property
Trust Group
2022
$'000
2021
$'000
–
–
–
–
-
–
–
–
–
-
–
–
–
–
-
–
–
–
–
-
–
–
–
–
-
–
–
–
–
-
–
–
–
–
–
12,281
327,005
(338,494)
(792)
-
(20,581)
618,339
(587,292)
1,815
12,281
Notes to the consolidated financial statements
For the year ended 30 June 2022
24 Controlled entities
(a) Critical judgements
The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity. Critical judgements are made in assessing whether an investee
entity is controlled or subject to significant influence or joint control. These judgements include an assessment of the nature, extent and
financial effects of the Group’s interest in investee entities, including the nature and effects of its contractual relationship with the entity
or with other investors.
(b) Principal controlled entities
The Group’s principal subsidiaries where the majority of activities are undertaken as at 30 June 2022 are set out below. The country of
incorporation or registration is also their principal place of business, unless otherwise stated.
Name of entity
Controlled entities of Charter Hall Limited
Charter Hall Holdings Pty Limited
Charter Hall Opportunity Fund No. 5
Folkestone Limited
Charter Hall Social Infrastructure Limited
Charter Hall Direct Property Management Limited
Charter Hall FLK Funds Management Limited
Charter Hall Investment Management Limited
Charter Hall Retail Management Limited
Charter Hall WALE Limited
Charter Hall Wholesale Management Limited
Charter Hall Development Services Pty Ltd
Folkestone No 3 Pty Limited
Charter Hall Opportunity Fund No. 6
Australian Leisure and Entertainment Property Management
Limited
Controlled entities of Charter Hall Property Trust
Charter Hall Co-Investment Trust
Charter Hall Co-Investment Trust 2
Charter Hall Co-Investment Trust 3
Charter Hall Co-Investment Trust 4
Charter Hall Co-Investment Trust 6
Charter Hall Co-Investment Trust 7
Charter Hall Co-Investment Trust 8
Charter Hall Co-Investment Trust 9
CHPT Exchange Trust
Charter Hall Direct Long WALE Fund
CHPT RP2 Trust
CHC Finance Pty Ltd
Charter Hall Co-Investment Trust 10
Charter Hall Co-Investment Trust 11
Charter Hall Co-Investment Trust 12
Charter Hall Maxim Income Fund
Charter Hall Wholesale Property Series No.2
Country of
incorporation Principal activity
Class of
securities
2022
%
2021
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Property management Ordinary
Property development
Ordinary
Property management Ordinary
Ordinary
Responsible entity
Ordinary
Responsible entity
Ordinary
Responsible entity
Ordinary
Responsible entity
Ordinary
Responsible entity
Ordinary
Responsible entity
Ordinary
Responsible entity
Ordinary
Property development
Ordinary
Property investment
Ordinary
Property development
Australia
Responsible entity
Ordinary
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Financing entity
Property investment
Property investment
Property investment
Property Investment
Property investment
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
93
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
45
100
93
100
100
100
100
100
100
100
100
100
100
–
–
100
100
100
100
100
100
100
100
100
32
100
100
100
–
–
–
–
No provisions for expected credit losses have been raised in relation to any outstanding balances.
(f) Fees paid to the Responsible Entity or its associates
Fees paid to the Responsible Entity of the Charter Hall Property Trust, and its associates, by the Charter Hall Property Trust Group
amounted to $4,208,000 (2021: $4,161,000). At 30 June 2022, related fees payable amounted to $4,827,000 (2021: $1,907,000).
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Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
Interests in unconsolidated structured entities
25
The Charter Hall Group considers its investments in associates and joint ventures to be unconsolidated structured entities, on the basis
that the Group’s voting rights are not the sole factor in determining whether control over an entity exists. Where the Group determines
that control over an entity does not exist, the entity is recognised as an associate or joint venture of the Group for reporting purposes.
The activities and objectives of the unconsolidated structured entities of the Group include property investment for annuity income and
medium to long-term capital growth and/or development profit.
The aggregate of all the Group’s interests and maximum exposure to loss in unconsolidated structured entities, being the Group’s
interests in associates and joint ventures, are included in the table below:
Current assets
Trade receivables
Distributions receivable
Loans to associates and joint ventures
Total current assets
Non-current assets
Loans to related parties
Investments at fair value through profit or loss
Investments accounted for using the equity method
Total non-current assets
Total carrying amount of interests in unconsolidated structured
entities
Total funds under management in unconsolidated structured
entities
Charter Hall Group
2022
$'m
17.5
35.4
–
52.9
2021
$'m
17.4
35.4
4.2
57.0
3.4
42.4
3,033.1
3,078.9
5.9
46.2
2,321.6
2,373.7
Charter Hall Property
Trust Group
2022
$'m
2021
$'m
–
34.6
–
34.6
–
42.4
2,750.1
2,792.5
–
34.1
–
34.1
–
46.2
2,234.6
2,280.8
3,131.8
2,430.7
2,827.1
2,314.9
79,911.0
52,288.9
79,911.0
51,751.2
There are no additional arrangements that would expose the Charter Hall Group or Charter Hall Property Trust Group to losses beyond
the carrying amounts.
During the year, the Charter Hall Group earned fees from structured entities in its capacity as investment manager. Refer to Note 23 for
further information.
No financial support has been provided to the funds beyond the loans disclosed in the above table.
26 Commitments
(a) Capital commitments
Charter Hall Group
The Group has capital expenditure and a funding guarantee contracted for at the reporting date but not recognised as liabilities of
$13.4 million at 30 June 2022 (2021: $34.4 million) relating to a development joint venture.
Charter Hall Property Trust Group
The Trust Group had no contracted capital commitments as at 30 June 2022 (2021: $nil).
27 Contingent liabilities
The Group has nil contingent liabilities as at 30 June 2022 (2021: $nil) other than the bank guarantees provided for under the bank
facility held by Charter Hall Property Trust (refer to 14(a)).
28 Security-based benefits expense
(a) Charter Hall – Performance Rights and Options Plan (PROP)
Charter Hall Group and
Charter Hall Property Trust Group
Performance rights
Rights issued 28/11/18
Rights issued 25/11/19
Rights issued 26/11/20
Rights issued 11/09/21
Rights issued 11/11/21
Rights issued 14/12/21
Performance rights issued
Number of rights forfeited/lapsed
1,015,843
–
–
–
–
–
1,015,843
2019
Number
2020
Number
2021
Number
2022
Number
Total
Number
–
713,588
–
–
–
–
713,588
–
–
838,798
–
–
–
838,798
–
–
–
4,094,224
905,776
794,630
5,794,630
1,015,843
713,588
838,798
4,094,224
905,776
794,630
8,362,859
Prior years
Current year
Number of rights vested
Current year
Closing balance
Service rights
Rights issued 28/11/18
Rights issued 01/07/18
Rights issued 01/07/19
Rights issued 28/11/19
Rights issued 01/07/20
Rights issued 01/07/20
Rights issued 27/07/21
Rights issued 27/07/21
Service rights issued
Number of rights forfeited/lapsed
Prior years
Current year
(36,497)
–
(15,263)
(37,356)
–
(43,651)
–
(40,804)
(51,760)
(121,811)
(979,346)
–
–
660,969
–
795,147
–
5,753,826
(979,346)
7,209,942
1,453,485
244,617
–
–
–
–
–
–
1,698,102
–
–
178,903
320,000
–
–
–
–
498,903
–
–
–
–
672,282
319,856
–
–
992,138
–
–
–
–
–
–
319,650
156,280
475,930
1,453,485
244,617
178,903
320,000
672,282
319,856
319,650
156,280
3,665,073
(96,899)
–
–
–
–
–
–
–
(96,899)
–
Number of rights vested
Prior years
Current year
Closing balance
Further detail regarding the vesting conditions are included in the remuneration report section of the Directors' report.
