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Washington Real Estate Investment TrustANNUAL REPORT
2021
CONTENTS
04
Financial
Highlights
06
Chair's Report
10
CEO's Report
19
Annual Financial
Report
20 Directors’ Report
65 Auditor’s Independence Declaration
67 Consolidated Statements of
Comprehensive Income
68 Consolidated Balance Sheets
69
Consolidated Statements of
Changes in Equity
71 Consolidated Statements of
Cash Flows
72 Notes to the Financial Statements
135 Directors’ Declaration
136 Independent Auditor’s Report
2
2
CROMWELL PROPERT Y G R OU P I 2 0 2 1 ANN UAL REP OR T
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
140
Corporate Governance
Statement
161
Securityholder
Information
Cromwell Property Group
Cromwell Property Group (Cromwell) is a real
estate investor and fund manager with operations on
three continents and a global investor base. As at
30 June 2021, Cromwell had a market capitalisation of
$2.3 billion, a direct property investment portfolio valued
at $3.9 billion and total assets under management of
$11.9 billion across Australia, New Zealand and Europe.
Cromwell is included in the S&P/ASX 200 and the
FTSE EPRA/NAREIT Global Real Estate Index.
THIS DOCUMENT IS ISSUED BY
Cromwell Property Group
consisting of
Cromwell Corporation Limited ABN 44 001 056 980
and
Cromwell Diversified Property Trust
ARSN 102 982 598 ABN 30 074 537 051
(the responsible entity of which is
Cromwell Property Securities Limited
AFSL 238052 ABN 11 079 147 809)
Level 19, 200 Mary Street, Brisbane QLD 4000
Phone: +61 7 3225 7777
Web: www.cromwellpropertygroup.com
invest@cromwell.com.au
Email:
SECURITYHOLDER ENQUIRIES
All enquiries and correspondence regarding your
security-holding should be directed to Cromwell’s
Investor Services Team on 1300 268 078 (within
Australia) or +61 7 3225 7777 (outside Australia).
C ROMWE LL P ROPE RTY GROU P I 2 0 21 ANN UA L REPORT
3
3
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT FINANCIAL
HIGHLIGHTS
Actively
invest, develop and manage
commercial property assets
to deliver
sustainable growing
total returns
for securityholders
strong risk-adjusted
returns
for investors
FY21 Previously Stated Priorities
FY21 Progress and Key Operational Highlights
Strategy Process
1
2
3
Optimise performance of Core
Australian property portfolio
Progress development pipeline
Offer Italian and Polish assets to capital
partners when conditions allow
Fund and Asset Management
Performance resilient through COVID-19 with only $0.6 million
of rent waived and $9.6 million deferred during the year and
like-for-like net operating income (NOI) growth of 2.8%(1)
29 projects across 10 countries identified. Ten projects, with
an estimated end development value of $2.2 billion, have
passed initial assessment and are in the planning, approvals
or construction phase
Italian assets being offered to investors as part of pan
European logistics fund. Polish assets to be offered to capital
partners when conditions allow
4
5
Grow Retail funds under management
Retail FUM increased $222 million inclusive of two liquidity
events
Increase investment management
capabilities and scale in Europe
New wooden building and logistics funds announced. New
agreements signed with capital partners in Italy and German.
CERIET continues to grow acquiring a portfolio of 11 logistics
assets in Czech Republic and Slovakia and also entering UK
for the first time.
(1) Plus $1.1 million of fitout waived (non-operational cost)
4
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Financial Results Summary
FY21
FY20
Change
Statutory profit ($M)
308.2
Statutory profit (cents per security)
11.78
Operating profit ($M)
192.2
Operating profit (cents per security)
7.35
Distributions ($M)
Distributions (cents per security)
183.1
7.00
177.6
6.83
221.2
8.50
195.5
7.50
73.5%
72.5%
(13.1%)
(13.5%)
(6.3%)
(6.7%)
Payout Ratio (%)
95.3%
88.4%
7.7%
Financial Position
Total assets
Total liabilities
Net assets
Securities on issue (M)
NTA per security
(including interest rate swaps)
Jun-21
($M)
5,008.9
2,343.6
2,665.3
2,617.5
$1.02
Jun-20
($M)
4,984.5
2,401.1
2,583.4
2,612.9
$0.99
Gearing(2)
46.2%
46.0%
(2) Calculated as (Total borrowings less cash) / (Total tangible assets less cash).
Look through gearing adjusts for the 28% interest in CEREIT, 50% interest in Ursynow,
50% interest in Oyster, and 100% interest in LDK
HQ North, Wickham Street, Fortitude Valley,
Brisbane QLD, Australia
5
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT CHAIR’S REPORT
2021 saw the retirement of previous Cromwell Chair,
Ms Jane Tongs, who joined the Board in 2014. Jane was
an active contributor to the Board and its Committees in
her time at Cromwell and, on behalf of securityholders,
I would like to officially thank her for her contribution
over the years.
Board composition, strategy and new CEO
The process to renew the Cromwell Board was
substantively completed during the year.
Cromwell now has a diversified Board consisting of
seven directors with significant commercial, real estate
and capital markets experience. Securityholders may be
assured that, with the appointments of directors Rob Blain,
Eng Peng Ooi and Jialei Tang, the Board will continue to
act in their best interests and seek to enhance the long-
term value of their investment.
The Board has been actively reviewing Cromwell’s
strategy and business model. The aim is to simplify the
Group structure with a view to improve capital efficiency,
using our existing portfolio assets to create new funds
and accelerate the growth in our funds management and
development businesses.
Initiatives are underway which we believe will unlock value
for securityholders, position Cromwell to grow and provide
increased opportunities for our team. An update will be
provided to the market as soon as the Board has adopted a
formal strategy.
The Board was also pleased to be able to announce the
appointment of Jonathan Callaghan as the new incoming
CEO in July. Jonathan is an outstanding leader and
industry veteran, well known for his achievements in his
previous role as CEO at Investa Property Group. The Board
is confident that his leadership and experience in property
and funds management will drive the strategy for the
benefit of all securityholders.
Dear Securityholder,
COVID-19
The last twelve months have been dominated by COVID-19
lockdowns, social distancing restrictions and the rollout
of vaccination programmes in all 15 countries in which
Cromwell operates.
Business continuity plans have been activated in most
countries and the vast majority of Cromwell’s people
have worked from home for large portions of the year.
Through their continued efforts Cromwell has been able
to successfully maximise the cashflows within its property
investment portfolio, establish a global pipeline of future
development opportunities and launch new initiatives to
grow its funds management businesses.
This is a testament to the quality of Cromwell’s people who
have supported their colleagues and local communities
throughout the pandemic while also remaining focused on
their roles and objectives.
The Board remains cognisant of the current and ongoing
implications of the current COVID-19 situation in Australia,
Europe and Singapore. While we expect a rebound in
economic activity once countries have opened up, this
is likely to take time and be different in every instance,
meaning continued subdued economic and real estate
market conditions as a whole in the short-term.
6
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Philanthropy at Cromwell
Cromwell has a long-standing commitment to contribute
to the communities in which its people live and work. Every
year local teams contribute to various causes that make a
difference to their local communities and, in Australia, this
philanthropy is augmented by the activities of the Cromwell
Property Group Foundation. The Foundation’s FY21
beneficiaries are detailed on the pages opposite.
The administration and costs associated with running a
Foundation structure has meant that the business has
taken a decision to wind it up after seven years. Pleasingly,
Cromwell has committed to maintaining its philanthropic
contributions at exactly the same level as before, simply
contributing to causes directly, and I look forward to seeing
the outcome of this activity over the next twelve months.
On behalf of the Cromwell Board I would like to thank
all securityholders for their support during the year. We
enter FY22 with a refreshed Board, a new incoming CEO in
Jonathan and are optimistic about the opportunities that
lie ahead.
Dr Gary Weiss, AM
Chair
Cromwell Property Group
207 Kent Street, Sydney NSW,
Australia
7
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT CROMWELL PROPERTY GROUP
FOUNDATION
2021 BENEFICIARIES
$50,000 to the Intergenerational Project
(MercyCare and Griffith University)
$30,000 to Trigeminal Neuralgia Association
Australia
After having donated $75,000 to support the first phase
of the Project, the Foundation has donated a further
$50,000 to the second phase of the Project run by
MercyCare and Griffith University.
The project aims to bring together Australia’s oldest and
youngest community members to forge relationships
based around mutual activities and strengths. The
second phase of the project is designed to pioneer a
co-designed model which will be sustainable and easy
to implement and replicate for individuals, care workers
and communities.
Trigeminal Neuralgia Association Australia (TNAA)
received $30,000 for its Telehealth Plan. TNAA aims
to improve the quality of life of Trigeminal Neuralgia
(TN) sufferers by ensuring their condition is managed
by specialist clinicians who can provide effective
treatment. The organisation provides information,
support, and encouragement to sufferers and promotes
the awareness of the condition to medical and dental
professionals to ensure there are no delays in diagnosis.
$20,000 to The Violet Initiative
The Violet Initiative received $20,000 for its Violet Guided
Support Programme. The programme advocates for
older Australians and helps their families understand
their wishes and needs in their last stage of life, helping
them make the most of the time they have together.
More specifically, the donation will support the delivery
of Guided Support to over 50 families in the next year.
8
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT About the Cromwell Property Group
Foundation
The Cromwell Property Group Foundation
was established in 2014 to support charities or
organisations that provide support to, or conduct
research into, causes relevant to the mature
aged community. The Foundation donated over
$1.2 million to numerous causes before it was
wound up at the end of the 2021 financial year.
FY21 Beneficiaries
Trigeminal Neuralgia
Association Australia
The Violet
Initiative
MercyCare &
Griffith University
$30,000
$20,000
$50,000
$100,000
was donated in FY21
9
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT CEO'S REPORT
DEBT EXPIRY PROFILE
$800 M
$700 M
$600 M
$500 M
$400 M
$300 M
$200 M
$100 M
)
M
$
(
e
c
n
a
l
a
B
t
i
b
e
D
Convertible
Bond
International
Banks
Australian
Major Banks
FY2022
FY2023
FY2024
FY2025
FY2026
FY2027
$0.0 M
$0.0 M
$0.0 M $350.8 M $0.0 M
$0.0 M
$0.0 M $725.8 M $305.1 M $349.7 M $67.1 M $0.0 M
$0.0 M $0.0 M $0.0 M $0.0 M $299.0 M $0.0 M
On Thursday 26 August 2021, Cromwell reported full-
year FY21 statutory profit of $308.2 million, equivalent to
11.78 cents per security. This represents a 73% increase
on the prior year, due in part to a $97.5 million increase in
the fair value of investment properties.
Operating profit was $192.2 million, equivalent to
7.35 cents per security. This represents a reduction of
13% compared with the prior period. The prior period
benefitted from a $32 million fee from the sale of
Northpoint Tower. Operating profit, excluding this fee,
increased by $3.0 million (1.4%).
During the year the total value of investment properties
held on the balance sheet rose to $3.9 billion reflecting
positive valuation gains in Cromwell’s Australian
office portfolio and contributing to Net Tangible Assets
increasing from $0.99 per security to $1.02 per security
as at 30 June 2021.
FINANCIAL HIGHLIGHTS
$308.2m
Statutory profit
$192.2m
Operating profit
Equivalent to 11.78 cents per security
Equivalent to 7.35 cents per security
(FY20 $177.6m)
(FY20 $221.2m(1))
$1.02
Net Tangible Assets
(FY20 $0.99)
Gearing unchanged at 42%
(FY20 42%)
29 projects
Development pipeline
6 planning stage and 4 underway
Across 10 countries
7.00 cents
FY21 Distributions
Payout ratio of 95.3%
(FY20 7.50 cents)
$11.9 billion
Total assets under
management (AUM)
(FY20 $11.5 billion)
(1) Underlying operating profit showed growth of 1.4% after adjusting for the sale of Northpoint in FY2020
10
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Total Assets Under Management (AUM) increased to
$11.9 billion from $11.5 billion.
Property investments
Gearing of 42% is unchanged on the year and we maintain
substantial liquidity and covenant headroom with a strong
Interest Coverage Ratio (ICR) of 6.1x. Debt has been
recently reprofiled and extended with a weighted average
debt maturity of 3.2 years, which provides Cromwell with
time and contractual flexibility to execute its identified
strategies to lower gearing.
Cromwell paid distributions per security of 7.00 cents per
security in the year, a reduction of 0.50 cents per security
on the prior year. The payout ratio for FY21 was 95.3%.
GROUP GEARING(2)
60%
55%
50%
45%
40%
35%
30%
25%
20%
Target Gearing Range
CMW Gearing
Jun-13
D ec-13
Jun-14
D ec-14
Jun-15
D ec-15
Jun-16
D ec-16
Jun-17
D ec-17
Jun-18
D ec-18
Jun-19
D ec-19
Jun-20
D ec-20
Jun-21
Cromwell’s property investments comprise direct
interests in 31 balance sheet assets and a number of
indirect property related investments.
The direct investments consist of 18 Australian primarily
office assets, seven Italian logistics assets and six Polish
shopping centres.
These assets have a combined value of $3.9 billion with
fair value gains in investment property during the year
of $101.2 million in Australia, $2.7 million in Italy and a
reduction of $6.4 million in Poland.
The indirect investments include a 28% interest in the
Cromwell European REIT, 50% interest in LDK Seniors’
Living and 50% interest in a seventh Polish shopping
centre, Ursynow.
Total profit for the direct and indirect property investments
was $193.6 million, a small decrease of $2.6 million or
1.3% on the prior year.
KEY PROPERTY INVESTMENT METRICS(3)
Australia
Poland(4)
Italy
Assets
18
Assets
6
Assets
7
Valuation
$3.1 billion
WACR
5.4%
WALE
6.1 years
Occupancy
94.7%
Valuation
$708 million
WACR
6.5%
WALE
4.8 years
Occupancy
94.8%
Valuation
$86 million
WACR
5.1%
WALE
9.8 years
Occupancy
100.0%
CEREIT
(28% interest)
Book value
$621 million
Portfolio value
€2.3 billion
WALE
4.6 years
Assets
109
LDK
(50% interest)
Equity accounted
value
$21.4 million
JV interest
50%
Seniors Living
Apartments
430
Seniors Living
Villages
2
T
C
E
R
D
I
T
C
E
R
D
N
I
I
(2) Gearing calculated as (total borrowings less cash/(total tangible assets less cash)
(3) All foreign exchange spot rates as a 30 June 2021
(4) Statistics for 6 balance sheet assets. 50% interest in Ursynow is equity accounted
11
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Direct Investments - Australia
The Australian portfolio valuation gains have been
supported by continuing investor demand for high quality
assets with long leases and strong covenants.
The portfolio has a weighted average lease expiry of
6.1 years, an occupancy of 94.7% with 78% of the tenant-
customers being either Government, Government
Authorities or large multi-national organisations.
The portfolio had like-for-like Net Operating Income
growth of 2.8% with a manageable exposure to
lease expires over the coming four years, with only
approximately 7% of leases expiring each year on average.
The Property Services team has been actively engaging
with Cromwell’s tenant-customers to understand their
businesses and expectations for office accommodation
today and into the future. A clear message from all tenant-
customers is they value office accommodation as a key
tool to reinforce their brand, organisational culture and
learning and development activities.
The type of space they are occupying continues to
evolve however with an increased focus on collaboration
spaces, more technology, flexibility and wellness facilities.
Cromwell’s portfolio is well positioned to meet
these expectations.
CROMWELL LEASE EXPIRY PROFILE(1)
65.0%
6.0%
7.3%
7.8%
4.5%
9.4%
VACANT(2)
2022
2023
2024
2025 Thereafter
70%
60%
50%
40%
30%
20%
10%
0%
SECTOR DIVERSIFICATION
1.0%
2.7%
10.0%
7.2%
12.5%
19.7%
46.9%
Government
Authority(3)
Professional
Services
Transport
Technology
Other
Retail
SMEs
GEOGRAPHIC DIVERSIFICATION
10.7%
15.2%
30.4%
43.7%
ACT
NSW
VIC
QLD
The Victorian and NSW State Governments have
recently reintroduced the Code of Conduct which requires
landlords to provide rental relief and deferment to eligible
SME tenant-customers proportionate to their reduction
in turnover.
Cromwell’s entire SME segment represents just
10% of total gross passing income and not all tenant-
customers are impacted. As per the previous lockdown,
we will ensure all those eligible are directly engaged by
Cromwell employees and arrangements agreed on a case-
by-case basis.
(1) Calculated on current gross passing income, subject to review and rounding
(2) Includes vacancy, holdover, casual
(3) Includes Government owned and funded entities
12
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT DHL Logistics Portfolio, Italy
Direct Property Investments - Italy and Poland
In Italy, the seven logistics assets fully let to DHL
have seeded a pan-European logistics fund which is
currently being offered to capital partners. The assets
have remained operational throughout the pandemic,
experiencing increased trading volumes and Cromwell
intends to retain up to 20% in the fund going forward.
Poland has seen four separate lockdowns since the
start of the pandemic and the shopping centres in
the Cromwell Polish Retail Fund have remained open
throughout given their focus on grocery, pharmacy and
essentials. Discretionary retail however has been more
impacted by COVID-19 with a large number of leases
renegotiated during the year.
Total invoice collection for the twelve months to
30 June 2021 was 89%. This is expected to increase given
the normal collection lag and as outstanding invoices
are pursued.
The centres remain accretive to earnings and Cromwell
will hold them until conditions allow for the original
recycling strategy to be executed.
Monthly Gross Invoice Collection(4) after adjustments for
Lockdown 1 but after only partial corrective Invoices for
Lockdown 2, 3 & 4 and partial COVID Lease Discounts as
some negotiations are on-going
Gross Collected
93%
94%
94%
93%
93%
90%
78%
89%
85%
90%
90%
75%
89%
Month
Jul 2020
Aug 2020
Sep 2020
Oct 2020
Nov 2020
Dec 2020
Jan 2021
Feb 2021
Mar 2021
Apr 2021
May 2021
Jun 2021
Total
(4) Footfall as at 10/08/2021. Gross Collected as of 22/07/2021. All statistics including Ursynow
13
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Greenway Views, Canberra, ACT Australia
Indirect Property Investments
Cromwell has a 50% ownership in LDK Healthcare which
owns two Seniors Living villages, The Landings and
Greenway Views. The redevelopment at LDK’s Greenway
Views continues with Stage 1 complete and Stage 2 due to
complete on time in February 2022.
148 of the 210 Stage 1 apartments have already been
sold, with 134 settled. Stage 2 will deliver 117 more
apartments. Pre-sales are strong with 67 sales achieved
so far, representing a further 25 sold in the six months to
30 June 2021.
Cromwell’s equity accounted share of CEREIT’s profit for
the year, based on its 28% interest, was $43.3 million with
the total stake valued at A$621 million.
The CEREIT portfolio once again recorded a strong
3.2% uplift in value to €2.3 billion for the twelve months
with a 94.9% occupancy rate by net lettable area.
The 109 properties are managed by Cromwell’s
experienced local teams in Europe and showed their
resilience to COVID-19 with an approximately 96% cash
collection rate since February 2020.
CEREIT also expanded into new geographical markets
in Slovakia and, earlier this month, announced its first
acquisition in the UK, highlighting its substantial future
growth opportunities.
