Charter Hall Group
Annual Report
2023
CHC
Charter Hall Group
Annual Report 2023
Charter Hall
GROUP
Acknowledgement of Country
Charter Hall acknowledges the Traditional
Custodians of the lands on which we work
and gather.
We pay our respects to Elders past and
present and recognise their continued care
and contribution to Country.
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Contents
Strategy
Performance Highlights
About Us
Chair Message
Managing Director & Group CEO Message
Capital Sources
Industrial & Logistics
Long WALE Retail
Shopping Centre Retail
Office
Social Infrastructure
Charter Hall Direct
Sustainability
Leadership
Directors’ Report and Financial Report
Securityholder Analysis
Investor Information
Contact Details
Corporate Directory
Our annual reporting suite
– Annual Results Presentation >
– Sustainability Report >
– Corporate Governance Statement >
– Modern Slavery Statement >
Published before 31 December 2023
Left: Ascent Logistics Centre
Alexandria NSW
Gadigal land
Cover: Midwest Logistics Hub
Truganina VIC
Bunurong land
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Charter Hall Group Annual Report 2023 Charter Hall Group
Annual Report 2023
STRATEGY
We remain focused on creating value and generating
superior returns for our investor customers through
our strategy of access, deploy, manage and invest.
Access
Accessing equity from
listed, wholesale and
retail investors.
Deploy
Creating value through
attractive investment
opportunities.
1 year1
3 years1
5 years1
Gross equity
allotted
$2.8bn
$12.8bn
$21.3bn
Acquisitions
Divestments
$7.6bn
$22.5bn
$34.0bn
$2.8bn
$6.5bn
Net
acquisitions
$4.8bn
$16.1bn
$8.3bn
$25.7bn
Manage
Managing funds and
assets, leasing and
development services.
Invest
Investing alongside our
capital partners.
Gross
transactions
$10.4bn
$29.0bn
$42.3bn
Development
Capex
$3.0bn
$7.4bn
$9.8bn
Group
funds under
management
(FUM)
Property
FUM growth
Increase in
Property
Investment
(PI) portfolio
Total PI
yield/return
$87.4bn
↑ $7.5bn
$71.9bn
↑ $6.2bn
$31.3bn
($10.4bn p.a.)
$48.7bn
($9.7bn p.a.)
$33m
↑ 1.1%
$0.9bn
↑ 45.5%
$1.2bn
↑ 73.0%
4.4%
PI yield
11.9%
PI return2
10.5%
PI return2
5
Above: Truganina Distribution Facility
Truganina VIC
Bunurong land
1. Page refers to Property FUM unless otherwise stated.
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 2023. This excludes investments in new
vehicles held for less than a year.
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Charter Hall Group
Annual Report 2023
Performance
HIGHLIGHTS1
Our results demonstrate the
strength of our underlying business
and its resilience throughout the
property cycle.
Clockwise from left:
Mater Corporate
Headquarters and
Training Facilities
Newstead QLD
Turrbal and
Yuggera land
130 Lonsdale Street
Melbourne VIC
Wurundjeri and
Bunurong land
Group Returns
Operating
earnings
$441m
Statutory
profit2
$196m
Operating earnings
per share (OEPS)
93.3cps
Return on
contributed equity3
23.8%
Contributed equity
per security of $3.91
Property Investments
Funds Management
Balance Sheet
Property Investment
portfolio
$3.0bn
Group Funds Under
Managment (FUM)4
$87.4bn
↑9.4%
Property Investment
portfolio growth
Property
FUM
$33m
Property Investment
yield
4.4%
$71.9bn
↑9.5%
Gross property
transactions
$10.4bn
Funds Management
(FM) yield5
9.3%
Net tangible assets
(NTA)
$6.28
Balance sheet gearing
2.2%
Investment Capacity
Group investment
6
capacity
$6.0bn
1. Figures and statistics throughout this report are for the 12 months to
30 June 2023, 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 2023.
4. Includes Paradice Investment Management (PIM) Partnership,
with $15.6bn of FUM.
5. 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 2023.
6. Investment capacity calculated as cash plus undrawn debt facilities
for CHC and the funds management platform. At 30 June 2023,
platform cash was $0.9bn. Excludes committed and unallotted equity.
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ABOUT
US
For more than three decades,
we have focused on the collective
ambitions of our customers,
driving mutual success and
enduring impact.
As a property investment and funds management company,
Charter Hall (CHC or the Group) takes pride in custodianship of
our investor capital. We recognise that our responsibility extends
far beyond this, presenting opportunity for us to make a real
difference. By harnessing the ambitions of our customers, our
people and our communities, we create opportunities to create
value that makes a lasting impact.
Driven by our purpose
United by our values
Creating
better futures
by driving
value and
mutual
success.
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.
Clockwise from left:
130 Lonsdale Street
Melbourne VIC
Wurundjeri and
Bunurong land
Berrinba Motorway
Industrial Park
Yugambeh and
Yuggera land
Delivered in partnership
Tenant customers
We use our national reach and
local market expertise to deliver
inventive, sustainable solutions for
our tenant customers. The breadth
and depth of our cross-sector
expertise enables us to problem-
solve holistically and better deliver
on the evolving needs of our
customers. Our partnership with
tenant customers runs deep,
and we continue to challenge
ourselves to go above and beyond
in our service.
Our people
The strength of our business is our
people. We act and behave as one
across the diverse elements of our
business. We create safe, equitable
and inclusive environments to
support and energise our high-
performing talent. To bring out
the best in our people we provide
experience-based learning to
accelerate their growth, flexible
workspaces to foster innovative
thinking and a sense of community
to encourage well-being.
Environment
We continue to deliver sustainable
outcomes with long-term impact,
including making meaningful
progress toward our Net Zero
by 2025 target. We work closely
with our customers and supply
chain partners to identify further
opportunities to reduce emissions,
make more sustainable choices,
and ultimately deliver a healthier
future for our industry, people and
the planet.
Investors
We have built a reputation as
trust-worthy custodians of
capital, with a long track record
of delivering strong returns. We
work hard to create investment
funds that can withstand the
property cycle and generate
consistent, superior returns over
the long-term. We invest alongside
our capital partners to achieve
collective ambitions. Our focus
on quality, well-located assets
with long-term leases delivers
stability, returns and growth
through market cycles.
Community
Our goal is to create an enduring
impact for communities. Partnering
where we can make the most
difference, we focus on vulnerable
youth and communities impacted
by hardship. We have established
meaningful partnerships with
community organisations whose
work contributes to better futures
for entire communities. Through
these partnerships and Pledge 1%
(our commitment to sharing one
percent of profits, places and our
people’s time to do good), we can
amplify and measure our impact.
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Charter Hall Group Annual Report 2023
Chair
MESSAGE
Despite a challenging economic
environment that has impacted businesses
and individuals across the country, our
underlying business remains strong, our
people remain engaged, and our culture of
partnership and mutual success continues
to drive our approach.
Dear Securityholder
This year, we saw economies
across the globe come under
pressure, as supply chain
disruptions lingered and high
inflation drove the Reserve Bank
of Australia to increase cash rates
at an historic pace, with 11 rate
rises during the financial year.
As a result, many, if not most,
across the country have felt
the effects, with wide-reaching
consequences impacting much
of the property sector as well.
Throughout the Group’s history,
we have highlighted the
importance of our resilient and
sustainable business model that
can withstand the property cycle.
It is times like these that put it
to the test, and we are pleased
to report that we have once
again proven the strength of
our underlying business,
delivering strong results in new
development completions
and robust leasing activity.
This year, we delivered 93.3 cents
per security (cps) in operating
earnings, ahead of our guidance
of no less than 90 cps, and paid to
our securityholders a distribution
per stapled security of 42.5 cps.
Earnings decreased compared to
last year, in large part due to fewer
performance fee review events.
We continue to carefully manage
our costs and make strategic
investments – demonstrating
our commitment to prudent
capital management and active
portfolio curation.
Our demonstrated
resilience is a result
of our approach
to partnership,
creating long-lasting
relationships with our
customers and our
communities.
Our strengths have enabled us to
hold the largest sector-diversified
commercial property portfolio
in Australia, with $71.9 billion in
property FUM and a total of $87.4
billion in total FUM.
As we continue to weather the
property cycle, we remain focused
on capitalising on opportunities
while managing risks. Importantly,
we will continue to look after our
people, our customers, and our
communities, ensuring that we
work together to achieve mutual
success and enter the next growth
phase poised to uncover new
opportunities, together.
Above: 333 George Street
Sydney NSW
Gadigal land
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We have accelerated
our commitment to
Net Zero carbon in
operations (Scope 1
and Scope 2) to
2025 1 from 2030.
This enormous achievement
is a direct reflection of how
we leverage our scale to deliver
platform-wide efficiencies,
as well as the actions of our
people in creating better
environmental outcomes.
Since 2017, we have achieved
an absolute reduction of 61% in
Scope 1 and Scope 2 emissions and
remain on track to meet our Net
Zero target of 20251. It’s important
to note that we have not achieved
this alone. It is in large part a
result of our strong track record
of partnering with our tenant
customers, as demonstrated
by the 63MW of solar already
installed across our portfolio.
We will pursue further opportunities
to partner with our tenant
customers and supply chain
partners on emissions reductions
initiatives, especially as we work
toward our Scope 3 emissions
reduction targets.
We continue 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 remain focused on 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. ▶
David Clarke, Chair
Investing in long-term
outperformance
While this report measures
our performance for the year to
30 June 2023, we see long-term
performance as the true test of
success. Over the past 10 years,
we’ve delivered securityholders
15.1% post-tax growth in earnings
per annum, and distribution growth
of 7.7% per annum.
We know that ongoing
outperformance is achieved
in close partnership with our
customers, and that our approach
to partnership is a key differentiator
for us. In recent years, we have
invested heavily in building our
collective capability to partner
with our tenant customers more
strategically, which has enabled
us to better transform insights
into actions and collaboration into
mutual success.
We also recognise that central to
our success is our people, and it
is the responsibility of the Board
and leadership team to ensure we
foster a dynamic and rewarding
workplace that attracts and retains
top talent.
In order to do that, we’ve continued
to invest in well-being and safety
processes, and enabled our people
to focus on high-value work and
structured, experience-based
learning opportunities.
Further, our long-term focus on
creating an inclusive workplace
saw us awarded the Employer
of Choice for Gender Equality by
the Workplace Gender Equality
Agency for the second time.
Demonstrable progress on
environmental goals
Our approach to sustainability
continues to be guided by the
business fundamentals that we
have relied on for more than
three decades, with a focus on
addressing current and emerging
challenges for the environment
and our communities.
From an environmental perspective,
we continued to deliver
measurable progress this year.
1.
Our Net Zero target applies to Scope 1 and Scope 2 emissions for existing assets that fall under
the operational control of responsible entities for which Charter Hall Limited is the controlling
corporation. Where residual Scope 1 emissions are offset, Charter Hall will use high quality
nature-based offsets.
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Charter Hall Group Annual Report 2023 Meaningful action for an
enduring impact
We continue to focus on how we
help build community foundations
that support prosperity in periods
of growth and provide stability in
times of upheaval.
In our efforts to achieve enduring
impact, we have identified
opportunities to deliver lasting
change and maximise benefits
for individuals and communities.
The focus on building long-lasting,
meaningful partnerships with
community organisations is not
new to Charter Hall. However,
reframing our thinking around how
we approach these partnerships
has enabled us to establish a
more thoughtful framework to
ensure we are well positioned to
provide immediate support to the
communities most impacted by
natural disasters, whether that be
in preparedness, relief or recovery.
We continue to diversify our supply
chain, creating opportunities
for those affected by economic
disadvantage, disability or social
marginalisation to work with us.
This year, in line with our Pledge 1%
commitment, our efforts resulted
in more than $1.4 million in
community investment, a 16%
increase from FY22. Notably,
FY23 saw a record level of
volunteering hours by our people,
which we are extremely proud of.
Looking forward
Many of the economic challenges
of FY23 are expected to linger
in FY24. We continue to focus
on what is within our control,
including our cost base and how
we strategically invest and deploy
capital, setting out priorities that
will deliver long-term, sustainable
growth for securityholders.
Charter Hall has been built with a
focus on resilience, with a talented
workforce, best-in-class partners
and customers, and carefully
curated portfolios. This will enable
us to navigate uncertainty with
confidence through this phase
of the property cycle.
We 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.
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 leadership team 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
We continued to ensure robust
governance underpins our
operations and that we uphold
universal principles on human
rights, labour, the environment and
anti-corruption. Our annual
Modern Slavery Statement was
completed, outlining efforts to
prevent occurrences of modern
slavery in our supply chain, with
our Human Rights and Modern
Slavery Working Group actively
reviewing and managing our
efforts in relation to this across
all our portfolios.
As part of our commitment
to Indigenous reconciliation
and the implementation of our
Reconciliation Action Plan (RAP),
we continue to actively work
on building our relationships
and capacity with First Nations
businesses, as well as sharing
factual and impartial information
to support our people to be better
informed on issues impacting
First Nations Peoples.
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.
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.
I encourage all our securityholders
to review the Directors Report on
page 43 to understand more about
the Board.
Above: Bunnings Caboolture
Brisbane QLD
Gubbi Gubbi land
Left: Kids Club Murrumbeena
Melbourne VIC
Wurundjeri and
Bunurong land
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Charter Hall Group Annual Report 2023 Managing Director
& Group CEO
MESSAGE
Dear Securityholder
FY23 presented a range of
challenges to economies around
the world. Supply chain and labour
constraints drove soaring inflation,
which resulted in record interest
rate rises in Australia and globally.
This rapid increase in the cost
of debt has impacted many
asset classes.
Charter Hall has also felt
the effects of this economic
turbulence. However, our focus
on resilience, diversification and
partnership has allowed us to
deliver above guidance earnings,
while we have continued to curate
our portfolios and stay close to our
investor and tenant customers as
they navigate this turbulence.
Our property FUM grew by
$6.2 billion or 9.5% to
$71.9 billion over the year.
Our return on
contributed equity
continues to be
sector leading at
23.8%,
as we harness our investment
expertise for the benefit of
securityholders and invest
alongside our investors.
Our Property Investment Portfolio
grew $33 million and now stands
at $3.0 billion.
We delivered earnings of 93.3 cps,
ahead of our guidance of no
less than 90 cps. This was a 19%
decrease in earnings compared to
FY22, which reflects the elevated
transaction and performance fee
revenue delivered in FY22.
Importantly, we have continued
the upward trajectory of earnings
growth ex-transaction and
performance fees, which has
been a key focus of the Group
since our ASX listing in 2005.
We will continue to drive this
element of sustainable earnings
growth despite headwinds to fund
distributions from rising debt costs.
While inflation growth is decreasing,
FY24 is expected to remain a
challenging operating environment.
With that in mind, we will continue
to optimise cost control and
sustain high-quality service for
our customers. Prior dislocation
events have created opportunities
for the benefit of investors and
securityholders. It is in times like
these that customers turn to trusted
companies with scale, a proven
track record, an experienced team
providing best-in-class service and
a business model that is built to
endure. We see these as the key
ingredients to retain and grow our
customer base.
As the largest custodian of capital
invested in Australian property,
our approach to partnership and
mutual success remains central to
the way we do business and will
enable us to weather the cycle
and emerge poised for growth.
Demonstrated strength of
our underlying business
Throughout the year, we have
continued to actively curate
sustainable and resilient portfolios
that unlock value for investors
through all market conditions.
This focus on performance for our
investors, and our co-investment
alongside them, continues to
attract capital to our platform.
FY23 was no exception, with
$2.8 billion of gross equity allotted,
which helped facilitate $10.4 billion
of gross transactions.
Our Office development activity
remained robust, delivering
$2.2 billion in new developments
this year, with a further $13.9 billion
in the pipeline. Modernisation of our
Office portfolios is targeted to meet
the bifurcation of tenant demand
we have seen play out for many
years. This trend was accelerated
by the pandemic, with tenant
customers increasingly committing
to modern and new buildings so
they can retain and attract talent
to the very best workplaces.
We continued to enjoy strong
leasing success in our Office
projects, having leased
388,000sqm across 222 leasing
transactions. 360 Queen Street
in Brisbane is now two-thirds
pre-committed. 555 Collins Street
in Melbourne has over 90% of
available space committed to
blue-chip companies including
anchor tenant Amazon, Allianz,
Aware Super and Ericsson.
60 King William Street in Adelaide
has 95% pre-commitments to
NAB, Telstra and Services Australia.
Notably, our Office portfolio is over
96% occupied versus a national
average of 85.1%, demonstrating
the critical role that modern
workplaces will continue to play
and our ability to deliver on our
tenant customers’ evolving needs.
Our Industrial & Logistics business
also continued to grow, delivering
$874 million of new facilities
through its development pipeline
and actively curating its portfolio
by undertaking $3.4 billion of
acquisitions and $1.5 billion of
divestments. Excitingly, we have
begun construction on our first
multi-level warehouse, located
in the inner-city Sydney suburb
of Alexandria, which is already
80% pre-leased to Schindler and
Coles. We remain well-positioned
to capitalise on the accelerating
demand for modern, purpose-
built, highly efficient facilities and
warehouses. Our Industrial &
Logistics portfolio has grown to
over $30 billion (including pipeline),
making Charter Hall one of the
largest logistics platforms nationally.
In Retail, our non-discretionary
convenience retail portfolio
continues to provide resilient
income returns, with our triple
net, CPI-linked convenience
retail platform now exceeding
$9 billion. This is complemented
by a large Bunnings portfolio and
supermarket-anchored shopping
centre portfolio, seeing our Retail
FUM total $14 billion.
Similarly, the essential service
thematic embedded in our Social
Infrastructure portfolio and the
importance of these assets to
the community and the economy
means such assets have delivered
resilience and liquidity where funds
have looked to divest assets. We
continued to see opportunities to
grow in this space and further our
position as a market leading social
infrastructure partner.
David Harrison, Managing Director & Group CEO
Our property funds
management
portfolio is
well-diversified,
comprising 1,663
properties with a
lettable area of
11.9 million sqm and
delivering over
$3.3bn in net rental
income per annum.
We have built resilience across all
our assets and portfolios. Evidence
of this is that 26% of all leases are
triple net, meaning the tenant pays
all outgoings including structural
repairs and maintenance. Similarly,
we have made a conscious effort to
build portfolios that are positioned
to benefit from rising inflation, with
21% of all leases having inflation-
linked annual rent escalations,
providing direct inflation hedging.
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 cash retention to fund a
FY23 payout ratio of circa 50%.
Our growth in earnings comes
after-tax. On a post-tax basis,
we delivered sector-leading
15.1% OEPS compound annual
growth rate (CAGR) annually
over the last ten years. Tax
paid earnings also deliver
valuable franking credits for our
securityholders. Grossed-up for
franking credits, securityholders
received distributions worth
50.76 cps for FY23. 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. Group
WALE remains strong at
8.2 years and the weighted
average capitalisation rate is
4.76%, reflecting the low risk
profile and high-quality assets in
our funds and partnerships.
Active development pipeline
Our development capex continued
to make a meaningful contribution
to our FUM and portfolio curation.
We had $3.1 billion of development
completions during the year
across our Office (four assets) and
Industrial & Logistics (17 facilities)
portfolios. This is an enormous
achievement. ▶
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Charter Hall Group Annual Report 2023 Charter Hall Group
Annual Report 2023
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 FY23 have added significant
incremental stabilised
income to our portfolios.
Our total development pipeline
now stands at $13.9 billion, with
$6.6 billion committed and under
construction, providing for future
portfolio curation and FUM growth.
Demand for industrial space
continues to significantly outweigh
supply, as demonstrated by the
high levels of pre-leasing to
quality tenants within our
$6.5 billion Industrial & Logistics
development pipeline.
Our pipeline will generate
institutional-quality, long-leased
assets for our funds and will
provide attractive incremental
FUM growth and enhance our
ability to attract capital.
16
Our $7.1 billion Office pipeline
continues to deliver attractive
development returns and new
buildings to meet tenant
demand for best-in-class,
modern and sustainable
workplaces. This includes
completions at 555 Collins Street in
Melbourne, 60 King William Street
in Adelaide, 155 Little Lonsdale at
Wesley Place in Melbourne and
31 Duncan Street in Brisbane.
Work continues to progress on
schedule at 480 Swan Street,
Richmond, which will be the
32,000sqm Australia Post
headquarters in Melbourne.