(1,213,607)
(387,596)
–
–
(109,928)
882,210
(89,455)
(89,448)
320,000
–
–
475,930
(1,303,062)
(586,972)
1,678,140
(b) PROP expense
Total expenses related to the PROP recognised during the year as part of employee benefit expense were as follows:
Performance rights and option plan
Charter Hall Group
2022
$'m
12.4
2021
$'m
6.8
Charter Hall Property
Trust Group
2022
$'m
–
2021
$'m
–
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Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
Notes to the consolidated financial statements
For the year ended 30 June 2022
29 Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity of the Charter Hall Group, being Charter Hall Limited, and the parent entity of
the Charter Hall Property Trust Group, being the Charter Hall Property Trust, have been prepared on the same basis as the Group’s
financial statements:
Charter Hall Limited
Charter Hall
Property Trust
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders' equity
Issued capital
Other reserves
Accumulated profit/(losses)
Net equity
Profit for the year
Total comprehensive income for the year
Charter Hall Property Trust has total net assets of $1.6 billion and liquidity through the inter-staple loan with Charter Hall Limited.
1,538.0
4.0
37.6
1,579.6
92.9
92.9
314.8
(53.6)
(126.3)
134.9
85.7
85.7
290.8
(53.6)
(129.6)
107.6
74.6
74.6
2021
$'m
296.0
562.7
64.9
455.1
2022
$'m
101.2
1,924.3
64.3
344.7
2021
$'m
63.7
1,797.4
60.2
321.1
1,426.0
(0.5)
50.8
1,476.3
254.1
254.1
2022
$'m
219.1
486.8
122.5
351.9
(b) Contingent liabilities of the parent entity
Charter Hall Limited and Charter Hall Property Trust had no contingent liabilities as at 30 June 2022 (2021: $nil) other than the bank
guarantees provided for under the bank facility held by Charter Hall Property Trust (refer to Note 14(a)).
(c) Contractual commitments
As at 30 June 2022, Charter Hall Limited had no contractual commitments (2021: $nil).
As at 30 June 2022, Charter Hall Property Trust had no contractual commitments (2021: $nil).
Notes to the consolidated financial statements
For the year ended 30 June 2022
28 Security-based benefits expense continued
(c) PROP Valuation Inputs
The Black-Scholes or Monte Carlo method, as applicable, is utilised for valuation and accounting purposes. The model inputs to assess
the fair value of the PROP rights granted during FY2022 are as follows:
CHC
Retention and
Outperformance Outperformance
CHC
Retention and Performance Performance
rights
rights
CHC
CHC
Grant date
Stapled security price at grant date1
Fair value of right
Expected volatility2
Dividend yield
Risk-free interest rate
Grant date
Stapled security price at grant date1
Fair value of right
Expected volatility2
Dividend yield
Risk-free interest rate
Plan
Plan (CEO)
Tranche 1
Tranche 2
11/09/2021
$17.72
$4.58
31.9%
2.1%
0.6%
CHC
Service
rights –
Mandatory
Deferred STI
27/07/2021
$16.04
$15.45
37.7%
2.4%
0.3%
11/11/2021
$18.83
$5.86
32.3%
2.0%
1.4%
14/12/2021
$21.95
$20.59
35.8%
1.7%
1.1%
14/12/2021
$21.95
$16.44
35.8%
1.7%
1.1%
CHC
Service
rights –
Voluntary
Deferred STI
CQE
Service
rights –
Mandatory
Deferred STI
CLW
Service
rights –
Mandatory
Deferred STI
27/07/2021
$16.04
$14.23
32.8%
2.4%
0.3%
27/07/2021
$3.49
$3.25
30.6%
4.5%
0.3%
27/07/2021
$4.91
$4.47
24.7%
5.9%
0.3%
1 The grant date reflects the date the rights were allocated. Participants are eligible and performance period commences from 1 July of the relevant financial year for
performance rights.
2 Expected volatility takes into account historical market price volatility.
Further detail regarding the vesting conditions are included in the remuneration report section of the Directors' report.
(d) Charter Hall General Employee Security Plan (GESP)
During the year, eligible employees received up to $1,000 (2021: $1,000) in stapled securities which vested immediately on issue but
are held in trust until the earlier of the completion of three years’ service or termination. An expense of $601,666 (2021: $434,931) was
recognised in relation to this plan during the year. For the GESP, the cost of the stapled securities bought on-market to settle the award
liability is included in employee benefits expense.
(e) Accounting policy
Security-based benefits
Security-based compensation benefits are provided to employees via the Charter Hall Performance Rights and Options Plan (PROP)
and the General Employee Security Plan (GESP). For market-based performance rights, the fair value at grant date is independently
valued using a Monte Carlo simulation pricing model that takes into account the exercise price, the term of the rights, impact of dilution,
stapled security price at grant date, expected price volatility of the underlying stapled security, expected dividend yield and the risk-free
interest rate for the term of the rights and market vesting conditions, but excludes the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of rights
that are expected to vest. For non-market based performance rights, the fair value at grant date is independently valued using the
Black-Scholes methodology. At each reporting date, the entity revises its estimate of the number of rights that are expected to vest.
The employee benefits expense recognised each year takes into account the most recent estimate.
Upon the vesting of stapled securities, the balance of the stapled security-based benefits reserve relating to those stapled securities is
transferred to equity, net of any directly attributable transaction costs.
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Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
30 Deed of cross guarantee
Charter Hall Group
Charter Hall Limited (CHL) and its wholly owned subsidiaries, Charter Hall Holdings Pty Ltd (CHH) and Folkestone Limited (FLK), are
parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering into the deed, CHH
and FLK have been relieved from the requirement to prepare financial statements and a Directors’ report under ASIC Instrument
2016/785 issued by the Australian Securities and Investments Commission. FLK was added by assumption deed to the deed of cross
guarantee from 3 May 2019.
(a) Consolidated statement of comprehensive income and summary of movements in consolidated accumulated losses
The above companies 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 Charter Hall Limited, they also represent the ‘extended closed group’.
Set out as follows is a consolidated statement of comprehensive income and a summary of movements in consolidated accumulated
losses for the year of the closed group consisting of CHL, CHH and FLK.
Statement of comprehensive income
Revenue
Other net fair value adjustments
Employee benefits expense
Depreciation and amortisation
Finance costs
Share of net profit of associates accounted for using the equity
method
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Accumulated profit at the beginning of the financial year
Profit for the year
Dividends paid/payable
Accumulated profit at the end of the financial year
2022
$'000
728.8
20.0
(181.2)
(8.4)
(2.3)
13.2
(48.6)
521.5
(156.0)
365.5
132.6
365.5
(82.3)
415.8
2021
$'000
356.0
–
(147.9)
(7.8)
(2.8)
–
(26.5)
171.0
(52.3)
118.7
84.5
118.7
(70.6)
132.6
30 Deed of cross guarantee continued
(b) Balance sheet
Set out below is a consolidated balance sheet of the closed group consisting of CHL, CHH and FLK.