CEREIT SECTOR DIVERSIFICATION
CEREIT GEOGRAPHIC DIVERSIFICATION
5%
56%
39%
Light Industrial /
Logistics
Office
Others(1)
3%
3%
3%
5%
9%
10%
27%
18%
22%
The Netherlands
Italy
France
Poland
Germany
Finland
Denmark
Czech
Republic
Slovakia
KEY STATISTICS
Book value (28.0%)
$621
million
Portfolio Value
€2.3
billion
WALE
4.6
years
Occupancy
94.9%
Properties
109
Tenant-customers
832
(1) Others include three government-let campuses, one leisure / retail property and one hotel in Italy
14
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT THIRD PARTY FUNDS UNDER MANAGEMENT
Australia
Chatswood(2)
Retail Funds
Phoenix Portfolios
Oyster Property Group
(New Zealand)
13%
4%
14%
2%
Europe
67%
Europe
CEREIT
Other
28%
72%
(2) Others FUM represents third party funds under management
and excludes Polish and Italian properties which are internally
managed
Fund and Asset Management
Fund and asset management profit of $41.7 million was
44.1% lower than the prior corresponding period due to
the impact of COVID-19 on transactional activity,
performance fees and lower development fees.
Total third-party funds under management increased
to $7.6 billion from $7.2 billion in the prior year.
The European platform has benefitted from the arrival
of Managing Director, Europe Pertti Vanhanen who
commenced in January 2021 having joined from Aberdeen
Standard Investments.
He brings deep institutional funds management
experience and strong capital partner relationships.
He has already launched new initiatives to grow FUM
including a joint venture with Dasos Capital to launch
a Wooden Building Fund, signed agreements with new
capital partners in Germany and Italy, and has taken the
European Logistics Fund to market. Cromwell remains
committed to enhancing its investment management
capabilities and driving growth in funds under
management.
Within retail funds management, the majority of
unitholders in Cromwell Property Trust 12 and the
Cromwell Direct Property Fund continued with their
investments after liquidity events earlier in the year.
As part of Cromwell Property Trust 12’s liquidity event,
the Rand Distribution Centre in South Australia was sold
for $63 million, a $10 million premium to book value.
545 Queen Street, Brisbane, QLD Australia
The Cromwell Direct Property Fund’s acquisition of
545 Queen Street at the entrance to Brisbane CBD’s
‘Golden Triangle’ for $117.5 million completed in May.
The asset benefits from a 2,735 square metre Island site
providing ample natural light to all sides and tenancies
and is 100% occupied.
Post year end, the Cromwell Direct Property Fund sold
a Bunnings asset in Munno Para West, South Australia.
The sale represents a great outcome for unitholders in the
Fund. Initially acquired for $27.5 million in 2015, the sale
price of $48.8 million represents a material premium on
the 30 September 2020 valuation of $36.5 million.
The Cromwell Direct Property Fund continues to see
strong equity inflows. Cromwell will continue to market
the fund to investors and is also looking at opportunities
to take advantage of the ongoing appetite for quality retail
fund offerings.
15
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Larger Investment Universe than the Benchmark
CROMWELL
PHOENIX PROPERTY
SECURITIES FUND
ARSN 129 580 267 | APIR Code CRM0008AU | PRODUCT FLYER | JUNE 2021
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Understandable
• Track record
• Cash flows
• Balance sheet
• Competitive position
Attractive Valuation
• Dividend discount model
• Sum of the parts/break-up
Good Governance
• Strong board and
management
• Good capital allocation
• Alignment of interests
• Shareholder focused
‘Best Ideas’
investment
portfolio
1 Year
3 Years
5 Years 10 Years
35.9% 6.7%
Inception
(April 08)
Past performance is not indicative of future performance.
Fund Performance
After fees & costs
Performance1 (Annualised as at 30 June 2021)
As can be seen from the chart above, the increased flexibility of this ‘benchmark unaware’ strategy has improved
Phoenix’s ability to out-perform the Benchmark Index over the long term1.
What makes this Fund different?
The Fund follows a truly active ‘benchmark unaware’ strategy that means it is not forced to own stocks just because
they are part of the Benchmark Index.
Phoenix carries out extensive proprietary research on
approximately 75 stocks covering a broad range of Real
Estate Investment Trusts, property related stocks and
some infrastructure. A large universe of investment options
provides more opportunities to add value. Phoenix uses a
standardised valuation framework which facilitates ‘apples
for apples’ comparisons.
The investment team considers the characteristics of
each investment opportunity and the related corporate
governance issues which can have a material impact on the
stock’s long term valuation.
Fundamental analysis focuses on “bottom-up” research to
fully understand the key factors that have driven historic
performance and to enable informed forecasts to be made
of its future earnings and cash generation.
This Fund combines the investment
management skills of Phoenix
Portfolios with the specialised
property and fund management
expertise of Cromwell Property Group.
Key Statistics
Unit Price3
Distributions4
Withdrawals5
1. After fees and costs. Performance data for periods longer than one year have been annualised. Past performance is not a reliable indicator of future performance.
Management Fee6
2. As at 30 June 2021. Positions in the Fund and the Benchmark Index are subject to change.
Diversity and the power of small stocks
The Benchmark2
If you were to invest in the Benchmark Index on
30 June 2021, approximately 79.03% of your investment
would be in 10 stocks. ‘Benchmark unaware’, Phoenix is
able to diversify the Fund’s exposure and gain a bigger
slice of the smaller stocks (compare the orange sections
in both graphs adjacent).
The Fund
Phoenix believes that smaller stocks are typically
under-researched and therefore more likely to be
attractively priced. So despite many of these stocks
possessing compelling investment fundamentals, they
are overlooked by many managers due to their size.
Benchmark
S&P/ASX 300 A-REIT
Accumulation Index
Quarterly
Daily
Excess Returns
After fees & costs
6.2% 12.0% 5.1%
6.3% 13.8% 8.8%
The
Benchmark2
33.9% 8.2%
2.0% (1.5%)
$1.2993
The
Fund2
3.7%
0.1%
1.8%
0.82%
Only a subset of the stocks Phoenix researches are
considered ‘Best Ideas’ and worthy of consideration for
inclusion in the Fund.
Portfolios are constructed without reference to a benchmark
index. Position size is a function of valuation and liquidity
with portfolio positions heavily skewed towards those
stocks with the most attractive valuations. The portfolio
is constructed to achieve a well-diversified outcome with
exposures across all property sub-sectors and geographies.
As stock fundamentals change, or as a stock moves
towards Phoenix’s assessment of fair value it may no longer
qualify as a ‘Best Idea’ and will likely be replaced with more
compelling investment opportunities.
How to Invest
Australian residents can apply for units in the Fund either online at
www.cromwell.com.au/psf or by completing the investment application
form/s and returning them to Cromwell, along with payment for the initial
investment amount.
If you have any questions regarding the Fund, or if you need to order
a Product Pack, please contact your financial adviser or Cromwell’s
Investor Services Team directly on:
( 1300 268 078
7
8 www.cromwell.com.au
invest@cromwell.com.au
Cromwell Funds Management Limited ABN 63 114 782 777 AFSL 333214 (CFM) has prepared this flyer and is the responsible entity of, and the issuer of units in, the Cromwell Phoenix Property
Securities Fund ARSN 129 580 267 (the Fund). In making an investment decision in relation to the Fund, it is important that you read the product disclosure statement dated 29 September 2017
(PDS). The PDS is issued by CFM and is available from www.cromwell.com.au/psf or by calling Cromwell’s Investor Services Team on: 1300 268 078. This flyer has been prepared without taking
into account your objectives, financial situation or needs. Before making an investment decision, you should consider the PDS and assess, with or without your financial or tax adviser, whether the
Fund fits your objectives, financial situation or needs. CFM and its related bodies corporate, and their associates, do not receive any remuneration or benefits for the general advice given in this flyer.
If you acquire units in the Fund, CFM and certain related parties may receive fees from the Fund and these fees are disclosed in the PDS.
Phoenix Portfolios Pty Ltd ABN 80 117 850 254 AFSL 300302 (Phoenix) is the investment manager of the Fund. None of CFM, Phoenix, nor their related entities, directors or officers makes any promise
or representation, or gives any guarantee as to the success of the Fund, distributions, the amount you will receive on withdrawal, your income or capital return or the tax consequences of investing.
Please note: Any investment, including an investment in the Fund, is subject to risk. If a risk eventuates, it may result in reduced distributions and/or a loss of some or all of the capital value of your
investment. See the PDS for examples of key risks. Past performance is not a reliable indicator of future performance. Forward-looking statements in this flyer are provided as a general guide only.
Capital growth, distributions and tax consequences cannot be guaranteed. Forward-looking statements and the performance of the Fund are subject to the risks and assumptions set out in the PDS.
3. Unit price as at 30 June 2021. See the PDS for further informtion and www.cromwell.com.au/psf for latest pricing.
5. Withdrawals cannot be guaranteed and are subject to the conditions set out in Section 2.2 of the PDS and the assumptions and risks set out in Section 4 of the PDS.
6. An Indirect Cost Ratio of 0.97% was realised for the year ending 30 June 2020. For details of all applicable fees and costs see Section 6 of the PDS.
Cromwell Funds Management Limited | Level 19, 200 Mary Street, GPO Box 1093, Brisbane QLD 4001 | Phone 1300 268 078 | Email invest@cromwell.com.au
4. Distributions cannot be guaranteed.
The Phoenix Portfolios investment team continues to
perform with the Cromwell Phoenix Property Securities
Fund retaining highly recommended ratings from two
major independent research houses.
The Fund is the number one performing Australian
property securities fund over ten years, according to
Morningstar as at 31 July 2021.
In New Zealand, total AUM at Oyster Group (of which
Cromwell has a 50% interest) grew to NZ$2.1 billion.
Oyster now manages 37 commercial properties on behalf
of fund investors and is currently marketing a new Large
Format Retail Fund while continuing to grow both its
Industrial Fund and Diversified Property Fund. Cromwell’s
FY21 share of operating profit was A$3.7 million.
Cromwell is also focused on identifying possible
development opportunities in its managed property
portfolio, across both Europe and Australia, in order to
unlock potential value, and to ensure a higher, and more
consistent and regular flow of future development fees.
19 National Circuit, Canberra, ACT Australia
A total of 29 projects across 10 different countries have
been identified, 19 of which are undergoing an initial
assessment with six in planning or approval stages and
four are currently already underway. The ten projects that
have progressed past the initial assessment stage have a
combined estimated end development value of $2.2 billion
covering gross floor area of c.329,000 square metres.
While not all projects will proceed, a robust future
development pipeline will add significant value for both
Cromwell and its capital partners.
29 PROJECTS ACROSS TEN DIFFERENT COUNTRIES AT VARIOUS STAGES OF
ASSESSMENT, PLANNING, APPROVALS AND CONSTRUCTION
Stage 1
Initial
Assessment
19 projects
undergoing initial
assessment
Stage 2
Concept
Planning
4 projects
$1.1 billion
130,941 sqm
Stage 3
Planning
Approved
Stage 4
Construction
Underway
Stages 2-4:
Estimated End
Development Value
2 projects
$470 million
101,000 sqm
4 projects
$659 million
97,178 sqm
$2.2
billion
16
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
FY22 Priorities
Strategy Process
Objectives
1
Welcome incoming CEO and complete
strategy and business model review
Update will be provided to the market once a formal
strategy has been approved by the Board
Property Investment
2
3
4
Optimise performance of Core Australian
property portfolio
Maximise NOI and minimise vacancy in core Australian
portfolio driving growth in dividends and NTA per security
Grow development pipeline
Offer Italian and Polish assets to capital
partners
Complete assessment of 19 Stage 1 projects, progress
other projects through pipeline and continue with those
already under construction
Bring logistics fund to first close with Polish assets to be
offered to capital partners once local trading conditions
have stabilised
Fund and Asset Management
5
6
Grow Retail funds under management
Continue with funds marketing and identify new products
to launch
Increase investment management
capabilities and scale in Europe
Pursue first close on new wooden building and logistics
funds as well as separate account partnerships. Support
CEREIT's growth ambitions.
Outlook
The executive team and I continue to focus on a clear
set of priorities. We will continue optimising the
performance of the core Australian portfolio minimising
vacancy and driving NOI growth. We are also focusing on
the value-add opportunities identified in the development
pipeline and we will continue our efforts to grow our funds
management businesses.
Cromwell does not provide earnings guidance but expects
to continue to pay distributions at the current quarterly
rate of 1.625 cents per security until further notice. With
a security-price of 0.905 cents at the close of business on
25 August 2021, this represents an annualised distribution
yield of 7.18%.
I would like to thank everyone at Cromwell for their
dedication and hard work over the last year. It has truly
been a great team effort and I have very much appreciated
the support since stepping into this role.
Yours sincerely
Michael Wilde
Acting CEO
Cromwell Property Group
17
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT CONTENTS
P.20
Directors' Report
P.65
Auditor's Independence
Declaration
P.66
Financial Statements
P.67 Consolidated Statements of
Comprehensive Income
P.68 Consolidated Balance Sheets
P.69 Consolidated Statements of
Changes in Equity
P.71 Consolidated Statements of
Cash Flows
P.72
Notes to the Financial
Statements
P.73 About this report
P.77 Results
P.90 Operating assets
P.100 Finance and capital structure
P.116 Group structure
P.122 Other items
P.135
Directors' Declaration
P.136
Independent Auditor's
Report
P.140
Corporate
Governance
Statement
P.161
Securityholder
Information
DIRECTORY
Board of Directors:
Gary Weiss AM
Eng Peng Ooi
Robert Blain
Tanya Cox
Joseph Gersh AM
Lisa Scenna
Jialei Tang
Company Secretary:
Lucy Laakso
Securities Registry:
Link Market Services Limited
Level 21, 10 Eagle Street
Brisbane QLD 4000
Registered Office:
Level 19, 200 Mary Street
Brisbane QLD 4000
Tel: +61 7 3225 7777
Web: www.cromwellpropertygroup.com
Listing:
Cromwell Property Group
is listed on the
Australian Securities Exchange
(ASX:CMW)
Auditor:
Deloitte Touche Tohmatsu
Level 23, Riverside Centre
123 Eagle Street
Brisbane QLD 4000
All ASX and media releases as well as company news can be found on our webpage www.cromwellpropertygroup.com
18
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
FINANCIALS
Cromwell Property Group
Annual Financial Report
30 June 2021
Consisting of the combined consolidated Financial Reports of
Cromwell Corporation Limited (ABN 44 001 056 980) and
Cromwell Diversified Property Trust (ARSN 102 982 598)
Cromwell Corporation Limited
ABN 44 001 056 980
Level 19, 200 Mary Street
Brisbane QLD 4000
Cromwell Diversified Property Trust
ARSN 102 982 598
Responsible entity:
Cromwell Property Securities Limited
ABN 11 079 147 809 AFSL 238052
Level 19, 200 Mary Street
Brisbane QLD 4000
19
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT DIRECTORS’ REPORT
The Directors of Cromwell Corporation Limited and Cromwell Property Securities Limited as responsible entity for the
Cromwell Diversified Property Trust (collectively referred to as “the Directors”) present their report together with the
consolidated financial statements for the year ended 30 June 2021 for both:
• the Cromwell Property Group (Cromwell) consisting of Cromwell Corporation Limited (the Company) and its controlled
entities and the Cromwell Diversified Property Trust (the CDPT) and its controlled entities; and
• the CDPT and its controlled entities (the Trust).
The shares of the Company and units of the CDPT are combined and issued as stapled securities in Cromwell. The shares
of the Company and units of CDPT cannot be traded separately and can only be traded as stapled securities.
In order to comply with the provisions of the Corporations Act 2001 (Cth), the Directors Report follows.
Principal activities
The principal activities of Cromwell and the Trust, which did not change significantly through the year, are summarised
below:
Direct property
investment
Indirect property
investment
Fund and asset
management
This involves the ownership of investment properties located in Australia, Poland and Italy. These
properties, which may be held for long term investment purposes or warehoused whilst being
repositioned for deployment into the fund and asset management business, primarily contribute
net rental income and associated cash flows to results.
This activity encompasses Cromwell’s investments in assets it may not fully own or over which
it cannot exercise unilateral control. This includes investments in the Cromwell European Real
Estate Investment Trust (CEREIT), the Ursynów joint venture, the LDK Seniors living joint venture
and other investment vehicles. This activity contributes the relevant share of profit of each
investee to consolidated results.
Fund management represents activities in relation to the establishment and management of
external funds for institutional and retail investors. Asset management includes property and
facility management, leasing and project management and development related activities. These
activities are carried out by Cromwell itself and by associates and contributes related fee revenues
or the relevant share of profit of each investee to consolidated results.
20
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Key results and metrics
Financial performance
Total assets under management ($B)
Total revenue and other income for the year ($M)
Statutory profit for the year ($M)
Statutory profit per stapled security for the year (basic) (cents)
Results from operations:
Direct property investment
Indirect property investment
Fund and asset management
Unallocated items
Operating profit for the year ($M)
Operating profit per stapled security for the year (cents)
Dividends / distributions for the year ($M)
Dividends / distributions per stapled security for the year (cents)
Financial position
Total assets ($M)
Net assets ($M)
Net tangible assets ($M) (1)
Net debt ($M) (2)
Gearing (%) (3)
Stapled securities issued (M)
NTA per stapled security
(1) Net assets less deferred tax assets, intangible assets and deferred tax liabilities.
(2) Borrowings less cash and cash equivalents and restricted cash.
(3) Net debt divided by total tangible assets less cash and cash equivalents.
Financial performance
STATUTORY PROFIT
2021
2020
2019
2018
11.9
595.0
308.2
11.78
156.5
37.1
41.7
(43.1)
192.2
7.35
183.1
7.00
5,008.9
2,665.3
2,656.7
2,021.2
42%
2,617.5
$1.02
11.5
494.7
177.6
6.83
155.0
41.1
74.5
(49.4)
221.2
8.50
195.5
7.50
4,984.5
2,583.4
2,573.4
1,975.9
42%
2,612.9
$0.99
11.9
457.3
159.9
7.53
132.5
45.4
32.6
(36.2)
174.3
8.21
157.5
7.25
3,695.7
2,183.0
2,176.2
1,254.8
35%
2,236.6
$0.97
11.5
539.8
204.1
10.89
121.2
25.9
34.4
(24.7)
156.8
8.36
157.1
8.34
3,466.3
1,901.5
1,907.2
1,207.4
37%
1,985.3
$0.96
Cromwell recorded a statutory profit of $308.2 million for the year ended 30 June 2021 (2020: $177.6 million). The Trust
recorded a statutory profit of $293.9 million for the year ended 30 June 2021 (2020: $153.8 million).
OPERATING PROFIT
Statutory profit includes a number of items which are non-cash in nature or occur infrequently and/or relate to realised or
unrealised changes in the values of assets and liabilities and in the opinion of the Directors should be adjusted for in order
to allow securityholders to gain a better understanding of Cromwell’s operating profit. Operating profit is considered by the
Directors to reflect the underlying earnings of Cromwell. It is a key metric taken into account in determining distributions.
Operating earnings is not a measure which is calculated in accordance with International Financial Reporting Standards
(IFRS) and has not been reviewed by Cromwell’s auditor. There has been no significant change to the methodology of the
calculation of operating profit since Cromwell stapled in 2007 other than the inclusion of items, such as foreign currency,
which are associated with the ongoing growth of the business.
Cromwell recorded an operating profit of $192.2 million for the year ended 30 June 2021 compared with $221.2 million for
the previous year.
21
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT A reconciliation of operating profit, as assessed by the Directors, to statutory profit is as follows:
Cromwell
Operating profit
Reconciliation to profit for the year
Gain on sale of investment properties
Fair value net gains - Investment properties
Fair value net gains - Derivative financial instruments
Lease cost and incentive amortisation and rent straight-lining
Relating to equity accounted investments (1)
Net exchange gain / (loss) on foreign currency borrowings
Tax expense relating to non-operating items (2)
Other non-cash expenses or non-recurring items (3)
Profit after tax
2021
$M
192.2
5.9
97.5
14.2
(26.6)
30.9
26.1
7.8
(39.8)
308.2
2020
$M
221.2
3.3
17.5
18.4
(19.5)
(14.8)
(1.8)
10.5
(57.2)
177.6
(1) Comprises fair value adjustments included in share of profit of equity accounted entities.