This year we progressed our
plans for Chifley South, which
is already 30% pre-committed,
having submitted our development
application following endorsement
from the City of Sydney.
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.
72% of our tenant
customers lease
more than one
tenancy across
the platform.
We see our customers as partners,
and this often generates sale and
leaseback opportunities.
We continue to have independent
surveys of tenant customers
and are pleased to see our Net
Promoter Score (NPS) scores
leading almost all our peers across
all sectors.
Defensive and diversified
Property Investment portfolio
With $3.0 billion co-invested in our
funds, 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.
Occupancy has improved from
97.3% to 97.6%, and the Property
Investment portfolio WALE remains
a healthy 7.4 years. Our weighted
average rent review is attractive
at 3.6%, boosted by our exposure
to CPI-linked leases. The Group’s
Property Investment portfolio is
a very defensive, well diversified,
core investment portfolio.
Our people are our
greatest asset
Key to our success are 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. It is the breadth
of experience and talent within
our sector-diverse business
that enables us to deliver for
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 FY23, our
engagement score was 89% –
nine points above the Australian
norm – with 93% of our people
saying that Charter Hall is a great
place to work.
Diversity and inclusion continues
to be a priority, across the business
as we actively seek to attract and
retain talented people from a wide
range of experiences, backgrounds
and perspectives, celebrate
diversity and provide a sense of
belonging for all our people.
Clockwise from left:
130 Lonsdale Street
Melbourne VIC
Wurundjeri and Bunurong land
Queensland TAFE
Robina QLD
Kombumerri land
Outlook and guidance
Based on no material adverse
change in current market
conditions, FY24 guidance is for
post-tax OEPS of approximately
75 cents. FY24 distribution per
security guidance is for 6% growth
over FY23.
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
Group Board for their continued
strategic guidance along with the
Independent Directors of our
Fund Boards.
Our approach to partnership
underpins the strength of our
long-term outlook, as we continue
to deepen our existing relationships
and establish new ones, unlocking
value and enabling a better
future for our customers, our
communities, and our people.
We are proud of what has been
achieved over more than three
decades and continue to look
beyond the horizon, with 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
17
CAPITAL
SOURCES
From the properties we invest in, to the way we
source and deploy capital, diversification is central to
our success. Our investment options attract a wide
range of investors, from wholesale and institutional
investors to retail investors.
Clockwise from left:
Canning Vale
Distribution Facility
Whadjuk land
10 Shelley Street
Sydney NSW
Gadigal land
Wholesale pooled
and partnerships
Listed
Charter Hall Direct
FUM
$48.1bn
$13.3bn
$10.5bn
Occupancy
97.1%
99.1%
99.2%
Capitalisation rate
4.6%
5.1%
Gearing
WALE
32.1%
31.4%
7.7yrs
10.0yrs
CHC investment
$1.7bn
$0.8bn1
5.0%
38.0%
7.6yrs
$0.4bn
18
1. Held at accounting value not market value.
19
Charter Hall Group Annual Report 2023 INDUSTRIAL
& LOGISTICS
With one of the largest national portfolios in the
sector and a multi-billion dollar development pipeline,
we’re focused on supporting the changing landscape
of growing populations, consumer shopping and
supply chains.
With our national scale and diversity of assets, we partner with the most
trusted local and global businesses to meet their current logistics needs,
while providing the flexibility 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 online shopping and 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
4.4%
Capitalisation rate
10.1yrs
WALE
Key highlights
$24.5bn
FUM
303
Properties
$6.5bn
Development pipeline
Above and right:
Midwest Logistics Hub
Truganina VIC
Bunurong land
20
21
Charter Hall Group Annual Report 2023 Long WALE
RETAIL
RETAIL
Our portfolio of long WALE assets with strong
tenant covenants provides investors with stable
and secure income, bolstered through our active
management and portfolio curation. This year,
we enhanced the scale of our portfolio, while
increasing exposure to CPI-linked rent reviews.”
Avi Anger
Fund Manager, Charter Hall Long WALE REIT (CLW)
Key highlights
$9.7bn
FUM
4.7%
Capitalisation rate
803
Properties
10.7yrs
WALE
Clockwise from
Top: Bunnings
Palmerston
Yarrawonga NT
Larrakia land
New Brighton Hotel
Manly NSW
Gayemagal land
bp Asquith
Sydney NSW
Darramurragal and
Darug land
$0.2bn
Development pipeline
22
23
Charter Hall Group Annual Report 2023 Charter Hall Group
Annual Report 2023
Shopping Centre
RETAIL
Clockwise from above:
Bass Hill Plaza NSW
Bidjigal land
Secret Harbour Square WA
Bindjareb land
Rosebud Plaza VIC
Bunurong land
Gateway Plaza
Leopold VIC
Wadawurrung land
As the leading owner and manager of convenience
retail property, our long-term and deep relationships
with some of Australia's best-known brands enables
us to provide investors with a highly defensive and
resilient income stream. In FY23, we continued
to deliver for our investors through curation that
enhanced the quality of our portfolio, active
asset management and utilisation of our low site
coverage to optimise the tenancy mix servicing our
communities, and prudent capital management to
ensure resilience.”
Ben Ellis
Retail CEO and Fund Manager, Charter Hall Retail REIT (CQR)
5.7%
Capitalisation rate
5.0yrs
WALE
Key highlights
$4.3bn
FUM
52
Properties
$0.1bn
Development pipeline
24
25
OFFICE
Despite the office market being under
pressure this year, our portfolio of
modern, sustainable workplaces has
proven resilient.
We leased 388,000sqm across 222 leasing transactions,
resulting in over 96% portfolio occupancy compared
to the national average of 85.1%. We also delivered an
impressive $2.2 billion in development completions,
including 555 Collins Street and 155 Little Lonsdale in
Melbourne, 60 King William Street in Adelaide, and
31 Duncan Street in Brisbane.
We continue to build lasting relationships with our
customers and carefully curate our portfolio to meet
demand for premium offices that are rich with amenity.
This is reflected in our strategic investments and
development pipeline, including our recently submitted
application for Chifley South in Sydney which will realise
the development potential of the site.”
Carmel Hourigan
Office CEO
Clockwise from left:
555 Collins Street
Melbourne VIC
Wurundjeri and
Bunurong land
201 Elizabeth Street
Sydney NSW
Gadigal land
Key highlights
$29.3bn
FUM
5.0%
Capitalisation rate
$7.1bn
Development
pipeline
96
Properties
5.9yrs
WALE
26
27
Charter Hall Group Annual Report 2023 Charter Hall Group
Annual Report 2023
SOCIAL
Infrastructure
With Australia’s largest listed social infrastructure
REIT as part of our portfolio, we provide investors
with secure income and capital growth through
exposure to social infrastructure property and support
communities with essential services. Our diversified
portfolio has strong covenants and long WALEs to
tenant customers including government
and Goodstart Early Learning.”
Travis Butcher
Fund Manager, Charter Hall Social Infrastructure REIT (CQE)
Key highlights
$3.7bn
FUM
4.6%
Capitalisation rate
409
Properties
13.9yrs
WALE
100%
Occupancy
Clockwise from left:
Innovation Quarter
Westmead NSW
Burramattagal land
Busy Bees
Killarney QLD
Garigal and Gayemagal land
Emergency Command Centre
Keswick SA
Kaurna land
28
29
Charter Hall
DIRECT
As one of Australia’s leading direct property
fund managers, Charter Hall Direct has a strong
track record managing unlisted property funds
for more than 25 years. We offer investors
access to sector-specific and diversified funds
that are consistently highly rated by external
research groups. Our skilled and motivated
team utilise their industry experience to deliver
regular income for our investors, with a focus on
outperformance of fund benchmarks over the
long term.”
Steven Bennett
Direct CEO
Direct funds net return since inception
Funds have returned an average of 10.6% p.a. since inception
Clockwise from
above: Translink
Distribution Centre
Launceston TAS
Therrernotepanner,
Leterrermairrener
and Panniher land
Geoscience Australia
Narrabundah ACT
Ngunnawal land
Australian
Office
Australian Industrial
& Logistics
Australian Diversified
Long WALE
Australian
Diversified
2
1
1. Benchmark refers to the headline MSCI/IPD Unlisted Core Wholesale
3. Returns refer to the following unit classes: DIF3 – Wholesale,
Property Fund Index returns series as at June 2023, since the respective
fund inception dates. Years shown are indicative of inception year
to 30 June 2023, though returns are as at exact inception date. Past
performance is not a reliable indicator of future performance.
2. DIF3, DIF4, LWF, DOF – returns assume Bonus Units or Entitlement Offer
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 2023, over the past 10-year return period.
Past performance is not a reliable indicator of future performance.
as per respective PDS.
30
31
Charter Hall Group Annual Report 2023 SUSTAINABILITY
Sustainability is integrated
into everything we do.
As stewards of capital and
shapers of places, it
is key to delivering
economic, environmental
and social value for our
direct stakeholders and
the broader community.
Our approach to sustainability
remains practical, authentic and
targeted. Through our platform-wide
scale, we’re able to maximise value
while operating as a responsible
business.
Doing so enables us to not only
attract and retain capital, but also
generates the most value for
our customers and employees.
Throughout FY23, we continued
to partner with our customers to
progress our shared sustainability
targets and in turn, create long-
lasting value for all.
Achievements in FY23
Net Zero Carbon
targets
Established near term and
long-term Scope 3 target1.
Scope 1 and Scope 2 by 2025.
Accelerated by 5 years2.
ESG leadership and
performance
17 Charter Hall funds
scored in the top 20% of
GRESB, with three Funds
recognised as Global and
Regional Sector leaders.
61% absolute reduction in
carbon emissions
(Scope 1 and 22) against FY17
baseline, despite a >60%
growth in lettable area.
Australia’s largest
independently rated
green space
~6.7m sqm of Green Star
rated space.
Support for disaster
and hardship
Invested over $1.4m to support
communities with resources
to build and rebuild strong
foundations.
89% overall employee
engagement
9 points above the high-
performing industry norm.
We always have a
long-term perspective.
It’s not about temporary
solutions but creating
an enduring impact.
Our focus is to:
Respond to the challenges
and consequences of a warming
climate, how to protect and restore
nature, and rethink how we use
resources;
Drive lasting change by
partnering where we can make
the most difference to individuals
and communities by unlocking
opportunities to access learning
and employment, as well as
supporting communities to build
and rebuild following disaster; and
Lead in our role as a steward
of third party capital and create
strategies that deliver long-term
value to our investors, customers
and other stakeholders.
Above: 60 King William
Street Adelaide SA
Kaurna land
6 Star (Design Review)
Design & As Built v1.2
(registered)
Right: Kanyana Wildlife
Park WA, Corporate
Volunteering
More information is provided in
our 2023 Sustainability Report >
32
1. Target uses science based methodologies, and it is our intention to obtain external
verification of the baseline year and emissions inventory in the next 12-24 months. Target
reflects current business activity and plan. Charter Hall will monitor emerging reporting
frameworks, reserving the right to change this target in the future.
2. Our Net Zero target applies to Scope 1 and Scope 2 emissions for existing assets that fall
under the operational control of responsible entities for which Charter Hall Limited is the
controlling corporation. Where residual Scope 1 emissions are offset, Charter Hall will use
high quality nature-based offsets.
33
Reflect Reconciliation Action Plan launched Employer of Choice Awarded WGEA Employer of Choice for Gender EqualityWinner2022 Social Traders Game Changer Awards (NSW/ACT) Climate Leader8th in 2022 FT/Nikkei Asia Pacific Climate LeaderCharter Hall Group Annual Report 2023
Progress against our sustainability targets
Strategic
focus area
Climate action
Scope 1 and 2 carbon
emissions
FY23 performance
Looking forward
– 61% absolute reduction in carbon
– Net Zero emissions by 2025
emissions (Scope 1 and 21) against FY17
baseline, despite over 60% growth in
lettable area.
(Scope 1 and 2)1.
Clean energy
– 80% electricity supplied from renewable
sources for eligible assets2.
Progress on Scope 3
emission target
Energy performance
– 63MW of solar installed, an increase
of 15.8MW sincy FY22. Increase
represents solar installed, or solar
measured through acquisition.
– Established near term and long-term
Scope 3 target3.
– Maintained 5.0 star NABERS Energy for
Office portfolio, covering 97% eligible
assets2.
– 5.1 star NABERS Energy for Shopping
Centre Retail portfolio, covering 79%
eligible assets2, an uplift of 0.6 stars.
Benchmarking
performance
– Australia’s largest footprint of
independently rated green space.
– ~6.7m sqm of Green Star rated space
across the country for our Office, Retail
and Industrial & Logistics sectors.
– 5.0 star Green Star Performance for
Office portfolio, covering 100% eligible
assets2, an uplift of 1 star.
– 3.0 star Green Star Performance for Retail
portfolio, covering 100% eligible assets2,
an uplift of 1 star.
– 2.0 star Green Star Performance for
Industrial & Logistics portfolio, covering
76% eligible assets2.
1.
Our Net Zero target applies to Scope 1 and Scope 2 emissions for existing assets that fall under
the operational control of responsible entities for which Charter Hall Limited is the controlling
corporation. Where residual Scope 1 emissions are offset, Charter Hall will use high quality
nature-based offsets.
2. Eligible assets in operational control.
3. Target uses science based methodologies, and reflects Charter Hall’s current business activity
and plan. Charter Hall will monitor emerging reporting frameworks, reserving the right to change
this target in the future.
– 100% electricity supplied from
renewable sources by 2025 for
assets in operational control.
– An additional 15MW of solar
installed during FY24.
– Seek external verification
of the baseline year and
emissions inventory.
– Target 5.5 star NABERS Energy
for Office portfolio by 2025.
– Maintain NABERS Energy for
Shopping Centre Retail portfolio.
– Maintain Green Star Performance,
while transitioning to the updated
rating tool.
High performing talent
Inclusion, diversity
and equality
Strategic
focus area
Rethink resources
Operational waste
Align to circular
economy
Restore nature
Potable water
consumption
Water
performance
FY23 performance
Looking forward
– 33% operational waste diverted
from landfill for Office portfolio, a
1% improvement from last year.
– 39% operational waste diverted
from landfill for Shopping Centre Retail
portfolio, a 11% improvement from last year.
– 75% diversion from landfill
by 2030 target at Office
and Shopping Centre Retail
portfolios.
– Creation of Group circular economy
– Implement a responsible
approach.
resource strategy that addresses
circular economy by 2025.
– 0.47kL/sqm water intensity, up 5% from
last year as a result of higher occupancy
in our assets.
– 4.7 star NABERS Water for Office portfolio,
covering 90% eligible assets2, a decrease
of 0.1 star.
– 4.2 star NABERS Water for Retail portfolio,
covering 73% eligible assets2, an increase
of 0.1 star.
– Target 5.0 star NABERS Water for
Office portfolio rating by 2025.
– Continued to improve our Australian
– Sustain levels of engagement
that align with being a global high
performing culture.
Workplace Equality Index (AWEI) score.
– Employee engagement of 89%, nine points
above the high-performing industry norm.
– Bronze Employer for LGBTQ+ inclusion.
– Employer of Choice for Gender Equality
by the Workplace Gender Equality Agency.
– 29% female participation on the CHC Board
and 36% in senior management.
Deep customer partnerships
Customer satisfaction
– Tenant retention rate of 85.3% in the period.
– 63% (by income) of our tenant customers
leased more than one tenancy from us
during the year and close to half of our
top 20 customers increased their tenancy
footprint with us.
– Group NPS score improved to +52 up
from +45 in 2022. On a like-for-like basis
satisfaction results increased in Industrial &
Logistics and Social Infrastructure, achieved
7-year highs in Shopping Centre Retail,
while Office remained stable.
– Create a benchmark to measure
the cross-sector customer
experience, considering all
aspects of how we partner with
our customers.
34
35
Charter Hall Group Annual Report 2023 Canning Vale
Distribution Facility WA
Whadjuk land
FY23 performance
Looking forward
– Community donations were $1.4m,
up 16%, with over a third donated to
disaster relief.
– Continue engaging closely
with Reconciliation Australia to
develop our new Innovate RAP.
Task Force on Climate-related
Financial Disclosure (TCFD) update
We have actively aligned our climate action approach to the recommendations of the TCFD to ensure
meaningful steps are taken to meet our objectives. Below is a summary of measures we undertook this year.
Governance
Charter Hall Board oversee sustainability strategy
and policies (including our approach to climate
change) through the Audit Risk and Compliance
Committee (ARCC). Climate change forms part of our
sustainability strategy, progress on which is reported
to the ARCC on a regular basis.
The Executive Committee continued to have strategic
oversight of ESG strategy and implementation, led by
the ESG Committee to drive platform-wide alignment
for the management of climate related risks and
opportunities.
Strategy
– Achieve Net Zero carbon target for Scope 1
and Scope 2 by 20252.
– 100 percent renewable electricity by 2025 for
Charter Hall workplaces and assets under
operational control.
– Continued investment in efficiency upgrades
through strategic asset planning and maintain
Australia’s largest footprint of independently
green rated space.
– Partner with tenant customers and suppliers
to reduce Scope 3 emissions.
– Support communities with immediate relief and
long term recovery following climate related
natural disasters.
Risks
– Delivered Australia’s largest footprint of
– Maintain WELL building portfolio
Climate related risk
FY23 performance
Strategic
focus area
Strong communities
Community
investment
Health and well-being
Healthy
buildings
WELL Building Portfolio and Health Safety
rated workplaces, covering 1.4m sqm.
rating for our Office sector.
Workforce health
and safety
– Lost Time Injury Frequency Rate
(LTIFR) = 2.71.
Pathways to prosperity
Create employment
opportunities
– 210 youth employment
outcomes generated.
Employee
volunteering
– Provided 3,403 hours of employee
volunteering, equating to $316k,
up 9% from last year.
– Achieve 400 youth employment
outcomes by 2025 and 1,200
by 2030.
– Volunteer 6,000 hours in the
community by FY25.
Sustained returns
Sustainable finance
Governance
Transparency
and disclosure
– Provided $3.4bn of sustainable finance
transactions, up $900m since FY22 and
comprising ~12% of total debt.
– Leverage approach to ESG
to support future sustainable
financing opportunities.
– 17 Charter Hall funds scored in the top 20%
of GRESB, with three funds recognised as
Global and Regional Sector leaders.
– Maintained Australia’s largest Green Star
certified portfolio.
– Actively monitor progress of
International Sustainability
Standards Board and future
integration of environmental
and financial metrics.
– Published third Modern Slavery Statement.
1. LTIFR includes both CHC employees and all contractors.
2. Our Net Zero target applies to Scope 1 and Scope 2 emissions for existing assets that fall under the operational control of responsible entities for which Charter
Hall Limited is the controlling corporation. Where residual Scope 1 emissions are offset, Charter Hall will use high quality
nature-based offsets.
3. Target uses science based methodologies and reflects Charter Hall’s current business activity and plan. Charter Hall will monitor emerging reporting frameworks,
reserving the right to change this target in the future.
4. Eligible assets in operational control.
36
Transition
risk
– Costs to transition to lower
emissions technology.
– Electrification and electric vehicle studies undertaken
to inform transition planning.
– Increased upfront carbon
– Focus on exploring opportunities to reduce upfront carbon,
cost for new developments
and capital works.
– Increase in operating costs
due to volatility in energy
market.
both in design and material selection.
– Long term Power Purchase Agreement for the supply of
off-site renewable electricity, providing certainty on cost.
Physical
risk
– Damage to property
– Improving integration with asset planning and risk
and increased insurance
premiums from changes
in climate.
management. Improving the climate risk assessment for all
new developments and acquisitions.
Progress against targets
Targets
FY23 performance
GHG
emissions
– Net Zero Scope 1 and 2
emissions by 20252.
– 61% absolute reduction in carbon emissions (Scope 1 and 22)
against FY17 baseline, despite a 60% growth in lettable area.
– Set a Scope 3
emissions target.
– 480 Swan Street, 60 King William Street and Chifley South
designed for Net Zero in operations.
– Established near term and long-term Scope 3 target3.