Assets
Current assets
Cash and cash equivalents
Receivables and other assets
Total current assets
Non-current assets
Net loans payable to related entities
Investment in associates at fair value through profit or loss
Investment in associates
Investments in controlled entities
Property, plant and equipment
Intangible assets
Right-of-use assets
Deferred tax assets
Derivative financial instruments
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other liabilities
Lease liabilities
Total current liabilities
Non-current liabilities
Trade and other liabilities
Loans due to Charter Hall Property Trust
Net loans due to related entities
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated profit
Total equity
2022
$'m
2021
$'m
380.0
101.0
481.0
–
15.1
207.5
203.5
15.1
71.0
20.8
4.7
20.0
557.7
1,038.7
242.5
6.9
249.4
4.6
–
24.4
19.5
48.5
297.9
740.8
314.8
10.2
415.8
740.8
178.0
80.5
258.5
5.4
15.1
2.8
193.5
14.4
71.0
9.3
13.8
–
325.3
583.8
127.3
4.5
131.8
3.8
12.3
–
10.7
26.8
158.6
425.2
290.8
1.8
132.6
425.2
31 Events occurring after the reporting date
In July 2022, Charter Hall Group and PGGM entered into a partnership (CHPIP2) to acquire all stapled securities in Irongate Group
(ASX:IAP) for $1.90 per IAP stapled security totalling $1,287.4m. Charter Hall Group will own 12% of CHPIP2.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect:
(a) The Group’s operations in future financial years; or
(b) The results of those operations in future financial years; or
(c) The Group’s state of affairs in future financial years.
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Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
Notes to the consolidated financial statements
For the year ended 30 June 2022
32 Summary of significant accounting policies
The significant policies which have been adopted in the
preparation of these consolidated financial statements for the
year ended 30 June 2022 are set out below. These policies have
been consistently applied to the years presented, unless
otherwise stated.
Changes in accounting policies
(a) New and amended standards adopted
No new accounting standards or amendments have come into
effect for the year ended 30 June 2022 that affect the Group’s
operations or reporting requirements.
Significant accounting policies
(b) Controlled entities
The Charter Hall Group (Group or CHC) is a ‘stapled’ entity
comprising Charter Hall Limited (Company or CHL) and its
controlled entities, and Charter Hall Property Trust (Trust) and its
controlled entities (CHPT Group). The shares in the Company are
stapled to the units in the Trust. The stapled securities cannot be
traded or dealt with separately. The stapled securities of the
Group are listed on the Australian Securities Exchange (ASX).
CHL has been identified as the parent entity in relation to the
stapling.
The two Charter Hall entities comprising the stapled Group
remain separate legal entities in accordance with the
Corporations Act 2001, and are each required to comply with the
reporting and disclosure requirements of Accounting Standards
and the Corporations Act 2001.
As permitted by ASIC Corporations (Stapled Group Reports)
Instrument 2015/838, this financial report is a combined financial
report that presents the consolidated financial statements and
accompanying notes of both the Charter Hall Group and the
Charter Hall Property Trust Group.
The financial report of the Charter Hall Group comprises CHL and
its controlled entities, including Charter Hall Funds Management
Limited (Responsible Entity) as responsible entity for CHPT and
CHPT and its controlled entities. The results and equity not
directly owned by CHL, of CHPT, have been treated and
disclosed as a non-controlling interest. Whilst the results and
equity of CHPT are disclosed as a non-controlling interest, the
stapled securityholders of CHL are the same as the stapled
securityholders of CHPT. The financial report of the Charter Hall
Property Trust Group comprises the Trust and its controlled
entities.
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, and continue to be
prepared on the going concern basis of accounting. The Charter
Hall Group and Charter Hall Property Trust Group are for-profit
entities for the purpose of preparing the consolidated financial
statements.
On 6 June 2005, CHL acquired Charter Hall Holdings Pty Ltd
(CHH). Under the terms of AASB 3 Business Combinations, CHH
was deemed to be the accounting acquirer in this business
combination. This transaction was therefore accounted for as a
reverse acquisition under AASB 3. Accordingly, the consolidated
financial statements of the Group have been prepared as a
continuation of the consolidated financial statements of CHH.
CHH, as the deemed acquirer, acquisition accounted for CHL as
at 6 June 2005.
Group references in accounting policies
The accounting policies apply to both the Group and Charter Hall
Property Trust Group unless otherwise stated in the relevant
policy.
Compliance with IFRS
The consolidated financial statements of the Group also comply
with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
Historical cost convention
The consolidated financial statements have been prepared on a
historical cost basis, except for the following:
(cid:3013) Assets held for sale – measured at the lower of carrying
(cid:3013)
(cid:3013)
(cid:3013)
amount and fair value less costs to sell;
Investment properties – measured at fair value;
investments in associates at fair value through profit or loss
– measured at fair value;
investments in financial assets held at fair value – measured
at fair value; and
(cid:3013) derivative financial instruments.
(c) Principles of consolidation
(i) Controlled entities
The consolidated financial statements of the Charter Hall Group
and the Charter Hall Property Trust Group incorporate the assets
and liabilities of all controlled entities as at 30 June 2022 and their
results for the year then ended.
The Group controls an entity when the Group is exposed to, or
has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to
direct the activities of the entity. Controlled entities are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on
transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred asset.
Accounting policies of controlled entities have been changed
where necessary to ensure consistency with the policies adopted
by the Group.
Non-controlling interests in the results and equity of controlled
entities are shown separately in the consolidated statement of
comprehensive income, consolidated balance sheet and
consolidated statement of changes in equity respectively.
Investments in associates
(ii)
Associates are entities over which the Group has significant
influence but not control or joint control. Investments in
associates are accounted for in the consolidated balance sheet at
either fair value through profit or loss or by using the equity
method. On initial recognition, the Group elects to account for
Notes to the consolidated financial statements
For the year ended 30 June 2022
32 Summary of significant accounting policies continued
investments in associates at either fair value through profit or loss
or by using the equity method based on assessment of the
expected strategy for the investment.
Under the equity accounted method, the Group’s share of the
associates’ post acquisition net profit after income tax expense is
recognised in the consolidated statement of comprehensive
income. The cumulative post-acquisition movements in results
and reserves are adjusted against the carrying amount of the
investment. Distributions and dividends received from associates
are recognised in the consolidated financial report as a reduction
of the carrying amount of the investment.
Investments in associates at fair value through profit or loss are
initially recognised at fair value and transaction costs are
expensed in the consolidated statement of comprehensive
income.
(iii) 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 Group recognises its direct right to the assets, liabilities,
revenues and expenses of joint operations and its share of any
jointly held or incurred assets, liabilities, revenues and expenses.
These have been incorporated in the consolidated financial
statements.
Joint ventures
Interests in joint ventures are accounted for using the equity
method, with investments initially recognised at cost and adjusted
thereafter to recognise the Group’s share of post-acquisition
profits or losses of the investee in profit or loss, and the Group’s
share of movements in other comprehensive income of the
investee in other comprehensive income. Dividends received or
receivable from joint ventures are recognised as a reduction in
the carrying amount of the investment.
When the Group’s share of losses in an equity accounted
investment equals or exceeds its interest in the entity, including
any other unsecured long-term receivables, the Group does not
recognise further losses, unless it has incurred obligations or
made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its
equity accounted investees are eliminated to the extent of the
Group’s interest in these entities. Unrealised losses are also
eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of equity
accounted investees have been aligned where necessary to
ensure consistency with the policies adopted by the Group.