(2) Comprises tax expense attributable to changes in deferred tax assets recognised as a result of carried forward tax losses.
(3) These expenses include but are not limited to:
• Amortisation of loan transaction costs.
• Amortisation of intangible assets and depreciation of property, plant and equipment.
• Other transaction costs.
Operating profit per security for the year was 7.35 cents (2020: 8.5 cents). This represents a decrease of approximately
13% over the prior year, which included the recognition of a one-off $32.0 million development fee derived from a joint
venture that has since been disposed of.
ANALYSIS OF SEGMENT PERFORMANCE
The contribution to operating profit of each of the 3 segments of Cromwell and the reconciliation to total operating profit is
set out in the upcoming sections.
22
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Direct Property Investment
Financial highlights in relation to direct property investment include:
Total
Australia
Poland (1)
Italy (2)
2021
2020
2021
2020
Portfolio value ($M) (3)
3,863.5
3,708.3
3,063.1
2,961.7
Net property income ($M)
Operating profit ($M)
Net fair value gains ($M)
Occupancy rate (%)
WALE (years)
Capitalisation rate (%)
212.6
156.5
97.5
95.1
5.9
5.5
207.3
155.0
17.5
92.3
5.9
5.7
175.8
144.8
101.2
94.7
6.1
5.4
183.8
150.0
83.4
90.9
6.2
5.5
2021
714.1
32.9
9.1
(6.5)
94.8
4.8
6.5
2020
746.6
23.4
5.0
(65.9)
94.8
4.7
6.4
2021
86.3
3.9
2.6
2.8
100.0
9.8
5.1
2020
-
-
-
-
-
-
-
(1) Portfolio acquired November 2019.
(2) Portfolio acquired November 2020.
(3) Excludes related right of use assets.
AUSTRALIA
The tenant mix in Cromwell’s Australian property portfolio is weighted to Government and ASX-listed tenants which has
proven resilient in the current economic conditions. As a consequence tenant rent collections from the Australian property
portfolio have been relatively unimpacted by the onset of the COVID-19 pandemic. Only a small amount of rent has been
waived ($0.6 million) or deferred ($9.6 million) during the year.
During the year Cromwell disposed of 13 Keltie Street, ACT for $20.0 million and Wakefield Street, SA for $30.0 million, a
combined $6.0 million above the last valuations.
Weighted average lease expiry and occupancy remained steady due to positive leasing outcomes in several properties
despite COVID-19-related headwinds.
Valuations for the Australia portfolio increased by $78.3 million during the year (2020: $65.2 million), net of property
improvements, leasing incentives and lease costs.
Change in valuations, net of property improvements, lease costs and incentives
Non-cash adjustments for straight-lining of rentals and lease amortisation
Increase in fair value of investment properties
2021
$M
78.3
22.9
101.2
2020
$M
65.2
18.2
83.4
The weighted average capitalisation rate applicable to the Australian portfolio, a key indicator of investment real estate
value, tightened during the year. This rate compression has been most prevalent in relation to properties located in
Victoria, NSW and ACT, driven primarily by the high weighting towards government tenants in these regions. Resultant fair
value increases followed this geographical trend with material fair value increases attributable to 700 Collins Street, VIC
($17.5 million), 203 Coward Street, NSW ($27.1 million), and Soward Way, ACT ($18.8 million), among others.
POLAND
The Cromwell Polish Retail Fund (CPRF) portfolio contains six catchment-dominating shopping centres, plus a 50%
interest in a seventh (Ursynów – see further below), in Poland. The portfolio is currently warehoused and will form the
seed portfolio for a fund to be offered to capital partners as soon as current economic conditions allow.
During the year, Poland was subject to multiple periods of lockdown due to the COVID-19 pandemic. Whilst non-
discretionary retail, which constitutes a significant proportion of this portfolio, remained open, operating earnings has
been negatively impacted by $12.0 million (€7.5 million) as a result. All known COVID-19-related tenant outcomes have
been provided for.
Weighted average lease expiry and occupancy remained steady due to positive leasing outcomes in several properties
despite COVID-19-related headwinds.
23
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT All six of the properties were independently valued at 30 June 2021 resulting in a $7.0 million decrease in fair value (2020:
$62.7 million), net of property improvements, leasing incentives and lease costs.
Change in valuations, net of property improvements, lease costs and incentives
Non-cash adjustments for straight-lining of rentals and lease amortisation
Acquisition transaction costs
Decrease in fair value of investment properties
2021
$M
(7.0)
3.5
(3.0)
(6.5)
2020
$M
(62.7)
1.2
(4.4)
(65.9)
The weighted average capitalisation rates applicable to the Polish portfolio, a key indicator of investment real estate value,
expanded marginally during the year. This rate expansion impacted across the portfolio and fair value decreases of $6.5
million have been recognised.
ITALY
During the year Cromwell and the Trust completed the acquisition of seven logistics assets in Northern Italy for $83.1
million (€51.0 million). The properties are held in the Cromwell Italy Urban Logistics Fund (CIULF). The portfolio is
currently warehoused and will form the seed portfolio for a fund to be offered to capital partners as soon as current
economic conditions allow.
The portfolio is currently fully let to and occupied by one tenant, logistics giant DHL, whose own activities have remained
robust through the period. Hence, this portfolio has not been negatively impacted by COVID-19.
All seven of the properties were independently valued at 30 June 2021 resulting in a $6.1 million increase in fair value, net
of property improvements, leasing incentives and lease costs.
Change in valuations, net of property improvements, lease costs and incentives
Acquisition transaction costs
Increase in fair value of investment properties
2021
$M
6.1
(3.3)
2.8
2020
$M
-
-
-
The discount and terminal yield rates applicable to the Italian portfolio, key indicators of investment real estate value,
tightened slightly during the year. This rate compression impacted across the portfolio and net resultant fair value
increases of $2.8 million have been recognised.
24
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Indirect Property Investment
Financial highlights in relation to indirect property investment include:
Total
CEREIT
Ursynów
LDK
Other
investments
Share of operating profit ($M)
Distribution income ($M)
Operating profit ($M)
Ownership share (%)
2021
48.3
1.8
37.1
-
2020
51.4
2.0
41.1
-
2021
43.3
-
30.5
28.0
2020
47.5
-
35.2
30.7
Investment value ($M)
702.5
712.3
620.7
645.4
2021
2020
2021
2020
2021
2020
1.8
-
1.8
50.0
51.5
3.7
-
3.7
94.1
47.3
3.2
-
3.2
50.0
21.4
-
-
-
50.0
6.7
(0.2)
1.8
1.6
-
8.9
0.2
2.0
2.2
-
12.9
CEREIT
Cromwell continues to manage and sponsor CEREIT, a SGX-listed real estate investment trust. At 30 June 2021 CEREIT
had 109 properties with a fair value of €2.3 billion (2020: 96 properties with a fair value of €2.2 billion) located across
Europe. CEREIT’s property and tenant portfolios have been relatively unimpacted by COVID-19. Occupancy has remained
stable at 94.6% (2020: 94.7%) and the COVID-19 pandemic has had an imperceptible impact on tenant collections.
External valuations as at 30 June 2021 were conducted for 67 properties representing approximately 80% of CEREIT’s
portfolio by value resulting in net fair value gains of €43.4 million.
URSYNÒW
At year end Cromwell and the Trust own a 50.0% interest in CH Ursynów sp. z o.o., (Ursynów) (2020: 94.1%), an entity that
owns a retail asset in Poland, the remaining equity is owned by Unibail-Rodamco Westfield B.V. (URW). The investment
property that underpins the joint venture was independently valued at 30 June 2021 at €104.0 million (2020: €106.5
million) with the decrease related to stalled leasing outcomes due to COVID-19.
In January 2020 URW exercised an option to acquire all the equity it did not already own in the joint venture from Cromwell
and the Trust. The investment was therefore classified as held for sale at 30 June 2020. Subsequently, URW expressed
its desire to continue with the joint venture on revised terms. Cromwell has now agreed terms with URW in respect of
continuing the joint venture, which included an equalisation of the equity injected into the company. Accordingly, the
investment has been transferred from non-current assets held for sale to equity accounted investments and the share of
profit will be split 50% to each joint venture partner going forward.
LDK
Cromwell holds a 50% interest in the LDK Healthcare Unit Trust (LDK), a joint venture conducting a Seniors living
business. LDK operates one of Sydney’s premium Seniors villages, The Landings at Turramurra (The Landings) which
continues to operate profitably.
In 2018 Cromwell and LDK commenced a project to repurpose the Cromwell-owned property Tuggeranong Office Park
in the ACT into a Seniors living village. The first stage of the project is complete and since opening in May 2020 141 of
the 210 (67%) completed suites have been sold, of which 125 (60%) have settled. Construction of the second stage is well
advanced.
Cromwell recognised a share of statutory profit of $14.7 million for the year (2020: $6.7 million), of which $3.2 million was
considered to be operating in nature (2020: $nil).
CO-INVESTMENTS
Cromwell currently has co-investments in European real estate investment mandates which are accounted for as
investments at fair value through profit or loss. Cromwell receives distributions from its co-investments which also
support the fund management business. Cromwell may also, from time to time, warehouse assets to use as seed
portfolios for new funds or mandates. During the year the balance of co-investments held by Cromwell decreased
primarily due to disposals.
25
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Fund and Asset Management
Financial highlights in relation to fund and asset management include:
Total
Australia
Europe
Joint ventures
2021
101.7
25.5
4.7
90.2
41.7
11.9
2020
132.0
34.6
2.9
95.0
74.5
11.5
2021
37.3
-
-
16.4
20.9
4.4
2020
24.8
32.0
-
16.0
40.8
3.3
2021
64.4
17.2
-
73.8
7.8
5.8
2020
107.2
0.9
-
79.0
29.1
5.8
Fee and other revenues ($M)
Development income ($M)
Share of operating profit ($M)
Expenses attributable ($M)
Operating profit ($M)
Assets under management ($B)
AUSTRALIA
Retail fund management
A breakdown of retail fund management results is below:
Recurring fee income
Transactional fee income
Performance fee income
Total fee and other revenue
Costs attributable
Operating profit
2021
2020
-
8.3
4.7
-
13.0
1.4
2021
$M
8.1
2.4
13.2
23.7
5.4
18.3
-
1.7
2.9
-
4.6
2.4
2020
$M
8.2
0.4
1.2
9.8
4.4
5.4
Retail fund management profit increased from $5.4 million in the prior comparative period to $18.3 million for the year
ended 30 June 2021. This is primarily due to Cromwell receiving $9.7 million in performance fees during the year in
respect of the performance and extension of Cromwell Property Trust 12.
Direct property funds were unimpacted by COVID-19 and the Cromwell Direct Property Fund successfully completed its
first liquidity event in July 2020.
The Cromwell Phoenix Property Securities Fund and Cromwell Phoenix Opportunities Fund recovered positively from the
market turmoil as a result of the COVID-19 pandemic and outperformed relevant benchmarks.
During the year the Australian retail fund management business acquired real estate assets worth $117.5 million and
divested $29.0 million. Total assets under management at year end was $1.4 billion.
Cromwell remains committed to investing in increasing the scale and diversification of its fund retail management
business, which it believes is highly complementary to its property and facilities management activities.
Wholesale fund management
A breakdown of wholesale fund management results is below:
Recurring fee income
Development income
Total fee and other revenue
Operating profit
2021
$M
1.0
-
1.0
1.0
2020
$M
1.0
32.0
33.0
33.0
Wholesale fund management profit decreased to $1.0 million (2020: $33.0 million) due to the development management
fee received in respect of the Northpoint joint venture in the prior year.
26
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Property management
A breakdown of property management results is below:
Recurring fee income
Costs attributable
Operating profit
2021
$M
12.6
11.0
1.6
Property management profit decreased to $1.6 million (2020: $2.4 million) due to the slowdown caused by COVID-19.
EUROPE
A breakdown of European fund management results is below:
Fee revenue
Recurring fee income
Development income
Performance fee income
Transactional fee income
Total fee and other revenue
Costs attributable
Employee benefits expense:
Performance fee-related
Other
Other operational costs
Total costs attributable
Operating profit
2021
$M
52.0
17.2
7.7
4.7
81.6
1.9
45.5
26.4
73.8
7.8
2020
$M
14.0
11.6
2.4
2020
$M
58.2
0.9
36.7
12.3
108.1
12.9
48.4
17.6
78.9
29.2
The European fund management business continues to execute the strategy of securing longer-term and more secure
revenue sources. The business generated an operating profit of $7.8 million (2020: $29.2 million) for the year, reflective
of the downturn in transactional activity due to COVID-19, the expiry of mandates ($7.7 million in performance fees were
earned during the current year compared with $36.7 million in 2020) and restructuring activities within the business.
At 30 June 2021 the European fund management business had €3.7 billion ($5.8 billion) assets under management (2020:
€3.5 billion ($5.8 billion)). The business continues to broaden its focus from Private Equity funds and mandates towards
longer term, more secure revenue sources. Following further acquisitions by CEREIT and the transfer of CPRF and
CIULF assets into the Trust for future fund creation, the European business now has 80% (2020: 78%) of its assets under
management (AUM) in long-term mandates.
JOINT VENTURES
LDK
During the year Cromwell and the Trust recorded $8.3 million finance income for the year in respect of development-
related loans made to LDK. The loans have been utilised by LDK to construct the village at Greenway and acquire The
Landings retirement village. This revenue stream is forecast to rise due to the restructuring of the development finance
arrangements provided to the LDK joint venture to fund its growth strategies.
Phoenix – Australia
Cromwell Phoenix Opportunities Fund performed extremely well during the period and exceeded its own benchmark for
the year.
Cromwell recognised a share of operating profit of $1.0 million for the year (2020: $0.4 million).
Oyster – New Zealand
Oyster Property Group’s assets under management increased slightly to NZD$2.1 billion at year end (2020: NZD$2.0 billion).
Cromwell recognised a share of operating profit of $3.7 million for the year (2020: $2.5 million).
27
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Finance costs
Interest expense in relation to borrowings for the year increased slightly to $59.9 million (2020: $58.3 million). The
increase in interest expense is in line with increased borrowings used to acquire the investment property portfolio in Italy.
The average interest rate for the current year decreased to 2.33% compared with 2.58% for the prior comparative period.
The net fair value gain in relation to derivative financial instruments of $14.2 million (2020: $18.4 million) primarily arose
as a result of the revaluation of interest rate swap and cap contracts, which resulted in the recognition of net gains of
$14.6 million for the year (2020: loss of $5.3 million). Cromwell has hedged future interest rates through various types
of interest rate derivatives (predominately interest rate caps) with 82% of its borrowings at year end hedged or fixed to
minimise the risk of changes in interest rates in the future (2020: 66%). All hedging contracts expire between July 2021
and April 2025.
Capital management
Cromwell’s debt platform is underpinned by a facility secured against selected assets within the Australian property
portfolio and has considerable headroom against its covenants. The loan to value ratio covenant is set at 60% versus the
actual ratio which stands at 37% at balance date, resulting in headroom under the covenant of $1.0 billion. The WALE
covenant is set at 3.0 years versus the actual WALE of 6.3 years for the selected assets and interest cover ratio is 2.0
times versus the actual interest cover of 6.1 times. Given the headroom Cromwell enjoys against all its covenants it has
determined that holding the CPRF assets on its balance sheet until property and market valuations stabilise will realise
the best outcome for securityholders.
DEBT
Net debt (excluding operating lease liabilities) increased by $45.3 million due to total borrowings increasing by $6.5 million
whilst cash and cash equivalents decreased by $51.8 million, primarily driven by the acquisition of the Italian investment
property portfolio being funded from cash on hand and proceeds from additional borrowings. Gearing remained steady at
42% during the year. Notwithstanding the current low interest rate environment, this places Cromwell’s gearing outside
its target range of between 30% - 40% through the cycle range. It is expected that Cromwell’s gearing will remain around
this range depending upon investment deployment.
Cromwell’s main loan facility (bilateral loan facility) is secured against selected Core and Core+ investment properties
in the Australian portfolio. This facility’s performance against loan covenants at balance date reinforces the ability of
Cromwell to carry higher gearing levels without impacting the ongoing operations of the business.
Covenant
Loan to value
WALE
Interest cover
Actual
37%
6.3 yrs
Limit
60%
3.0 yrs
Headroom
$1.101 billion
3.3 years
6.1 times
2.0 times
$115.0 million
Cromwell’s Euro / GBP revolving credit facility has a look-through gearing covenant of 65.0% versus balance date actual
look-through gearing of 46.2%.
All other loan facilities are asset level financing with no reference to group level gearing.
LIQUIDITY
As at 30 June 2021 Cromwell had $142.3 million of cash (2020: $194.1 million) and undrawn bank facilities totalling $534.9
million (2020: $472.9 million).
EQUITY
An additional 4.6 million stapled securities were issued during the year at an average issue price of $0.30, composed
entirely of securities issued following the exercise of performance rights.
Net tangible assets (NTA) per security has increased during the year from $0.99 to $1.02, primarily as a result of an
overall increase in property valuations attributable to the direct investment property portfolio and properties held in equity
accounted investment valuations.
28
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Strategy
Following the completion of the Board renewal process, the Board has been reviewing Cromwell’s ongoing strategy and
business model. The principal focus of the Board is to seek to simplify the Group structure and improve capital efficiency
to unlock value for securityholders and accelerate growth in our fund management and development businesses. This
can be achieved via:
• Growing and strengthening our retail fund management platform;
• Continuing to deliver innovative fund products to investors in sectors that meet current market demands;
• Providing greater access for potential capital partners to our well credentialed development business to provide a
pipeline of asset opportunities for our fund management business and Cromwell itself;
• Maintaining an appropriate capital structure capable of delivering on our identified pipeline of development
opportunities;
• Streamlining operations to drive efficiencies and allow Cromwell to focus on its core strengths; and
• Asset recycling to create fund management opportunities to generate annuity style management fee income.
Outlook
Cromwell expects the economic and social impacts of COVID-19 to continue to cause uncertainty and dislocation in all the
markets in which it operates in during 2022. However, the progressive roll out of the COVID-19 vaccination programs in the
markets that Cromwell operates in provides confidence that the pandemic impacts may become more manageable and we
are hopeful that calendar year 2022 will bring increased stabilisation of business conditions.
While real estate transactions in Europe have been subdued over the last 12 months, Cromwell continues to enjoy strong
support from its capital partners in Europe and retail investor base in Australia. The extension of both the Cromwell
Direct Property Fund and Cromwell Property Trust 12 show the benefits of Cromwell’s disciplined approach to asset
selection for retail investors. The Cromwell European REIT has continued to benefit from the breadth and depth of our
European platform which can source off market real estate deals in a dislocated market. The initial response from
investors for our recently announced Wooden Building Fund in Europe has been extremely encouraging and we anticipate
this fund to reach a First close within the first 6 months of 2022. The new Cromwell European Logistics Fund, seeded by
seven Italian logistics assets leased to DHL, will be launched in the first quarter of 2022. These demonstrate the value of
Cromwell’s vertically integrated property and asset management capabilities in both Europe and Australia which allows us
to better understand the financial challenges of our tenants and provide more tailored solutions.
The Cromwell Polish Retail Fund assets have proved resilient due to their high weighting to essential shopping and
services. While these assets will likely remain on balance sheet for the immediate future, we will look to commence
marketing this Fund to external investors once there has been consistent, uninterrupted trading at all the assets in the
Fund and an expectation that further lockdowns will not be initiated by the Polish Government.