Resilience
– Energy efficiency.
– Maintained 5.0 star NABERS Energy for Office portfolio,
covering 97% eligible assets4.
– 5.1 star NABERS Energy for Shopping Centre Retail portfolio,
covering 79% eligible assets4, an uplift of 0.6 star.
– 100% electricity from
– 80% electricity supplied from renewable sources for assets4.
renewable sources by 2025.
– Partnering with tenants on
– 63MW of solar installed.
renewable electricity.
– Sustainable finance.
– Provided $3.4bn of sustainable finance transactions, up
$900m since FY22, and comprising ~12% of total debt.
37
Diversified
business
activities
Access to
capital
LEADERSHIP
Board of Directors
Executive Committee
From Left:
Greg Paramor AO, Independent Non-Executive Director
Jacqueline Chow, Independent Non-Executive Director
David Clarke, Chair/Independent Non-Executive Director
David Harrison, Managing Director & Group CEO
Karen Moses, Independent Non-Executive Director
Stephen Conry AM, Independent Non-Executive Director
David Ross, Independent Non-Executive Director
See pages 49-51 for
information on the Directors.
From Left:
Richard Stacker, Industrial & Logistics CEO
Steven Bennett, Direct CEO
Natalie Devlin, Chief Experience Officer
David Harrison, Managing Director & Group CEO
Ben Ellis, Retail CEO
Carmel Hourigan, Office CEO
Sean McMahon, Chief Investment Officer
Russell Proutt, Chief Financial Officer
38
39
Charter Hall Group Annual Report 2023
David Harrison
Managing Director & Group CEO
BBus (Land Economics), FAPI, GradDip
Applied Finance
See page 50.
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.
Steven Bennett
Direct CEO
BBA, CA, GAICD
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 currently the Vice
President for the Property Council
Australia NSW Divisional Council.
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.
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 over
10 years at Charter Hall, she has
focused on 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 environmental, social and
governance strategy, including its
ongoing commitment to creating
strong local communities and
tangible outcomes for vulnerable
Australians using the Pledge 1%
framework.
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.
Natalie represents Charter Hall on
the National and NSW Board of
Advisors for the Property Industry
Foundation, and is a member
of Chief Executive Women and
IWF Australia.
Russell Proutt
Chief Financial Officer
BCom (Hons), CA, CBV
Russell brings over 33 years’
finance experience to the
Group, including property
and infrastructure investment
management in North America,
Australia and broader Asia, as
well as extensive merger and
acquisition 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, more 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.
Ben Ellis
Retail CEO
BAS (Property Economics)
Ben brings more than 23 years’
experience in the property market,
and with that, a deep knowledge of
Charter Hall’s business.
As Fund Manager of the Charter
Hall Retail REIT and Charter Hall’s
Retail CEO, Ben is responsible for
all management aspects of the
Retail Funds Management platform
to deliver value creation within the
retail portfolio and optimise returns
for our investors.
Prior to becoming the Retail CEO,
Ben held several roles with Charter
Hall including the Head of Retail
Wholesale, then more recently has
been Head of Capital Transactions
across the Group’s property
platform, overseeing more than
$25 billion of gross transactions
across all sectors.
Carmel Hourigan
Office CEO
BBus (Land Economics),
GradDip Finance and Investment
Carmel brings 30 years’ experience
in the real estate investment
industry, spanning key senior
leadership positions and roles in
funds management across public
and private markets, investment,
research and advisory services.
As Office CEO, Carmel is
responsible for driving the office
business’ strategic growth,
including funds management,
portfolio curation, capital raising
and equity flows.
Carmel’s previous roles include the
Global Head of Real Estate at AMP
Capital, CIO at GPT Group and
Head of Investment Management
at Lendlease.
Carmel has served as a Director
of the Property Council of
Australia for 9 years, including Vice
President. Carmel currently serves
as a member of the Property
Champions of Change group,
and is a Fellow of the Australian
Property Institute. Carmel is also
a former member of the Trustee
Board and Deputy Chancellor of
Western Sydney University.
Sean McMahon
Chief Investment Officer
BBus (Property)
Sean has 30 years of property and
investment banking experience in
the real estate sector and is active
in the listed, wholesale and direct
capital markets.
As Chief Investment Officer,
Sean is responsible for the
Group’s strategy and balance
sheet investments, mergers and
acquisitions, with oversight for
multi-sector disciplines including
property transactions and
corporate development. He brings
a wealth of experience across
investment markets, diversified
across office, industrial and retail
sectors, and has been responsible
for driving the development of
corporate strategies, capital
allocation and reinvestment
programs.
Prior to joining Charter Hall,
Sean worked at national diversified
property group Australand (now
Frasers) as Chief Investment Officer
and was previously responsible
for investment and development
for all commercial, industrial and
retail property.
Prior to Frasers, Sean spent
seven years at Macquarie Bank
as a senior executive in the
Property Investment Banking
division undertaking property
finance, structured finance, funds
management and joint venture
transactions.
40
41
Charter Hall Group Annual Report 2023
Contents
Charter Hall Group
Annual Report 2023
42
Directors’ Report
and Financial
REPORT
For the year ended 30 June 2023
Contents
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statement of Changes in Equity
– Charter Hall Group
– Charter Hall Property Trust Group
Consolidated Cash Flow Statements
Notes to the Consolidated Financial Statements
Directors’ Declaration to Securityholders
Independent Auditor’s Report
Left: No.1 Martin Place
Sydney NSW
Gadigal land
44
79
80
82
83
84
85
86
132
133
43
Charter Hall Group Directors' Report 2023
Charter Hall Group Directors' Report 2023
Directors’ report
For the year ended 30 June 2023
Operating and financial review continued
The 30 June 2023 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
2023
869.7
196.1
41.5
441.2
93.3
42.5
137.5
36.0
579.8
4,072.6
817.4
3,255.2
–
3,255.2
473.0
6.88
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
Charter Hall Property
Trust Group
2023
21.8
(115.9)
(24.5)
n/a
n/a
23.4
n/a
n/a
n/a
2,892.2
698.4
2,193.8
–
2,193.8
473.0
4.64
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
2,971.6
6.28
2.2%
87,420.9
71,864.9
2,960.3
6.26
0.0%
79,930.1
65,639.1
2,193.8
4.64
n/a
n/a
n/a
2,420.9
5.12
n/a
n/a
n/a
1 Gross revenue does not include the Group’s share of net losses of associates and joint ventures of $83.4 million (2022: $544.9 million profit).
2 Segment earnings and revenue is used by the Board in assessing the performance and allocating of resources to its operating segments.
3
4 NTA attributable to stapled securityholders and NTA per stapled security ($) are calculated using assets less liabilities, net of intangible assets (including goodwill
30 June 2022: represented 54.9% non-controlling interest share of Charter Hall Wholesale Property Series No.2 (WPS2).
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 $15.6 billion (30 June 2022: $14.3 billion), of which the Group owns 50%.
6
Directors’ Report
Directors’ report
For the year ended 30 June 2023
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 2023, 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
Stephen Conry AM
‒ David Clarke
‒
‒
‒ David Harrison
‒
Karen Moses
‒ Greg Paramor AO
‒ David Ross
Independent Non-Executive Director
Independent Non-Executive Director (appointed 16 January 2023)
‒ Chair and Independent Non-Executive Director
‒
‒
‒ Managing Director and Group CEO
‒
‒
‒
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Distributions/Dividends – Charter Hall Group
Distributions/dividends paid/payable to stapled securityholders during the year were as follows:
Final ordinary distribution of 11.9 cents and ordinary dividend of 9.8 cents per stapled security for the six
months ended 30 June 2023 payable on 31 August 2023
Interim ordinary distribution of 11.46 cents and interim ordinary dividend of 9.38 cents per stapled
security for the six months ended 31 December 2022 paid on 28 February 2023
Total Distributions/Dividends paid and payable to stapled securityholders
2023
$'m
102.6
98.6
201.2
Operating and financial review
The Group recorded a statutory profit after tax attributable to stapled securityholders for the year to 30 June 2023 of $196.1 million
compared to a profit of $911.1 million for the year ended 30 June 2022.
Operating earnings amounted to $441.2 million for the year to 30 June 2023, compared to $542.8 million for the year ended
30 June 2022, a decrease of 18.7%. 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 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 (losses)/gains on derivatives1
Less: Impairment of equity accounted investments
Less: Performance fees expense1
Less: Non-operating pursuit recoveries
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.
2023
$'m
441.2
(220.7)
–
4.6
(8.5)
(9.1)
3.0
–
(0.5)
(13.9)
196.1
2022
$'m
542.8
355.9
0.3
(13.1)
70.1
(18.5)
(14.4)
1.4
(0.7)
(12.7)
911.1
44
45
3
4
Charter Hall Group Annual Report 2023
Charter Hall Group Directors' Report 2023
Charter Hall Group Directors' Report 2023
Directors’ report
For the year ended 30 June 2023
Directors’ report
For the year ended 30 June 2023
Operating and financial review continued
Operating and financial review continued
Directors’ Report continued
Property investment
Property investment provides the Group with yields from its co-investments in Group funds. During the year property investment
contributed $137.5 million (30 June 2022: $142.9 million) in segment earnings to the Group.
Industrial & Logistics;
The Group’s property investments are classified into the following real estate sectors:
‒
‒ Long WALE Retail;
‒ Office;
‒ Social Infrastructure;
‒ Shopping Centre Retail; and
‒ Diversified.
The following table summarises the key metrics for the property investments of the Group:
Ownership
stake
(%)
Charter Hall
investment
($m)
average
FY2023 Weighted Weighted Weighted Weighted
average
average
lease market cap discount
rate
rate
expiry
(%)
(%)
(years)
FY2023
average Charter Hall
rental investment
yield2
(%)
Charter Hall
investment
income1
($m)
reviews
(%)
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
$36.0 million (30 June 2022: $35.5 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 $71.9 billion property funds management portfolio. The Group holds
a 50% interest in Paradice Investment Management, a fund manager with $15.6 billion in funds under management invested in
Australian and global listed equities.
During the year, the funds management business contributed $579.8 million (30 June 2022: $703.0 million) in segment revenue to the
Group.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the period.
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)
Genge Office Trust
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)
Diversified
Charter Hall Long WALE REIT (ASX: CLW)
Charter Hall DVP Fund (DVP)
Charter Hall PGGM Industrial Partnership No. 2
(CHPIP2)
1.3
5.6
12.0
17.5
43.2
4.8
15.7
12.4
8.6
16.8
49.9
8.7
3.0
10.7
10.7
13.0
12.0
121.0
92.4
46.9
236.2
68.5
18.2
290.9
277.8
172.6
162.8
129.6
78.8
103.2
126.0
17.5
4.5
3.3
1.1
8.4
2.9
1.5
11.7
12.6
9.6
8.9
7.4
2.9
5.1
5.1
0.9
10.2
8.5
8.3
6.6
17.7
n/a
5.9
6.6
6.0
6.2
9.8
4.4
n/a
13.2
17.1
288.7
17.8
7.4
429.2
67.5
21.6
2.0
11.2
6.3
94.6
4.0
4.6
4.2
4.3
4.7
4.6
4.8
n/a
4.9
4.7
5.5
5.2
4.8
5.8
n/a
5.1
3.9
5.6
4.8
3.7
5.2
Other investments
Property Investment Total
128.8
2,951.2
6.2
137.5
n/a
7.4
n/a
4.9
6.1
6.2
6.2
5.8
7.0
n/a
6.1
5.9
6.4
6.2
6.2
7.0
n/a
n/a
5.3
6.8
6.2
4.7
6.1
n/a
6.1
3.3
3.2
3.9
2.8
2.5
n/a
3.6
3.6
3.5
3.7
4.0
3.5
n/a
3.7
6.6
4.5
5.1
3.4
3.6
n/a
3.6
3.6
4.1
2.4
3.2
3.6
n/a
3.7
4.0
4.7
4.9
5.6
7.6
n/a
4.1
4.3
5.9
4.6
3.3
4.0
n/a
4.4
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
47
5
6
Charter Hall Group Annual Report 2023
Charter Hall Group Directors' Report 2023
Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
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
No matter or circumstance has arisen since 30 June 2023 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.
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.
Directors’ report
For the year ended 30 June 2023
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 Chief Executive
Officer 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 2023
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
Jacqueline joined the Board of the Charter Hall Group on
17 February 2021.
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, and Campbell’s, and most
recently, she was 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.
Other current listed company directorships
Coles Group Limited
nib Holdings Limited
Boral Limited
Special responsibilities as at 30 June 2023
Member of the Audit, Risk and Compliance Committee
Member of the Nominations Committee
Interests in securities
10,000 stapled securities in Charter Hall Group
Stephen Conry AM
Independent Non-Executive Director
Experience and expertise
Stephen joined the Board of the Charter Hall Group on
16 January 2023.
Stephen brings over 40 years’ experience in executive positions
in the property industry in Australia and globally.
Stephen held the position of Chief Executive Officer at Jones
Lang LaSalle (JLL) Australia for 13 years until 2022, following a
career with JLL that spanned four decades, including serving as
an International Director for 22 years.
Stephen has held roles with numerous business and community
boards, including the Property Council of Australia where he was
National President from 2019 to 2021. Stephen is currently
Chairman of private investment company Langdon Capital Pty
Ltd, a member of the Commonwealth Remuneration Tribunal, a
Board member of Redkite, a Fellow of the Australian Property
Institute, a Fellow of the Royal Institution of Chartered Surveyors,
and Fellow of the Australian Institute of Company Directors.
Stephen was appointed a Member of the Order of Australia in the
2019 Queens Birthday Honours list for his service to the
Australian Commercial Property Sector and the Community.
Other current listed company directorships
Nil
Former listed company directorships in last three years
Nil
Special responsibilities as at 30 June 2023
Member of the Remuneration and Human Resources Committee
Member of the Investment Committee
Interests in securities
16,000 stapled securities in Charter Hall Group via an an indirect
interest
48
49
7
8
Charter Hall Group Annual Report 2023
Charter Hall Group Directors' Report 2023
Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
Information on Directors continued
David Harrison
Managing Director and Group Chief Executive Officer
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 Chief
Executive Officer, David is responsible for strategically growing
the business and maintaining its position 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 $87.4 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 Chair of the Property Council of Australia
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 2023
Member of the Investment Committee
Interests in securities
327,026 stapled securities in Charter Hall Group via direct
interests and 841,773 stapled securities in Charter Hall Group via
indirect interests.
David also holds 856,234 performance rights, 905,776
performance rights (ROP), 122,516 service rights in the Charter
Hall Performance Rights and Options Plan, as well as 369,829
STI Service Rights.
Total 3,423,154 securities and 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.
50
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 2023
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 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 Chief Executive Officer 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
Nil
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
9
Directors’ report
For the year ended 30 June 2023
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 2023
Chair of the Remuneration and Human Resources
Member of the Investment Committee
Member of the Audit, Risk and Compliance Committee
Interests in securities
17,500 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 (First Class Honours), a Graduate Certificate in Legal Practice,
and is admitted as a lawyer of the Supreme Court of NSW. Mark has over 19 years’ experience as a lawyer, including advising on
listed company governance, securities law, funds management, real estate, and general corporate law. Mark joined Charter Hall in
2012, prior to which he was a Senior Associate in the Sydney office of King & Wood Mallesons.
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 2023, and the number of meetings attended by each Director were:
Full meetings of the
Board of Directors
A
9
8
3
9
8
9
9
B
9
9
3
9
9
9
9
Audit, Risk and
Compliance
Committee
A
5
5
2
*
5
*
5
B
5
5
2
*
5
*
5
Investment
Committee
A
4
*
2
4
*
4
4
B
4
*
2
4
*
4
4
Nomination
Committee
A
-
-
*
*
-
-
*
B
-
-
*
*
-
-
*
Remuneration and
HR Committee
B
*
*
3
*
6
6
6
A
*
*
2
*
6
5
6
D Clarke
J Chow
S Conry
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.
10
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Charter Hall Group Annual Report 2023
Charter Hall Group Directors' Report 2023
Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
Changes to FY2023 Remuneration
For FY2023, there were no material changes to the remuneration structure, with the only changes, as foreshadowed in the FY2022
Remuneration Report, being to introduce a face value methodology for determining the number of Rights allocated under the
Performance Rights and Options Plan (PROP) to provide better alignment with securityholders, and to increase the minimum
securityholding requirements for the Managing Director to 150% of Fixed Annual Remuneration (FAR) and Non-Executive Directors
(NED) to 100% of their annual base director fee. Following a comprehensive review and repositioning of fixed and variable
remuneration in FY2022, there was no increase to Fixed Remuneration for our Reported Executives in FY2023 with an increase only
in the “at risk” STI component, resulting in an overall 3.5% increase to target total remuneration. More detail can be found in section
6.2 of this report.
Non-Executive Directors (NED) fees were increased by 3% effective 1 July 2022. More detail of these changes can be found in
section 8 of this report.
We invite you to read Charter Hall’s Remuneration Report on the following pages which 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 2023 Annual General Meeting.
David Ross
Chair – Remuneration and
Human Resources Committee
David Clarke
Chair – Board
Directors’ report
For the year ended 30 June 2023
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 2023 (FY2023).
The broader environment continues to be challenging economically and geopolitically. Charter Hall’s strategy, operating model and
focus on relationships with investors, tenant customers and employees continues to support our resilience through the cycle. Against
the backdrop of rising inflation and increasing interest rates throughout FY23, we have managed to record encouraging results,
despite the economic uncertainty and financial pressures. The energy and dynamism of our Group, coupled with our culture of
engagement and experience-based development, has enabled us to retain top talent in a highly competitive landscape. We are proud
of our progress in establishing a solid foundation for long-term environmental impact through onsite renewables, efficiency initiatives
supporting our Net Zero Carbon targets and our new grid supplied renewables partnership with ENGIE.
Additional information on our operating conditions and business achievements are provided in the Chair and Managing Director &
Group CEO (Managing Director) messages in the FY2023 Annual Report.
In FY2023, while the Group Operating Earnings Per Security (OEPS) was down on FY2022 due largely to the significant and greater
performance fees earned in FY2022 compared to FY2023, the Group achieved its OEPS target of 90 cents per security (the second
highest OEPS result for Charter Hall) and shared this success with all employees through the Short-Term Incentive (STI).
Assessment of individual performance scorecards has resulted in 108.3% of the total target STI amount being awarded to eligible
employees across the Group.
The Managing Director’s KPI performance outcomes exceeded the target for the FY23 period. However, at the CEO’s initiative due to
the external environment, and in consultation with the Board, it was agreed to reduce his STI payment to 100% of the STI target. The
Other Reported Executives have been awarded an STI payout at 115% of the target. Further details on FY2023 STI performance and
outcomes is included in section 6.4 of this report.
In addition, the second tranche of the FY2020 Long Term Incentive (LTI) reached the end of its four-year performance period on 30
June 2023 and based upon performance against the two performance measures 87.5% of the LTI will vest on 31 August 2023. The
results for each measure are as follows:
‒
‒
the aggregate OEPS over the performance period was equivalent to a 31.0% pa compound average growth rate (CAGR)
exceeding the stretch hurdle of the required aggregate OEPS performance measure, which will result in this component fully
vesting; and;
the Relative Total Shareholder Return (TSR) measure achieved the seventh rank of the 17 REITs (at the 62.5th percentile) in the
comparator group from the S&P/ASX200 A-REIT Accumulation Index with a TSR of 8.93% (an equivalent CAGR of 2.2%) over
the four year performance period, which will result in 75% of this component vesting.
Further details on the FY2020 (LTI) results are included in section 6.8 of this report.