(iv) Changes in ownership interests
When the Group ceases to equity account for an investment
because of a loss of joint control or significant influence, any
retained interest in the entity is remeasured to its fair value with
the change in carrying amount recognised in profit or loss. This
fair value becomes the initial carrying amount for the purposes of
subsequently accounting for the retained interest as a joint
venture entity or financial asset. In addition, any amounts
previously recognised in other comprehensive income in respect
of that entity are accounted for as if the Group had directly
disposed of the related assets or liabilities. This may mean that
amounts previously recognised in other comprehensive income
are reclassified to profit or loss. The Group treats transactions
with non-controlling interests that do not result in a loss of control
as transactions with equity owners of the Group.
If the ownership interest in a joint venture entity or an associate is
reduced but joint control or significant influence is retained, only a
proportionate share of the amounts previously recognised in other
comprehensive income is reclassified to profit or loss where
appropriate.
(d) Foreign currency translation
(i) Functional and presentation currencies
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (the functional
currency). The consolidated financial statements are presented in
Australian dollars, which is CHL’s and CHPT’s functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at
year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the
consolidated statement of comprehensive income, except when
they are deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges or are attributable to part of the
net investment in a foreign operation.
Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date
when the fair value was determined. Translation differences on
assets and liabilities carried at fair value are reported as part of
the fair value gain or loss.
(iii) Foreign currency translation
On consolidation, exchange differences arising from the
translation of borrowings, and other financial instruments
designated as hedges of such investments, are recognised in
other comprehensive income.
(e) Revenue recognition
The amount of revenue recognised in each period is based on the
delivery of performance obligations and when control has been
transferred to customers in accordance with the principles set out
in AASB 15. Where the Group enters into contracts with multiple
service components, judgement is applied to determine whether
the components are:
(cid:3013) distinct – accounted for as separate performance
obligations;
(cid:3013) not distinct – combined with other promised services until a
distinct bundle is identified; or
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Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
32 Summary of significant accounting policies continued
32 Summary of significant accounting policies continued
Notes to the consolidated financial statements
(cid:3013) part of a series of distinct services that are substantially the
same and have the same pattern of transfer to the
customer.
For each performance obligation identified, it is determined
whether revenue is recognised at a point in time or over time.
Revenue is recognised over time if:
(cid:3013)
(cid:3013)
(cid:3013)
the customer simultaneously receives and consumes the
benefits provided over the life of a contract as the services
are performed;
the customer controls the asset that the Group is creating or
enhancing; or
the Group’s performance does not create an asset with an
alternative use to the Group and has an enforceable right to
payment for performance completed to date.
At contract inception, the Group estimates the consideration to
which it expects to be entitled and has rights to receive under the
contract. Variable consideration, where the Group’s performance
could result in further revenue, is only included to the extent that it
is highly probable that a significant reversal of revenue
recognised will not occur.
In assessing the amount of consideration to recognise, key
judgements and assumptions are made on a forward-looking
basis where required.
To the extent revenue has not been received at reporting date, a
receivable is recognised in the consolidated balance sheet.
Investment Management revenue
Fund management fees are received for performance obligations
fulfilled over time with revenue recognised accordingly. Fund
management fees are determined in accordance with relevant
agreements for each fund, based on the fund’s periodic (usually
monthly or quarterly) Gross Asset Value (GAV).
Generally, invoicing of funds for management fees occurs on a
quarterly basis and are receivable within 21 days.
Performance fees are for performance obligations fulfilled over
time and for which consideration is variable. The fees for each
applicable fund are determined in accordance with the relevant
agreement which stipulates out-performance of a benchmark over
a given period.
Performance fee revenue is recognised to the extent that it is
highly probable that the amount of variable consideration
recognised will not be significantly reversed when the uncertainty
is resolved. Detailed calculations and an assessment of the risks
associated with the recognition of the fee are completed to inform
the assessment of the appropriate revenue to recognise.
Invoicing of funds for performance fees occurs in accordance with
the contractual performance fee payment date.
A contract asset is recognised in the consolidated balance sheet
at each reporting date in line with revenue recognised where the
right to receive consideration remains conditional on future
performance.
Transaction fee revenue is recognised at a point in time upon
fulfillment of the performance obligation. This is usually the point
at which control of the underlying asset being transacted has
transferred to the buyer.
Transaction fees are invoiced when the performance obligation
has been fulfilled and are receivable within 21 days.
Property Services revenue
Property services primarily include property management,
development management, leasing, facilities and project
management. Revenue is recognised either over time or at a
point in time depending on the terms of the specific agreement for
each type of service. Invoicing of funds for property services fees
occurs on a monthly or quarterly basis and are receivable within
21 days.
Recovery of property and fund-related expenses revenue
Accounting, marketing and property management services
provided to managed funds are charged as an expense recovery.
Revenue is recognised over time as the performance obligations
are fulfilled. Invoicing of funds for expense recoveries occurs on a
monthly or quarterly basis depending on the recovery type and
are receivable within 21 days.
Development revenue
Where Charter Hall has control of the underlying asset, revenue
from the sale of development assets is recognised when control
has been transferred to the customer. Where development assets
have been recognised in relation to the enhancement of an asset
controlled by the customer, revenue from the realisation of the
development costs are recognised over time in accordance with
the performance obligations of the contract.
Revenue is calculated by reference to the total consideration
expected to be received in exchange for fulfilling the performance
obligations under the contract. Any variable consideration is
constrained to the amount that is highly probable to not
significantly reverse. Revenue is recognised based on the most
appropriate method that depicts the transfer of goods and
services to the customer, generally the ‘cost to cost’ method.
A development asset is recognised in the consolidated balance
sheet at each reporting date in line with revenue recognised
where the right to receive consideration remains conditional on
future performance.
Proceeds from the sale of development assets are invoiced and
receivable in accordance with the relevant terms of the contract.
(f) Employee benefits
(i) Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits
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.
Long service leave
(ii)
Liabilities for other employee entitlements which are not expected
to be paid or settled within 12 months of reporting date are
accrued in respect of all employees at present values of future
amounts expected to be paid. Expected future payments are
discounted using a corporate bond rate with terms to maturity that
match, as closely as possible, the estimated future cash outflows.
(iii) Retirement benefit obligations
Contributions to employee defined contribution superannuation
funds are recognised as an expense as they become payable.
(iv) Bonus plans
Charter Hall recognises a liability and an expense for amounts
payable to employees. Charter Hall recognises a provision where
contractually obliged or where there is a past practice that has
created a constructive obligation.
Termination benefits
(v)
Termination benefits are payable when employment is terminated
by the Group before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for these
benefits. The Group recognises termination benefits at the earlier
of the following dates:
(a) when the Group can no longer withdraw the offer of those
benefits; and
(b) when the entity recognises costs for a restructuring that is
within the scope of AASB 137 and involves the payment of
termination benefits. In the case of an offer made to encourage
voluntary redundancy, the termination benefits are measured
based on the number of employees expected to accept the offer.
Benefits falling due more than 12 months after the end of the
reporting period are discounted to present value.
(g) Development assets
Costs incurred in fulfilling a development contract with a customer
are recognised as a development asset.
Where Charter Hall has control of the asset, development costs
are recorded at the lower of cost and net realisable value.
Where Charter Hall has incurred costs in relation to the
enhancement of an asset controlled by the customer, a
development contract asset is recognised in the consolidated
balance sheet where the right to receive consideration remains
conditional on future performance. Development assets are
recorded at the lower of cost or the total consideration expected
to be received less the total costs expected to be recognised as
an expense. Where consideration is received in excess of
revenue recognised, a development liability will be recognised.
Development assets are classified as non-current where the
group is not contractually entitled to payment within 12 months
from balance date.