While gearing still remains above Cromwell’s target range at 42 % (target range of 30% to 40%) Cromwell has a strong
balance sheet with sufficient liquidity and ample loan covenant headroom to maintain operations well into the future and
to continue to invest into our direct and indirect portfolio and our fund management platform.
Distributions
Given the ongoing uncertainty, suppressed transactional activity in Europe and current market conditions Cromwell will
continue to pay distributions at the current quarterly rate of 1.625cps until further notice. Any further alteration in the
current economic conditions of Cromwell and our tenants, the continuing changing landscape of the COVID-19 pandemic,
the effectiveness of vaccines and responses by various governments may impact on the final level of distributions for FY22.
29
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Risks
Cromwell actively identifies and manages the risks that may impact its operations, strategy and outlook, and considers
megatrends and external insights to respond to emerging areas of risk. The Board is ultimately accountable for corporate
governance and risk management. To assist it, the Board has separate committees to review and assess key risks
and ensure they are managed appropriately. The Investment Committee is responsible for overseeing and reviewing
all major transactions including investment in and divestment of assets. The Audit and Risk Committee is responsible
for overseeing and reviewing the effectiveness of Cromwell’s risk management framework in responding to the various
exposures to risk Cromwell has in the course of its business.
Cromwell has an enterprise-wide risk management framework which provides a comprehensive approach to identifying,
assessing and treating risk within the context of Cromwell’s business environment and based on the Board’s risk appetite.
The framework includes policies and processes and recognises that everyone at Cromwell has a role to play in effectively
managing risk. Risks are identified and assessed in a timely and consistent manner with regular reporting back to the
Board from management via the Audit and Risk Committee.
Cromwell’s key risks and the core controls and mitigants to assist in managing them are described below:
Key Risk
Description
Mitigation
Performance
• Delivering distributions that meet
market guidance and expectations
• Ensuring that investments and
developments perform in line with
expectations
• Retaining and growing AUM
Capital
management
• Ensuring continuous access to debt and
equity markets to support Cromwell’s
sustainable growth
• Board approved strategy continuously reviewed with
processes to monitor and manage performance
to ensure maximisation of security value and best
operational structures
• Investment Committee and management regular
review of performance of investments and
developments against targets
• Transition of European investments to long term,
secure, reliable revenue streams
• Board approved gearing range through the cycle
reduced to 30% - 40% and regularly monitored
• Prudent capital management informed by cash flow
forecasting and sensitivity analysis. Regular reviews
of available liquidity matched to capital requirements
and monthly Board reporting
• Long dated debt expiry profile
• Diversification of debt funding sources
• Spreading of debt maturities
People and
culture
• Ensuring Cromwell has access to and
• Investment in our staff with focused learning and
can retain key talent
development plans
• Maintaining Cromwell’s strong, adaptive
• Diversity and Inclusion Working Group to promote
and open culture
equity
• Succession planning and leadership development for
senior staff
• Fostering the development of key talent
• Competitive remuneration and benefits
• Effective performance management and review
• Staff engagement and feedback mechanisms
• Various staff wellbeing initiatives
30
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Key Risk
Description
Mitigation
Information and
data security
• Ensure that information management
systems are resilient and able to meet
business needs
• Ensure availability and integrity
of critical IT infrastructure and
applications
• Ensure Cromwell remains compliant
with data protection requirements, and
provides measures to protect against
cyber-attack
• Maintaining suitable policies, guidelines and
procedures to support secure business operations
• Executing regular cyber-security evaluations,
training, testing, and vulnerability mitigation activities
• Maintaining ISO 27001 certification for critical
technology services
• Maintaining and testing suitable business continuity
plans and procedures
• Providing robust vendor selection and assessment
methodology with ongoing performance due diligence
Leasing
• Ensuring that assets are leased in
• Defensive portfolio with long WALE
accordance with asset management
plans and forecasts
• Maintain a portfolio of high quality
commercially attractive property
assets that respond to tenant demand
and market expectations ensuring
consistent, predictable occupancy and
income returns
• Large and diversified tenant base
• Experienced leasing team
• Active asset management with focus on repositioning,
refurbishing and re-leasing properties to enhance
returns
• Strategic asset management plans to ensure
optimisation of asset use and assist return
expectations over the asset’s lifecycle
Governance and
compliance
• Ensuring continuous compliance with
• Independent Compliance Committee with direct
regulatory requirements
reporting to the Audit and Risk Committee
• Meeting stakeholder and investor
expectations
• Board approved Policies and key frameworks that
facilitate good governance and drive appropriate
accountability and oversight
• Board approved Tax Risk Management Policy ensures
ongoing REIT status
• Appropriate assurance activities for areas of potential
compliance and governance risk
• Cromwell’s Culture and Values expectations
clearly articulated to all staff and interlinked with
performance reviews and incentives
Health, safety
and wellbeing
• Ensuring the health, safety and
wellbeing of Cromwell’s staff,
contractors, visitors and occupants
• Education and awareness programs to ensure
that our Directors, Officers and Staff are aware of
workplace health and safety
• Prevention of death or serious
• Wellbeing Program promotes pursuing healthy
injury at any Cromwell owned or
controlled property or in the course of
employment with Cromwell
lifestyles and self-care to staff and provides practical
tools and advice
• Employee Assistance Program makes a wide network
of health professionals available to staff to discuss
any issues in confidence
• Code of Conduct establishes required standards of
behaviour across the Group, with complementary
Whistleblower protection, Grievance resolution
and escalation mechanisms to promote a safe
environment
• Group wide Supplier Code of Conduct and
Procurement Policy extends Cromwell’s corporate
expectations to our suppliers and service providers
• Formal Work Health and Safety programmes in place
and reviewed regularly at Cromwell owned properties
and operational locations
31
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Climate-related financial disclosure
Cromwell is a supporter of the Task Force on Climate-related Financial Disclosure (TCFD) recommendations and
recognises the potential risks and opportunities arising from climate change and a transition to a low-carbon economy.
The TCFD recommendations are voluntary in nature and were introduced to support a consistent reporting approach to
enable financiers, investors, insurers and other stakeholders to understand an organisation’s material climate related
risks, and the financial implications and approach being undertaken to manage them.
Cromwell’s climate-related disclosures provide a position statement on each of the four core elements and 11 disclosures
that comprise the TCFD recommendations. In addition, Cromwell also, completes detailed annual submissions on
climate strategy as part of both GRESB and CDP (formerly the Carbon Disclosure Project) requirements. Further details
on the TCFD disclosures, Cromwell’s annual CDP submission and relevant statements covering the Sustainable Finance
Disclosure Regulations are available on Cromwell’s website at www.cromwellpropertygroup.com/sustainability.
The TCFD structured the disclosure recommendations around four thematic areas that represent core elements of an
organisation’s operations. These recommended elements and Cromwell’s response is described below:
TCFD thematic
element
Governance
Disclose the
organisation’s
governance around
climate-related risks
and opportunities
Strategy
Disclose the actual
and potential
impacts of climate-
related risks and
opportunities on
the organisation’s
businesses, strategy,
and financial
planning where
such information is
material.
Overview of the TCFD Recommended Disclosures and Cromwell’s response
Reference
The Group Sustainability Committee, led by the Chief Sustainability Officer
(CSO), is responsible for identifying climate-related risks and opportunities.
Section 1
Governance
The Audit and Risk Committee (ARC) is responsible for monitoring the
effectiveness of the sustainability framework and advising the Board on the
progress and actions undertaken to implement sustainability objectives and
ensure strong corporate risk management.
The Board’s oversight of climate-related risks and Management’s role in
assessing and managing risks and opportunities is detailed in the TCFD
Statement.
Cromwell operates its business in a complex social, economic and physical
environment, managing assets of differing types and quality and in differing
geographies. Our objective is to provide stable, secure and growing distributions
to investors, with the potential for capital growth.
Section 2
Strategy
As an investor and asset manager, Cromwell considers that the greatest
material risks posed from climate change are likely to be from:
• Physical risks from severe weather events directly impacting and damaging
the assets we own and manage,
• The indirect impacts such as increasing operational costs from rising
insurance premiums, energy costs, carbon charges and taxes, legislation and
operational costs resulting from increased temperature extremities and wear
and tear to operating plant and equipment,
• The potential climate change impacts on the security of our tenants’
business operations, on our supply chains and impacts on the infrastructure
supporting the communities where our property assets are located,
• Forming effective and economic strategies to respond to the demand to
transition to a low carbon economy to achieve net zero emissions. Developing
strategies that ensure our property assets remain resilient to climate change
whilst setting pathways to improve performance and respond to market
demand presents a significant opportunity for Cromwell to underpin the long-
term value of the property assets we own and manage.
Our climate adaption strategy is to ensure that we understand and respond to
the impacts from climate change in the short, medium and long term.
32
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT TCFD thematic
element
Overview of the TCFD Recommended Disclosures and Cromwell’s response
Reference
Cromwell considers climate risks and impacts over the following time frames:
• Short term = 1 to 3 years
• Medium term = 4 to 7 years (leading to 2030)
• Long term = 8 to 15 years (up to and post 2030, leading to 2040)
This information is then used to plan effective responses and determine risk
mitigation strategies where appropriate.
Risk Management
Disclose how
the organisation
identifies, assesses,
and manages climate-
related risks.
Cromwell conducts formal reviews of the actual and potential impacts of
climate change across its operations. Assessment of the risk from acute
physical events related to weather extremities and longer term chronic
effects continue to evolve and mature as the depth of knowledge increases
through ongoing evaluation utilising the growing body of climate science,
future environmental impact forecasts, scenario testing and engagement with
insurers, financiers and industry organisations.
Section
3 Risk
Management
Metrics and targets
Disclose the metrics
and targets used to
assess and manage
relevant climate-
related risks and
opportunities where
such information is
material.
The process for identifying, assessing and managing climate-related risks and
how the process is integrated into Cromwell’s risk management framework is
detailed in the TCFD Statement.
Cromwell has disclosed its sustainability performance for more than eleven
years and reports annually in accordance with the Global Reporting Initiative
(GRI).
Section 4
Metrics and
Targets
Each year our annual Sustainability Report sets out the boundaries for reporting
and provides a breakdown between the properties for which Cromwell has
ownership and direct management control of operations.
Cromwell has set targets to respond to the transition to net zero emissions.
In FY20 Cromwell obtained net zero certification from Climate Active for its
Australian corporate operations. This was rating was maintained in FY21.
Cromwell recognises that the greatest impact from reducing emissions is
within its property assets. For the Australian assets where Cromwell has
operational control, energy consumption and emissions intensity has been
tracked for ten years.
Our annual Sustainability Report provides access to data tables that
provide further information on Cromwell’s corporate emissions, energy and
performance certification for our property portfolios and the actions we are
implementing to achieve our long-term targets.
Further details of our metrics and targets are also contained in the TCFD
Statement.
33
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Directors
The Directors of Cromwell Corporation Limited and Cromwell Property Securities Limited as responsible entity of the
CDPT (responsible entity) during the year and up to the date of this report are:
Dr Gary Weiss AM
Non-executive Chair LLB (Hons), LLM, JSD, 68
Listed Company Directorships (held within the last three years):
Chair – Ardent Leisure Group Limited (2017 – current)
Executive Director – Ariadne Australia Limited (1989 – current)
Chair – Estia Health Limited (2016 – current)
Non-executive Director – Hearts and Minds Investments Limited (2018 – current)
Non-executive Director – Thorney Opportunities Ltd (2013 – current)
Chair – Ridley Corporation Limited (2010 – 2020)
Non-executive Director – The Straits Trading Company Limited (2014 – 2020)
Skills and Experience
Dr Weiss has substantial board and board committee experience at both listed and non-
listed entities. Dr Weiss is currently Chair of Ardent Leisure Group Limited and Estia
Health Limited, an Executive Director of Ariadne Australia Limited and a Non-executive
Director of Hearts and Minds Investments Limited, Thorney Opportunities Ltd, the Victor
Chang Cardiac Research Institute and The Centre for Independent Studies. Dr Weiss is
also a Commissioner of the Australian Rugby League Commission.
Dr Weiss served as Chair of Ridley Corporation Limited, Clearview Wealth Limited and
Coats Group plc. Dr Weiss is a former Non-executive Director of The Straits Trading
Company Limited, a former Executive Director of Industrial Equity Ltd, Whitlam, Turnbull
& Co and Guinness Peat Group plc, and has served on the boards of numerous other
companies, including Westfield Group, Premier Investments Limited and Tower Australia
Limited. Dr Weiss has been involved in overseeing large businesses with operations in
many regions including Asia Pacific, Europe, China, India and the United States (US) and
is familiar with investments across a wide range of industries and sectors, including real
estate.
In 2019, Dr Weiss was awarded the Member (AM) in the General Division of the Order of
Australia for significant services to business and the community.
Dr Weiss holds an LLB (Hons) and LLM from the Victoria University of Wellington and a
Doctor of the Science of Law (JSD) from Cornell University. He was admitted as a Barrister
and Solicitor of the Supreme Court of New Zealand, a Barrister and Solicitor of the Supreme
Court of Victoria and as a Solicitor of the Supreme Court of New South Wales.
Mr Eng Peng Ooi
Non-executive Deputy Chair BCom, Member of the Certified Practising Accountants of
Australia, Member of the Singapore Institute of Directors, 65
Listed Company Directorships (held within the last three years):
Deputy Chair – Manager of ESR-REIT (1 July 2021 – current)
Chair – Manager of ESR-REIT (2017 – 30 June 2021)
Non-executive Director – Manager of ESR-REIT (2012 – current)
Non-executive Director – Perennial Real Estate Holdings Limited (2015 – 2020)
Skills and Experience
Mr Ooi has more than 35 years of real estate experience, including in property
investment, development, project management, fund investment and management and
capital partnerships in Australia and across Asia.
Director since:
18 September 2020
Chair since:
17 March 2021
Board Committee
membership:
Member of the Audit and Risk
Committee
Member of the Investment
Committee
Independent:
No
Director since:
8 March 2021
Deputy Chair since:
17 March 2021
34
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Board Committee
membership:
Chair of the Audit and Risk
Committee
Member of the Investment
Mr Ooi joined Lendlease in 1981, working in various finance roles in Sydney, before
taking on the role of Chief Financial Officer, Asia in the late 1990s. Later, Mr Ooi
returned to Sydney with Lendlease and fulfilled the roles of Chief Financial Officer
of Lendlease Development (2000 – 2002), Global Chief Financial Officer of Lendlease
Investment Management (2002 – 2003) and Asia Pacific Chief Financial Officer, Lendlease
Communities (2003 – 2005).
Committee
Independent:
Yes
From 2006 to 2010, Mr Ooi was the Asia Chief Executive Officer, Lendlease Investment
Management and Retail, based in Singapore. Mr Ooi subsequently established the
development business and retail funds, and successfully developed capital partnerships,
forming strong relationships across Asia. In 2010, Mr Ooi was appointed Asia Chief
Executive Officer for Lendlease.
Since retiring from his executive career in late 2011, Mr Ooi has gained board and board
committee experience at both listed and non-listed entities across Asia Pacific. Mr Ooi has
served as a Non-executive Director of ESR Funds Management (S) Limited, the manager
of SGX-listed ESR-REIT, since 2012 and was Chair from 2017 to 30 June 2021. After almost
nine years as independent Non-executive Director with ESR Funds Management (S)
Limited, Mr Ooi was redesignated as Deputy Chair and non-independent Non-executive
Director effective 1 July 2021. Mr Ooi is a Member (and the former Chair) of ESR-REIT’s
Nominating and Remuneration Committee, a Member of its Audit, Risk Management and
Compliance Committee and the Chair of its Executive Committee. Since 2016, Mr Ooi has
been a Non-executive Director of Savant Global Capital Pty Ltd, a specialist investment
management and real estate advisory platform.
Mr Ooi was previously a Non-executive Director of formerly-SGX-listed Perennial Real
Estate Holdings Limited (2015 – 2020), Frasers Property Australia (2014 – 2018) and
Perennial China Retail Trust Management Pte Ltd (2012 – 2014).
Mr Ooi holds a Bachelor of Commerce from the University of New South Wales and is
a Member of the Certified Practising Accountants of Australia and a Member of the
Singapore Institute of Directors.
Mr Robert Blain
Non-executive Director FAPI, FRICS, 66
Skills and Experience
Mr Blain has more than 40 years of real estate experience, including in property and
asset management, strategic development, cross border activity and capital markets in
Australia and across Asia.
After pursuing rural infrastructure interests, Mr Blain commenced his corporate career in
Sydney in the late 1970s, obtaining a real estate licence and working for several years with
LJ Hooker. He joined the Colliers Jardine Group as Sales Director before being appointed
as Regional Service Director, Capital Markets APAC. From 1995 to 1998, Mr Blain held the
position of Regional Investment Director based in Singapore and, in 1999, was appointed
Australia Director. Mr Blain’s last role at the Colliers Jardine Group was as Chief Executive,
New South Wales.
Director since:
8 March 2021
Board Committee
membership:
Chair of the Investment
Committee
Member of the Nomination
and Remuneration Committee
Independent:
Yes
In 2002, Mr Blain joined CBRE as Managing Director, CBRE Hong Kong and China, based
in Hong Kong. In 2003, he was appointed Chief Executive Officer, CBRE Asia and, in 2005,
became Chair and Chief Executive Officer, CBRE Asia-Pacific. Mr Blain was responsible for
CBRE’s activities across the Asia-Pacific region and was a member of the Global Operating
Committee, based in the US, driving CBRE’s global business strategy.
In 2014, Mr Blain transitioned to the role of Executive Chair, CBRE Asia-Pacific and
focussed on CBRE’s major clients and building strong relationships across the region. In
2019, Mr Blain retired from his Executive Chair and Global Operating Committee roles at
CBRE and returned to Australia.
35
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Mr Blain is a Fellow of the Australian Property Institute and Fellow of the Royal Institute
of Chartered Surveyors.
Ms Tanya Cox
Non-executive Director MBA, Grad Dip Applied Corporate Governance, FAICD, FGIA, 60
Listed Company Directorships (held within the last three years):
Non-executive Director – OtherLevels Holdings Ltd (2015 – 2020)
Non-executive Director – BuildingIQ, Inc (2015 – 2019)
Skills and Experience
Director since:
21 October 2019
Board Committee
membership:
Chair of the Nomination and
Remuneration Committee
Member of the Audit and Risk
Ms Cox has over 15 years of board experience and extensive executive experience in
sustainability, property, finance and funds management. Ms Cox began her career at
the Bank of New Zealand and over an 11 year period succeeded to the role of General
Manager of Finance, Operations and IT. Ms Cox led similar functions at the managed
fund custodian Ausmaq Limited, before joining Rothschild & Co Australia Limited as
Director and Chief Operating Officer for the Australian operations. During her tenure
at Rothschild & Co Australia Limited, Ms Cox was a member of several Executive
Committees, including Chair of the Risk Committee and a member of the Investment
Committee.
Committee
Independent:
Yes
In 2003, Ms Cox joined Dexus as Chief Operating Officer and Company Secretary, with
her responsibilities expanding in 2012 to include the role of Executive General Manager
– Property Services. During her tenure at Dexus, Ms Cox was a member of the Executive
Committee and the Investment Committee, and her responsibilities included oversight
of all operational aspects of the business including corporate responsibility and
sustainability, marketing and communications, information technology, operational risk
management, corporate governance and company secretarial practices.
Since retiring from her executive career in 2014, Ms Cox has gained board experience
at listed companies. She is a former Non-executive Director of BuildingIQ, Inc and
OtherLevels Holdings Ltd. Ms Cox is Chair of Cromwell Funds Management Limited,
Chair of Equiem Holdings Pty Ltd, Chair of the World Green Building Council, former
Chair and current Director of the Green Building Council of Australia and a Director of
Niche Environment and Heritage Pty Ltd. Ms Cox was a member of the NSW Climate
Change Council until it disbanded on 30 June 2021, and is a former Director of Low
Carbon Australia.