Throughout a challenging year, our people demonstrated exceptional perseverance, while we remained committed to enhancing
well-being and encouraging a culture of connection and inclusion. This is reflected in our people and culture highlights for the year:
‒ 89% Engagement result with a 97% participation rate, 9 points above the Australian norm
‒ 93% of our people would recommend Charter Hall as a good place to work
‒ Awarded Employer of Choice for Gender Equality for the second consecutive biennial cycle (in 2021 and 2023)
‒ Awarded the Social Procurement Game Changer (NSW/ACT region) and the 2022 Social Traders National Game Changer
Award for our partnership with Two Good Co
‒ Recognised in the 2022 AFR BOSS Most Innovative Companies List – winning the award for Best Innovation Program and
ranking first in Property, Construction and Transport, from over 700 nominated organisations across Australia and New Zealand
‒ Successfully delivered our reimagined workplace in Sydney to foster connection and inclusion
‒ Celebrated and acknowledged First Nations cultures through activations and placemaking in our assets
‒ Hosted World Pride across our assets as part of the Building Pride and Rainbow City initiatives
‒ Tenant customer surveys across Retail, Office and Industrial maintained strong results with sector leading results in each sector
with a weighted Net Promoter Score (NPS) of +52, being in the top decile of NPS
‒ Retail NPS scores are at a 6-year high (+27) and improvements were made in scores for both Office (+58) and Social
Infrastructure (+52)
52
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Charter Hall Group Annual Report 2023 Charter Hall Group Directors' Report 2023
Charter Hall Group Directors' Report 2023
Directors’ report
For the year ended 30 June 2023
1. Key Management Personnel
Directors’ report
For the year ended 30 June 2023
2. FY2023 Remuneration outcome summary and framework changes at a glance
This Report outlines the remuneration policies and practices that apply to Charter Hall’s Key Management Personnel (KMP) for the
year ended 30 June 2023. The KMP include the Non-Executive Directors, Managing Director and Other Reported Executives.
Charter Hall Limited is pleased to present its Remuneration Report for the year ended 30 June 2023 (FY2023). The table below
outlines the FY2023 outcomes and key remuneration framework changes.
Directors’ Report continued
Name
Non-Executive Directors
David Clarke
Jacqueline Chow
Stephen Conry AM
Karen Moses
Greg Paramor AO
David Ross
Managing Director
David Harrison
Other Reported Executives
Sean McMahon
Russell Proutt
Role
Chair
Director
Director
Director
Director
Director
Term as KMP
Full Year
Full Year
Part Year – appointed 16 January 2023
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).
Component
Section Outcomes/Remuneration Framework Changes
Total Target
Remuneration (TTR)
6.2
Fixed Annual
Remuneration (FAR)
Short Term Incentive
(STI)
6.3
6.4
The Managing Director and Other Reported Executives received a 3.5% increase to TTR in
FY2023, all of which was in the ‘at risk’ STI component as disclosed in the Notice of Meeting
and Information Memorandum for the FY2022 AGM for the Managing Director.
There were no changes to FAR for the Managing Director and Other Reported Executives in
FY2023.
The Managing Director and Other Reported Executives received a 10.5% increase to STI target
in FY2023 as disclosed in the Notice of Meeting and Information Memorandum for the FY2022
AGM for the Managing Director.
Group OEPS was 93.3 cents, which was 3.7% above target FY2023 OEPS. Assessment of
individual performance scorecards has resulted in 108.3% of the aggregate target STI at Group
level being 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%). The Managing Director and Other Reported Executives KPI performance
and STI outcomes are provided in section 6.8.
Long Term Incentive
(LTI)
6.8
The first tranche of the FY2020 LTI grant vested at 100% on 31 August 2022.
The second tranche of the FY2020 LTI grant reached the end of its four-year performance
period on 30 June 2023. As a result of performance exceeding the stretch hurdle for the
aggregate OEPS measure (50% of the LTI) this component will fully vest and with the Relative
TSR measure (50% of LTI) outcome at the 62.5th percentile of its comparator group 75% of this
component will vest. On a combined basis, 87.5% of the LTI will vest on 31 August 2023.
Minimum Charter Hall
Securityholding
Requirements
6.1 and
8
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 the 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 their annual base
director fee, excluding Committee membership fees, in CHC securities (up from $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.
Effective FY2023, the methodology for determining the number of Rights allocated under the
PROP is 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 and paid to the securityholders during the period from the grant of Rights to the
exercise date following vesting of Rights will be paid to the participants on the exercise of
Rights. This will only be payable on the Rights that vest.
This is regarded as providing alignment with securityholders.
Rights Allocation
Methodology
6.4 and
6.5
NED Fees
8
NED Board base and Committee fees were increased by 3% in FY2023.
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Charter Hall Group Directors' Report 2023
Directors’ report
For the year ended 30 June 2023
Directors’ report
For the year ended 30 June 2023
3. FY2023 Actual remuneration received
Below is the table displaying the remuneration actually received by Reported Executives for the fiscal year ending on 30 June 2023.
This voluntary disclosure is provided to increase transparency and includes:
4. FY2023 Remuneration framework changes at a glance
The following table outlines the remuneration framework changes planned for FY2024.
Component
Section Changes
Directors’ Report continued
‒
fixed pay and other benefits for FY2023;
‒ 2022 cash STI paid during FY2023; and
‒
the value of any LTI and STI award that vested and were exercised during FY2023.
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.
The short-term incentive in the table below is representative of what was paid in FY2023 in cash, for FY2022 performance.
D Harrison elected to voluntarily defer 100% of the $2,250,000 cash component of his FY2022 STI into rights, and R Proutt elected to
voluntarily defer 50% of the $865,000 cash component of his FY2022 STI into rights.
Name
Managing Director
D Harrison
Other Reported Executives
S McMahon
R Proutt
Totals
Salary
and other
benefits1
$
Short Term
Incentive2
$
Value of
securities
vested and
exercised3
$
% of
remuneration
consisting of
vested and
Total exercised rights
%
$
1,500,814
–
2,333,077
3,833,891
925,814
865,814
3,292,442
925,000
432,500
1,357,500
851,320
828,918
4,013,315
2,702,134
2,127,232
8,663,257
60.9
31.5
39.0
46.3
1 Other benefits include superannuation and non-monetary benefits.
2 Values relate to STI paid in FY2023 in cash for FY2022 performance. D Harrison elected to voluntarily defer 100% of the cash component of his FY2022 STI into rights
and R Proutt elected to voluntarily defer 50% of the cash component of his FY2022 STI into rights.
3 Values calculated using the VWAP of $12.97 on the vesting date applied to the number of rights that vested and were exercised for the FY20 LTI performance rights
(tranche1), the FY20 STI T2 deferred service rights and the FY21 STI T1 deferred service rights. The value at the vesting date includes the change in the price of Charter
Hall securities since the grant of the rights which were based upon independent valuations at the time.
Exercise of Vested Rights
under the PROP
6.4 and
6.5
Effective for grants of Rights from 1 July 2023, the automatic exercise of Rights into
Charter Hall securities at vesting, will be amended to allow the exercise of Rights at
the election of the participant for a period of up to 10 years from the grant date. A
cash payment equivalent to cash distributions declared and paid to the
securityholders during the period from the grant of Rights to the exercise date
following vesting of Rights will be paid to the participants on the exercise of Rights.
This will only be payable on the Rights that vest.
The proposed changes outlined above are applicable to all existing plans under the PROP effective from 1 July 2023.
The changes are intended to improve shareholder alignment as employees may choose to have additional capital exposure to Charter
Hall because of the flexibility of the offering. At a time when talent shortages and market pressures remain high, improved
personalisation of the equity offering also serves as a talent retention tool by providing employees with greater control of their capital.
The entitlement to a cash payment equivalent to cash distributions declared and paid to the securityholders during the period from the
grant of Rights to the exercise date following vesting of Rights, is consistent with the existing methodology up until the vesting date,
and reasonably reflects the dividends/distributions received on securities held in Trust for the participant following the vesting date until
the Rights are exercised by the participant.
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Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
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.
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.
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)
- Stephen Conry 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.
Managing Director and Management
The Managing Director makes recommendations to the Committee regarding Executives’ remuneration. These
recommendations consider performance, culture and values.
The Managing Director’s remuneration is considered separately to manage conflicts of interest.
1 Stephen Conry AM was appointed to the Board on 16 January 2023 and the Remuneration and Human Resources Committee effective 17 February 2023
Directors’ report
For the year ended 30 June 2023
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
FY2023. 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
Component
Delivery
Attract, retain and
motivate top talent
Be simple, transparent
and consistent
Drive appropriate risk culture
and employee conduct
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
The MD/CEO must accumulate Charter Hall securities equal to 150% of pre-tax FAR and other Reported Executives
100% of pre-tax FAR 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.
FY2022 RETENTION AND OUTPERFORMANCE PLAN (One-off)1
Performance
Period (FY)
Vesting
Period and
Holding Lock
2022
2023
2024
2025
2026
2027
2028
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
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.
1 For further information regarding the FY2022 Retention and Outperformance Plan, including more detail on the Plan terms, please refer to section 6.9 of the FY2022
Remuneration Report.
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Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
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.
FY2023 Total Target Remuneration (TTR)
The FY2023 remuneration increases for the Managing Director and Other Reported Executives are shown below.
Total Target Remuneration in FY2023 increased by 3.5%, with the increase in the ‘at risk’ STI component. The Board determined that
no increase in Fixed Remuneration was necessary, however an increase to TTR was reasonable given the highly competitive
landscape for talent and allocated the increase to ‘at risk’ STI in a year which was forecast to be more challenging given the macro-
economic environment with rewards subject to performance. 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
2023
2022
Chief Investment Officer
Sean McMahon
2023
2022
Chief Financial Officer
Russell Proutt
2023
2022
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
2,486,250
2,250,000
3,000,000
3,000,000
6,986,250
6,750,000
78.5%
77.8%
925,000
925,000
1,022,125
925,000
925,000
925,000
2,872,125
2,775,000
865,000
865,000
955,825
865,000
865,000
865,000
2,685,825
2,595,000
67.8%
66.7%
67.8%
66.7%
The figures below for all Reported Executives show the percentage mix of fixed versus ‘at-risk’ remuneration components on target that
apply for FY2023. All Reported Executives have the potential to earn up to 150% of target STI.
Directors’ report
For the year ended 30 June 2023
Remuneration Report
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
individual performance and 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
Other Reported
Executives
The Managing Director’s FAR remained unchanged at $1,500,000 in FY2023.
FAR for the CFO and the CIO remained unchanged in FY2023.
6.4 Short Term Incentive
FY2023 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
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%
60
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Charter Hall Group Directors' Report 2023
Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
Remuneration Report
Features
Approach
Determining and
Assessing
Performance
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
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. Effective for grants from 1 July 2023, participants will have the right to elect the timing of exercise of
rights that vest for a period of up to 10 years from the initial grant date. The rationale for this change can
be found in section 4.
Voluntary Deferral
of Cash Component
of STI
Under the FY2023 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. Effective for grants of
rights from 1 July 2023, participants will have the right to elect the timing of the exercise of rights for a
period of up to 10 years from the initial grant date. The rationale for this can be found in section 4. 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 the
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 2023.
For rights granted from 1 July 2022 onwards, a cash payment equivalent to cash distributions declared
and paid to the securityholders during the period from the grant date to the date of exercise of the rights
following vesting will be paid to the participants on exercise of the rights. This will only be payable on the
rights that vest.
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 2023
Remuneration Report
KPI Performance and STI Outcome for Financial Year Ending 30 June 2023 – Managing Director
Group Gateway
A financial gateway of 95% of target OEPS (90.0 cps) must be met before any STI
entitlement is available, with the Board retaining overall discretion on performance
achievement.
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.
Achieved
Fully met
Financial & Risk (50%)
Operating Earnings is a key measure of the financial performance of the Group in a financial year.
Fund and partnership property portfolio performance during the financial year compared to relevant benchmark measures whether
fund investors are satisfied that their investment performance meets or exceeds expectations, measured either against the funds
return objective or relevant benchmarks.
Risk Management is implemented at an acceptable level throughout the Group, measured by feedback from Investors and Board
members.
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 90.0 cps)
Growth from FY22 Group OEPS
after tax excluding Performance
Fees and STI.
35%
Exceeds
Expectations
Group OEPS of 93.3 cps which was 3.7% above
target OEPS.
Group OEPS after tax excluding Performance Fees
and STI was 7.7% above FY22.
Performance of Funds &
Partnerships relative to agreed
benchmarks
10%
Does not meet
Expectations
This was below our internal goal for funds and
partnerships that CHC co-invests in weighted by
value, relative to agreed benchmarks.
Risk Management
5%
Exceeds
Expectations
Commercial risk was well managed during the year
with strong leasing momentum, stable margins and
FUM. Broader risks were largely anticipated and
controlled although rising interest rates impacted fund
investment returns.
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Charter Hall Group Directors' Report 2023
Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
Remuneration Report
Strategy & Customer (30%)
Equity allotted is a measure of the funds’ inflow raised from investors in funds and partnerships and drives capacity to grow
portfolios.
Progressing decarbonisation 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 (Strategy & Customer)
Weighting Scorecard
Outcome
result
Key Group Fund & Partnership
h
t
w
o
r
G
Gross Equity Allotted
10%
Outstanding
Gross Equity allotted of $2.8 bn exceeded target.
Key ESG Initiatives Progress
10%
Progress decarbonisation of the
group
Exceeds
Expectations
Accelerated Net Zero Carbon target for Scope 1 and
Scope 2 by five years to 2025. Established Scope 3
boundary and target, as well as a Group Offset
Strategy.
e
c
n
e
i
l
i
s
e
R
Directors’ report
For the year ended 30 June 2023
Remuneration Report
KPI performance and STI outcome for financial year ending 30 June 2023 – 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 as relevant for each role: Group and
Divisional financial measures, fund property
investment performance, transaction activity for funds
and partners, and risk management.
Including as relevant for each role: customer
experience, service and satisfaction measures, ESG
progress, Group treasury and liquidity management,
Group Fund & Partnership gross equity allotted and
divisional Funds under Management growth.
Sean McMahon
Performance Rating
Russell Proutt
Performance Rating
Exceeds
Expectations
Exceeds
Expectations
Exceeds
Expectations
Exceeds
Expectations
Culture, Leadership and
Collaboration
Including as relevant for each role: leadership
contribution, succession, talent, diversity and
engagement.
Exceeds
Expectations
Exceeds
Expectations
Excellence in Investor & Tenant
Customer Relationships
Listed and Unlisted Investor
customer confidence and advocacy
NPS Scores
10%
Outstanding
Top quartile results for investor surveys.
Final Scorecard Outcome for Other Reported Executives
Tenant Customer survey weighted NPS result
exceeded target at +52 resulting in top decile
outcome.
After consideration of the performance of the Group and the Other Reported Executives’ KPI performance outcomes, the Board
awarded an STI equivalent to 115% of STI target.
Leadership, Culture & Collaboration (20%)
Leadership Capability for Growth and Scale is to develop and retain key talent to future proof the business.
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 &
Weighting Scorecard
Outcome
Collaboration)
result
Leadership Capability for
h
t
w
o
r
G
Growth and Scale
10%
Exceeds
Expectations
Strong feedback from internal stakeholders, investors
and tenant customers on leadership capability and
strategic direction of the Group.
Deep, Diverse and Engaged
Talent Pipeline
10%
Exceeds
Expectations
Sustain improvements in diversity,
engagement, and wellbeing
e
c
n
e
i
l
i
s
e
R
Female representation at Senior Management
increased to 35.85% as at 30 June 2023 up from
31.4% as at 30 June 2022.
Employee Engagement was 89% (9pts above the
Australian norm) and Employee Wellbeing was 84%
(18pts above the Australian norm and 3pts above the
High Performing organisation norm).
Final Scorecard Outcome
The Managing Director’s KPI performance outcomes exceeded the target for the FY23 period. However, at the CEO’s initiative due to
the external environment, and in consultation with the Board, it was agreed to reduce his STI payment to 100% of the STI target.
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Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
Remuneration Report
Group FY2023 performance outcomes
In FY2023, Charter Hall’s OEPS was 93.3 cents, which was 19.3% below the FY2022 OEPS. This was due largely to the significant
and greater performance fees earned in FY2022 compared to FY2023. CAGR over 4 years is 18.4% as illustrated in the table below
showing Charter Hall’s OEPS (cps) over a five-year period.
Directors’ report
For the year ended 30 June 2023
Remuneration Report
6.5 Long Term Incentive
FY2023 LTI plan – key features
Features
Approach
Purpose
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 2022 and ending on
30 June 2026.
Performance
Rights Allocation
Methodology
The number of rights granted to a participant in FY2023 was determined based on the face value of Charter
Hall securities, calculated on the VWAP for the month of June prior to the grant date. This was a change from
prior years and better aligns with securityholders. The previous methodology was based on an independent
value calculated 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.
Vesting
Conditions
OEPS Growth
Performance
Measure (50% of
LTI Allocation)
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. 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 FY2023 LTI, the
Board set the commencement OEPS as the FY2022 actual OEPS result of 115.6 cps (after tax).
If the aggregate OEPS achieved over the four-year
performance period is:
Percentage of Performance Rights subject to
the aggregate OEPS performance measure
which may vest
Less than an aggregate OEPS (after tax) of 523.2 cps
(based on a 5% CAGR)
0%
Equal to aggregate OEPS (after tax) of 523.2 cps
(based on a 5% CAGR)
50%
More than an aggregate OEPS (after tax) of 523.2 cps
(based on a 5% CAGR) but less than an aggregate
OEPS (after tax) of 549.2 cps (based on a 7% CAGR)
Pro rata straight line vesting between 50% -
100%
Equal to or more than an aggregate OEPS (after tax)
of 549.2 cps (based on a 7% CAGR)
100%
No CHOT Performance Fee recognised in FY2021, FY2022 and FY2023
FY2023 STI outcomes
Assessment of individual performance scorecards has resulted in 108.3% of the aggregate target STI
at Group level to be awarded, in September 2023, to eligible employees across the Group.
The below table shows the STI outcomes for Reported Executives for 2023.
The Managing Director received an STI payout at 100% of STI target and the other Reported
Executives received an STI payout at 115% of target, for FY2023. 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 Proutt2
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
target maximum
%
fixed pay
%
rights
$
%
2,486,250
1,657,500
–
828,750
166%
100%
1,175,444
1,099,199
783,629
366,400
–
366,400
391,815
366,400
111%
111%
115%
115%
67%
77%
77%
1 To be paid on 15 September 2023.
2 R Proutt has elected to voluntarily defer 50% of the cash component of his FY2023 STI into rights.
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Directors’ report
For the year ended 30 June 2023
Remuneration Report
Directors’ report
For the year ended 30 June 2023
Remuneration Report
Directors’ Report continued
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 FY2023 LTI:
Abacus Property Group (ABP)
Growthpoint Properties Australia (GOZ)
Arena REIT (ARF)
BWP Trust (BWP)
Centuria Capital Group (CNI)
Centuria Industrial REIT (CIP)
Charter Hall Group (CHC)
HMC Capital Limited (HMC)
Homeco Daily Needs REIT (HDN)
Ingenia Community Stapled Securities (INA)
Mirvac Group (MGR)
National Storage REIT (NSR)
Charter Hall Long Wale REIT (CLW)
Region RE Limited (RGN)
Charter Hall Retail REIT (CQR)
Scentre Group (SCG)
Cromwell Property Group (CMW)
Stockland Corporation Limited (SGP)
Dexus (DXS)
Goodman Group (GMG)
GPT Group (GPT)
Vicinity Centres (VCX)
Waypoint REIT Limited (WPR)
Relative TSR
Performance
Measure (50% of
LTI Allocation)
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:
Percentage of Performance Rights subject to the
relative TSR performance measure which may vest
Less than the comparator group 50th percentile
0%
Equal to the comparator group 50th percentile
50%
More than the comparator group 50th percentile
and less than 75th percentile
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, FY2022 and FY2023, 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 FY2020 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, FY2022 and FY2023 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.
For AREITs (excluding Charter Hall) currently in the S&P ASX 200 AREIT accumulation index, the average
and median OEPS growth over 3 and 5 years to 30 June 2022 was less than a 2% CAGR.
Based on the above historic OEPS growth within the comparator group an OEPS CAGR hurdle of at least 5%
over a four-year period requires top quartile performance.
Rationale for
Performance
Measures
Charter Hall has typically delivered aggregate OEPS growth in excess of the 5-7% CAGR range. 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 continue to be rewarded
when delivering an OEPS CAGR in excess of the majority of its peers. The Board does not believe that the
OEPS CAGR hurdle ranges should be changed 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 FY23 LTI Relative TSR measure
is comprised of the REITs included in the S&P/ASX 200 A-REIT Accumulation Index as at 1 July 2023. 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 could make an upfront election to apply a voluntary restricted
period of 2, 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. For Performance
Rights allocations granted from 1 July 2023, the voluntary restriction period will no longer be in use, as
participants will have the right to elect the timing of exercise of vested rights for a period of up to 10 years
from the grant date.