Investment properties
(h)
Investment properties comprise investment interests in land and
buildings (including integral plant and equipment) held for the
purpose of producing rental income, including properties that are
under construction for future use as investment properties.
Initially, investment properties are measured at cost including
transaction costs. Subsequent to initial recognition, the
investment properties are stated at fair value. Fair value of
investment property is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The best
evidence of fair value is given by current prices in an active
market for similar property in the same location and condition.
Gains and losses arising from changes in the fair values of
investment properties are included in the consolidated statement
of comprehensive income in the year in which they arise.
At each balance date, the fair values of the investment properties
are assessed by the Responsible Entity with reference to
independent valuation reports or through appropriate valuation
techniques adopted by the Responsible Entity. Further
information relating to valuation techniques can be found in Note
22(d).
Where the Group disposes of a property at fair value in an arm’s
length transaction, the carrying value immediately prior to the sale
is adjusted to the transaction price, and the adjustment is
recorded in the consolidated statement of comprehensive income
within net fair value gain/(loss) on investment property.
The carrying amount of investment properties recorded in the
consolidated balance sheet takes into consideration components
relating to lease incentives, leasing costs and fixed increases in
operating lease rentals in future years.
Plant and equipment
(i)
Plant and equipment is stated at historical cost less depreciation.
Historical cost includes expenditure that is directly attributable to
the acquisition of plant and equipment.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the
consolidated statement of comprehensive income during the
financial year in which they are incurred.
Depreciation on other assets is calculated using the straight-line
method to allocate their cost or revalued amounts, net of their
residual values, over their estimated useful lives, as follows:
(cid:3013) Furniture, fittings and equipment
(cid:3013) Fixtures
3 to 10 years
5 to 10 years
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in the
consolidated statement of comprehensive income.
Assets held for sale
(j)
Non-current assets or disposal groups are classified as held-for-
sale if it is highly probable that they will be recovered primarily
through sale rather than through continuing use. They are
measured at the lower of their carrying amount and fair value less
costs to sell, except for assets such as financial assets and
investment property that are carried at fair value.
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Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Charter Hall Group Financial Report 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
Notes to the consolidated financial statements
For the year ended 30 June 2022
32 Summary of significant accounting policies continued
32 Summary of significant accounting policies continued
Notes to the consolidated financial statements
Impairment losses on initial classification as held-for-sale and
subsequent gains and losses on remeasurement are recognised
in profit or loss. Once classified as held-for-sale, intangible assets
and property, plant and equipment are no longer amortised or
depreciated, and any equity-accounted investee is no longer
equity accounted.
Impairment of non-monetary assets
(k)
Assets are reviewed 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 is the higher of an asset’s fair value less
costs of disposal and value-in-use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of
assets (cash generating units). Non-financial assets that suffered
impairment in prior years are reviewed for possible reversal of the
impairment at each reporting date.
(l) Business combinations
The acquisition method of accounting is used to account for all
business combinations, including business combinations
involving entities or businesses under common control,
regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a
subsidiary comprises the fair values of the assets transferred, the
liabilities incurred and the equity interests issued. The
consideration transferred also includes the fair value of any
contingent consideration arrangement and the fair value of any
pre-existing equity interest in the subsidiary. Acquisition-related
costs are expensed as incurred. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially at
their fair values at the acquisition date. On an acquisition-by-
acquisition basis, any non-controlling interest in the acquiree is
recognised either at fair value or at the non-controlling interests’
proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition-date
fair value of any previous equity interest in the acquiree over the
fair value of the acquirer’s share of the net identifiable assets
acquired is recorded as goodwill. If those amounts are less than
the fair value of the net identifiable assets of the subsidiary
acquired and the measurement of all amounts has been
reviewed, the difference is recognised directly in profit or loss as
a bargain purchase.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the
entity’s incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent
financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a
financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value
recognised in profit or loss.
Trade and other receivables
(m) Financial Instruments
(i)
Trade and other receivables are recognised initially at fair value
and subsequently measured at amortised cost, less provision for
expected credit losses. Trade receivables are due for settlement
no more than 21 days from the date of recognition. Expected
credit losses in relation to trade receivables are reviewed on an
ongoing basis.
(ii) Other financial assets
Classification
The Group classifies its other financial assets as being measured
either:
(cid:3013) at fair value through other comprehensive income or
through profit or loss; or
(cid:3013) at amortised cost.
The means by which the assets are measured depends upon
how they are managed and the contractual terms of the cash
flows.
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, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at fair value through profit or loss
are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the
Group’s business model for managing the asset and the cash
flow characteristics of the asset. Presently all the Group’s debt
instruments are classified under amortised cost.
Assets that are held for collection of contractual cash flows where
those cash flows represent solely payments of principal and
interest are measured at amortised cost. A gain or loss on a debt
investment that is subsequently measured at amortised cost and
is not part of a hedging relationship is recognised in profit or loss
when the asset is derecognised or impaired. Interest income from
these financial assets is included in finance income using the
effective interest rate method.
(iii)
Impairment
Trade receivables
For trade receivables, the Group applies the simplified approach
to providing for expected credit losses prescribed by AASB 9,
which requires the use of the lifetime expected credit loss
provision for all trade receivables from initial recognition of the
receivables.
Any impairment loss is recognised through the consolidated
statement of comprehensive income.
Debt instruments
The Group assesses on a forward-looking basis the expected
credit loss associated with its debt instruments carried at
amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk.
(iv) Derivatives and hedge accounting
The Group uses derivatives to hedge its exposure to interest
rates and foreign currency on borrowings. Derivative financial
instruments are measured and recognised at fair value on a
recurring basis.
The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and
if so, the nature of the item being hedged. The Group designates
certain derivatives as either fair value hedges or cash flow
hedges.
The full fair value of a hedging derivative is classified as a non-
current asset or liability when the remaining maturity of the
hedged item is more than 12 months; it is classified as a current
asset or liability when the remaining maturity of the hedged item
is less than 12 months.
The Group’s derivatives in place as at 30 June 2022 qualified as
fair value and cash flow hedges under AASB 9. The Group’s risk
management strategies and hedge documentation are aligned
with the requirements of AASB 9 and these relationships are
therefore treated as continuing hedges.
Fair value hedges that qualify for hedge accounting
The gain or loss relating to interest payments on interest rate
swaps hedging fixed rate borrowings is recognised in profit or
loss within finance costs. Changes in the fair value of derivative
hedging instruments and the hedged fixed rate borrowings
attributable to interest rate risk are recognised within ‘Net
gains/(losses) from derivative financial instruments’. The gain or
loss relating to the ineffective portion is also recognised in profit
or loss within ‘Net gains/(losses) from derivative financial
instruments’.
Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives is
recognised in other comprehensive income and accumulated in
the cash flow hedge reserve in equity. The gain or loss relating to
the ineffective portion is recognised immediately in profit or loss
within ‘Net gains/(losses) from derivative financial instruments’.
Amounts accumulated in equity are reclassified to profit or loss in
the periods when the hedged item affects profit or loss (for
instance when the forecast transaction that is hedged takes
place). The gain or loss relating to the effective portion of cross
currency interest rate swaps hedging fixed rate borrowings is
recognised in profit or loss within ‘Finance costs’.
Derivatives that do not qualify for hedge accounting
For derivative instruments that do not qualify for hedge
accounting, changes in the fair value of the derivative instrument
are recognised immediately in profit or loss.