Ms Cox holds a Master of Business Administration from the Australian Graduate School
of Management at University of New South Wales and a Graduate Diploma in Applied
Corporate Governance from the Governance Institute of Australia. Ms Cox is a Fellow
of the Australian Institute of Company Directors, the Governance Institute of Australia
(formerly known as the Institute of Chartered Secretaries & Administrators) and is a
Member of Chief Executive Women.
36
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Director since:
18 September 2020
Board Committee
membership:
Member of the Audit and Risk
Committee
Member of the Investment
Committee
Member of the Nomination
and Remuneration Committee
Independent:
Yes
Director since:
21 October 2019
Board Committee
membership:
Member of the Audit and Risk
Committee
Member of the Investment
Committee
Member of the Nomination
and Remuneration Committee
Independent:
Yes
Mr Joseph Gersh AM
Non-executive Director BCom, LLB (Hons), 65
Skills and Experience
Mr Gersh is currently Executive Chairman of Gersh Investment Partners Ltd and
a government appointed Non-executive Director of the Australian Broadcasting
Corporation (ABC). Mr Gersh is also a Director of the Sydney Institute in an honorary
capacity.
Mr Gersh was formerly the inaugural Chairman of the Australian Reinsurance Pool
Corporation, foundation Director of the Reserve Bank of Australia's Payments System
Board and Director of the Federal Airports Corporation. Mr Gersh is a former senior
partner and Chairman of the Management Committee of law firm, Arnold Bloch Leibler.
One of his principal areas of expertise is major property development and, in particular,
the construction of hotels, shopping centres, land subdivisions, apartments and office
towers.
Mr Gersh previously served as Deputy Chairman of the Australia Council for the Arts, as
Chairman of Artbank (which is part of the Australian Government Office for the Arts) and
as Chairman of the National Institute of Circus Arts.
In 2006, Mr Gersh was awarded the Member (AM) in the General Division of the Order of
Australia for significant services to business, government, the arts and the community.
Mr Gersh holds a Bachelor of Commerce and Bachelor of Laws (Hons) from the
University of Melbourne.
Ms Lisa Scenna
Non-executive Director B.Comm, Member of Chartered Accountants Australia and New
Zealand, MAICD, 53
Listed Company Directorships (held within the last three years):
Non-executive Director – Harworth Group plc (2020 – current)
Non-executive Director – Genuit Group plc (2019 – current)
Skills and Experience
Ms Scenna has over 25 years of executive experience in property and asset management
and funds/investment management in both the United Kingdom (UK) and Australia. Ms
Scenna joined Westfield Group in 1994 and progressed to the role of Head of Investor
Relations. Ms Scenna moved to Stockland Group as General Manager – Finance and
Business Development and rose through the group to the role of UK Joint Managing
Director in 2007. In this role, Ms Scenna was responsible for establishing Stockland Group
in the UK, had full responsibility for the regional operations and was involved in a number
of acquisitions and integrations.
In 2009, Ms Scenna left Stockland Group to stay in the UK and accepted the role of Group
Head of Explore at Laing O’Rourke, the country’s largest privately-owned construction
solutions provider. For just under three years, Ms Scenna led the Explore Investments and
Explore Living businesses across Europe, Canada, the Middle East and Australasia. In this
role, Ms Scenna led the infrastructure investing activities globally and worked with clients
and investors to build Laing O’Rourke’s direct infrastructure portfolio held in co-ownership
with a number of institutional investors across the UK, Australia and Canada.
In 2013, Ms Scenna joined UK construction and regeneration company, Morgan Sindall
Group plc, as the Managing Director of their Investments business. During her tenure, Ms
Scenna was a Director of the Morgan Sindall Investments Board. Through her extensive
executive experience in the UK, Ms Scenna has developed strong connections with local
authorities, developers and investors and has a deep understanding of the drivers for
competitors.
37
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Ms Scenna is a Non-executive Director of Genuit Group plc (formerly known as Polypipe
Group plc) and is a Member of its Audit Committee, Nomination Committee and
Remuneration Committee. Ms Scenna is a Non-executive Director of Harworth Group plc
and is a Member of its Audit Committee and Remuneration Committee. Genuit Group plc
and Harworth Group plc are listed on the London Stock Exchange.
Ms Scenna is the former Deputy Chair of the Private Infrastructure Development Group’s
Supervisory Board and has played a leadership role in charitable organisations.
Ms Scenna holds a Bachelor of Commerce from the University of New South Wales and
is a member of Chartered Accountants Australia and New Zealand and the Australian
Institute of Company Directors.
Ms Jialei Tang
Non-executive Director BFA Architectural Design, BA in Liberal Arts, 26
Skills and Experience
Ms Tang has investment, executive and board experience in diverse industries including
finance, real estate, hospitality, pharmaceuticals and technology, as well as across many
geographies and jurisdictions including Singapore, the US and China.
In the real estate sector, Ms Tang is actively involved in the evaluation, acquisition and
planning of sea port terminal real estate, the development of the new UBS Singapore
headquarters and the 1468-unit Parc Clematis residential complex in Singapore. Since
2019, Ms Tang has been the Chief Executive Officer of Silver City Properties, LLC, a
residential property investment and management company in the US which owns
and manages properties in New York. In the same year, Ms Tang took on the role as
director at Ariva Hospitality Pte. Ltd., a hospitality management company, directing its
rebranding and operations with a focus on sustainability while overseeing its expansion
plans into the fund space.
Ms Tang joined the board of TauRx Pharmaceuticals Ltd in 2019, whose drug for
therapeutic treatment of Alzheimer’s Disease is in its phase III trials and will seek FDA,
EMA and NMPA approval upon successful results. She also handles the communication
and strategic planning for the family office’s philanthropy including support for
education, the Olympic movement, refugee relief and healthcare.
Ms Tang holds a double degree, Bachelor of Fine Arts in Architectural Design from
the Parsons School of Design and Bachelor of Arts in Liberal Arts (Epistemology and
Language) from Eugene Lang College of Liberal Arts at The New School. Ms Tang is
a member of, and undertaking studies through, the Australian Institute of Company
Directors. She will be pursuing a Master in Urban Planning at Harvard University in
September 2021 (with graduation due in 2023).
Director since:
9 July 2021
Independent:
No
38
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Mr Leon Blitz (retired)
Non-executive Chair B.Com (Hons), C.A. (S.A.), 57
Skills and Experience
Mr Blitz is the co-founder and CEO of Grovepoint, a London-based private equity and FCA
regulated investment management firm which manages and invests principal, institutional
and family office funds.
Through his role at Investec Bank, which over 20 years included Head of Principal
Investments, Private Banking and Property Lending, Mr Blitz developed a deep
understanding of property, banking and risk management. He also managed acquisition
and integration processes for the Investec Group in UK and European jurisdictions.
Mr Blitz has a significant track record as a deal maker and fundraiser and has
extensive experience in working with high performance management teams to
develop and execute corporate strategies and implementation plans. He has acted as
a Non-executive Director of a number of companies in the UK and Europe and is on
the governance and advisory board of a London-based industrial investment holding
company, as well as playing a leading role in governing a number of LLP investment and
GP management partnerships.
Mr Blitz is the Chair of an international London-based chamber of commerce and
plays a leadership role in a number of charitable and communal organisations. He is a
Chartered Accountant and trained at Arthur Andersen.
Mr Andrew Fay (retired)
Non-executive Deputy Chair BAgEc (Hons), A Fin, 56
Listed Company Directorships (held within the last three years):
Non-executive Director – Pendal Group Limited (2011 – current)
Non-executive Director – Spark Infrastructure RE Limited (2010 – current)
Non-executive Director – Gateway Lifestyle Group (2015 – 2018)
Skills and Experience
Mr Fay has over 30 years’ experience in the financial services industry, bringing
extensive knowledge of investment and funds management, including the property
asset classes. Whilst a large part of his executive career was as a professional investor,
he has also been directly involved in advising and determining the strategic direction
of businesses including being involved in a range of merger and acquisition activities.
These businesses come from a diverse range of industries, including property, financial
services, internet, medical devices, microbiology and renewable energy, and have given
him considerable experience in operating in international markets. During his 14 years
at Deutsche Asset Management (Australia) Ltd, he held a number of senior positions
including Chair, CEO Australia, Regional Chief Investment Officer (CIO) Asia-Pacific and
CIO Australia.
He was also Chair of Deutsche Managed Investments Ltd and Tasman Lifestyle
Continuum Ltd and a Non-executive Director of formerly-ASX-listed Gateway Lifestyle
Group, DB Real Estate Australia Ltd and South Australian Power Networks Pty Ltd.
Mr Fay is a former consultant to Dexus Property Group in the area of capital markets.
Earlier in his career, he held various senior investment roles at AMP Capital and was
also a member of the Investment Board Committee of the Financial Services Council
from 1998 to 2006.
Mr Fay has substantial board committee experience having chaired both Nomination
and Remuneration Committees and Audit and Risk Committees for Top 100 ASX listed
entities. He is currently a Non-executive Director of ASX listed Pendal Group Limited
Director since:
28 June 2017
Chair since:
26 February 2020
Director and Chair until
retired:
18 November 2020
Board Committee
membership:
Member of the Investment
Committee
Independent:
Yes
Director since:
15 October 2018
Deputy Chair since:
26 February 2020
Director and Deputy Chair
until retired:
18 November 2020
Board Committee
membership:
Member of the Audit and Risk
Committee
Member of the Investment
Committee
Member of the Nomination
and Remuneration Committee
Independent:
Yes
39
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
and the Chair of the Remuneration and Nominations Committee; and a Non-executive
Director of ASX listed Spark Infrastructure RE Limited and a member of the Audit, Risk
and Compliance Committee and the Nomination Committee. Mr Fay is currently a Non-
executive Director of J O Hambro Capital Management Holdings Limited and National
Cardiac Pty Ltd.
Mr John Humphrey (retired)
Non-executive Director LLB, 66
Listed Company Directorships (held within the last three years):
Non-executive Director – Lynas Rare Earths Limited (2017 – current)
Chair – Auswide Bank Ltd (2009 – 2020)
Non-executive Director – Auswide Bank Ltd (2008 – 2020)
Chair and Non-executive Director – Spotless Group Holdings Limited (2017 – current)
Chair – Horizon Oil Limited (2016 – 2018)
Non-executive Director – Horizon Oil Limited (1989 – 2018)
Skills and Experience
Mr Humphrey has more than 40 years of corporate law experience, specialising in mergers
and acquisitions, major commercial transactions and capital raisings, in Australia and
globally, as well as over 30 years of experience serving on listed company boards.
He commenced his career with Tully & Wilson (now Corrs Chambers Westgarth) in
1976, becoming a Partner in 1980, and later managing the firm as a Member of the
Management Committee. In 1998, Mr Humphrey moved to Mallesons Stephen Jacques
and took the leading role in establishing and growing the Queensland business to the
pre-eminent commercial law firm it is today.
Mr Humphrey was instrumental in the development and execution of a key five-
year strategic plan focused on Asia, with this plan resulting in the merger with King
and Wood in China to form one of the biggest law firms in the world – King & Wood
Mallesons. Mr Humphrey played a pivotal role in this negotiation and has gone on to
achieve a national reputation in corporate law, particularly in mergers and acquisitions
and equity capital markets work. He has advised on many major commercial
transactions and has experience with markets in China through his work as a Non-
executive Director of ASX listed Downer Group Limited, Chair of ASX listed Horizon Oil
Limited and Chair of Villa World Limited.
In 2013, Mr Humphrey became the Executive Dean of the Faculty of Law at the Queensland
University of Technology (QUT). He acted in that role until June 2019, at which time
he returned to the Brisbane office of King & Wood Mallesons as a Senior Consultant,
specialising in corporate mergers and acquisitions and general commercial work. Mr
Humphrey is a former member of the Takeovers Panel.
He is currently a Non-executive Director of ASX listed Lynas Rare Earths Limited (formerly
known as Lynas Corporation Limited) and a member of the Audit and Risk Committee and
Nomination, Remuneration and Community Committee. He is the Chair of formerly-ASX-
listed Spotless Group Holdings Limited and the former Chair of ASX listed Auswide Bank
Ltd and of Bligh Ventures Limited.
Mr Humphrey is a member of the Board of Trustees of the Brisbane Grammar School.
He holds a Bachelor of Laws from the University of Queensland.
Director since:
8 September 2020
Director until retired:
18 November 2020
Board Committee
membership:
Member of the Nomination
and Remuneration
Committee
Independent:
Yes
40
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Director since:
6 August 1998
Director until retired:
31 December 2020
Board Committee
membership:
Member of the Investment
Committee
Independent:
No
Director since:
26 November 2014
Chair since:
18 November 2020
Director and Chair until
retired:
17 March 2021
Independent:
Yes
Mr Paul Weightman (retired)
Managing Director / Chief Executive Officer B.Com, B.Law, 59
Skills and Experience
Mr Weightman was a founding Director of Cromwell, acted as its Executive Chair from
1998 to 2008 and as its Managing Director/Chief Executive Officer from 2008 to 2020,
driving Cromwell’s strategic development from a small retail syndicator to an ASX200
international real estate investor and funds manager. He practised as a solicitor for
more than 20 years, acted as Managing Partner of a national law firm and continues
to hold a practising certificate as a solicitor of the Supreme Court of Queensland. Mr
Weightman is also a Fellow of the Royal Institution of Chartered Surveyors and is an
approved person registered with the Financial Conduct Authority (UK).
Mr Weightman is a former Director of Cromwell Investment Services Limited and
Cromwell EREIT Management Pte. Ltd., the latter of which is a licensed REIT manager
with the Monetary Authority of Singapore and the manager of Cromwell European REIT.
He has extensive Australian and international experience in real estate investment and
management and has legal, commercial and corporate experience in areas including
mergers and acquisitions, revenue matters, property development, corporate and
financial structuring, public listings, joint ventures and funds management.
Ms Jane Tongs (retired)
Non-executive Chair B.Bus, MBA, FCA, FCPA, MAICD, 61
Listed Company Directorships (held within the last three years):
Chair – Netwealth Group Limited (2000 – 2021)
Skills and Experience
Ms Tongs has over 30 years of management expertise, serving on the boards of
insurance, funds management, property and other financial services entities. She has
extensive experience in profitably growing businesses and enhancing the profitability
of established businesses. Current examples are Warakirri Asset Management Ltd and
Hollard Insurance Company Pty Ltd and a former example is Netwealth Group Limited.
Her previous property experience includes Non-executive Director positions at AIMS
Fund Management Limited (formerly MacarthurCook Fund Management Limited),
AIMS Investment Managers Ltd (formerly MacarthurCook Investment Managers Ltd),
Little Real Estate Pty Ltd (formerly Run Ltd), the Heine Property Group and Warakirri
Agricultural Trusts. She was a Non-executive Director of the Australian Energy Market
Operator and of Catholic Church Insurance Limited and served as a Member and
Company Director to the Advisory Board of the South Australian Financing Authority. She
developed her leadership and management experience earlier in her career, specifically
as Partner at PricewaterhouseCoopers, specialising in the financial services sector and
litigation support.
Along with her deep expertise in finance, her board experience is vast with over 20 years’
experience as a Chair, Chair of Audit and Risk Committees and Non-executive Director.
Ms Tongs was appointed as an independent Non-executive Director of Cromwell
Property Group in 2014. She was elected as independent Non-executive Chair in
November 2020 and served in that role until her retirement from the Cromwell Property
Group Board in 2021. Ms Tongs is the former Chair of Netwealth Group Limited. She
is currently Chair of Columbus Capital Pty Ltd and of the Lendlease Australian Prime
Property Fund Investors Committee and a Non-executive Director of Cromwell Funds
Management Limited, Warakirri Asset Management Ltd, Hollard Insurance Company Pty
Ltd and Brighton Grammar School.
Ms Tongs is a Fellow of Chartered Accountants Australia and New Zealand and of CPA
Australia and a member of the Australian Institute of Company Directors.
41
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Appointed since:
10 August 2015
Ms Lucy Laakso
Company Secretary and Corporate Counsel
B.Bus, MBA (Corporate Governance), Juris Doctor (First Class Honours), GAICD
Skills and Experience
Ms Laakso has more than 20 years of corporate and financial services experience,
having worked as a legal practitioner and in the areas of company secretariat, corporate
governance, compliance and business banking. Prior to joining Cromwell, Ms Laakso
was a manager in the company secretariat/compliance team at Access Capital Advisers
(now Whitehelm Capital). She also worked at ASX listed Suncorp Group Limited in areas
including corporate secretariat, compliance and business banking. Ms Laakso has
private practice experience at Norton Rose Fulbright and inhouse legal experience at a
fund manager. Ms Laakso is a member of Cromwell's Diversity Leadership Council and
is a Sponsor in the Property Council of Australia's 500 Women in Property programme
for 2020-2021. In 2019-2020, she was a member of two Property Council of Australia
national committees: the National Risk Roundtable and the Corporate Governance and
Regulation Committee.
Ms Laakso holds a Juris Doctor (First Class Honours), an MBA (specialising in Corporate
Governance) and a Bachelor of Business and is a Graduate and Member of the
Australian Institute of Company Directors.
DIRECTORS’ MEETINGS
The following table sets out the number of Directors' meetings (including committees of directors) held during the
financial year and the number of meetings attended by each director (where a director or member of committee).
Board of Directors
Meetings
attended
Meetings
eligible
to attend
18
Directors
Notes
G Weiss
EP Ooi
R Blain
T Cox
J Gersh
L Scenna
J Tang
L Blitz
A Fay
J Humphrey
Appointed 18
September 2020
Appointed 8
March 2021
Appointed 8
March 2021
Appointed 21
October 2019
Appointed 18
September 2020
Appointed 21
October 2019
Appointed 9 July
2021
Retired 18
November 2020
Retired 18
November 2020
Appointed 8
September
2020; retired 18
November 2020
P Weightman Retired 31
J Tongs
December 2020
Retired 17 March
2021
17(1)
7
6
25
17(2)
25
-
10
10
5
14(3)
20
Audit and Risk
Committee
Investment
Committee
Nomination and
Remuneration
Committee
Meetings
attended
4
1
-
8
1
8
-
-
4
-
-
4
Meetings
eligible
to attend
4
1
-
8
1
8
-
-
4
-
-
4
Meetings
attended
3
1
1
-
3
3
-
-
-
-
1
-
Meetings
eligible
to attend
3
1
1
-
3
3
-
-
-
-
1
-
Meetings
attended
1
-
1
8
2
2
-
3
6
3
-
-
Meetings
eligible
to attend
1
-
1
8
2
2
-
3
6
3
-
-
7
7
25
18
25
-
10
10
5
16
20
(1) Dr Weiss AM gave notice to the other Directors of a material personal interest and recused himself from receiving the materials and from attending the
meeting on 14 October 2020.
(2) Mr Gersh AM gave notice to the other Directors of a material personal interest and recused himself from receiving the materials and from attending the
meeting on 14 October 2020.
(3) Mr Weightman gave notice to the other Directors of a material personal interest and recused himself from receiving the materials and from attending
the meeting on 7 December 2020 and on 17 December 2020.
42
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Remuneration Report
A message from the Chair, Nomination and Remuneration Committee
Dear Securityholder
On behalf of the Board, I am pleased to present the Remuneration Report which focuses on our
remuneration strategy and outcomes for the financial year ending 30 June 2021.
YEAR IN REVIEW AND REMUNERATION OUTCOMES
FY21 was dominated by the impact of the COVID-19 pandemic. Cromwell’s people, processes and
systems were truly tested with Business Continuity Plans activated in every country of operation
with the majority of Cromwell’s people spending a substantial amount of the year working from
home. Throughout these events and even as the impact of COVID-19 continues to be felt it is
pleasing to see that our people have continued to stay focused on our securityholders, tenant-
customers, business operations and also in supporting their colleagues.