For Performance Rights allocations granted from 1 July 2022, a cash payment equivalent to cash distributions
declared and paid to the securityholders during the period from the grant date to the date of exercise of the
Performance Rights following vesting will be paid to the participants. This will only be payable on the rights
that vest, once Performance Rights are exercised.
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
Hedging and
margin lending
prohibitions
The Board, in its absolute discretion, may determine the manner in which the rights will be dealt with.
In accordance with the Corporations Act 2001, all participants are prohibited from hedging or otherwise
protecting the value of unvested stapled securities.
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Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
Remuneration Report
Directors’ report
For the year ended 30 June 2023
Remuneration Report
6.7 FY2023 Group performance summary
FY2020 LTI – Tranche 1 performance period
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 ($)
CHC total securityholder return – Jul to Jun (%)
Total Funds Under Management ($bn)
Property Funds Under Management ($bn)2
1 No CHOT performance fee was recognised in FY21, FY22 and FY23.
2 Excluding Paradice Investment Management (PIM).
TSR for Charter Hall versus comparable indices is outlined below
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
2023
196.1
41.5
441.2
93.3
(19.3)
93.3
(19.3)
42.5
10.71
2.6
87.4
71.9
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
2.6%
15.1%
8.1%
(4.9%)
3 Years
6.5%
11.9%
8.1%
3.4%
5 Years
14.0%
7.8%
3.5%
2.2%
10 Years
15.6%
8.8%
7.7%
4.7%
1 Source UBS.
6.8 Group LTI performance outcomes
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 12.45% equivalent to a
4% CAGR achieving the 5th ranking (at the 75th percentile) of the 17 REITs in the comparator group from the S&P/ASX200 A-REIT
Accumulation Index.
OEPS (FY2020 LTI Tranche 2) – The Group delivered aggregate OEPS of 323.8 cents (excluding Charter Hall Office Trust
performance fees) over the four years to 30 June 2023 (FY2020 LTI performance period) equivalent to a 31.0% CAGR exceeding the
upper end of the performance hurdle aggregate OEPS of 187.18 cents based upon a 7% CAGR over four-year performance period.
Relative TSR (FY2020 LTI Tranche 2) – The TSR for the four-year performance period to 30 June 2023 was 8.93% equivalent to a
2.2% CAGR achieving the 7th ranking (at the 62.5th percentile) 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 FY2020
(Tranche 1 and 2) LTI performance periods.
FY2020 LTI - Tranche 2 performance period
Outcomes
‒ The FY2020 Tranche 1 LTI, with a three-year vesting period had a vesting date of 31
August 2022. As a result of the aggregate OEPS and TSR performance achieved over the
three years to 30 June 2022, the aggregate OEPS and relative TSR stretch hurdles were
exceeded and 100% of the performance rights vested on 31 August 2022.
‒ The FY2020 Tranche 2 LTI, with a four-year vesting period has a vesting date of 31 August
2023. As a result of the aggregate OEPS and TSR performance achieved over the four
years to 30 June 2023, the aggregate OEPS stretch hurdle was exceeded and the relative
TSR performance hurdle achieved the 62.5th percentile, 87.5% of the performance rights
will vest on 31 August 2023.
‒ Further details of the terms of these awards are set out in the relevant prior year
remuneration reports.
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Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
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 FY2022 and FY2023.
Short-term benefits
Post-
employ-
ment
benefits
Cash
short-term
incentive
$
Non-
Annual monetary
Super-
leave1 benefits2 annuation
$
$
$
Security-based
payments
Voluntarily
deferred
short-term
incentive6
$
Mandatory
security-
based
short-term
incentive6
$
Securities
options
and
perform-
ance
rights
$
Other
long-term
benefits
Long
service
leave1
$
% of total
remun-
eration
consisting
Total of rights5
%
$
Salary
$
Name
Managing Director
D Harrison3
2023
2022
Other Reported Executives
S McMahon
2023
2022
R Proutt4
2023
2022
Total 2023
Total 2022
899,708
902,932
1,474,708 1,657,500
–
1,476,432
(84,807)
78,750
814
691
25,292
– 1,024,318 3,621,285
23,568 2,467,088 1,233,538 3,186,109
(34,326)
26,251
7,684,784
8,492,427
(74,712)
74,824
814
691
25,292
23,568
–
–
456,327 1,120,921
985,853
507,103
16,188
22,583
3,228,167
3,442,554
783,629
925,000
366,400
432,500
839,708
841,432
(41,919)
4,940
3,214,124 2,807,529 (201,438)
3,220,796 1,357,500 158,514
814
691
2,442
2,073
421,620 1,078,904
344,324
25,292
474,221
963,321
474,208
23,568
75,876
344,324 1,902,265 5,821,110
70,704 2,941,309 2,214,849 5,135,283
15,138
18,250
(3,000)
67,084
3,050,281
3,233,131
13,963,232
15,168,112
60
81
49
43
60
59
58
68
1 Shows the movement in leave accruals for the year.
2 Non-monetary benefits for FY2023 is salary continuance insurance.
3 D Harrison had 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 R Proutt has elected to voluntarily defer 50% of the cash component of his FY2023 STI into rights; in FY2022 he had elected to defer 50% of the cash component of his
FY2022 STI into rights for a 3-year period.
5 Includes voluntarily deferred cash STI, mandatory security based STI and Securities options and performance rights.
6 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 FY23, based on allocation date, for each reported executive was: D. Harrison $2,486,250,
S. McMahon $1,175,444, R. Proutt $1,099,199.
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 2023
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:
‒
‒
‒
‒
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):
‒ Board base fee; and
‒ 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 by 3% in FY2023. Further details are outlined in
section 8.1 below.
Minimum
shareholding
requirement
Effective FY2023, 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).
72
73
31
32
Charter Hall Group Annual Report 2023
Charter Hall Group Directors' Report 2023
Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
8.1 Changes to NED Fees and Maximum Aggregate NED Fee Pool
A summary of the NED fees in FY2022 and the increased fees in FY2023 are set out below.
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
8.2 Statutory NED Remuneration for FY2023
Non-Executive Director remuneration
Non-Executive Directors
D Clarke
J Chow
S Conry AM1
P Garling AM2
K Moses
G Paramor AO
D Ross
Total
2023
$
2022
$
478,950
180,250
465,000
175,000
56,650
25,750
41,200
19,055
5,150
5,150
17,510
12,360
55,000
25,000
40,000
18,500
5,000
5,000
17,000
12,000
2023 fees
$
2022 fees
$
478,950
207,888
85,807
–
261,105
225,147
259,560
1,518,457
465,000
200,000
–
79,180
253,500
208,682
252,000
1,458,362
1 Stephen Conry AM was appointed to the Board effective 16 January 2023.
2 Philip Garling AM retired from the Board effective 11 November 2021.
The maximum aggregate NED fee pool is $2.0 million which was approved by securityholders at the 2021 AGM.
Directors’ report
For the year ended 30 June 2023
9. Additional Disclosures
9.1 Securityholdings
Key management personnel securityholdings
Name
Directors of Charter Hall Limited
Ordinary stapled securities
D Clarke
J Chow
S Conry AM1
K Moses
G Paramor AO
D Ross
Managing Director
D Harrison
Other Reported Executives
S McMahon2
R Proutt
Opening
balance at
1 Jul 2022
Stapled
securities
acquired
Rights and
options
exercised
Stapled
securities
sold
Closing
balance at
30 Jun 2023
49,875
5,500
–
23,137
14,300
10,000
-
4,500
16,000
-
-
7,500
1,423,037
50,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
330,580
174,668
-
-
65,629
63,902
(91,200)
(132,958)
49,875
10,000
16,000
23,137
14,300
17,500
1,473,037
305,009
105,612
1 Stephen Conry AM was appointed to the Board effective 16 January 2023.
2 Opening balance restated.
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
2023
Total performance rights outstanding
Service rights
Financial year of grant
2020
2021
2021
2022
2022
2023
2023
2023
Total service rights outstanding
Securities
312,084
709,324
690,172
5,000,000
963,664
7,675,244
Securities
195,000
659,661
50,000
78,140
311,326
284,654
439,445
25,818
2,044,044
Exercise price
Nil
Nil
Nil
Nil
Nil
Exercise price
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Vesting conditions
OEPS and relative performance criteria
OEPS and relative performance criteria
OEPS and relative performance criteria
Performance conditions
OEPS and relative performance criteria
Vesting conditions
Service Conditions
Voluntary Deferred STI
Service Conditions
Service conditions - Deferred STI
Voluntary Deferred STI
Service conditions - Deferred STI
Voluntary Deferred STI
Service Conditions
74
75
33
34
Charter Hall Group Annual Report 2023 Charter Hall Group Directors' Report 2023
Directors’ report
For the year ended 30 June 2023
Charter Hall Group Directors' Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
10. Appendix
Valuation model
The Black-Scholes-Merton methodology which discounts for dividends/distributions foregone (there is no discount for market risk) is
used for 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.
Reported Executive rights – details by plan
Type of equity
Managing Director
D Harrison
LTI Performance Rights
LTI Performance Rights
LTI Performance Rights
ROP Performance Rights
LTI 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
STI Deferred Service Rights
STI Deferred Service Rights
Other Reported Executives
S McMahon
LTI Performance Rights
LTI Performance Rights
LTI Performance Rights
ROP Performance Rights
LTI 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
ROP Performance Rights
LTI 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
STI Deferred Service Rights
STI Deferred Service Rights
Rights held
at 1 July
2022
Rights
Rights vested and
exercised
during
the year
granted
during
the year
Rights
forfeited Rights held
at 30 June
2023
during
the year
Fair value
per right
at grant
date ($)
Grant
date
Vesting
date
Fair value
to be
expensed
in future
years ($)1
113,706
40,461
25,692
33,917
19,396
12,316
35,633
17,290
10,979
113,706
113,705
265,737
905,776
218,594
–
40,461
84,918
91,263
25,692
25,692
–
–
–
–
33,917
33,916
79,264
372,374
67,400
–
19,396
40,708
12,781
12,316
12,316
–
–
35,633
35,633
83,276
348,220
63,028
–
17,290
36,288
38,999
45,574
10,979
10,979
–
–
–
258,198
48,412
48,412
96,824
96,824
79,610
19,902
19,902
74,446
18,611
18,611
37,223
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
113,705
265,737
905,776
218,594
258,198
–
84,918
91,263
–
25,692
48,412
48,412
96,824
96,824
–
33,916
79,264
372,374
67,400
79,610
–
40,708
12,781
–
12,316
19,902
19,902
–
35,633
83,276
348,220
63,028
74,446
–
36,288
38,999
45,574
–
10,979
18,611
18,611
37,223
25-Nov-19
25-Nov-19
26-Nov-20
11-Nov-21
14-Dec-21
17-Nov-22
01-Jul-20
01-Jul-20
01-Jul-20
27-Jul-21
27-Jul-21
29-Jul-22
29-Jul-22
29-Jul-22
29-Jul-22
25-Nov-19
25-Nov-19
26-Nov-20
11-Sep-21
14-Dec-21
17-Nov-22
01-Jul-20
01-Jul-20
27-Jul-21
27-Jul-21
27-Jul-21
29-Jul-22
29-Jul-22
25-Nov-19
25-Nov-19
26-Nov-20
11-Sep-21
14-Dec-21
17-Nov-22
01-Jul-20
01-Jul-20
01-Jul-20
27-Jul-21
27-Jul-21
27-Jul-21
29-Jul-22
29-Jul-22
29-Jul-22
7.10
7.01
10.33
5.86
18.52
11.83
9.10
8.83
8.22
15.63
15.27
12.74
12.74
12.74
12.74
7.10
7.01
10.33
4.58
18.52
11.83
9.10
8.83
14.91
15.63
15.27
12.74
12.74
7.10
7.01
10.33
4.58
18.52
11.83
9.10
8.83
8.22
14.91
15.63
15.27
12.74
12.74
12.74
–
31-Aug-22
31,904
31-Aug-23
31-Aug-24
769,255
31-Aug-26 3,252,743
31-Aug-25 2,104,799
31-Aug-26 2,320,738
–
31-Aug-22
–
31-Aug-23
–
31-Aug-25
–
31-Aug-22
–
31-Aug-23
–
31-Aug-23
–
31-Aug-24
–
31-Aug-24
–
31-Aug-25
–
31-Aug-22
9,516
31-Aug-23
31-Aug-24
229,453
31-Aug-26 1,045,144
648,982
31-Aug-25
715,551
31-Aug-26
–
31-Aug-22
–
31-Aug-23
–
31-Aug-24
–
31-Aug-22
–
31-Aug-23
–
31-Aug-23
–
31-Aug-24
31-Aug-22
31-Aug-23
31-Aug-24
31-Aug-26
31-Aug-25
31-Aug-26
31-Aug-22
31-Aug-23
31-Aug-25
31-Aug-24
31-Aug-22
31-Aug-23
31-Aug-23
31-Aug-24
31-Aug-25
–
9,998
241,067
977,351
606,884
669,136
–
–
–
–
–
–
–
–
–
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.
76
35
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) 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:
‒ 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
‒ 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 compliance services
PricewaterhouseCoopers – New Zealand Firm
Taxation compliance services for DLWF
Total remuneration for taxation compliance services
Other services
PricewaterhouseCoopers – Australian Firm
Other assurance services
Total remuneration for other services
Total remuneration for non-audit services
Charter Hall Group
2023
$
2022
$
Charter Hall Property
Trust Group
2023
$
2022
$
67,970
144,800
–
67,970
6,569
151,369
160,000
160,000
227,970
18,150
18,150
169,519
–
–
–
–
–
–
–
6,569
6,569
–
–
6,569
36
77
Charter Hall Group Annual Report 2023
Charter Hall Group Directors' Report 2023
Charter Hall Group Financial Report 2023
Directors’ Report continued
Directors’ report
For the year ended 30 June 2023
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:
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 support the following outcomes:
− Net Zero Carbon in operation for Scope 1 and Scope 2 by
−
−
−
−
−
2025, accelerating our commitment by 5 years
100% Renewable electricity powering our assets in
operational control by 2025
50% waste diversion from landfill by 2025
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
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 CHC and GRESB Real Estate Assessment Reports for 29
funds representing $63.0 billion of FUM. Additionally, GRESB
Public Disclosure Statements were submitted 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
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
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 for the year ended 30 June 2023, 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 the entities it controlled during the period and
Charter Hall Property Trust and the entities it controlled during the period.
E A Barron
Partner
PricewaterhouseCoopers
Sydney
21 August 2023
international and Australian Modern Slavery legislation, reflecting
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 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 79.
Rounding of amounts
The Company and the Trust is of a kind referred to in ASIC
Corporations Instrument (Rounding in Financial/Directors’
Reports) 2022/519, 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 21 August 2023. The Directors have the
power to amend and re-issue the Financial Statements.
David Clarke
Chair
Sydney
21 August 2023
37
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, www.pwc.com.au
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T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
38
78
79
Charter Hall Group Annual Report 2023 Consolidated Statements of Comprehensive Income
Consolidated statements of comprehensive income
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Consolidated statements of comprehensive income continued
For the year ended 30 June 2023
Income
Revenue
Share of net (loss)/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/(loss) before tax
Income tax expense
Profit/(loss) for the year
Profit/(loss) for the year attributable to:
Equity holders of Charter Hall Limited
Equity holders of Charter Hall Property Trust
(non-controlling interest)
Profit/(loss) attributable to stapled securityholders of
Charter Hall Group
Net profit attributable to other non-controlling interests
Profit/(loss) for the year
Note
4
2,3
5
5
5
6
Charter Hall Group
2023
$'m
2022
$'m
Charter Hall Property
Trust Group
2023
$'m
2022
$'m
869.7
1,098.3
21.8
(83.4)
0.5
0.7
787.5
(187.0)
(193.0)
(40.1)
(26.9)
(17.8)
–
(0.9)
(465.7)
321.8
(125.7)
196.1
312.0
(115.9)
196.1
–
196.1
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 –
(100.6)
0.6
4.2
(74.0)
–
–
(3.6)
(29.2)
(9.1)
–
–
(41.9)
(115.9)
–
(115.9)
–
(115.9)
(115.9)
–
(115.9)
28.1
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
Profit/(loss) 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
Equity accounted fair value movements
Other comprehensive income for the year
Total comprehensive income/(loss) for the year
Total comprehensive income/(loss) 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/(loss) attributable to stapled
securityholders of Charter Hall Group
Total comprehensive income attributable to other non-controlling
interests
Total comprehensive income/(loss) 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
Note
Charter Hall Group
2023
$'m
196.1
1.4
(0.5)
(0.1)
0.8
196.9
2022
$'m
927.0
(0.5)
5.1
–
4.6
931.6
Charter Hall Property
Trust Group
2023
$'m
(115.9)
2022
$'m
519.7
1.4
(0.5)
–
0.9
(115.0)
(0.5)
5.1
–
4.6
524.3
311.9
407.3
–
–
(115.0)
508.4
(115.0)
508.4
196.9
–
196.9
66.0
915.7
(115.0)
508.4
15.9
931.6
–
(115.0)
15.9
524.3
86.8
n/a
n/a
(24.5)
107.3
(24.5)
107.3
8(a)
41.5
64.8
194.1
85.4
n/a
n/a
n/a
n/a
(24.1)
105.6
(24.1)
105.6
8(b)
40.7
191.0
n/a
n/a
The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.