(n) Borrowings
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
the consolidated statement of comprehensive income over the
period of the borrowing using the effective interest rate 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 unless there is
an effective fair value hedge of the borrowings, in which case a
fair value adjustment will be applied based on the mark to market
movement in the benchmark component of the borrowings and
this movement is recognised in profit or loss. If the facility has not
been drawn down, the fee is capitalised as a prepayment and
amortised over the period of the facility to which it relates.
Borrowings are removed from the consolidated balance sheet
when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount
of a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, is recognised in profit or
loss as other income or finance costs.
Where the terms of a financial liability are renegotiated and the
entity issues equity instruments to a creditor to extinguish all or
part of the liability (debt for equity swap), a gain or loss is
recognised in profit or loss, which is measured as the difference
between the carrying amount of the financial liability and the fair
value of the equity instruments issued.
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 reporting period.
Borrowing costs
Borrowing costs associated with the acquisition or construction of
a qualifying asset, including interest expense, are capitalised as
part of the cost of that asset during the period that is required to
complete and prepare the asset for its intended use. Borrowing
costs not associated with qualifying assets are expensed.
(o) Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation, and the amount can be reliably estimated. Provisions
are not recognised for future operating losses.
(p) Comparative information
Where necessary, comparative information has been adjusted to
conform with changes in presentation in the current year.
(q) Rounding of amounts
Under the option provided by ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191 issued by the
Australian Securities and Investments Commission relating to the
‘rounding off’ of amounts in the financial statements, amounts in
the Company and the Trust’s consolidated financial statements
have been rounded to the nearest hundred thousand in
accordance with that ASIC Corporations Instrument, unless
otherwise indicated.
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Charter Hall Group 2022 Annual Report
Charter Hall Group Financial Report 2022
Directors' declaration to Securityholders
Directors’ declaration to securityholders
For the year ended 30 June 2022
Independent auditor’s report
For the year ended 30 June 2022
Independent auditor’s report
Independent auditor’s report
In the opinion of the Directors of Charter Hall Limited (Company), and the Directors of the Responsible Entity of Charter Hall Property
Trust (Trust), Charter Hall Funds Management Limited (collectively referred to as the Directors):
(a)
(b)
(c)
the financial statements and notes of Charter Hall Limited and its controlled entities including Charter Hall Property Trust and
its controlled entities (Charter Hall Group) and Charter Hall Property Trust and its controlled entities (Charter Hall Property
Trust Group) set out on pages 84 to 135 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
giving a true and fair view of Charter Hall Group’s and Charter Hall Property Trust Group’s financial positions as at 30
June 2022 and of their performance for the financial year ended on that date; and
there are reasonable grounds to believe that both Charter Hall Limited and the Charter Hall Property Trust will be able to pay
their debts as and when they become due and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group
identified in Note 30 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the
deed of cross guarantee described in Note 30.
Note 32(b) 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 Group CEO 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.
David Clarke
Chair
Sydney
25 August 2022
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94
Independent auditor’s report
To the stapled security holders of Charter Hall Limited and Charter Hall Property Trust
Report on the audit of the financial reports
Our opinion
In our opinion:
The accompanying financial reports of Charter Hall Limited and its controlled entities and Charter Hall
Property Trust and its controlled entities (together “Charter Hall Group”) and Charter Hall Property
Trust and its controlled entities (together “Charter Hall Property Trust Group”) are in accordance with
the Corporations Act 2001, including:
(a) giving a true and fair view of the Charter Hall Group's and the Charter Hall Property Trust
Group’s financial positions as at 30 June 2022 and of their financial performance for the year
then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Charter Hall Group and the Charter Hall Property Trust Group financial reports comprise:
(cid:3511)
(cid:3511)
(cid:3511)
(cid:3511)
(cid:3511)
(cid:3511)
(cid:3511)
the consolidated balance sheets as at 30 June 2022
the consolidated statements of comprehensive income for the year then ended
the consolidated statement of changes in equity – Charter Hall Group for the year then ended
the consolidated statement of changes in equity – Charter Hall Property Trust Group for the
year then ended
the consolidated cash flow statements for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration to securityholders.
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
reports section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation.
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Directors’ Report and Financial Report | 137
Charter Hall Group 2022 Annual Report Independence
We are independent of the Charter Hall Group and the Charter Hall Property Trust Group in
accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical
requirements of the Accounting Professional & 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 reports 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 reports are 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 reports.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial reports as a whole, taking into account the geographic and management
structure of the Charter Hall Group and the Charter Hall Property Trust Group, their accounting
processes and controls and the industry in which they operate.
The Charter Hall Group comprises Charter Hall Limited and the entities it controlled at year end or
from time to time during the financial year and includes Charter Hall Property Trust and the entities it
controlled at year end or from time to time during the financial year. The Charter Hall Property Trust
Group comprises Charter Hall Property Trust and the entities it controlled at year end or from time to
time during the financial year.
Materiality
(cid:3511) For the purpose of our audit of Charter Hall Group and Charter Hall Property Trust Group we used overall
materiality of $27.1 million, which represents approximately 5% of Charter Hall Group’s operating
earnings.
(cid:3511) 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.
Independent auditor’s report
(cid:3511) We chose operating earnings (an adjusted profit metric) as the benchmark because, in our view, it is a
generally accepted industry metric against which the performance of Charter Hall Group is regularly
measured.
(cid:3511) We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
(cid:3511) Our audit focused on where Charter Hall Group and Charter Hall Property Trust Group made subjective
judgements; for example, significant accounting estimates involving assumptions and inherently uncertain
future events.
(cid:3511) We, as the group audit team, identified separate components of Charter Hall Group and Charter Hall
Property Trust Group representing individually significant investments. Component audit teams assisted
the group engagement team to perform an audit of those components.
(cid:3511) At both the Charter Hall Group and Charter Hall Property Trust Group level, audit procedures were
performed over group transactions and financial report disclosures.
(cid:3511) The work performed by component audit teams, together with the additional audit procedures performed at
the Charter Hall Group and Charter Hall Property Trust Group level provided us with sufficient evidence for
our opinion on the financial reports as a whole.
(cid:3511)
As part of our audit, we also considered the potential impact of climate change on our risk assessment.
We made enquiries of management to develop an understanding of the process that they adopted to
assess the extent of the potential impact of climate change risk on the financial reports. We considered
management's progress in developing its assessment, and in particular the assessment of the carrying
value of investments accounted for using the equity method.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial reports for the current period. The key audit matters were addressed in the
context of our audit of the financial reports 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. We communicated the key audit matters to the
Audit and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Carrying value of investments accounted for
using the equity method (Charter Hall Group and
Charter Hall Property Trust Group)
(Refer to notes 2 and 3)
Our audit procedures included evaluating the design
of relevant controls relating to Charter Hall Group’s
and Charter Hall Property Trust Group’s equity
accounted investments process.
Charter Hall Group and Charter Hall Property Trust
Group invest in both Funds Management and
Property Investment entities, including certain
underlying funds managed by Charter Hall Group.
To assess the carrying amount of investments
accounted for using the equity method, our audit
included the following audit procedures, amongst
others:
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9(cid:25)
9(cid:26)
Directors’ Report and Financial Report | 139
Charter Hall Group 2022 Annual Report Key audit matter
How our audit addressed the key audit matter
Key audit matter
How our audit addressed the key audit matter
Independent auditor’s report
These funds comprise listed and unlisted funds which
invest across a range of office, industrial, retail, social
infrastructure and diversified property portfolios.
These investments are typically classified as
associates or joint ventures as the investor is
considered to have significant influence or joint
control.