During the year a substantial amount of time and effort was spent dealing with government
legislation introduced in every country of operation designed to support tenants impacted by the
pandemic. Tens of thousands of hours were spent understanding, negotiating and applying the
legislation to Cromwell’s tenant-customers across 14 different countries.
Ms Tanya Cox
Chair, Nomination
and Remuneration
Committee
It comes as no surprise to know that despite the hard work of our people there was no escaping the impact of COVID-19
and the general ensuing reduction in market activity impacted transactions and performance fees. This flowed through to
Operating Earnings.
The FY21 KMP Short-Term Incentive (STI) Plan had a behavioural and financial gateway and the financial gateway of 95%
of budgeted Operating Earnings was not met, therefore no STI’s were paid to the KMP for performance during FY21.
The KMP Long-Term Incentive (LTI) Plan has three equally weighted hurdles applicable to FY21; Total Return (TR), Return
on Contributed Equity (ROCE) and Total Securityholder Return (TSR). The ROCE portion will vest at 42% in FY21, the TR
hurdle was not met in FY21 and therefore will vest at 0% and the TSR hurdle will not be tested until the completion of the
three-year vesting period.
Long-Term Incentives granted to the Acting CEO, Acting CFO and CIO (the Executive KMP) under the historical Performance
Rights Plan, for performance in the financial year ending 2017 vested in full as all performance hurdles were met.
BOARD AND EXECUTIVE MANAGEMENT CHANGES
During the year, Cromwell’s largest securityholder, ARA Asset Management called an Extra-ordinary General Meeting
(EGM) on 18 September 2020 to seek representation on the Board. Two nominated directors, Mr Joseph Gersh, AM and Dr
Gary Weiss, AM were elected to the Cromwell Board.
Subsequently a number of directors were not re-elected at the November 2020 Annual General Meeting (AGM) at which
Cromwell Corporation Limited also received a second strike on its Remuneration Report. Securityholders voted in favour
of the Spill Resolution, which triggered a ‘Spill Meeting’ within 90 days and the remaining directors (other than the
Managing Director) who had approved the Remuneration Report ceasing to hold office immediately before the end of the
Spill Meeting and seeking re-election.
This was followed by the retirement of long-standing Cromwell CEO Paul Weightman in December 2020 with COO Jodie
Clark also subsequently leaving in March 2021. In January 2021, Cromwell CFO Michael Wilde was appointed Acting CEO
and Brett Hinton was appointed Acting CFO.
February 2021 also saw three non-executive directors, including myself, successfully stand for re-election at the
Spill Meeting. Mr Rob Blain and Mr Eng Peng Ooi joined the Board in March 2021 with Dr Weiss elected Chair on 17
March 2021. There has been increased engagement with our substantial securityholders including through the recent
appointment of Ms Jialei Tang as a non-independent Non-executive Director on 9 July 2021. After an executive search
conducted by independent advisor Egon Zehnder, Jonathan Callaghan was appointed Cromwell’s new permanent CEO
later in that month, with a commencement date of 5 October 2021.
The Board has welcomed five new directors over the course of the last 12 months, adding substantial commercial, real
estate and capital markets skills and experience. The Board refresh is now complete. The executive team, who have
steered the business through the last few months, will now be joined by a highly regarded incoming CEO and we believe
these changes have substantially repositioned Cromwell for a very bright future.
43
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT TEMPORARY ENHANCED REDUNDANCY POLICY
In March 2020, to address job security concerns, the Board encouraged management to review and extend notice periods
of key employees and in April 2020 the Board approved implementation of enhanced redundancy arrangements for all
employees. The enhanced redundancy provisions are timebound and expire on 31 December 2021.
DIMINISHING DEFERRED PAYMENT SCHEME
The temporary Enhanced Redundancy Policy addressed job security and retention concerns for longer tenured employees
but did not address the risk of key employee loss for those with fewer years of service and/or relatively low value of
unvested equity on foot. In August 2020, the Board considered alternatives to encourage key employees to remain with
Cromwell through the most critical periods of uncertainty, while minimising costs, in the event that positions were not
made redundant. Consequently, Cromwell introduced a one-off Diminishing Deferred Payment (DDP) scheme for a limited
number of employees deemed critical for the ongoing operations of the business.
The DDP scheme entitles participants to receive a one-off payment on 31 December 2021, subject to continued
employment, with the payment reduced by any actual incentive payments received in cash or securities from 1 October
2020. The only executive KMP included in the arrangement is the Chief Investment Officer and the Acting Chief Financial
Officer.
CHANGES TO REMUNERATION POLICY
Given the response of securityholders to the previous Remuneration Report Cromwell undertook an exercise to review
the appropriateness of its stated Peer Group. It was felt the Peer Group did not accurately reflect the composition and
complexity of the business. As a result, the Fixed Remuneration of the incoming CEO was determined on the basis of this
new Peer Group leading to a Fixed Remuneration of $1.0 million, a 35% reduction on that of the previous permanent CEO.
APPROACH TO FY22 REMUNERATION
There will be no increase to the Fixed Remuneration of the Executive KMP.
The KMP STI Plan will remain unchanged with KMP’s eligible to earn between 50% and 100% of their Fixed Remuneration,
once they have passed through both the behavioural and financial gateways, with 50% of any payments deferred into
stapled securities and held in a holding lock for 12 months. The incoming CEO will participate in the KMP STI Plan but will
have an additional 20% of his STI paid as stapled securities for an initial two-year period.
The KMP LTI Plan will also remain unchanged with KMP’s eligible to be awarded Cromwell stapled securities of between
50% and 100% of their Fixed Remuneration, subject to the achievement of financial performance hurdles over a three-year
period.
NON-EXECUTIVE DIRECTOR FEES
No changes were made to the remuneration policy for Non-executive Directors in FY21. The total fee pool approved by
securityholders in 2011 stands at $1 million and this has not been reviewed since 2017.
Following the new director appointments and completion of the Board renewal process, the Board initiated an external
independent review of Non-executive Director fees. The review found that base Board and Committee fees were below
market, and that headroom compared to the current pool was less than 2%, which impacts the Board’s ability to appoint a
new director if required.
Having regard to the findings of this external independent review, the Nomination and Remuneration Committee
recommended to the Board an increase in Non-executive Director fees and the corresponding fee pool cap to bring fees in
line with market benchmarks. The new fee pool will be considered by securityholders at the AGM in November.
We hope you find this Remuneration Report transparent and informative. The Board and Nomination and Remuneration
Committee remain committed to ensuring management are rewarded for the right behaviours and outcomes and their
remuneration is aligned to market expectations and the long-term interests of securityholders.
Yours sincerely,
Ms Tanya Cox
Chair, Nomination and Remuneration Committee
44
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
REMUNERATION REPORT
Table of Contents
The remuneration report is presented for the financial year ending 30 June 2021. The report forms part of the Directors’
Report and has been prepared and audited in accordance with the requirements of the Corporations Act 2001 (Cth).
This report is where we explain how performance has been linked to reward outcomes that forge a clear alignment
between Cromwell staff and securityholders.
P.46
1. Remuneration
Overview
1.1. Key Management Personnel 46
1.2. Executive appointment
arrangements
46
P.52
3. Cromwell Performance
and Remuneration
Outcomes
3.1. Cromwell’s five-year
performance summary
1.3. Executive exit arrangements 46
3.2. STI Scorecard
P.47
2. Remuneration Strategy
and Governance
2.1. Cromwell’s Remuneration
Strategy
2.2. Remuneration Mix
47
48
2.3. Remuneration Time Horizon 48
2.4. How variable remuneration
is structured
49
2.5. Employment Contract Terms
and Conditions
51
2.6. Remuneration Governance 51
3.3. Executive KMP STI
Outcomes
3.4. Executive KMP LTI
Performance
3.5. Executive statutory
remuneration
52
54
55
55
57
P.58
4. Non-executive Director
Remuneration
4.1. Board remuneration
structure
4.2. Total remuneration for
Non-executive Directors
58
58
4.3. Non-executive Directors’
security holding requirement 58
4.4. Non-executive Directors’
remuneration table
59
P.60
5. Additional Disclosures
5.1. At risk cash awards and
performance rights vesting
and forfeiture in 2021
60
5.2. Equity based compensation
for the CEO and other KMP 60
5.3. Security holdings
5.4. Loans to Key Management
Personnel
62
62
45
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
1. Remuneration Overview
1.1 KEY MANAGEMENT PERSONNEL
In this report, Key Management Personnel (KMP) are those with the authority and responsibility for planning, directing and
controlling the activities of the Group, either directly or indirectly.
Name
Position / Title
Current Non-executive Directors
Term
Gary Weiss AM Non-executive Director
Elected 18 September 2020
Non-executive Chair
Elected 17 March 2021
Eng Peng Ooi
Non-executive Director (independent)
Appointed 8 March 2021
Non-executive Deputy Chair
Elected 17 March 2021
Robert Blain
Non-executive Director (independent)
Appointed 8 March 2021
Tanya Cox
Non-executive Director (independent)
Full year
Joseph Gersh AM Non-executive Director (independent)
Elected 18 September 2020
Lisa Scenna
Non-executive Director (independent)
Full year
Former Non-executive Directors
Current
securityholding
100,000
-
-
90,000
-
55,000
Leon Blitz
Non-executive Chair (independent)
Retired 18 November 2020
Andrew Fay
Non-executive Deputy Chair (independent) Retired 18 November 2020
John Humphrey Non-executive Director (independent)
Appointed 8 September 2020
Not applicable
Not applicable
Not applicable
Retired 18 November 2020
Jane Tongs
Non-executive Director
Retired 17 March 2021
Not applicable
Non-executive Chair
Elected 18 November 2020 and
retired 17 March 2021
Former Executive Director
Paul Weightman Chief Executive Officer
Retired 31 December 2020
Not applicable
Other Executive KMP
Michael Wilde
Acting Chief Executive Officer
Appointed 1 January 2021
824,944
Chief Financial Officer
1 July 2020 – 31 December 2020
Jodie Clark
Chief Operations Officer
Retired 31 March 2021
Robert Percy
Chief Investment Officer
Full year
Brett Hinton
Acting Chief Financial Officer
Appointed 1 January 2021
Not applicable
1,183,571
-
On 9 July 2021, Ms Jialei Tang was appointed as a Non-executive Director. Her current security holding is 123,346,692
stapled securities.
1.2 EXECUTIVE APPOINTMENT ARRANGEMENTS
On 1 January 2021, Michael Wilde was appointed Acting CEO and Brett Hinton was appointed Acting CFO. Prior to 1
January 2021, Michael Wilde was CFO and Brett Hinton was the Head of Treasury for Cromwell.
1.3 EXECUTIVE EXIT ARRANGEMENTS
Paul Weightman (CEO and Managing Director) retired on 31 December 2020. His exit arrangements were as follows:
• Payment in lieu of contractual notice period.
• Provision of benefits and payments in accordance with his employment agreement and law.
• 2,986,867 Performance Rights associated with performance in financial years 2018 and 2019 were accelerated and
vested, following securityholder approval on 12 February 2021.
• 2,945,786 Performance Rights associated with performance in financial years 2019 and 2020, remain on-foot and will
vest on 1 July 2022 and 1 July 2023 respectively.
Jodie Clark (COO) retired on 31 March 2021. Her exit arrangements were as follows:
• Payment in lieu of partial contractual notice period.
• Provision of benefits and payments in accordance with her employment agreement and law.
46
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 2. Remuneration Strategy and Governance
2.1 CROMWELL’S REMUNERATION STRATEGY
Our Purpose
We exist to look after people
Maintain efficient
values-led operations
Maintain a sustainable,
predictable and
resilient business
Our Strategic Objectives
Leverage our unique
global platform to
become a capital
partner of choice
Our Values
Maintain our stable,
secure cash flow-
generating portfolio
and our strong retail
platform
Generate value
from selective asset
enhancement initiatives
and investigate
opportunities for investors
in growing sectors
Encourage
behaviours consistent
with our values
Our Remuneration Principles
Attract proven
high performers
Motivate achievement of strategic
objectives
Create
securityholder
alignment
Retain proven high
performers
Fixed
STI
LTI
Fixed Remuneration
Short-Term Incentive
Long-Term Incentive
KMP Remuneration Structure
Benchmarked to market, Fixed
Remuneration is used as a tool to
attract executives with the skills and
experience required to execute the
strategy.
Base salary, superannuation and non-
financial benefits.
STI drives achievement of short-
term strategic objectives.
Designed to improve retention and create
securityholder alignment.
50% paid in cash
At the end of three years:
50% paid in securities and deferred
for one year.
100% vests in staple securities
50% is released immediately
50% is deferred in holding lock for a
further 12 months.
Reviewed annually against comparable organisations
Minimum Securityholding Requirement
The departing CEO was required to hold a minimum securityholding of 150% of Fixed Remuneration.*
Other executive KMP are required to hold a minimum of 50% of Fixed Remuneration (within 4 years of 1 July 2019).
Securities in STI and LTI holding lock are included in KMP total holdings.
* the incoming CEO will be required to hold a minimum of 100% of gross Fixed Remuneration in Cromwell stapled securities within 4 years.
47
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 2.2 REMUNERATION MIX
The following diagram illustrates the remuneration mix at maximum potential for Key Management Personnel.
Fixed Remuneration
Short term
Long term
Variable remuneration
Current KMP
Acting CEO
CFO
Acting CFO
CIO
Former KMP
CEO
COO
39%
50%
72%
40%
39%
50%
23%
25%
11%
40%
23%
25%
38%
25%
17%
20%
38%
25%
2.3 REMUNERATION TIME HORIZON
The following diagram provides an illustration of how 2021 financial year remuneration will be delivered.
YEAR 1
YEAR 2
YEAR 3
YEAR 4
Fixed remuneration
Base salary, superannuation
and other non-financial
benefits
STI – cash component
STI – deferred component
LTI – vested component
LTI – deferred component
2021
2022
2023
2024
48
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 2.4 HOW VARIABLE REMUNERATION IS STRUCTURED
Short-Term Incentive (STI)
Purpose
Value
To drive the achievement of short-term strategic objectives.
% of Fixed Remuneration
Target
Current KMP
Acting CEO
CFO
Acting CFO*
CIO*
Former KMP
CEO
COO
60%
50%
$100,000**
100%
60%
50%
Performance
Measures
All KMP STI’s are subject to the following gateways:
1. Achieving 95% of earnings guidance or Board approved budgeted earnings where no guidance is
provided; and
2. Scoring a minimum of Meeting Expectations against Cromwell’s values-based Behavioural
Competencies.
If either of the gateways are not met, no STI is payable.
Individual STI outcomes are determined on the basis of group performance against a mix of financial and
non-financial measures. More information can be found on the KMP STI Performance Measures in the STI
Scorecard.
Financial Measures
Non-financial Measures
Current KMP
Acting CEO
CFO
Acting CFO
CIO
Former KMP
CEO
COO
80%
50%
80%
80%
80%
50%
20%
50%
20%
20%
20%
50%
Reason for
performance
measures
Calculation of
awards
The Board considers that a mix of financial and non-financial measures are appropriate and that they
are aligned with Cromwell’s strategy and values. Performance measures are reviewed annually, and the
Board has discretion to review and amend the measures during the performance period where significant
unforeseen events have occurred which are outside the control of management, or where formulaic
application is likely to produce a material and perverse outcome.
Value of awards are calculated as follows:
Fixed Remuneration x Target STI opportunity % x Achievement Score against Performance Measures
Delivery of
awards
50% of the STI awarded is delivered in cash and 50% is delivered in securities and deferred for a further 12
months.*** All securities are purchased on market.
In the event the recipient ceases to be employed:
• before the award date, the recipient is ineligible to receive an award
• after the STI is awarded, securities in holding lock remain in holding lock until the release date provided
the employee is deemed to be a good leaver
Malus and Clawback clauses allow deferred securities to be clawed back where a recipient has acted
fraudulently, dishonestly or where there has been a material misstatement or omission in Cromwell’s
financial statements leading to receipt of an unfair benefit. This may also occur where an executive KMP
fails to meet cultural related expectations including acting ethically and responsibly.
In the event of a change of control, any STI award deferred in securities will be released.
Clawback
Change of
Control
* The CIO and Acting CFO are eligible for a Diminishing Deferred Payment of up to 70% and 80%, respectively, of their Base salary, less any incentive
payments received between October 2020 and December 2021, if they remain employed as at 31 December 2021. This payment will be delivered in cash.
**The Acting CFO remained on his previous Executive STI Scheme for the duration of FY21.
*** The Former CEO’s STI was delivered in cash.
49
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT KMP Long Term Incentive (LTI)
Purpose
Value
To create securityholder alignment and encourage retention.
% of Fixed Remuneration
Target
Allocation method
Current KMP
Acting CEO
CFO
Acting CFO
CIO
Former KMP
CEO
COO
100%
50%
25%*
50%
100%
50%
Face value
Face value
Fair value*
Face value
Face value
Face value
Performance
Measures
For each measure, 25% vests at the lower bound with straight line vesting to 100% at the maximum
threshold.
33.33%
Total Return
Total Return = (Distributions + Change in NTA)/Opening NTA.
Performance is tested annually, and the addition of each year’s outcome
is awarded at the end of 3 years. The TR hurdle range is 8.5%-11.5%.
Equity Issues that significantly impact NTA will be considered, as well
as significant write downs in intangible assets.
33.33%
Return on Contributed Equity (ROCE)
ROCE = Operating Profit/Weighted Average Contributed Equity.
Performance is tested annually, and the addition of each year’s outcome
is awarded at the end of 3 years. The ROCE hurdle range is 8.5%-11.5%.
33.33%
Relative TSR
Measured against the S&P/ASX300 A-REIT Accumulation Index on a
percentile basis with 50th percentile lower bound and 75th percentile
upper bound. Measured once over the measurement period.
Below Median - 0% vesting
Reason for
performance
measures
Total Return aligns the underlying absolute returns that securityholder’s experience.
ROCE best reflects the sustainable returns achieved on securityholders’ contributed equity and is accepted
as a good measure of the performance of management. Over the medium to long term an improving ROCE
has been shown to correlate with upward stapled security price movements and hence returns experienced
by securityholders.
Calculation of
awards
The number of performance rights granted is calculated under the Face Value Methodology, based
on the VWAP of Cromwell’s security price for the 10 days immediately succeeding the annual results
announcement.
Delivery of
awards
At the end of the 3 year performance period, 100% of the award vests, with 50% released and 50% deferred
in holding lock for a further 12 months. All securities are purchased on market.
In the event the recipient ceases to be employed:
• before the vesting date, all rights to securities are forfeit
• after the vesting date, securities in holding lock remain in holding lock until the release date provided the
employee is deemed to be a good leaver
Clawback
Malus and Clawback clauses allow unvested and deferred securities to be clawed back where a recipient has
acted fraudulently, dishonestly or where there has been a material misstatement or omission in Cromwell’s
financial statements leading to receipt of an unfair benefit. This may also occur where an executive KMP
fails to meet cultural related expectations including acting ethically and responsibly.
Change of
Control
In the case of a change of control, performance rights will be tested and will pro rata vest in line with
achievement against performance measures.
* The Acting CFO has remained on his previous Executive LTI Scheme for the duration of FY21. The Executive LTI Scheme entitles the incumbent to
Performance Rights, vesting over three years, up to the value of 25% of his Base Salary, allocated using fair value at grant date. Performance measures are
continued employment and a minimum score of Solid Performance against KPIs each year.