80
81
39
40
Charter Hall Group Annual Report 2023
Consolidated Balance Sheets
Consolidated balance sheets
As at 30 June 2023
Charter Hall Group Financial Report 2023
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 accounted for at fair value through profit or loss
Development assets
Investments accounted for using the equity method
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
Note
9
14
9
14
2,3
2,3
10
12
12
14
13
11
15(a)
16
15(a)
16
Charter Hall Group
2023
$'m
401.4
159.5
29.0
4.8
–
594.7
3.7
34.2
29.7
123.6
76.3
3,066.7
113.5
14.1
16.1
3,477.9
4,072.6
209.2
13.3
35.1
7.1
264.7
4.7
41.1
450.7
16.0
16.4
23.8
552.7
817.4
3,255.2
314.8
1.2
745.4
1,061.4
1,536.2
3.7
653.9
2,193.8
–
3,255.2
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
Charter Hall Property
Trust Group
2023
$'m
2022
$'m
56.1
39.1
–
4.8
–
100.0
–
17.5
29.7
123.6
–
2,621.4
–
–
–
2,792.2
2,892.2
62.8
–
–
–
62.8
143.8
41.1
450.7
–
–
–
635.6
698.4
2,193.8
–
–
–
–
1,536.2
3.7
653.9
2,193.8
–
2,193.8
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
The above consolidated balance sheets should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
– Charter Hall Group
Consolidated statement of changes in equity – Charter Hall Group
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Attributable to the owners of
Charter Hall Limited
Charter Hall
Group
Note
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
Balance at 1 July 2022
Profit/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Transactions with equity holders in their
capacity as equity holders:
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
Loss of control of subsidiary
Balance at 30 June 2023
6(c)
7
6(c)
7
Contributed
Accumulated
equity Reserves profit/(losses)
$'m
$'m
199.1
(22.1)
407.3
–
–
–
407.3
–
$'m
290.8
–
–
–
Non-
controlling
interest
$'m
2,043.3
519.7
4.6
524.3
Total
$'m
467.8
407.3
–
407.3
Total
equity
$'m
2,511.1
927.0
4.6
931.6
22.1
(3.7)
5.6
–
–
–
–
–
24.0
314.8
–
(9.5)
(2.3)
8.2
12.4
–
–
–
8.8
(13.3)
–
–
–
–
–
(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
314.8
(13.3)
524.1
825.6
2,464.1
3,289.7
–
–
–
–
(0.1)
(0.1)
312.0
–
312.0
312.0
(0.1)
311.9
(115.9)
0.9
(115.0)
196.1
0.8
196.9
(0.7)
0.7
–
–
–
–
–
314.8
(6.4)
–
8.4
12.6
–
–
14.6
1.2
–
–
(7.1)
0.7
–
–
(90.7)
–
(90.7)
745.4
8.4
12.6
(90.7)
–
(76.1)
1,061.4
(1.8)
–
–
–
(110.5)
(43.0)
(155.3)
2,193.8
(8.9)
0.7
8.4
12.6
(201.2)
(43.0)
(231.4)
3,255.2
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
82
41
42
83
Charter Hall Group Annual Report 2023
Consolidated Statement of Changes in Equity
Consolidated statement of changes in equity – Charter Hall Property Trust Group
– Charter Hall Property Trust Group
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Consolidated Cash Flow Statements
Consolidated cash flow statements
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Attributable to the owners of the
Charter Hall Property Trust Group
Note
Contributed
Accumulated
equity Reserves profit/(losses)
$'m
$'m
481.3
(1.5)
503.8
–
–
4.6
503.8
4.6
$'m
1,426.0
–
–
–
Non-
controlling
interest
$'m
137.5
15.9
–
15.9
Total
$'m
1,905.8
503.8
4.6
508.4
Total
equity
$'m
2,043.3
519.7
4.6
524.3
7
7
127.2
(15.2)
–
–
–
112.0
1,538.0
1,538.0
–
–
–
(1.8)
–
–
(1.8)
1,536.2
–
–
–
–
–
3.1
3.1
–
0.9
0.9
–
–
(0.3)
(0.3)
3.7
–
127.2
146.0
273.2
–
(106.1)
0.8
(105.3)
879.8
879.8
(115.9)
–
(115.9)
–
(110.5)
0.5
(110.0)
653.9
(15.2)
(106.1)
–
0.8
6.7
2,420.9
2,420.9
(115.9)
0.9
(115.0)
(1.8)
(110.5)
0.2
(112.1)
2,193.8
–
(5.0)
(0.9)
(250.3)
(110.2)
43.2
43.2
–
–
–
(15.2)
(111.1)
(0.9)
(249.5)
(103.5)
2,464.1
2,464.1
(115.9)
0.9
(115.0)
–
–
(43.2)
(43.2)
–
(1.8)
(110.5)
(43.0)
(155.3)
2,193.8
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
Balance at 1 July 2022
Loss for the year
Other comprehensive income
Total comprehensive income/(loss)
Transactions with equity holders in their
capacity as equity holders:
Buyback and issuance of securities for
exercised performance rights
Dividend/distribution provided for or paid
Loss of control of subsidiary
Balance at 30 June 2023
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Note
18
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
Proceeds on disposal of investment properties
Interest from investing activities
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 inflow/(outflow) from investing activities
Buy back of stapled securities
Borrowing costs paid
Proceeds from borrowings (net of borrowing costs)
Repayment of borrowings
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
2023
$'m
890.7
(520.0)
(165.5)
9.7
(25.2)
147.6
337.3
(2.3)
–
1.6
–
(434.3)
115.5
–
–
–
(319.5)
(8.9)
–
–
–
(6.8)
–
–
(195.4)
(211.1)
(193.3)
594.7
401.4
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
Charter Hall Property
Trust Group
2023
$'m
2022
$'m
21.8
(1.8)
–
0.5
(22.9)
110.1
107.7
–
–
1.6
–
(300.8)
91.9
(64.6)
274.3
–
2.4
–
–
–
–
–
–
–
(107.4)
(107.4)
2.7
53.4
56.1
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
The above consolidated cash flow statements should be read in conjunction with the accompanying notes.
84
85
43
44
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
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:
‒ Note 2
‒ Note 3
‒ Note 4
‒ Note 10
‒ Note 20(d)
‒ Note 22
Investments in associates
Investments in joint ventures
Revenue
Intangible assets
Valuation techniques used to derive Level 3 fair values
Controlled entities
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.
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
1 Segment information continued
(b) Operating segments
The operating segments reported to the Board for the year ended 30 June 2023 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)
Refer to Note 8 for statutory earnings per stapled security figures.
2023
$'m
137.5
219.6
(193.0)
9.4
36.0
472.0
107.8
579.8
753.3
(113.6)
(42.9)
596.8
(8.2)
(17.1)
571.5
(130.3)
441.2
473.0
93.3
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
(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 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 (losses)/gains on derivatives1
Less: Impairment of equity accounted investments
Less: Performance fees expense1
Less: Non-operating pursuit recoveries
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.
2023
$'m
441.2
(220.7)
–
4.6
(8.5)
(9.1)
3.0
–
(0.5)
(13.9)
196.1
2022
$'m
542.8
355.9
0.3
(13.1)
70.1
(18.5)
(14.4)
1.4
(0.7)
(12.7)
911.1
86
87
45
46
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
(continued)
Notes to the consolidated financial statements
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
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
Investment in associates
2
(a) Carrying amounts
All associates are incorporated and operate in Australia. Refer to Note 30(c) for accounting policy information relating to associates.
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: Net gain on investment in associates and financial assets at fair value
Less: Interest income on loan receivable
Less: Interest income on development investments
Less: Distributions in operating income
Share of net profit of investments accounted for using the equity method
2023
$'m
137.5
36.0
14.0
187.5
(238.4)
(26.6)
–
(1.7)
(2.2)
(0.3)
(1.7)
(83.4)
2022
$'m
142.9
35.5
13.3
191.7
385.9
(27.3)
(1.6)
–
–
(0.7)
(3.1)
544.9
(e) Reconciliation of funds management earnings stated above to revenue per the statement of comprehensive income
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
2023
$'m
472.0
107.8
579.8
70.5
219.6
–
12.1
1.7
(14.0)
869.7
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.
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
CH Deep Value AREIT Partnership No.3
Other associates
Equity accounted
Unlisted
Charter Hall Prime Office Fund
Charter Hall Office Trust2
Charter Hall Direct PFA Fund
Charter Hall Direct Office Fund
Charter Hall Prime Industrial Fund
Core Logistics Partnership
Deep Value Partnership
Charter Hall Exchange Wholesale Trust
Other associates
Listed
Charter Hall Long WALE REIT4
Charter Hall Retail REIT3
Charter Hall Social Infrastructure REIT5
Total investments in associates
Principal activity
Ownership interest
Carrying amount
2023
%
2022
%
2023
$'m
2022
$'m
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
14.1
14.0
31.4
4.8
15.7
12.4
8.6
1.3
5.6
13.0
3.0
10.7
10.7
8.7
12.0
13.9
–
5.1
15.7
12.2
8.7
1.4
3.6
10.0
4.5
10.7
10.7
8.7
22.6
20.9
18.8
4.3
66.6
290.9
277.8
172.6
162.8
121.0
92.4
67.5
17.5
55.8
23.6
16.4
–
2.4
42.4
325.6
311.2
205.5
183.7
120.3
65.3
49.8
24.8
57.7
429.2
288.7
126.0
2,102.2
2,168.8
470.7
300.6
126.4
2,241.6
2,284.0
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 19.
2 The entity has a 31 December balance date.
3 Fair value at the ASX closing price as at 30 June 2023 was $224.5 million (30 June 2022: $234.1 million).
4 Fair value at the ASX closing price as at 30 June 2023 was $310.2 million (30 June 2022: $329.6 million).
5 Fair value at the ASX closing price as at 30 June 2023 was $94.2 million (30 June 2022: $108.0 million).
88
47
48
89
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
2
Investment in associates continued
2
Investment in associates continued
(c) Summarised movements in carrying amounts of associates accounted for at fair value through profit or loss
Opening balance
Investment
Net loss on investment in associates at fair value
Return of capital
Closing balance
Charter Hall Group
2023
$'m
42.4
28.2
(4.0)
–
66.6
2022
$'m
46.2
20.6
(9.8)
(14.6)
42.4
Charter Hall Property
Trust Group
2023
$'m
42.4
28.2
(4.0)
–
66.6
2022
$'m
46.2
20.6
(9.8)
(14.6)
42.4
(d) Summarised movements in carrying amounts of equity accounted associates
Opening balance
Investment
Share of profit/(loss) after income tax
Distributions received/receivable
Share of movement in reserves
Impairment of carrying amount
Divestments
Closing balance
Charter Hall Group
2023
$'m
2,241.6
204.7
(62.7)
(98.2)
1.0
(7.1)
(177.1)
2,102.2
2022
$'m
1,899.9
311.0
419.1
(108.9)
–
–
(279.5)
2,241.6
Charter Hall Property
Trust Group
2023
$'m
2,180.9
132.6
(65.3)
(92.9)
1.1
(7.1)
(176.5)
1,972.8
2022
$'m
1,830.9
311.0
404.7
(104.5)
–
–
(261.2)
2,180.9
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
CH Deep Value AREIT Partnership No.3
Other associates
Equity accounted
Unlisted
Charter Hall Prime Office Fund
Charter Hall Office Trust2
Charter Hall Direct PFA Fund
Charter Hall Direct Office Fund
Core Logistics Partnership
Deep Value Partnership
Charter Hall Prime Industrial Fund
Charter Hall Exchange Wholesale Trust
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
2023
%
2022
%
2023
$'m
2022
$'m
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
14.1
14.0
31.4
3.7
15.7
12.4
8.6
5.6
13.0
0.3
3.0
10.7
10.7
8.7
12.0
13.9
–
5.1
15.7
12.2
8.7
3.6
10.0
0.3
4.5
10.7
10.7
8.7
22.6
20.9
18.8
4.3
66.6
222.7
277.8
172.6
162.8
92.4
67.5
23.3
17.5
67.4
23.6
16.4
–
2.4
42.4
325.6
311.2
205.5
183.7
65.3
49.8
24.9
24.8
67.5
288.7
429.2
150.9
1,972.8
2,039.4
300.6
470.7
151.3
2,180.9
2,223.3
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 19.
2 The entity has a 31 December balance date.
3 Fair value at the ASX closing price as at 30 June 2023 was $224.5 million (30 June 2022: $234.1 million).
4 Fair value at the ASX closing price as at 30 June 2023 was $310.2 million (30 June 2022: $329.6 million).
5 Fair value at the ASX closing price as at 30 June 2023 was $94.2 million (30 June 2022: $108.0 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 all listed and two unlisted equity accounted
investments were estimated through a value in use calculation. These calculations were performed using the share of the present value
of the estimated future cash flows expected to be generated by the associates and used the following assumptions:
−
base case cash flow projections covering a 10 year period based on executed lease agreements, CPI estimates and
estimated net market rents;
− weighted average investment property discount rates of 6.3%-8.1%; and
−
investment property terminal values calculated using capitalisation rates of 5.4%-5.9%.
External valuation support for the investment property carrying values of underlying listed funds was obtained for more than 98% of the
gross asset values on a look-through basis.
As a result of these estimates, impairment of $7.1 million was recorded for unlisted equity accounted investments in the property
investments segment.
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 5-9%.
90
91
49
50
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
2
Investment in associates continued
2
Investment in associates continued
(f) Reconciliation of net assets of associates to carrying amounts of equity accounted investments
(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 Retail REIT
$'m
$'m
Fund
$'m
$'m
2023
Summarised balance sheet:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Summarised statement of comprehensive income:
Revenue
Profit/(loss) for the year from continuing operations
Other comprehensive income/(loss)
Total comprehensive income/(loss)
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
35.1
3,718.6
35.1
1,952.6
1,766.0
108.8
(182.4)
–
(182.4)
34.5
3,841.8
73.9
1,818.2
1,984.2
90.5
339.5
–
339.5
68.0
4,031.5
120.3
1,230.7
2,748.5
213.4
37.8
6.2
44.0
60.6
3,984.5
121.2
1,069.3
2,854.6
215.7
663.6
1.1
664.7
339.8
8,724.9
258.9
2,748.5
6,057.3
401.7
(174.0)
(0.3)
(174.3)
1,126.5
6,672.2
120.5
1,251.9
6,426.3
336.9
715.9
6.3
722.2
48.3
6,155.1
90.7
2,043.0
4,069.7
222.5
(189.0)
2.9
(186.1)
50.5
6,431.5
86.1
1,937.7
4,458.2
219.7
911.9
(5.5)
906.4
Charter Hall Group
2023
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
Impairment of carrying amount
Distributions received/receivable
Divestment
Closing balance
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
Charter Hall Charter Hall
Charter Hall Charter Hall Prime Office Long WALE
REIT
Office Trust Retail REIT
$'m
$'m
Fund
$'m
$'m
1,766.0
15.7%
277.8
2,748.5
10.7%
294.1
6,057.3
4.8%
292.6
4,069.7
10.7%
435.5
–
277.8
311.2
1.9
(28.7)
–
(0.3)
(6.3)
–
277.8
(5.4)
288.7
300.6
–
4.0
0.8
–
(16.7)
–
288.7
(1.7)
290.9
325.6
72.0
(8.4)
–
–
(11.5)
(86.8)
290.9
(6.3)
429.2
470.7
–
(20.2)
0.3
–
(21.6)
–
429.2
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 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 historically 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.
92
93
51
52
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
2
Investment in associates continued
Charter Hall Property Trust Group
2023
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
Impairment of carrying amount
Distributions received/receivable
Divestment
Closing balance
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
Charter Hall Charter Hall
Charter Hall Charter Hall Prime Office Long WALE
REIT
Office Trust Retail REIT
$'m
$'m
Fund
$'m
$'m
1,766.0
15.7%
277.8
2,748.5
10.7%
294.1
6,057.3
3.7%
224.7
4,069.7
10.7%
435.5
–
277.8
311.2
1.9
(28.7)
–
(0.3)
(6.3)
–
277.8
(5.4)
288.7
300.6
–
4.0
0.8
–
(16.7)
–
288.7
(2.0)
222.7
325.6
–
(6.2)
–
–
(10.1)
(86.6)
222.7
(6.3)
429.2
470.7
–
(20.2)
0.3
–
(21.6)
–
429.2
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 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 historically 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
$734.2 million (2022: $807.9 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
$30.8 million (2022: $54.3 million) relating to investment properties and development commitments.
Investments in joint ventures
3
(a) Carrying amounts
All joint ventures are incorporated and operate in Australia. Refer to Note 30(c) for accounting policy information relating to joint
ventures.
Unless otherwise noted all joint ventures have a 30 June year end.
Charter Hall Group
Name of entity
Accounted for at fair value through
profit or loss:
Unlisted
Other Joint Ventures
Equity accounted
Unlisted
Long WALE Hardware Partnership1
Paradice Investment Management
Brisbane Square Wholesale Fund
Charter Hall PGGM Industrial Partnership No. 2
CH Genge Office Trust
CH DJ Trust
Charter Hall PGGM Industrial Partnership
CH Castlereagh Trust
Charter Hall Koala Investment Partnership
Other joint ventures
Total investments in joint ventures
Principal activity
Ownership interest
Carrying amount
2023
%
2022
%
2023
$'m
2022
$'m
Property investment
Funds management
Property investment
Property development
Property development
Property investment
Property investment
Property development
Property investment
17.5
50.0
16.8
12.0
49.9
43.2
12.0
50.1
20.0
15.7
50.0
16.8
–
–
43.2
12.0
–
20.0
57.0
57.0
–
–
236.2
196.8
129.6
94.6
78.8
68.5
46.9
27.4
26.7
59.0
964.5
1,021.5
239.9
206.2
126.7
–
–
80.4
45.9
–
19.0
73.4
791.5
791.5
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
Accounted for at fair value through
profit or loss:
Unlisted
Other Joint Ventures
Equity accounted
Unlisted
Long WALE Hardware Partnership1
Brisbane Square Wholesale Fund
Charter Hall PGGM Industrial Partnership No. 2
CH DJ Trust
Charter Hall PGGM Industrial Partnership
Charter Hall Koala Investment Partnership
Other joint ventures
Total investments in joint ventures
Principal activity
Ownership interest
Carrying amount
2023
%
2022
%
2023
$'m
2022
$'m
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
17.5
16.8
12.0
43.2
12.0
20.0
15.7
16.8
–
43.2
12.0
20.0
57.0
57.0
236.2
129.6
94.6
68.5
46.9
26.7
46.1
648.6
705.6
–
–
239.9
126.7
–
80.4
45.9
19.0
57.3
569.2
569.2
1 Ownership interest is calculated as the weighted average holding of BP Fund 1 and BP Fund 2.
94
95
53
54
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
3
Investments in joint ventures continued
4 Revenue
(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.
Due to the difference in the fair value and carrying amounts, the recoverable amounts for two unlisted equity accounted investments
were estimated through a value in use calculation. These calculations were performed using the share of the present value of the
estimated future cash flows expected to be generated by the associates and used the following assumptions:
−
base case cash flow projections covering a 10 year period based on executed lease agreements, CPI estimates and
estimated net market rents;
− weighted average investment property discount rates of 5.7%-6.7%; and
−
investment property terminal values calculated using capitalisation rates of 4.7%-6.0%.
External valuation support for the investment property carrying values of underlying listed funds was obtained for more than 93% of the
gross asset values on a look-through basis.
As a result of these estimates, impairment of $2.0 million was recorded for unlisted equity accounted investments in the property
investments segment.
If the terminal capitalisation rate assumptions were to increase by 50bps, value in use would decrease by 5-7%.
If the terminal capitalisation rate assumptions were to decrease by 50bps, value in use would increase by 5-6%.
(c) Summarised movements in carrying amounts of joint ventures accounted for at fair value through profit or loss
Opening balance
Investment
Closing balance
Charter Hall Group
2023
$'m
–
57.0
57.0
2022
$'m
–
–
–
Charter Hall Property
Trust Group
2023
$'m
–
57.0
57.0
2022
$'m
–
–
–
(d) Summarised financial information and movements in carrying amounts of equity accounted joint ventures
Movements in aggregate carrying amount:
Opening balance
Investment
Share of profit/(loss) after income tax
Distributions received/receivable
Impairment of carrying amount
Return of capital
Share of movement in reserves
Closing balance
Charter Hall Group
Charter Hall Property
Trust Group
2023
$'m
791.5
272.6
(20.7)
(57.6)
(2.0)
(19.4)
0.1
964.5
2022
$'m
421.7
316.3
125.8
(30.5)
(18.5)
(23.3)
–
791.5
2023
$'m
569.2
158.4
(35.3)
(22.5)
(2.0)
(19.3)
0.1
648.6
2022
$'m
403.7
106.6
104.5
(22.5)
–
(23.1)
–
569.2
(e) Commitments and contingent liabilities of joint ventures
There are no commitments and contingent liabilities of joint ventures material to the Group's balance sheet.
Investment management revenue1
Property services revenue1
Development revenue2
Gross rental income
Other revenue
Recovery of property and fund-related expenses
Interest
Distributions/Dividends3
Other investment-related revenue
Total other revenue
Total revenue4
Charter Hall Group
2023
$'m
458.0
107.8
219.6
–
785.4
70.5
12.1
1.7
–
84.3
869.7
2022
$'m
613.9
75.8
326.3
9.7
1,025.7
67.6
1.7
3.3
–
72.6
1,098.3
Charter Hall Property
Trust Group
2023
$'m
–
–
–
–
–
2022
$'m
–
–
–
9.6
9.6
–
2.6
1.7
17.5
21.8
21.8
–
0.2
3.3
15.0
18.5
28.1
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
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
2023
$'m
2022
$'m
Charter Hall Property
Trust Group
2023
$'m
2022
$'m
165.6
12.6
8.8
187.0
7.6
2.4
9.8
12.6
7.7
40.1
8.2
0.5
9.1
17.8
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
–
–
–
–
–
–
3.6
–
–
3.6
–
–
9.1
9.1
–
–
–
–
–
–
4.9
–
1.9
6.8
–
–
–
–
96
97
55
56
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
6
Income tax expense
6
Income tax expense continued
Income tax expense
(a)
Current tax expense
Deferred income tax expense/(benefit)
Over/(under)-provided in prior years
Deferred income tax expense/(benefit)
Decrease/(increase) in deferred tax assets for the tax
consolidated group
(Decrease)/increase in deferred tax liabilities for the tax
consolidated group
Note
Charter Hall Group
2023
$'m
130.0
(4.5)
0.2
125.7
(0.7)
(3.8)
(4.5)
2022
$'m
171.7
7.5
0.2
179.4
(1.5)
9.0
7.5
Charter Hall Property
Trust Group
2023
$'m
2022
$'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
Other adjustments
Income tax expense
Amounts recognised directly in equity
(c)
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
321.8
96.5
1,106.4
331.9
(115.9)
(34.8)
519.7
155.9
34.8
(5.6)
125.7
(155.9)
3.4
179.4
34.8
–
–
(155.9)
–
–
(0.7)
–
(0.7)
(5.6)
2.3
(3.3)
–
–
–
–
–
–
(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.