Investments in associates and joint ventures
contribute a significant proportion of total income and
total assets.
In accordance with Australian Accounting
Standards, interests in associates and joint
ventures, need to be assessed for indicators of
impairment at the reporting date. If indicators of
impairment exist, the recoverable amount for
each investment needs to be estimated. These
assessments involve significant judgements in
estimating future cash flows and the rate at which
they are discounted and in evaluating fair value less
costs to sell.
Given the significance of these investments to the
results and consolidated balance sheets of Charter
Hall Group and Charter Hall Property Trust Group,
together with the extent of judgement involved in light
of the continued impact and uncertainty of the current
economic environment in which Charter Hall Group
and Charter Hall Property Trust Group operated, we
consider this to be a key audit matter.
(cid:3511) Updating our understanding of market conditions
relating to the investments and discussing with
management the particular circumstances
affecting the investments.
(cid:3511) Reperforming the equity method of accounting
(cid:3511)
(cid:3511)
(cid:3511)
(cid:3511)
calculations by reference to underlying investee
financial information.
For a sample of material acquisitions made
during the year, agreeing certain transaction
details to appropriate source documents.
Evaluating the assessments made by Charter
Hall Group and Charter Hall Property Trust
Group of whether there were any indicators of
impairment.
For investments with indicators of impairment our
procedures included:
(cid:3511)
evaluating the appropriateness of
impairment assessment methodology and
significant assumptions applied in calculating
the recoverable amounts of the relevant
investments
performing testing over the mathematical
accuracy of the underlying calculations .
Assessing the reasonableness of the relevant
disclosures in the financial reports in light of the
requirements of Australian Accounting
Standards.
(cid:3511)
Revenue recognition – performance fees (Charter
Hall Group)
(Refer to note 4)
Our audit procedures included evaluating the design
of relevant controls relating to the recognition and
measurement of performance fee revenue.
Australian Accounting Standards require variable
revenue, such as performance fees, to be recognised
only to the extent that it is highly probable that a
significant reversal in the amount of cumulative
revenue recognised will not occur.
We considered performance fees to be a key audit
matter because of the:
(cid:3511)
Estimation uncertainty associated with estimating(cid:3)
the period remaining from balance sheet date to(cid:3)
performance fee crystallisation date and(cid:3)
determining the degree of probability of revenue(cid:3)
reversal during that period, including potential(cid:3)
and uncertain economic impacts of inflation and(cid:3)
interest rates(cid:3)on future property valuations.
For a sample of funds with performance fees
contracts, our procedures included the following:
(cid:3511) We assessed the appropriateness of revenue
recognition against the requirements of
Australian Accounting Standards (AASB15).
(cid:3511) We evaluated the appropriateness of significant
assumptions and data used to estimate the
variable revenue in the context of Australian
Accounting Standards and whether the
judgements made in selecting them give rise to
indicators of possible bias by Charter Hall Group.
This included:
o
Agreeing the data in Charter Hall Group’s
calculations to source documents, where
possible.
(cid:3511)
the potential financial significance of performance
fees to the Charter Hall Group results.
o
Assessing the appropriateness of the key
factors the Charter Hall Group considered to
evaluate the probability of a revenue
reversal by comparing significant
assumptions to those available in the
industry.
(cid:3511)
Tested the mathematical accuracy, on a sample
basis, of the performance fee calculations and
assessed whether they were in accordance with
the relevant agreements.
(cid:3511) Where a performance fee was paid during the
year, we inspected evidence of payment.
Assessed the reasonableness of the disclosures in
the financial report, including those related to
estimation uncertainty, against the requirements of
Australian Accounting Standards.
Other information
The directors of Charter Hall Limited and the directors of Charter Hall Funds Management Limited, the
responsible entity of Charter Hall Property Trust (collectively referred to as “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 2022, but does not include the financial reports and our
auditor’s report thereon.
Our opinion on the financial reports 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 reports, 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.
Responsibilities of the directors for the financial reports
The directors are responsible for the preparation of the financial reports that give 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
reports that give a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial reports, the directors are responsible for assessing the ability of the Charter
Hall Group and the Charter Hall Property Trust Group to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless
140
9(cid:27)
9(cid:28)
Directors’ Report and Financial Report | 141
Charter Hall Group 2022 Annual Report Independent auditor’s report
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the directors either intend to liquidate the Charter Hall Group and the Charter Hall Property Trust
Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial reports
Our objectives are to obtain reasonable assurance about whether the financial reports as a whole are
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 reports.
A further description of our responsibilities for the audit of the financial reports are 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.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 53 to 80 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the remuneration report of Charter Hall Limited for the year ended 30 June 2022
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors 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
E A Barron
Partner
Sydney
25 August 2022
142
(cid:20)(cid:19)(cid:19)
Directors’ Report and Financial Report | 143
Charter Hall Group 2022 Annual Report Securityholder
analysis
Holding distribution
as at 18 August 2022
Range
100,001 and Over
50,001 to 100,000
10,001 to 50,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable Parcels
Stapled
securities held
% of issued
stapled securities
No. of
holders
444,060,561
2,910,008
7,869,813
5,468,878
9,785,276
2,902,663
472,997,199
0
93.88
0.62
1.66
1.16
2.07
0.61
100.00
0.00
59
41
413
764
4,211
7,705
13,193
0
Substantial Securityholder notices
as at 22 August 2022
Ordinary securities
KKR Entities
Commonwealth Bank of Australia
Superannuation and Investments HoldCo Pty Ltd
Mitsubishi UFJ Financial Group, Inc.
First Sentier Investors Holdings Pty Limited
Cohen & Steers, Inc
Blackrock Group
The Vanguard Group, Inc
Date of change
5 July 2022
1 July 2022
30 June 2022
26 May 2022
25 May 2022
29 March 2022
24 September 2020
23 April 2019
Stapled
securities held
% securities
held
28,140,643
28,311,207
28,140,653
28,946,257
28,946,257
23,789,412
23,402,834
47,641,144
5.95
5.99
5.95
6.12
6.12
5.03
5.02
10.23
Top 20 registered equity Securityholders
as at 19 August 2022
Rank Name
A/C designation
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
A/C>
UBS NOMINEES PTY LTD
MR KEVIN PAUL BECK
NETWEALTH INVESTMENTS LIMITED
BNP PARIBAS NOMS(NZ) LTD
PORTMIST PTY LIMITED / DAVID HARRISON
CERTANE CT PTY LTD
ONE MANAGED INVESTMENT FUNDS LTD
MORGAN STANLEY AUSTRALIA SECURITIES
(NOMINEE) PTY LIMITED
Units
174,967,568
115,809,134
53,555,073
29,693,403
17,624,834
16,096,894
7,584,219
3,366,529
2,577,172
2,498,745
2,237,025
1,547,101
1,325,156
1,209,154
1,155,740
1,048,799
915,144
781,782
760,191
%IC
36.99
24.48
11.32
6.28
3.73
3.40
1.60
0.71
0.54
0.53
0.47
0.33
0.28
0.26
0.24
0.22
0.19
0.17
0.16
20
TROY CHRISTOPHER ANGUS
Total
Balance of register
Grand total
566,357
435,320,020
37,677,179
472,997,199
0.12
92.03
7.97
100.00
144
Securityholder analysis | 145
Charter Hall Group 2022 Annual Report
Investor
information
How do I invest in
Charter Hall?
Charter Hall Group securities are listed on the
Australian Securities Exchange (ASX: CHC).
Securityholders will need to use the services of a
stockbroker or an online broking facility to invest in
Charter Hall.