50
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 2.5 EMPLOYMENT CONTRACT TERMS & CONDITIONS
All executive KMP are employed on Employment Contracts that detail the components of remuneration paid and frequency
of review but do not describe how remuneration levels are modified from year to year. The contracts do not provide for a
fixed term however they can be terminated on specified notice (with the exception of gross misconduct when they can be
terminated without notice).
Termination by Company
Termination by Executive KMP
Acting CEO and other
Executive KMP
Notice Period
6 months, with the option of payment in lieu
(lump sum)
3 months – Acting CFO
Termination by Redundancy
During the period, employees and executive
KMP terminated by way of redundancy were
entitled to an Enhanced Severance Package,
calculated as 4 weeks base pay plus 3 weeks
base pay for each completed year of service,
capped at six months base pay*.
Impact on incentives
If an executive KMP is determined to be a good
leaver deferred securities remain on foot. If an
executive KMP is determined to be a bad leaver
all deferred securities are forfeit.
Notice Period
6 months
3 months – Acting CFO
Impact on incentives
If an executive KMP is determined to be a good
leaver unvested performance rights and deferred
securities remain on foot. If an executive KMP
is determined to be a bad leaver, unvested and
deferred securities are forfeit.
* The Enhanced Severance amount is higher than the statutory severance and is paid in lieu of this.
2.6 REMUNERATION GOVERNANCE
The Board has appointed a Nomination and Remuneration Committee (Committee) responsible for reviewing, monitoring
and making recommendations in relation to the appointment, performance and remuneration of the KMP.
Board
The Board is responsible for setting the executive remuneration strategy,
monitoring KMP performance and approving the executive Key Performance
Indicators
Nomination and Remuneration Committee
The Committee is the main governing body for KMP appointment and remuneration.
The Committee is responsible for implementation of the Remuneration Principles.
Full charter available at:
https://www.cromwellpropertygroup.com/__data/assets/pdf_file/0028/16579/CG_
Nomination-and-Remuneration-Committee-Charter_approved-June-2020.pdf
Management
Provides recommendations on reward strategy design and implementation to the
Committee.
From time to time Management may seek remuneration advice.
External advisors
Provide expert independent
information on
remuneration for KMP.
Remuneration consultants are appointed from time to time to provide independent information and advice.
51
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 3. Cromwell Performance and Remuneration Outcomes
3.1 CROMWELL’S FIVE-YEAR PERFORMANCE SUMMARY
The remuneration outcomes of executive KMP vary with short-term and long-term performance outcomes. The graphs
and tables below show executive KMP remuneration outcomes and Cromwell’s core financial performance measures over
the past five years.
Cromwell's Five-year Performance Summary
Short-Term Measures
Long-Term Measures
AUM
$Bn
EPS
Cents
8.7
8.5
8.4
8.2
11.9
11.9
11.5
11.6
Total Return
%
18.7
18.5
ROCE
%
10.9
10.4
7.4
10.1
8.4
8.3
4.9
10.0
9.8
9.2
'17
'18
'19
'20
'21
'17
'18
'19
'20
'21
'17
'18
'19
'20
'21
'17
'18
'19
'20
'21
STI and LTI Outcomes
STI (average % of target)
LTI (% of maximum)
2017
88%
N/A
2018
94%
84%
2019
91%
82%
2020
71%
38%
2021
0%
21%
LTI excludes backward looking LTI scheme and the TSR which will not be tested until the 3 years ending 30 June 2022.
Total return of Cromwell securities
The chart below illustrates Cromwell’s performance against the S&P/ASX300 A-REIT Accumulation Index since 2009.
Cromwell Performance vs S&P / ASX 300 A-REIT Accumulation Index to 30 June 2021
600
500
400
300
200
100
0
52
Cromwell Property Group
S&P/ASX 300 A-REIT Accumulation Index
9
0
-
n
u
J
-
0
3
9
0
-
c
e
D
-
1
3
0
1
-
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J
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0
3
0
1
-
c
e
D
-
1
3
1
1
-
n
u
J
-
0
3
1
1
-
c
e
D
-
1
3
2
1
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n
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J
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3
2
1
-
c
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D
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1
3
3
1
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J
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3
3
1
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1
3
4
1
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3
4
1
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1
3
5
1
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3
5
1
-
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D
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1
3
6
1
-
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J
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3
6
1
-
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D
-
1
3
7
1
-
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J
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3
7
1
-
c
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D
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1
3
8
1
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3
8
1
-
c
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D
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1
3
9
1
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J
-
0
3
9
1
-
c
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D
-
1
3
0
2
-
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-
0
3
0
2
-
c
e
D
-
1
3
1
2
-
n
u
J
-
0
3
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Total Securityholder Returns (Annualised)
Cromwell’s Total Securityholder Return (TSR) over the last 1, 3, 5, 10 and 15 years relative to benchmark indices is shown
below.
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
-25.0%
-30.0%
-35.0%
CMW Total Return
S&P / ASX 300 A-REIT Accumulation Index
CMW Excess Performance
CMW Annualised Performance Returns to 30 June 2021
33.9%
5.3%
8.2%
5.1%
6.2%
11.1%
12.0%
8.5%
4.0% 4.6%
-0.6%
-1.2%
-0.9%
(8.9%)
(28.6%)
1 year
5.3%
33.9%
(28.6%)
3 year
(0.6%)
8.2%
(8.9%)
5 year
5.1%
6.2%
(1.2%)
10 year
15 year
11.1%
12.0%
(0.9%)
8.5%
4.0%
4.6%
As at 30 June 2020, the prior year balance date, Cromwell had outperformed the Property Index across all periods.
The impact of a very subdued stapled security price, largely due to the ongoing uncertainty of COVID-19 on Cromwell’s
European operations and the ongoing level of corporate activity, has significantly impacted the annualised performance of
Cromwell in 2021. This has had a flow on impact to all other return periods.
Over the course of any short-term period, the total securityholder return of Cromwell will vary against the index. Over the
medium term, the overall performance of Cromwell should be demonstrated in sustained operating earnings and growth
in total securityholder returns. The LTI hurdles implemented for all KMP will reward the achievement of medium-term
returns.
53
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 3.2 STI SCORECARD
Objective
Key Results
Commentary
Rating
KMP
Responsible
FINANCIAL GATEWAY
Achieve a minimum
of 95% of Operating
Earnings guidance
The board approved target operating
earnings for FY21 was set at 8.00cps and
the associated earnings gateway at 7.60cps.
This hurdle was not achieved, and the Board
chose not to exercise discretion to waive the
gateway.
Not achieved
All
FINANCIAL PERFORMANCE
Financial
Operating Earnings per
Security
Target range of 7.60 – 8.40cps was not
achieved.
Not achieved
All
NOI like for like growth
on core assets
Like for like growth in the core portfolio was
2% which exceeded the target of 1% growth.
Achieved
Acting CFO/CFO
Capital &
Product
Development
CMW Group corporate
costs at or below budget
Corporate costs were maintained below
$40m and reduced on FY20 levels.
Achieved
Acting CFO/CFO
Growth in External AUM
Target of between $1bn - $1.4bn was not
achieved.
Not achieved
All
Successful completion of
fund initiatives
Restructure of LDK
funding
EU Property
Management
Internalisation
The relaunch of CPRF and the launch of
a new logistics fund using the Italian DHL
portfolio as a seed portfolio were delayed as
a result of COVID-19.
Given the success of the LDK model and
the level of sales at Greenway Views, the
funding for LDK was restructured to provide
a more predictable return to Cromwell.
To improve the quality and control of
property management functions in Europe
as well as to reduce costs, Cromwell has
commenced on a process of internalisation.
Not achieved
All
Achieved
Acting CEO, CIO
Commenced
Acting CFO/CFO
Property
& Funds
Management
Australian Funds
Management Income
Successful completion
of KPIs on risk
management/asset
enhancement Initiatives
NON-FINANCIAL PERFORMANCE
Operational
Maintain High Level
Systems & Processes
EU Management Team
succession
Foster a Diverse &
Inclusive Culture across
the Group
Income exceeded target of $9m.
Outperformed
Acting CEO, CIO
All projects have moved forward as per
agreed targets and budgets.
Achieved
All
Continued investment in systems and
processes ensured minimal disruption to
operations across the Group.
Achieved
Acting CFO/CFO
Successful on-boarding of new MD, Europe.
Achieved
Acting CEO
D&I action plan, talent mapping and agile
working all implemented in FY21.
Achieved
All
Improved focus on risk
management culture
Compliance with all ISO and WH&S
requirements.
Achieved
Acting CFO/CFO
Sustainability
Improved group controls
environment
Foster a Culture of
Sustainability across
Group Business
Operations
GS007/ISAE3407 underway.
Achieved
Acting CFO/CFO
All sustainability index targets met.
Achieved
All
54
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 3.3 EXECUTIVE KMP STI OUTCOMES
Notwithstanding that the majority of KPIs were achieved, Cromwell’s financial gateway was not met. Consequently, no
KMP received an STI award in FY2021.
Behavioural
Gateway
Target STI
(as % of FR)
Met
Met
Met
Met
N/A
N/A
60%
50%
100%
11%
60%
50%
STI Awarded
STI Forfeit
$
$0
$0
$0
$0
$0
$0
$
$330,000
$212,500
$700,000
$100,000
$900,000
$425,000
Current KMP
Acting CEO*
CFO**
Michael Wilde
CIO
Rob Percy
Acting CFO
Brett Hinton
Former KMP
CEO
Paul Weightman
COO
Jodie Clark
* for 6 months to 30 June 2021.
** for 6 months to 31 December 2020.
3.4 EXECUTIVE KMP LTI PERFORMANCE
There are currently two LTI plans in operation for executive KMP, being a historic “backward looking” plan and the current
“forward looking” LTI plan.
The new “forward looking” LTI Plan was introduced on 1 July 2019. The following Performance Rights have been granted
under this Plan:
M Wilde
Total
R Percy
Total
P Weightman
Total
J Clark
Total
No of performance
rights granted
479,426
355,214
834,640
394,821
292,529
687,350
1,692,091
1,253,695
2,945,786
479,426
355,214
834,640
Allocation
date
1 July 2020
1 July 2019
1 July 2020
1 July 2019
1 July 2020
1 July 2019
1 July 2020
1 July 2019
Financial years
tested
2021 - 2023
2020 - 2022
2021 - 2023
2020 - 2022
2021 - 2023
2020 – 2022
2021 - 2023
2020 - 2022
Expiry
date
30 Sep 2023
30 Sep 2022
30 Sep 2023
30 Sep 2022
30 Sep 2023
30 Sep 2022
Forfeited
Forfeited
Performance Rights granted under the above Plan will be tested, at the vesting date, against the following performance
hurdles and the resulting number of Performance Rights will vest. Upon vesting, an equivalent number of Stapled
Securities will be issued to the holder, 50% of which will remain in holding lock for a further 12 months.
55
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Plan
Performance period start date
Performance period end date
Vesting conditions
2021 KMP
LTI Plan
1 July 2020
2020 KMP
LTI Plan
1 July 2019
30 June 2023
30 June 2022
• 33.3% Total Return (8.5% - 11.5%)
• 33.3% ROCE (8.5% - 11.5%)
• 33.3% Relative TSR (50th – 75th percentile)
• 33.3% Total Return (8.5% - 11.5%)
• 33.3% ROCE (8.5% - 11.5%)
• 33.3% Relative TSR (50th – 75th percentile)
The targets set for the 2021 and 2020 plans and performance against each target to date are as follows:
Total Return
Target range
Achieved
Vesting Percentage
Return on Contributed Equity
Target range
Achieved
Vesting Percentage
2021
2020
8.5%-11.5%
8.5%-11.5%
8.3%
0.0%
4.9%
0.0%
8.5%-11.5%
8.5%-11.5%
9.2%
41.9%
9.8%
56.4%
The “backward looking” LTI Plan was discontinued for executive KMP on 30 June 2019. The following Performance Rights
have been granted under this Plan:
M Wilde
Total
R Percy
Total
B Hinton
Total
J Clark
Total
No of performance rights granted
Allocation date
172,518
186,012
358,530
250,566
278,351
528,917
102,133
167,508
225,299
494,940
171,600
200,569
372,169
30 June 2019
30 June 2018
30 June 2019
30 June 2018
30 June 2020
30 June 2019
30 June 2018
30 June 2019
30 June 2018
Expiry date
1 Oct 2022
6 Nov 2021
1 Oct 2022
6 Nov 2021
1 Sep 2023
1 Oct 2022
6 Nov 2021
Forfeited
Forfeited
Performance Rights granted under the above Plan were tested on the allocation date, against specific performance
hurdles and the resulting number of Performance Rights were granted. The Performance Rights generally vest three
years after grant date provided the below ongoing conditions are met during the vesting period:
• continuing employment, and
• achievement of a minimum score of 70% against individual KPIs, assessed annually during the three-year period
56
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 3.5 EXECUTIVE STATUTORY REMUNERATION
The table below outlines the cash remuneration and at-risk cash awards received as well as the value of equity-based
compensation expensed during the year in accordance with applicable statutory accounting rules.
Short-term
Post-employment
Salary (1)
and
fees
Non-
monetary
benefits
At-risk
cash
bonus
Diminishing
deferred
payment
Super-
annuation
Termination
benefits
Long-
term
Security based
payments
Long
service
leave
Deferred
STI
award
LTI
scheme
Total
$
$
Executive KMP
P Weightman (2) 2021
879,597
7,800
$
-
2020 1,609,610
28,519
561,000
M Wilde (3)
2021 1,027,147
12,180
-
2020
824,599
26,143
187,708
J Clark (4)
2021
738,872
11,700
-
2020
850,235
22,119
187,708
$
-
-
-
-
-
-
R Percy (5)
2021
687,062
15,401
-
231,371
2020
676,385
25,046
215,250
B Hinton (6)
2021
330,427
-
Total
2021 3,663,105
47,081
-
-
-
91,869
$
$
$
$
$
$
21,694
1,526,657
12,431
-
419,940 2,868,119
21,003
21,694
21,003
16,271
21,003
21,694
21,003
10,847
-
-
-
25,005
81,398
- 1,012,717
3,257,854
-
257,561 1,399,980
21,365
187,708
230,410
1,498,936
827,315
10,561
-
- 1,604,719
-
-
-
-
19,981
187,708
240,128
1,528,882
11,062
-
195,248 1,161,838
12,752
215,250
160,341
1,326,027
20,871
-
-
43,725
497,739
916,474 7,532,395
323,240
92,200
2,353,972 136,323
remuneration 2020 3,960,829 101,827 1,151,666
-
84,012
-
79,103
590,666 1,643,596
7,611,699
(1) Includes any change in accruals for annual leave.
(2) Mr Weightman retired on 31 December 2020.
(3) Mr Wilde was CFO up until 31 December 2020 and Acting CEO from 1 January 2021.
(4) Ms Clark ceased employment on 31 March 2021.
(5) Mr Hinton became a KMP on 1 January 2021.
57
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 4. Non-executive Director Remuneration
4.1 BOARD REMUNERATION STRUCTURE
The Board determines remuneration of Non-executive Directors within the maximum amount approved by security
holders from time to time. This maximum currently stands at $1,000,000 per annum in total for fees to be divided among
the Non-executive Directors in such a proportion and manner as they agree.
4.2 TOTAL REMUNERATION FOR NON-EXECUTIVE DIRECTORS
Non-executive Directors are paid a Fixed Remuneration, comprising base and committee fees or salary and
superannuation (as applicable). Non-executive Directors do not receive bonus payments or participate in stapled security-
based compensation plans and are not provided with retirement benefits other than statutory superannuation.
Chair
Non-executive Director
Audit and Risk Committee – Chair
Audit and Risk Committee – Member
Investment Committee – Chair
Investment Committee – Member
Nomination and Remuneration Committee – Chair
Nomination and Remuneration Committee – Member
* from 24 February 2021
Fee review
2021
$
223,052
102,484
20,868
13,911
10,000*
5,000*
10,000*
5,796
2020
$
223,052
102,484
20,868
13,911
-
-
8,695
5,796
As the Directors’ fee cap was last approved by securityholders in 2011 and Directors’ fees have not been reviewed since
2017, the Nomination and Remuneration Committee commissioned a review of Board and Committee fees. The resulting
report identified that:
• the base board fee plus committee fees paid to the board chair were below the peer group median
• the base board fee paid to NEDs is below the peer group median
• the audit and risk committee chair and member fees are below the peer group median
• the nomination and remuneration committee chair and member fees are below the peer group median
• with the appointment of a seventh director, policy fee headroom is 2%
The report assessed, and the Nomination and Remuneration Committee supported, an increase in Board and Committee
fees and an increase in the fee pool, conditional upon receiving securityholder support for the fee pool increase at the
company’s AGM to be held in November 2021.
4.3 NON-EXECUTIVE DIRECTORS’ SECURITY HOLDING REQUIREMENT
Non-executive Directors are required to have a minimum holding of Cromwell Property Group stapled securities
equivalent to the Non-executive Director annual fee within three years of their start date. Non-executive Directors are
bound by Cromwell’s Securities Trading Policy, which is available on Cromwell’s website. No additional remuneration is
provided to Non-executive Directors to purchase these stapled securities.
58
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 4.4 NON-EXECUTIVE DIRECTORS’ REMUNERATION TABLE
The table below outlines the cash remuneration and benefits received by each Non-executive Director during the year in
accordance with applicable statutory accounting rules.
Non-executive directors:
G Weiss (1)
E P Ooi (2)
R Blain (3)
T Cox (4)
J Gersh (5)
L Scenna (6)
L Blitz (7)
A Fay (8)
J Humphrey (9)
J Tongs (10)
G Levy (11)
M McKellar (12)
D Blight (13)
Total remuneration
2021
2021
2021
2021
2020
2021
2021
2020
2021
2020
2021
2020
2021
2021
2020
2020
2020
2020
2021
2020
Director fees
$
110,647
30,450
29,106
114,617
75,739
76,983
125,390
74,816
94,368
155,482
47,211
113,577
20,538
114,471
116,652
139,406
53,546
7,107
763,781
736,325
Non-monetary
benefits
Post-employment
benefits
(superannuation)
$
-
-
-
-
-
-
-
-
-
14,263
-
6,977
-
-
7,903
12,120
14,208
-
-
55,471
$
10,511
2,893
2,765
10,889
7,195
7,313
-
-
-
-
4,485
10,790
1,951
10,875
11,082
13,244
-
675
51,682
42,986
Total
$
121,158
33,343
31,871
125,506
82,934
84,296
125,390
74,816
94,368
169,745
51,696
131,344
22,489
125,346
135,637
164,770
67,754
7,782
815,463
834,782
(1)
Dr Weiss was elected on 18 September 2020 and elected as Chair 17 March 2021.
(2) Mr Ooi was appointed on 8 March 2021 and elected as Deputy Chair 17 March 2021.
(3) Mr Blain was appointed on 8 March 2021.
(4) Ms Cox was appointed on 21 October 2019.
(5) Mr Gersh was elected on 18 September 2020.
(6) Ms Scenna was appointed on 21 October 2019.
(7) Mr Blitz retired on 18 November 2020.
(8) Mr Fay retired 18 November 2020.
(9) Mr Humphrey was appointed on 8 September 2020 and retired on 18 November 2020.
(10) Ms Tongs retired on 17 March 2021.
(11) Mr Levy retired on 26 February 2020.
(12) Ms McKellar retired on 28 November 2019.
(13) Mr Blight retired on 19 July 2019.
59
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 5. Additional Disclosures
5.1 AT RISK CASH AWARDS AND PERFORMANCE RIGHTS VESTING AND FORFEITURE IN 2021
For each at risk cash award and grant of performance rights options (equity-based compensation) included in the tables
above, the percentage of the available at-risk cash bonus paid, or equity-based compensation that vested, during the year
and the percentage that was forfeited because the person did not meet the service and performance criteria is set out
below.