Tax losses – Charter Hall Group
(f)
At 30 June 2023, the Group has approximately $17.6 million (2022: $18.9 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 11.9 cents and ordinary dividend of
9.8 cents per stapled security for the six months ended 30 June
2023 payable on 31 August 2023
Interim ordinary distribution of 11.46 cents and interim ordinary
dividend of 9.38 cents per stapled security for the six months
ended 31 December 2022 paid on 28 February 2023
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 paid 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 2022 paid on 28 February 2022
Total Distributions/Dividends paid and payable to stapled
securityholders
Distributions paid and payable to other non-controlling interests
Total Distributions/Dividends paid and payable
Charter Hall Group
2023
$'m
2022
$'m
Charter Hall Property
Trust Group
2023
$'m
2022
$'m
102.6
98.6
–
–
201.2
–
201.2
–
–
96.8
91.6
188.4
5.0
193.4
56.3
54.2
–
–
110.5
–
110.5
–
–
53.3
52.8
106.1
5.0
111.1
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.
Franking credits available in the parent entity (Charter Hall Limited) for dividends payable in subsequent financial years based on a tax
rate of 30% (2022: 30%) are $345.0 million (2022: $256.1 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.
98
99
57
58
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
8 Earnings per stapled security
9 Receivables and other assets
Basic earnings per security attributable to:
(a)
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
2023
Cents
66.0
(24.5)
41.5
64.8
(24.1)
40.7
2022
Cents
86.8
107.3
194.1
85.4
105.6
191.0
Charter Hall Property
Trust Group
2023
Cents
2022
Cents
n/a
(24.5)
n/a
n/a
(24.1)
n/a
n/a
107.3
n/a
n/a
105.6
n/a
Basic earnings per stapled security is determined by dividing profit attributable to the stapled securityholders by the weighted average
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
2023
$'m
2022
$'m
2023
$'m
2022
$'m
311.9
407.3
n/a
n/a
196.1
911.1
(115.9)
503.8
2023
Number
2022
Number
2023
Number
2022
Number
472,997,199
469,397,056
472,997,199
469,397,056
7,412,684
987,724
6,104,168
1,561,476
7,412,684
987,724
6,104,168
1,561,476
481,397,607
477,062,700
481,397,607
477,062,700
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
Distributions receivable
Other receivables and assets
Note
Non-current
Loans to associates and joint ventures
21(e)
Charter Hall Group
2023
$'m
106.3
–
34.0
19.2
159.5
3.7
3.7
2022
$'m
61.2
7.9
36.2
10.1
115.4
3.4
3.4
Charter Hall Property
Trust Group
2023
$'m
2022
$'m
4.4
–
30.2
4.5
39.1
–
–
17.7
–
35.4
–
53.1
–
–
(a) Bad and doubtful trade receivables
During the year, the Charter Hall Group and Charter Hall Property Trust Group incurred $nil expense (2022: $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 19 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
2023
$'m
105.8
0.5
–
–
106.3
2022
$'m
61.0
0.2
–
–
61.2
Charter Hall Property
Trust Group
2023
$'m
4.4
–
–
–
4.4
2022
$'m
17.7
–
–
–
17.7
As at 30 June 2023, Charter Hall Group had trade receivables of $nil (2022: $nil) past due but not impaired. Charter Hall Property Trust
Group had $nil (2022: $nil) receivables past due but not impaired.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable 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.
100
101
59
60
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
10
Intangible assets
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
11 Deferred tax assets and liabilities
Indefinite life intangibles – management rights
Charter Hall Retail REIT
Charter Hall Social Infrastructure REIT
Other indefinite life intangibles
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
2023
$'m
42.3
46.4
12.6
101.3
2.8
(0.5)
2.3
58.5
(56.2)
2.3
9.9
113.5
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
Charter Hall Property
Trust Group
2023
$'m
2022
$'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;
−
− 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;
− pre-tax discount rate of 14.3% (2022: 12.5%);
− growth after three years of 2.0% (2022: 2.0%) per annum; and
−
terminal value multiple of 10 times earnings (2022: 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.
Deferred tax assets comprises temporary differences attributable
to:
Employee benefits
Investments accounted for using the equity method
Other
Deferred tax liabilities comprises temporary differences
attributable to:
Intangible assets
Investments accounted for using the equity method
Share purchase option
Other
Net deferred tax liabilities
12 Trade and other liabilities
Current
Trade and other liabilities
Long service leave provision
Dividend/Distribution payable
Employee benefits liability
Non-current
Loan payable to Charter Hall Limited
Long service leave provision
Lease incentive liability
Charter Hall Group
2023
$'m
22.0
1.7
6.9
30.6
29.5
17.3
5.0
2.6
54.4
(23.8)
2022
$'m
22.7
–
7.2
29.9
29.7
18.5
6.0
4.0
58.2
(28.3)
Charter Hall Property
Trust Group
2023
$'m
2022
$'m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Charter Hall Group
2023
$'m
62.2
3.7
102.6
40.7
209.2
–
3.0
1.7
4.7
2022
$'m
108.4
3.3
96.8
48.9
257.4
–
3.0
1.7
4.7
Charter Hall Property
Trust Group
2023
$'m
2022
$'m
6.5
–
56.3
–
62.8
143.8
–
–
143.8
12.7
0.1
53.3
–
66.1
–
–
–
–
21(e)
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.
102
103
61
62
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
13 Borrowings
13 Borrowings continued
Non-current liabilities
US Private Placement Notes
Medium-term notes
Less: unamortised transaction costs
(a) Borrowings
Charter Hall Group
The Group’s debt platform includes the following:
Charter Hall Group
2023
$'m
246.2
207.2
(2.7)
450.7
2022
$'m
250.4
206.5
(3.0)
453.9
Charter Hall Property
Trust Group
2023
$'m
2022
$'m
246.2
207.2
(2.7)
450.7
250.4
206.5
(3.0)
453.9
‒ An unsecured $200.0 million (2022: $200.0 million) borrowings plus an additional $50.0 million (2022: $30.0 million) unsecured
facility to support the issuance of bank guarantees with maturity in May 2027. At 30 June 2023, drawn borrowings of $nil (2022:
$nil) and issuance of bank guarantees of $37.4 million (2022: $23.3 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.
‒ US$175 million (A$231.5 million at issue date) unsecured notes issued through a US Private Placement which was fully funded in
August 2018 and matures in August 2028.
‒ The Group has entered into A$/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
2023, the carrying amount of the notes at the prevailing spot rate was A$246.2 million (2022: A$250.4 million) including a fair
value adjustment of A$14.7 million (2022: A$18.9 million). The movement in the carrying amount since issuance is offset by
the fair value of the swap A$17.5 million (2022: A$21.9 million).
‒ 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.
‒ A$250 million unsecured medium-term notes (MTN) issued in April 2021 and maturing in April 2031.
‒ The Group has entered into interest rate swap agreements that hedge the Group’s exposure to changes in the fair value of
the MTN. At 30 June 2023, the carrying amount of the notes was A$207.2 million (2022: A$206.5 million), including a fair
value adjustment of A$42.8 million (2022: A$43.5 million). The movement in the carrying amount since issuance is offset by
the fair value of the swap liability A$41.1 million (2022: A$40.0 million liability).
(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 2023 was 2.2% (30 June 2022: 0.0%). 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
2023
Borrowings
Derivative financial instruments hedging debt
Borrowing costs
Cash
2022
Borrowings
Loans - related parties
Derivative financial instruments hedging debt
Borrowing costs
Cash
Charter Hall Property Trust Group
2023
Borrowings
Derivative financial instruments hedging debt
Borrowing costs
Funding received from Charter Hall Limited
Cash
2022
Borrowings
Derivative financial instruments hedging debt
Borrowing costs
Funding received from Charter Hall Limited
Cash
Opening
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
Movement Movement
in fair in borrowing Movement
in cash
costs
values
$'m
$'m
$'m
Derecognition
on disposal
of DLWF
$'m
(3.5)
4.9
–
–
1.4
(55.9)
–
47.6
–
–
(8.3)
(3.5)
4.9
–
–
–
1.4
(55.9)
47.6
–
–
–
(8.3)
–
–
0.3
–
0.3
–
–
–
(1.8)
–
(1.8)
–
–
0.3
–
–
0.3
–
–
(1.8)
–
–
(1.8)
–
–
–
193.3
193.3
44.2
–
–
–
(263.3)
(219.1)
–
–
–
143.8
(2.7)
141.1
44.2
–
–
12.3
(2.6)
53.9
–
–
–
–
–
(84.2)
–
1.2
2.4
20.5
(60.1)
–
–
–
–
–
–
(84.2)
1.2
2.4
–
20.5
(60.1)
Closing
balance
$'m
453.4
18.8
(2.7)
(401.4)
68.1
456.9
–
13.9
(3.0)
(594.7)
(126.9)
453.4
18.8
(2.7)
143.8
(56.1)
557.2
456.9
13.9
(3.0)
–
(53.4)
414.4
104
105
63
64
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
14 Derivative financial instruments
16 Reserves
Current assets
Cross-currency interest rate swaps - cash flow hedge and fair
value hedge
Interest rate swaps - fair value hedge
Interest rate swaps - fair value through profit and loss
Non-current assets
Cross-currency interest rate swaps - cash flow hedge and fair
value hedge
Share purchase option - fair value through profit and loss1
Non-current liabilities
Interest rate swaps - fair value hedge
Charter Hall Group
2023
$'m
2022
$'m
Charter Hall Property
Trust Group
2023
$'m
2022
$'m
2.8
0.2
1.8
4.8
17.5
16.7
34.2
41.1
41.1
3.4
0.8
–
4.2
21.9
20.0
41.9
40.0
40.0
2.8
0.2
1.8
4.8
17.5
–
17.5
41.1
41.1
3.4
0.8
–
4.2
21.9
–
21.9
40.0
40.0
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 20(c) and 20(d).
15 Contributed equity
(a) Movements in ordinary stapled security capital
Weighted
Details
Opening balance at 1 July 2021
Buyback and issuance of securities for exercised
performance and service rights1
Tax recognised directly in equity
Issuance of stapled securities
Closing balance at 30 June 2022
Closing balance per accounts at 30 June 2022
Buyback and issuance of securities for exercised
performance and service rights2
Tax recognised directly in equity
Closing balance at 30 June 2023
Closing balance per accounts at 30 June 2023
Number of
securities
465,777,131
–
–
7,220,068
472,997,199
472,997,199
–
–
472,997,199
472,997,199.0
issue price
average Charter Hall
Limited
$'m
Charter Hall
Property
Trust
$'m
$5.99
$20.68
$9.13
290.8
1,426.0
(3.7)
5.6
22.1
314.8
314.8
(0.7)
0.7
314.8
314.8
(15.2)
–
127.2
1,538.0
1,538.0
(1.8)
–
1,536.2
1,536.2
Total
$'m
1,716.8
(18.9)
5.6
149.3
1,852.8
1,852.8
(2.5)
0.7
1,851.0
1,851.0
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
2023
$'m
(52.0)
52.1
4.0
–
–
0.8
4.9
1.2
3.7
4.9
2022
$'m
(52.0)
37.2
4.0
0.5
0.4
(0.3)
(10.2)
(13.3)
3.1
(10.2)
Charter Hall Property
Trust Group
2023
$'m
–
–
4.0
–
–
(0.3)
3.7
–
3.7
3.7
2022
$'m
–
–
4.0
0.5
0.4
(1.8)
3.1
–
3.1
3.1
(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 Performance Rights and
Options Plan (PROP).
1
2
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.
645,142 stapled securities bought on-market at an average value of $12.97, offset by the exercise of 327,074 performance rights with a fair value of $7.10 and 318,068
service rights with an average value of $11.21.
(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 Reinvestment Plan
The Group has established a Distribution Reinvestment 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.
106
107
65
66
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
19 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 cooperation 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.
17 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 compliance services
PricewaterhouseCoopers – New Zealand Firm
Taxation compliance services for DLWF
Total remuneration for taxation compliance services
(c) Other services
PricewaterhouseCoopers – Australian Firm
Other assurance services
Total remuneration for other services
Charter Hall Group
2023
$
2022
$
Charter Hall Property
Trust Group
2023
$
2022
$
511,364
–
13,178
524,542
563,778
26,019
13,178
602,975
18,812
–
13,178
31,990
67,970
144,800
–
67,970
6,569
151,369
160,000
160,000
18,150
18,150
–
–
–
–
–
31,448
26,019
13,178
70,645
–
6,569
6,569
–
–
18 Reconciliation of profit after tax to net cash inflow from operating activities
Profit/(loss) 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
Other net losses
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/(decrease) in trade creditors and accruals
(Increase)/decrease in development assets
Share of net profits from equity accounted investments in associates
and joint ventures
Increase/(decrease) in income taxes payable
(Increase)/decrease for net deferred income tax
Net cash inflow from operating activities
Charter Hall Group
2023
$'m
196.1
0.5
9.1
9.4
12.6
(0.5)
(2.3)
0.9
3.3
–
(44.4)
(37.0)
0.9
229.3
(36.1)
(4.5)
337.3
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)
51.1
9.9
603.8
Charter Hall Property
Trust Group
2023
$'m
(115.9)
2022
$'m
519.7
–
9.1
0.6
–
(0.6)
(2.3)
–
(0.1)
–
14.0
(6.1)
–
209.0
–
–
107.7
–
–
0.8
–
1.6
(0.4)
–
(4.3)
0.1
(11.3)
1.0
–
(412.0)
–
–
95.2
Distributions and interest income received on investments has been classified as cash flow from operating activities.
108
109
67
68
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
19 Capital and financial risk management continued
19 Capital and financial risk management continued
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
2023
Assets – Charter Hall Group
Investments accounted for at fair value through profit or loss
Investments in financial assets at fair value through profit or loss
2022
Assets – Charter Hall Group
Investments in associates at fair value through profit or loss
Assets held for sale
Charter Hall Property Trust Group
2023
Assets – Charter Hall Property Trust Group
Investments accounted for at fair value through profit or loss
Investments in financial assets at fair value through profit or loss
2022
Assets – Charter Hall Property Trust Group
Investments in associates at fair value through profit or loss
Assets held for sale
1 The impact of a -10% change is the reverse of the impact shown for a +10% change.
Carrying
amount
$'m
10%
Impact on
Profit1
$'m
66.6
29.7
42.4
79.0
66.6
29.7
42.4
79.0
6.7
3.0
4.2
7.9
6.7
3.0
4.2
7.9
Cash flow and fair value interest rate risk
The Group has long-term interest-bearing assets from unsecured loans receivable from development partners of $3.7 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 13. 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 13
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
2023
Financial assets
Cash and cash equivalents
Derivative financial instruments
Investments accounted for at fair value through profit or loss
Financial liabilities
Borrowings
Total increase/(decrease)
2022
Financial assets
Cash and cash equivalents
Financial liabilities
Borrowings
Total increase/(decrease)
Charter Hall Property Trust Group
2023
Financial assets
Cash and cash equivalents
Derivative financial instruments
Investments accounted for at fair value through profit or loss
Financial liabilities
Loan payable to Charter Hall Ltd
Borrowings
Total increase/(decrease)
2022
Financial assets
Cash and cash equivalents
Financial liabilities
Borrowings
Total increase/(decrease)
Effective
interest rate
Fair value
$'m
Carrying
amount
$'m
+/-1%
Impact on
Profit
$'m
2.9%
3.7%
11.2%
401.4
1.8
57.0
4.6%
440.6
401.4
1.8
57.0
453.4
6.8
4.0/(4.0)
0.0/(0.0)
0.6/(0.6)
(4.6)/4.7
0.0/0.1
0.2%
594.7
594.7
5.9/(5.9)
1.9%
450.3
456.9
127.8
(5.3)/5.5
0.6/(0.4)
2.9%
3.7%
11.2%
5.4%
4.6%
56.1
1.8
57.0
143.8
440.6
56.1
1.8
57.0
0.6/(0.6)
0.0/(0.0)
0.6/(0.6)
143.8
453.4
(482.3)
1.4/(1.4)
(4.6)/4.7
(2.0)/2.1
0.2%
53.4
53.4
0.5/(0.5)
1.9%
450.3
456.9
–
(5.3)/5.5
(4.8)/5.0
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.
110
111
69
70
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
19 Capital and financial risk management continued
19 Capital and financial risk management continued
(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 14 for derivatives held by the Group.
The Group’s accounting policy for its fair value and cash flow hedges is set out in Note 30(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% (2022: 100%) of the foreign-denominated debt outstanding. The
variable AUD interest rate payable under the swaps is 2.0% (2022: 2.0%) above the 90-day bank bill swap rate which at the end of the
reporting period was 4.4% (2022: 1.8%) and the receivable USD fixed rate aligns with the foreign-denominated debt at 4.6% (2022:
4.6%).
Interest rate swaps currently in place for the medium-term notes cover 100% (2022: 100%) of the debt outstanding. The receivable
fixed rate of the swaps is 3.1% (2022: 3.1%) and the payable is the 90-day bank bill swap rate plus 1.5% (2022: 1.5%).
See Note 13(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:
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
Charter Hall Group
2023
2022
Charter Hall Property
Trust Group
2023
2022
20.3
231.5
25.3
231.5
20.3
231.5
25.3
231.5
August-2028 August-2028 August-2028 August-2028
1:1
1:1
1:1
(5.0)
4.2
1:1
(5.0)
4.2
(5.9)
8.8
(39.2)
250.0
April-2031
(40.9)
250.0
April-2031
1:1
(1.7)
(0.7)
(40.9)
250.0
April-2031
1:1
(1.7)
(0.7)
1:1
(42.9)
47.0
(5.9)
8.8
(39.2)
250.0
April-2031
1:1
(42.9)
47.0
(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 98.4% of its revenue from management fees, development revenue, transaction and other fees from related parties.
CHPT derives 88.1% of its revenue from distributions and other fees from investments in related party property funds.
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 trade receivables and financial assets at fair value through other comprehensive income or through profit or loss.
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.
112
113
71
72
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
19 Capital and financial risk management continued
20 Fair value measurement continued
Charter Hall Group
2023
Trade and other payables
Borrowings
Derivative financial instruments
Net contractual amounts payable/(receivable)
Total financial liabilities
2022
Trade and other payables
Borrowings
Derivative financial instruments
Net contractual amounts payable/(receivable)
Total financial liabilities
Charter Hall Property Trust Group
2023
Trade and other payables
Borrowings
Derivative financial instruments
Net contractual amounts payable/(receivable)
Total financial liabilities
2022
Trade and other payables
Borrowings
Derivative financial instruments
Net contractual amounts payable/(receivable)
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
213.9
453.4
41.1
708.4
262.1
456.9
40.0
759.0
206.6
453.4
41.1
701.1
66.1
456.9
40.0
563.0
209.2
–
7.1
216.3
257.4
–
2.8
260.2
62.8
–
7.1
69.9
66.1
–
2.8
68.9
1.7
–
24.4
26.1
1.3
–
22.4
23.7
–
–
24.4
24.4
–
–
22.4
22.4
3.0
481.5
19.4
503.9
3.4
456.9
24.1
484.4
143.8
481.5
19.4
644.7
–
456.9
24.1
481.0
213.9
481.5
50.9
746.3
262.1
456.9
49.3
768.3
206.6
481.5
50.9
739.0
66.1
456.9
49.3
572.3
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 2023, there was a gross liability position of $18.8 million (2022: $13.9 million) with
no amounts subject to offset.
As the Group does not have a legally enforceable right to offset, none of the financial assets or financial liabilities are offset on the
balance sheet of the Group.