Where can I find more
information about
Charter Hall?
Charter Hall’s website, www.charterhall.com.au
contains extensive information on our Board
and management team, corporate governance,
sustainability, our property portfolio and all investor
communications including distribution and tax
information, reports and presentations. The website
also provides information on the broader Charter
Hall Group including other managed funds available
for investment.
Can I receive my Annual
Report electronically?
Charter Hall provides its annual report as a PDF,
accessible on its website. You can elect to receive
notification that this report is available online via your
Investor Centre login.
How do I receive payment
of my distribution?
Charter Hall Group pays its distribution via direct
credit. This enables you to receive automatic payment
of your distributions quickly and securely. You can
nominate any Australian or New Zealand bank,
building society, credit union or cash management
account for direct payment by downloading a direct
credit form using the Investor Login facility and
sending it to Link Market Services. On the day of
payment, you will be sent a statement via post or
email confirming that the payment has been made
and setting out details of the payment. The Group no
longer pays distributions by cheque.
Can I reinvest my
distribution?
When operating, the Distribution Reinvestment Plan
(DRP) allows you to have your distributions reinvested
in additional securities in Charter Hall, rather than
having your distributions paid to you. The DRP is
currently not available.
Do I need to supply my
Tax File Number?
You are not required by law to supply your Tax File
Number (TFN), Australian Business Number (ABN)
or exemption. However, if you do not provide these
details, withholding tax may be deducted at the
highest marginal rate from your distributions. If you
wish to provide your TFN, ABN or exemption, please
contact Link Market Services on 1300 303 063 or your
sponsoring broker. You can also update your details
directly using the Investor Login facility on our website.
How do I complete my
annual tax return for the
distributions I receive from
Charter Hall?
At the end of each financial year, we issue
Securityholders with an Annual Taxation Statement.
This statement includes information required to
complete your tax return. The distributions paid in
February and August are required to be included in
your tax return for the financial year the income was
earned, that is, the distribution income paid in August
2021 should be included in your 2021 financial year
tax return.
How do I make a
complaint?
Securityholders wishing to lodge a complaint should
do so in writing and forward it to the Compliance
Manager, Charter Hall Group at the address shown
in the Directory. In the event that a complaint cannot
be resolved within a reasonable timeframe (usually
45 days) or you are not satisfied with our response,
you can seek assistance the Australian Financial
Complaints Authority (AFCA), an external complaints
resolution service that has been approved by ASIC.
AFCA’s contact details are below:
Australian Financial
Complaints Authority
GPO Box 3
Melbourne VIC 3001
Phone 1800 931 678
Email
info@afca.org.au
Web www.afca.org.au
146
Investor information | 147
Charter Hall Group 2022 Annual Report Contact
details
Registry
To access information on your holding or update/
change your details including name, address, tax
file number, payment instructions and document
requests, contact:
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Phone 1300 303 063 (within Australia)
+61 2 8280 7134 (outside Australia)
Email
charterhall.reits@linkmarketservices.com.au
Web
linkmarketservices.com.au
Investor Relations
All other enquiries related to Charter Hall Group can
be directed to Investor Relations:
Charter Hall Group
GPO Box 2704
Sydney NSW 2001
Phone 1300 365 585 (within Australia)
+61 2 8651 9000 (outside Australia)
Email
reits@charterhall.com.au
Web
charterhall.com.au
This page has been left blank intentionally.
148
Contact details | 149
Charter Hall Group 2022 Annual Report
Corporate
directory
Registered Office
Level 20, No.1 Martin Place
Sydney NSW 2000
Phone +61 2 8651 9000
ASX code CHC
Directors
David Clarke (Chair), David Harrison, Karen Moses,
Greg Paramor AO, David Ross and Jacqueline Chow
Company Secretary
Mark Bryant
Auditor
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay, Barangaroo
Sydney NSW 2000
Important information
This Annual Report has been prepared and issued by Charter Hall Limited (ABN 57 113 531 150) and Charter Hall Funds Management Limited (ABN 31 082 991
786 AFSL 262861) (CHFML) as Responsible Entity of the Charter Hall Property Trust (together, the Charter Hall Group or the Group). The information contained
in this report has been compiled to comply with legal and regulatory requirements and to assist the recipient in assessing the performance of the Group
independently and does not relate to, and is not relevant for, any other purpose.
This report is not intended to be and does not constitute an offer or a recommendation to acquire any securities in the Charter Hall Group. This report does
not take into account the personal objectives, financial situation or needs of any investor. Before investing in Charter Hall Group securities, you should
consider your own objectives, financial situation and needs and seek independent financial, legal and/or taxation advice. Historical performance is not a
reliable indicator of future performance. Due care and attention has been exercised in the preparation of forward looking statements. However, any forward
looking statements contained in this report are not guarantees or predictions of future performance and, by their very nature, are subject to uncertainties
and contingencies, many of which are outside the control of the Group. Actual results may vary materially from any forward looking statements contained in
this report. Readers are cautioned not to place undue reliance on any forward looking statements. Except as required by applicable law, the Group does not
undertake any obligation to publicly update or review any forward looking statements, whether as a result of new information or future events.
The receipt of this report by any person and any information contained herein or subsequently communicated to any person in connection with the Charter
Hall Group is not to be taken as constituting the giving of investment, legal or tax advice by the Charter Hall Group nor any of its related bodies corporate,
directors or employees to any such person. Neither the Charter Hall Group, its related bodies corporate, directors, employees nor any other person who may
be taken to have been involved in the preparation of this report represents or warrants that the information contained in this report, provided either orally or in
writing to a recipient in the course of its evaluation of the Charter Hall Group or the matters contained in this report, is accurate or complete.
CHFML does not receive fees in respect of the general financial product advice it may provide; however, entities within the Charter Hall Group receive fees for
operating the Charter Hall Property Trust in accordance with its constitution. Entities within the Group may also receive fees for managing the assets of, and
providing resources to, the Charter Hall Property Trust. All information herein is current as at 30 June 2022 unless otherwise stated. All references to dollars
($) or A$ are to Australian Dollars unless otherwise stated.
Information regarding US Investors/US Persons:
Each person that holds Charter Hall Group securities that is in the United States (US) or is a US Person is required to be a Qualified Institutional Buyer/Qualified
Purchaser (QIB/QP) at the time of the acquisition of any Charter Hall Group securities, and is required to make the representations in the confirmation letter or
subscription agreement as of the time it acquired the applicable securities.
The securities can only be resold or transferred in a regular brokered transaction on the ASX in accordance with Rule 903 or 904 of Regulation S, where
neither it nor any person acting on its behalf knows, or has reason to know, that the sale has been prearranged with a US Person, or that the purchaser is in
the United States or a US Person (e.g. no prearranged trades (‘special crossing’) with US Persons or other off-market transactions). To the maximum extent
permitted by law, the Charter Hall Group reserves the right to:
(i) request any person that they deem to be in the United States or a US Person, who was not at the time of acquisition of the securities a QIB/QP, to sell
its securities;
(ii) refuse to record any subsequent sale or transfer of securities to a person in the United States or a US Person; and
(iii) take such other action as it deems necessary or appropriate to enable the Charter Hall Group to maintain the exception from registration under Section
3(c) (7) of the Investment Company Act.
If you are not the beneficial owner of securities in the Charter Hall Group, you must pass this information to the beneficial owner of the securities.
© Charter Hall
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Corporate directory | 151
Charter Hall Group 2022 Annual Report charterhall.com.au/chc