20 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 or loss (Note 2)
Investments in joint ventures at fair value through profit or loss (Note 3)
‒
‒
‒ Financial assets at fair value through profit or loss
‒ Derivatives (Note 14)
73
114
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy:
(i)
(ii)
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;
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
2023
Financial assets at fair value through profit or loss
Investments in joint ventures at fair value through profit or
loss
Investments in associates at fair value through profit or
loss
Derivative financial instruments
Total assets
Derivative financial instruments
Total liabilities
2022
Financial assets at fair value through profit or loss
Investments in associates at fair value through profit or
loss
Derivative financial instruments
Assets classified as held for sale
Total assets
Derivative financial instruments
Total liabilities
Charter Hall Property Trust Group
2023
Financial assets at fair value through profit or loss
Investments in joint ventures at fair value through profit or
loss
Investments in associates at fair value through profit or
loss
Derivative financial instruments
Total assets
Derivative financial instruments
Total liabilities
2022
Financial assets at fair value through profit or loss
Investments in associates at fair value through profit or
loss
Derivative financial instruments
Assets classified as held for sale
Total assets
Derivative financial instruments
Total liabilities
29.7
–
–
–
29.7
–
–
20.0
–
–
–
20.0
–
–
29.7
–
–
–
29.7
–
–
20.0
–
–
–
20.0
–
–
–
–
–
22.3
22.3
(41.1)
(41.1)
–
–
26.1
–
26.1
(40.0)
(40.0)
–
–
–
22.3
22.3
(41.1)
(41.1)
–
–
26.1
–
26.1
(40.0)
(40.0)
–
57.0
66.6
16.7
140.3
–
–
–
42.4
20.0
79.0
141.4
–
–
–
57.0
66.6
–
123.6
–
–
–
42.4
–
79.0
121.4
–
–
29.7
57.0
66.6
39.0
192.3
(41.1)
(41.1)
20.0
42.4
46.1
79.0
187.5
(40.0)
(40.0)
29.7
57.0
66.6
22.3
175.6
(41.1)
(41.1)
20.0
42.4
26.1
79.0
167.5
(40.0)
(40.0)
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.
74
115
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
20 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 or 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.
Investments in joint ventures
The level 3 investment in joint ventures at fair value through profit or loss relates to a contractually linked instrument (CLI). The CLI is
designated on initial recognition to be treated at fair value through profit or loss.
The fair value of the CLI is determined by reference to the credit risk of the tranche that the group holds directly. The underlying pool of
instruments pay floating interest as does the tranche that the group holds directly.
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 98% of investment property as at 30 June 2023 on a look-through basis.
Movements in the inputs are likely to have an impact on the fair value of investment properties. An increase/(decrease) in gross market
rent will likely lead to an increase/(decrease) in fair value. A decrease/(increase) in adopted capitalisation rate, adopted terminal yield
or adopted discount rate will likely lead to an increase/(decrease) in fair value.
Where an independent valuation is not obtained, the fair value is determined using discounted cash flow and income capitalisation
methods.
Assets classified as held for sale
Held for sale assets relate to management rights and units in an unlisted property trust subject to a share and unit sale agreement. The
assets are measured at fair value less costs to sell and fair value is determined by reference to the agreed price in the sales
agreement.
21 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 22.
(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
2023
$'000
3,214
1,518
4,761
76
5,821
2
15,392
2022
$'000
3,221
1,458
6,060
71
5,135
2
15,947
Charter Hall Property
Trust Group
2023
$'000
–
–
–
–
–
–
–
2022
$'000
–
–
–
–
–
–
–
Detailed remuneration disclosures are provided in the Remuneration Report on pages 52 to 76.
(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
Development revenue
Charter Hall Group
2023
$'000
2022
$'000
Charter Hall Property
Trust Group
2023
$'000
2022
$'000
15,706
5,253
146,045
254,741
99,049
204,599
2,356
471
5,514
47,774
20,975
9,071
1,396
146
14,158
19,155
3,576
–
3,263
853,248
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
17,461
–
17,461
–
–
–
–
–
14,952
–
14,952
During the year, the Group sold holdings in related party entities to other related parties totalling $99.7 million (2022: $116.9 million).
116
117
75
76
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
21 Related parties continued
The following balances arising through the normal course of business were due from related parties at balance date:
Associates
Investment management revenue receivables
Other receivables
Distributions receivable
Joint ventures
Investment management revenue receivables
Other receivables
Distributions receivable
Other
Investment management revenue 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
Loan repayments received
Interest received/receivable
Closing balance
Loans from other related parties
Opening balances
Loans advanced
Loan repayments made
Interest charged
Interest paid/payable
Closing balance
Loans to/(from) Charter Hall Limited
Opening balances
Loans advanced
Loan repayments received
Interest payable
Closing balance
Charter Hall Group
2023
$'000
2022
$'000
Charter Hall Property
Trust Group
2023
$'000
2022
$'000
78,243
10,074
26,627
11,076
1,272
7,429
2,010
374
137,105
23,848
12,909
29,838
12,212
3,288
5,996
9,459
310
97,860
–
–
25,113
–
–
5,157
–
–
30,270
–
–
28,998
–
–
5,996
–
–
34,994
Charter Hall Group
Charter Hall Property
Trust Group
2023
$'000
2022
$'000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2022
$'000
3,260
1,583
(1,694)
259
3,408
6,949
(7,318)
369
–
–
11,000
–
1,278
(1,278)
11,000
–
–
–
–
–
–
249,242
(388,268)
(4,799)
(143,825)
12,281
327,005
(338,494)
(792)
–
2023
$'000
3,408
–
(32)
283
3,659
–
–
–
–
11,000
–
(5,500)
1,594
(1,594)
5,500
–
–
–
–
–
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
22 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 2023 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
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 Co-Investment Trust 13
Charter Hall Co-Investment Trust 14
Charter Hall Maxim Income Fund
Charter Hall Wholesale Property Series No.2
*Loss of control during the year
Country of
incorporation Principal activity
Class of
securities
2023
%
2022
%
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
Australia
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
Property Investment
Property investment
Ordinary
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
100
*
*
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
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 $2,951,000 (2022: $4,208,000). At 30 June 2023, related fees payable amounted to $624,000 (2022: $4,827,000).
118
119
77
78
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
Interests in unconsolidated structured entities
23
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
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
2023
$'m
8.5
34.0
42.5
3.7
96.3
3,066.7
3,166.7
2022
$'m
17.5
35.4
52.9
3.4
42.4
3,033.1
3,078.9
Charter Hall Property
Trust Group
2023
$'m
2022
$'m
–
30.2
30.2
–
96.3
2,621.4
2,717.7
–
34.6
34.6
–
42.4
2,750.1
2,792.5
3,209.2
3,131.8
2,747.9
2,827.1
75,660.4
79,911.0
59,961.7
79,911.0
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 21 for
further information.
No financial support has been provided to the funds beyond the loans disclosed in the above table.
24 Commitments
(a) Capital commitments
Charter Hall Group
The Group had no contracted capital commitments as at 30 June 2023 (2022: $13.4 million relating to a development joint venture).
Charter Hall Property Trust Group
The Trust Group had no contracted capital commitments as at 30 June 2023 (2022: $nil).
25 Contingent liabilities
The Group has nil contingent liabilities as at 30 June 2023 (2022: $nil) other than the bank guarantees provided for under the bank
facility held by Charter Hall Property Trust (refer to 13(a)).
26 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 25/11/19
Rights issued 26/11/20
Rights issued 11/09/21
Rights issued 11/11/21
Rights issued 14/12/21
Rights issued 17/11/22
Rights issued 17/11/22
Performance rights issued
Number of rights forfeited/lapsed
713,588
–
–
–
–
–
–
713,588
2020
Number
2021
Number
2022
Number
2023
Number
Total
Number
–
838,798
–
–
–
–
–
838,798
–
–
4,094,224
905,776
794,630
–
–
5,794,630
–
–
–
–
–
489,835
489,835
979,670
713,588
838,798
4,094,224
905,776
794,630
489,835
489,835
8,326,686
Prior years
Current year
Number of rights vested
Current year
Closing balance
Service rights
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
Rights issued 29/07/22
Rights issued 29/07/22
Rights issued 05/12/22
Service rights issued
Number of rights forfeited/lapsed
Prior years
Current year
(52,619)
(21,811)
(43,651)
(85,823)
(40,804)
(63,654)
–
(16,006)
(137,074)
(187,294)
(327,074)
312,084
–
709,324
–
5,690,172
–
963,664
(327,074)
7,675,244
178,903
320,000
–
–
–
–
–
–
–
498,903
–
–
672,282
319,856
–
–
–
–
–
992,138
–
–
–
–
319,650
156,280
–
–
–
475,930
–
–
–
–
–
–
284,654
449,657
25,818
760,129
178,903
320,000
672,282
319,856
319,650
156,280
284,654
449,657
25,818
2,727,100
–
(45,000)
–
(12,621)
–
(8,324)
–
(10,212)
–
(76,157)
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.
(178,903)
(80,000)
195,000
(109,928)
(159,928)
709,661
–
(78,140)
389,466
–
–
749,917
(288,831)
(318,068)
2,044,044
(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
2023
$'m
12.6
2022
$'m
12.4
Charter Hall Property
Trust Group
2023
$'m
–
2022
$'m
–
120
121
79
80
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
27 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 $1.7 billion and liquidity through the inter-staple loan with Charter Hall Limited.
1,536.2
3.3
156.6
1,696.1
229.4
229.4
314.8
(53.6)
(120.6)
140.6
96.4
96.4
314.8
(53.6)
(126.3)
134.9
85.7
85.7
1,538.0
4.0
37.6
1,579.6
92.9
92.9
2023
$'m
74.8
3,381.0
62.8
1,684.9
2022
$'m
101.2
1,924.3
64.3
344.7
2022
$'m
219.1
486.8
122.5
351.9
2023
$'m
327.9
623.0
94.6
482.4
(b) Contingent liabilities of the parent entity
Charter Hall Limited and Charter Hall Property Trust had no contingent liabilities as at 30 June 2023 (2022: $nil) other than the bank
guarantees provided for under the bank facility held by Charter Hall Property Trust (refer to Note 13(a)).
(c) Contractual commitments
As at 30 June 2023, Charter Hall Limited had no contractual commitments (2022: $nil).
As at 30 June 2023, Charter Hall Property Trust had no contractual commitments (2022: $nil).
26 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 FY2023 are as follows:
Grant date
Stapled security price at grant date1
Fair value of right
Expected volatility2
Risk-free interest rate
Grant date
Stapled security price at grant date1
Fair value of right
Expected volatility2
Risk-free interest rate
CHC
Performance
rights
CHC
Performance
rights
CHC
Service
rights –
CHC
Service
rights –
Tranche 1
Tranche 2
Mandatory
Deferred STI
Voluntary
Deferred STI
17/11/2022
$13.73
$9.93
39.0%
3.2%
CQR
Service
rights –
Mandatory
Deferred STI
29/07/2022
$4.18
$4.18
21.2%
2.8%
17/11/2022
$13.73
$13.73
39.0%
3.2%
29/07/2022
$12.74
$12.74
32.5%
2.8%
29/07/2022
$12.74
$12.74
34.9%
2.8%
CQE
Service
rights –
Mandatory
Deferred STI
29/07/2022
$3.78
$3.78
CLW
Service
rights –
Mandatory
Deferred STI
29/07/2022
$4.55
$4.55
26.8%
2.8%
19.6%
2.8%
CHC
Service
rights –
Sign-on
Rights
05/12/2022
$13.38
$13.38
35.0%
3.0%
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 (2022: $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 $601,656 (2022: $601,666) 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.
122
123
81
82
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
28 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
2023
$'m
614.2
(3.3)
(184.8)
(8.2)
(5.0)
14.6
(38.3)
389.2
(111.2)
278.0
415.8
278.0
(90.7)
603.1
2022
$'m
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
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
28 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
Net loans receivable from related entities
Total current assets
Non-current assets
Loans due from Charter Hall Property Trust
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
Net loans due to related entities
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated profit
Total equity
2023
$'m
281.3
128.5
35.6
445.4
143.8
15.1
225.9
203.5
14.1
71.0
16.1
5.8
16.7
712.0
1,157.4
165.3
7.1
172.4
4.7
20.8
16.4
41.9
214.3
943.1
314.8
25.2
603.1
943.1
2022
$'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
29 Events occurring after the reporting date
No matter or circumstance has arisen since 30 June 2023 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.
124
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Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
30 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 2023 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 2023 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:
‒ assets held for sale – measured at the lower of carrying
‒
‒
‒
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
‒ derivative financial instruments.
Controlled entities
(c) Principles of consolidation
(i)
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 2023 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.
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
30 Summary of significant accounting policies continued
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
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
126
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86
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
30 Summary of significant accounting policies continued
30 Summary of significant accounting policies continued
service components, judgement is applied to determine whether
the components are:
‒ distinct – accounted for as separate performance
obligations;
‒ not distinct – combined with other promised services until a
distinct bundle is identified; or
‒ 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:
‒
‒
‒
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.
(v) Termination benefits
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
20(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.
(i) Plant and equipment
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:
‒ Furniture, fittings and equipment
‒ 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.
128
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88
Charter Hall Group Annual Report 2023
Notes to the Consolidated Financial Statements
Notes to the consolidated financial statements
(continued)
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Charter Hall Group Financial Report 2023
Notes to the consolidated financial statements
For the year ended 30 June 2023
30 Summary of significant accounting policies continued
30 Summary of significant accounting policies continued
(j) Assets held for sale
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.
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:
‒ at fair value through other comprehensive income or
through profit or loss; or
‒ 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.
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 2023 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.
130
131
89
90
Charter Hall Group Annual Report 2023
Directors’ Declaration to Securityholders
Directors’ declaration to securityholders
For the year ended 30 June 2023
Charter Hall Group Financial Report 2023
Independent Auditor’s Report
Independent auditor’s report
For the year ended 30 June 2023
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 80 to 132 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 2023 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 28 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the
deed of cross guarantee described in Note 28.
Note 30(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
21 August 2023
91
Independent auditor’s report
To the stapled securityholders 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 2023 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 Charter Hall Property Trust Group financial reports comprises:
•
•
•
•
•
•
•
the consolidated balance sheets as at 30 June 2023
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.
92
132
133
Charter Hall Group Annual Report 2023 Independence
We are independent of the Charter Hall Group and 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
• We calculated materiality for the Charter Hall Group and the Charter Hall Property Trust Group
and applied the lower of these two materiality amounts in the audit of both the Charter Hall Group
and the Charter Hall Property Trust Group. For the purpose of our audit of Charter Hall Group and
Charter Hall Property Trust Group we used overall quantitative materiality of $22.0 million, which
represents approximately 5% of Charter Hall Group’s operating earnings.
• 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 reports as a whole.
• We chose operating earnings (which is 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.
We utilised a 5% threshold based on our professional judgement, noting it is within the range of
commonly acceptable thresholds.
Audit Scope
• 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.
• We, as the group audit team, identified separate components of Charter Hall Group and Charter
Independent Auditor’s Report
continued
Hall Property Trust Group. Component audit teams assisted the group engagement team to
perform an audit of those components.
•
•
•
•
At both the Charter Hall Group and Charter Hall Property Trust Group level, audit procedures were
performed over group transactions and financial report disclosures.
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.
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.
In all of our audits, we also address the risk of management override of internal controls, including
whether there was evidence of bias by the directors that may represent a risk of material
misstatement due to fraud.
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, Risk and Compliance 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)
(Notes 2 & 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.
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
To assess the carrying amount of investments
accounted for using the equity method, our audit
included the following audit procedures, amongst
others:
•
Updating our understanding of market
conditions relating to the investments and
discussing with management the
particular circumstances affecting the
investments.
Reperforming the equity method of
accounting 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
•
•
•
134
135
93
94
Charter Hall Group Annual Report 2023 Independent Auditor’s Report
continued
Key audit matter
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.
Revenue recognition – performance fees
(Charter Hall Group)
(Note 4)
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:
•
•
Estimation uncertainty associated with
estimating the period remaining from
balance sheet date to performance fee
crystallisation date and determining the
degree of probability of revenue reversal
during that period, including potential and
uncertain economic impacts of inflation
and interest rates on future property
valuations.
The potential financial significance of
performance fees to the Charter Hall
Group results.
How our audit addressed the key audit matter
Key audit matter
How our audit addressed the key audit matter
•
•
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:
o
o
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.
Our audit procedures included evaluating the
design of relevant controls relating to the
recognition and measurement of performance fee
revenue.
For a sample of funds with performance fees
contracts, our procedures included the following:
• We assessed the appropriateness of
revenue recognition against the
requirements of Australian Accounting
Standards (AASB15).
• 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.
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.
•
Tested the mathematical accuracy, on a
sample basis, of the performance fee
calculations and assessed whether they
were in accordance with the relevant
agreements.
• 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 2023, 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 accordingly we do not
express any form of assurance conclusion thereon through our opinion on the financial report. We
have issued a separate opinion on the remuneration report.
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
reports 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
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.
136
137
95
96
Charter Hall Group Annual Report 2023 Independent Auditor’s Report
continued
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 52 to 76 of the directors report for the year
ended 30 June 2023.
In our opinion, the remuneration report of Charter Hall Limited for the year ended 30 June 2023
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
21 August 2023
This page has been left blank intentionally.
138
97
139
Charter Hall Group Annual Report 2023 Securityholder
Analysis
Holding distribution
as at 21 July 2023
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
Top 21 registered equity Securityholders
as at 21 July 2023
441,124,460
2,686,731
8,638,128
6,121,788
11,404,597
3,021,495
472,997,199
0
93.26
0.57
1.83
1.29
2.41
0.64
100.00
0.00
60
37
451
854
4,840
8,122
14,364
0
Rank Name
A/C designation
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
Units
152,365,055
128,652,616
61,619,622
30,981,299
16,308,665
14,299,802
BNP PARIBAS NOMINEES PTY LTD
11,626,436
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
MR ANGUS DAVID ST JOHN PARADICE
BNP PARIBAS NOMINEES PTY LTD HUB24
CUSTODIAL SERV LTD
BNP PARIBAS NOMS(NZ) LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR KEVIN PAUL BECK
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED - A/C 2
NETWEALTH INVESTMENTS LIMITED
PORTMIST PTY LIMITED
ONE MANAGED INVESTMENT FUNDS LTD
TROY CHRISTOPHER ANGUS
MATTHEW JAMES RIORDAN
JOHN CHRISTOPHER LAKE
WOODROSS NOMINEES PTY LTD
2,966,653
2,577,172
1,740,379
1,655,612
1,541,443
1,325,156
1,182,781
1,049,908
841,773
631,345
566,357
555,704
555,704
505,572
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
%IC
32.21
27.20
13.03
6.55
3.45
3.02
2.46
0.63
0.54
0.37
0.35
0.33
0.28
0.25
0.22
0.18
0.13
0.12
0.12
0.12
0.11
Substantial Securityholder notices
as at 21 July 2023
Ordinary securities
Blackrock Group
Mitsubishi UFJ Financial Group, Inc.
First Sentier Investors Holdings Pty Limited
KKR Entities
Commonwealth Bank of Australia
Superannuation and In-vestments HoldCo Pty Ltd
The Vanguard Group, Inc
Date of change
Stapled
securities held
% securities
held
8 June 2023
8 May 2023
5 May 2023
5 July 2022
1 July 2022
30 June 2022
23 April 2019
28,601,704
35,330,326
35,330,326
28,140,643
28,311,207
28,140,653
47,641,144
6.04
7.47%
7.47%
5.95
5.99
5.95
10.23
Total
Balance of register
Grand total
433,549,054
39,448,145
472,997,199
91.66
8.34
100.00
140
141
Charter Hall Group Annual Report 2023
Contact
Details
Registry
To access information on your holding or update
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
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 Group’s 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 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 or your sponsoring
broker. You can also update your details directly using
the Investor Centre Login facility.
How do I complete my annual tax return for
the distributions I receive from Charter Hall?
At the end of each financial year, the Group 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 2023 should be included in your 2023
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 at the address shown in the
Contact details. In the event that a complaint cannot
be resolved within a reasonable timeframe (usually
45 days) or you are not satisfied with the 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
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Charter Hall Group Annual Report 2023
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), Jacqueline Chow,
Stephen Conry AM, David Harrison, Karen Moses,
Greg Paramor AO and David Ross.
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 2023 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 1940 (US).
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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Charter Hall Group Annual Report 2023 charterhall.com.au/chc