The performance rights are subject to vesting conditions as outlined above. No performance rights will vest if the
conditions are not satisfied, hence the minimum value of performance rights yet to vest is $nil. The maximum value of the
performance rights yet to vest has been determined as the amount of the grant date fair value of the performance rights
that is yet to be expensed at balance date. References to options in the table below relate to performance rights.
At-risk cash bonus
Equity-based compensation
Cash bonus
paid
Cash bonus
forfeited
Years
options
granted
Options
vested in
2021
Options
forfeited in
2021
Years
options may
vest
Maximum
value of
grant to vest
%
0%
0%
0%
0%
0%
%
100%
100%
100%
100%
100%
2019
2019/20/21
2019/20/21
2019/20/21
2019/20/21
%
86.5%(1)
100.0%(2)
100.0%(2)
100.0%(2)
-
%
13.5% (1)
-
$
-
-
-
-
-
2022/23/24
329,146
-
2022/23/24
2022/23/24
-
264,667
112,719
P Weightman
M Wilde
J Clark (3)
R Percy
B Hinton
(1) Related to performance rights issued in 2019. At the EGM held on 12 February 2021, security holders voted to accelerate the vesting of certain
performance rights held by Mr Weightman. These performance rights would have otherwise vested in June 2021 and November 2021 which was after
the retirement date of Mr Weightman. Security holders voted that these performance rights would vest at 86.5% with 13.5% being forfeited. Other
performance rights totalling 2,945,786 in number and vesting in July 2023 and September 2023 were also agreed to not lapse despite Mr Weightman’s
retirement.
(2) Related to performance rights issued in 2018.
(3) Ms Clark ceased employment on 31 March 2021 and forfeited all remaining unvested performance rights.
5.2 EQUITY BASED COMPENSATION FOR THE CEO AND OTHER KMP
Details of the PRP are set out in sections 2.4 and 3.4 of the remuneration report.
All Executive Directors and employees of Cromwell are considered for participation in the PRP subject to a minimum
period of service and level of remuneration, which may be waived by the Committee. Grants to Executive Directors are
subject to securityholder approval.
Consideration for granting performance rights, grant periods, vesting and exercise dates, exercise periods and exercise
prices are determined by the Board or Committee in each case. Performance rights carry no voting rights. When
exercised, each performance right is convertible into one stapled security.
60
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT The terms and conditions of each grant of performance rights under the PRP affecting remuneration for Key Management
Personnel in the current or future reporting periods are included in the table below:
Grant date
Expiry date
16-Feb-2018
01-Nov-2020
16-Feb-2018
01-Nov-2020
07-Nov-2018
06-Nov-2021
07-Nov-2018
06-Nov-2021
21-Dec-2018
06-Nov-2021
21-Dec-2018
30-Sep-2020
21-Dec-2018
30-Sep-2021
04-Oct-2019
01-Oct-2022
04-Oct-2019
01-Oct-2022
27-Mar-2020
01-Sep-2022
27-Mar-2020
01-Sep-2022
23-Dec-2020
01-Jul-2023
23-Dec-2020
01-Jul-2023
23-Dec-2020
01-Sep-2023
Exercise price
No of performance
rights granted
Assessed value per right
at grant date
-
$0.50
-
$0.50
$0.50
-
-
-
$0.50
-
-
-
-
-
454,164
2,136,616
386,581
503,650
1,846,581
899,297
1,606,038
344,118
418,074
668,638
334,319
1,710,892
845,446
102,133
75.9¢
28.8¢
80.8¢
34.0¢
35.4¢
72.2¢
87.6¢
106.3¢
57.5¢
63.0¢
30.2¢
69.5¢
34.5¢
76.9¢
Details of changes during the 2021 financial year in performance rights on issue to Key Management Personnel under the
PRP are set out below.
Opening
balance
Granted
Exercised
P Weightman
5,922,893
2,945,786 (1)
(5,457,141) (5)
M Wilde
J Clark
R Percy
B Hinton
932,596
962,695
1,125,862
392,807
479,426 (2)
479,426 (2)
394,821 (3)
102,133 (4)
(218,852) (6)
(235,312) (7)
(1,206,809)
(304,416) (8)
-
-
-
9,336,853
4,401,592
(6,215,721)
(1,672,561)
Forfeited
(465,752)
-
Lapsed
-
-
-
-
-
-
Closing
balance
2,945,786
1,193,170
-
1,216,267
494,940
5,850,163
(1) The fair value at grant date was $1,631,349.
(2) The fair value at grant date was $277,268.
(3) The fair value at grant date was $228,338.
(4) The fair value at grant date was $78,540.
(5) The fair value at grant date was $2,640,943. The face value at exercise date was $3,013,507. Exercise price was fully paid.
(6) The fair value at grant date was $166,109. The face value at exercise date was $194,526. Exercise price was fully paid.
(7) The fair value at grant date was $178,602. The face value at exercise date was $209,157. Exercise price was fully paid.
(8) The fair value at grant date was $87,672. The face value at exercise date was $118,372. Exercise price was fully paid.
The assessed fair value at grant date of performance rights granted is allocated equally over the period from grant date to
vesting date, and the amount is included in the remuneration tables in section 3.5 of the remuneration report.
A total of 5,969,553 performance rights were granted during 2021 (2020: 3,366,613) of which 4,401,592 (2020: 1,597,640)
were issued to Key Management Personnel. No approval for the issue of these performance rights was obtained under
ASX Listing Rule 10.14. The model inputs for performance rights granted during the 2021 year are disclosed in note 23.
Plan rules contain a restriction on removing the “at risk” aspect of the instruments granted to executives. Plan
participants may not enter into any transaction designed to remove the “at risk” aspect of an instrument before it vests
without explicit approval from the Board.
61
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 5.3 SECURITY HOLDINGS
The number of Cromwell stapled securities held during the 2021 financial year by key management personnel of
Cromwell, including their personally related parties are as follows:
Balance
at 1 July
Performance
rights exercised
Received as
deferred STI
Net purchases
(sales)
Balance
at 30 June
Non-executive directors:
G Weiss
E P Ooi
R Blain
T Cox
J Gersh
L Scenna
Executive KMP:
M Wilde
R Percy
B Hinton
-
-
-
90,000
-
55,000
391,190
982,721
-
1,518,911
-
-
-
-
-
-
218,852
304,416
-
523,268
-
-
-
-
-
-
214,902
246,434
-
461,336
100,000
100,000
-
-
-
-
-
-
(350,000)
-
-
-
90,000
-
55,000
824,944
1,183,571
-
(250,000)
2,253,515
5.4 LOANS TO KEY MANAGEMENT PERSONNEL
Cromwell had provided loans to Mr Weightman, a Director of the Company, for the exercise of his employee options under
Cromwell’s Performance Rights Plan. Each loan term was for three years, limited recourse and interest free. Following
Mr Weightman’s retirement on 31 December 2020 all loans have been repaid and the outstanding balance at balance date
was $nil (2020: $2,736,980).
End of Remuneration Report
62
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Significant changes in the state of affairs
Changes in the state of affairs of Cromwell during the financial year are set out within the financial report. There were no
significant changes in the state of affairs of Cromwell during the financial year other than as disclosed in this report and
the accompanying financial report.
Subsequent events
Other than as disclosed in note 27, no matter or circumstance has arisen since 30 June 2021 that has significantly affected
or may significantly affect:
• Cromwell’s operations in future financial years; or
• the results of those operations in future financial years; or
• Cromwell’s state of affairs in future financial years.
Environmental regulation
The Directors are not aware of any particular and significant environmental regulation under a law of the Commonwealth,
State or Territory relevant to Cromwell.
Trust Disclosures
ISSUED UNITS
Units issued in the Trust during the year are set out in note 15 in the accompanying financial report. There were
2,617,470,675 (2020: 2,612,871,600) issued units in the Trust at balance date.
VALUE OF SCHEME ASSETS
The total carrying value of the Trust’s assets as at year end was $4,861.6 million (2020: $4,834.0 million). Net assets
attributable to unitholders of the Trust were $2,564.1 million (2020: $2,494.7 million) equating to $0.98 per unit (2020:
$0.96 per unit).
The Trust’s assets are valued in accordance with policies stated in notes to the financial statements.
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (AIFMD) REMUNERATION DISCLOSURE
The senior management and staff of Cromwell whose actions have a material impact on the risk profile of the Trust are
considered to be the key management personnel identified in the Remuneration Report which is included in this Directors’
Report.
The amount of the aggregate remuneration paid by Cromwell to those key management personnel in respect of the
financial year ending 30 June 2021 was $8,347,858 (2020: $8,446,481). This amount is comprised of fixed remuneration of
$7,431,384 and variable remuneration of $916,474 (2020: $5,060,553 and $3,385,928 respectively).
This remuneration disclosure is being made to satisfy Cromwell Property Securities Limited’s obligations under AIFMD.
References to “remuneration”, “staff” and “senior management” should be construed accordingly.
Indemnifying officers or auditor
Subject to the following, no indemnity or insurance premium was paid during the financial year for a person who is or has
been an officer of Cromwell. The constitution of the Company provides that to the extent permitted by law, a person who is
or has been an officer of the Company is indemnified against certain liabilities and costs incurred by them in their capacity
as an officer of the Company.
Further, the Company has entered into a Deed of access, insurance and indemnity with each of the Directors and the
Company Secretary. Under the deed, the Company agrees to, amongst other things:
• indemnify the officer to the extent permitted by law against certain liabilities and legal costs incurred by the officer as
an officer of the Company and its subsidiaries;
• maintain and pay the premium on an insurance policy in respect of the officer; and
• provide the officer with access to board papers and other documents provided or available to the officer as an officer of
the Company and its subsidiaries.
63
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Cromwell has paid premiums for directors’ and officers’ liability insurance with respect to the Directors, Company
Secretary and senior management as permitted under the Corporations Act 2001 (Cth). The terms of the policy prohibit
disclosure of the nature of the liabilities covered and the premiums payable under the policy. No indemnities have been
given or insurance premiums paid, during or since the end of the financial year, for any person who is or has been an
auditor of the Company or any of its controlled entities.
Rounding of amounts
Cromwell is an entity of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 and in accordance with that instrument amounts in the Directors’ report have been rounded off to the nearest
one hundred thousand dollars, or in certain cases to the nearest dollar, unless otherwise indicated.
Auditor
Deloitte Touche Tohmatsu continues in office in accordance with section 327B of the Corporations Act 2001 (Cth).
The Company may decide to employ Deloitte Touche Tohmatsu on assignments additional to their statutory duties where
the auditor’s expertise and experience with the Company and/or Cromwell are important.
The Directors have considered the position and, in accordance with advice received from the Audit & Risk Committee, are
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 (Cth). 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 (Cth)
as none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants and all non-audit services have been reviewed by the Audit and Risk Committee to
ensure they do not impact the impartiality and objectivity of the auditor.
Details of the amounts paid or payable to the auditor and its related parties for non-audit services provided to Cromwell
are set out below:
Non-audit services
Due diligence services
Tax compliance services – Australia
Tax compliance and other services – overseas
Total remuneration for non-audit services
2021
$
-
18,690
9,118
27,808
2020
$
111,801
34,436
44,261
190,478
During the year, Deloitte, as auditor, received remuneration for audit and other services relating to other entities for
which Cromwell EREIT Management Pte. Ltd and Cromwell Investment Services Limited, both controlled entities, act as
responsible entity. The remuneration was disclosed in the relevant entity’s financial reports and totalled $1,476,200 (2020:
$1,272,200).
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 (Cth)
accompanies this report.
The Directors’ Report, including the Remuneration Report, is signed in accordance with a resolution of the Directors,
pursuant to 298(2) of the Corporations Act 2001 (Cth).
Dr Gary Weiss AM
Chair
25 August 2021
64
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Deloitte Touche Tohmatsu
ABN 74 490 121 060
Riverside Centre
123 Eagle Street
Brisbane QLD 4000
GPO Box 1463
Brisbane QLD 4001 Australia
DX: 10307SSE
Tel: +61 (0) 7 3308 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
25 August 2021
Board of Directors
Cromwell Corporation Limited and
Cromwell Property Securities Limited
(as responsible entity for Cromwell Diversified Property Trust)
Level 19, 200 Mary Street
Brisbane QLD 4000
Dear Directors
Auditor’s Independence Declaration
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of
independence to the Board of Directors of Cromwell Corporation Limited and Cromwell Property Securities Limited as
responsible entity for Cromwell Diversified Property Trust.
As lead audit partner for the audit of the financial report of Cromwell Property Group (the stapled entity which
comprises Cromwell Corporation Limited, Cromwell Diversified Property Trust and the entities they controlled at the
end of the year or from time to time during the year) and Cromwell Diversified Property Trust for the year ended 30
June 2021, I declare that to the best of my knowledge and belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(i)
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
David Rodgers
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation
Cromwell Property Group | Annual Financial Report | Page 44 of 112
65
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT FINANCIAL STATEMENTS
Table of Contents
P.67
Consolidated Statements
of Comprehensive
Income
P.68
Consolidated Balance
Sheets
P.69
Consolidated Statements
of Changes in Equity
P.71
Consolidated Statements
of Cash Flows
P.72
Notes to the Financial
Statements
P.73 About this report
P.77 Results
P.90 Operating assets
P.100 Finance and capital structure
P.116 Group structure
P.122 Other items
66
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Consolidated Statements of Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2021
Revenue
Other income
Fair value net gains from:
Investment properties
Derivative financial instruments
Share of profit of equity accounted investments
Net foreign currency gains
Gain on sale of investment properties
Total revenue and other income
Expenses
Property expenses and outgoings
Fund management costs
Cost of development sold
Employee benefits expense
Administrative and other expenses
Finance costs
Fair value net loss from:
Notes
5(a)
8(f)
9(f)
6(a)
6(b)
6(c)
Investments at fair value through profit or loss
Other transaction costs
Total expenses
Profit before income tax
Income tax expense / (benefit)
7(c)
Profit after tax
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Income tax relating to this item
Other comprehensive income, net of tax
Total comprehensive income
Total comprehensive income is attributable to securityholders:
Attributable to the Company
Attributable to the Trust
Attributable to non-controlling interests
Total comprehensive income
Earnings per security
Cromwell
Trust
2021
$M
375.5
97.5
14.2
75.3
26.6
5.9
2020
$M
416.0
17.5
18.4
39.5
-
3.3
2021
$M
266.8
97.5
14.2
55.5
23.7
5.9
2020
$M
262.4
17.5
18.4
32.4
-
3.3
595.0
494.7
463.6
334.0
58.5
7.8
14.9
80.5
43.8
71.5
2.0
7.7
286.7
308.3
0.1
308.2
(45.2)
-
(45.2)
263.0
11.0
252.0
-
263.0
57.2
8.7
-
90.2
59.6
70.1
4.3
23.4
313.5
181.2
3.6
177.6
(3.5)
-
(3.5)
174.1
21.5
152.6
-
174.1
6.83¢
6.80¢
68.3
64.9
-
-
-
28.3
70.9
-
2.1
169.6
294.0
0.1
293.9
(41.9)
-
(41.9)
252.0
-
251.9
0.1
252.0
11.23¢
11.19¢
-
-
-
32.1
69.3
-
19.0
185.3
148.7
(5.1)
153.8
0.6
-
0.6
154.4
-
152.6
1.8
154.4
5.91¢
5.89¢
Basic earnings per stapled security (cents)
Diluted earnings per stapled security (cents)
3(b)
3(b)
11.78¢
11.74¢
The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.
67
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Consolidated Balance Sheets
AS AT 30 JUNE 2021
Current assets
Cash and cash equivalents
Receivables
Inventories
Current tax assets
Investment properties held for sale
Equity accounted investments held for sale
Other current assets
Total current assets
Non-current assets
Investment properties
Equity accounted investments
Investments at fair value through profit or loss
Derivative financial instruments
Receivables
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Unearned income
Dividends / distributions payable
Interest bearing liabilities
Derivative financial instruments
Provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Derivative financial instruments
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to securityholders
Contributed equity
Reserves
Retained earnings
Equity attributable to securityholders
Comprising
Total equity attributable to the Company
Total equity attributable to the CDPT
Equity attributable to securityholders
Non-controlling interests
Total equity
Notes
13(b)
8(e)
9(a)
8(e)
9(a)
10(a)
12(a)
13(b)
20(a)
7(d)
13(c)
11(a)
12(a)
11(a)
12(a)
7(d)
15(b)
16(a)
17(f)
17(g)
Cromwell
2021
$M
142.3
80.0
-
2.9
-
-
7.3
232.5
3,863.5
712.5
8.9
11.3
148.7
22.0
1.1
8.4
4,776.4
5,008.9
83.1
12.1
42.5
3.8
8.6
5.3
1.6
2020
$M
194.1
50.3
15.4
1.6
44.0
49.8
8.7
363.9
3,708.3
668.2
12.9
-
201.0
20.3
1.6
8.3
Trust
2021
$M
83.7
55.1
-
0.8
-
-
1.3
140.9
3,863.5
662.0
-
11.3
183.9
-
-
-
4,620.6
4,984.5
4,720.7
4,861.6
111.1
13.9
49.0
3.7
13.1
6.8
4.9
60.8
12.1
42.5
0.4
8.6
-
0.8
2020
$M
117.8
30.9
-
0.7
44.0
47.3
3.0
243.7
3,708.3
633.7
-
-
246.7
-
-
1.6
4,590.3
4,834.0
85.6
13.6
49.0
0.4
13.1
-
-
157.0
202.5
125.2
161.7
2,182.4
2,187.5
2,168.9
2,168.2
2.8
0.8
0.6
2,186.6
2,343.6
2,665.3
2,279.8
16.6
368.9
2,665.3
108.9
2,556.4
2,665.3
-
6.2
0.8
4.1
2,198.6
2,401.1
2,583.4
2,278.5
61.1
243.8
2,583.4
97.0
2,486.4
2,583.4
-
2,665.3
2,583.4
2.8
-
0.6
2,172.3
2,297.5
2,564.1
2,072.5
(11.9)
495.8
2,556.4
-
-
2,556.4
7.7
2,564.1
6.2
-
3.2
2,177.6
2,339.3
2,494.7
2,071.4
30.0
385.0
2,486.4
-
-
2,486.4
8.3
2,494.7
The above consolidated balance sheets should be read in conjunction with the accompanying notes.
68
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Consolidated Statements of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2021
Attributable to Equity Holders of Cromwell
Contributed
equity
Reserves
Cromwell
Notes
$M
Balance at 1 July 2019 previously reported
Adjustments (1)
Adjusted balance at 1 July 2019
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 equity issue costs
Dividends / distributions paid / payable
Employee performance rights
Total transactions with equity holders
Balance as at 30 June 2020
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 equity issue costs
Dividends / distributions paid / payable
Employee performance rights
Total transactions with equity holders
Balance as at 30 June 2021
15(b)
4(a)
16(a)
15(b)
4(a)
16(a)
1,857.4
-
1,857.4
-
-
-
421.1
-
-
421.1
2,278.5
-
-
-
1.3
-
-
1.3
2,279.8
$M
58.3
3.0
61.8
-
(3.5)
(3.5)
-
-
2.8
2.8
61.1
-
(45.2)
(45.2)
-
-
0.7
0.7
16.6
Retained
earnings
$M
228.8
32.9
261.7
177.6
-
177.6
-
(195.5)
-
(195.5)
243.8
308.2
-
308.2
-
(183.1)
-
(183.1)
368.9
Total
$M
2,145.0
35.9
2,180.9
177.6
(3.5)
174.1
421.1
(195.5)
2.8
228.4
2,583.4
308.2
(45.2)
263.0
1.3
(183.1)
0.7
(181.1)
2,665.3
(1) The adjustments to opening retained earnings are due to an FCTR adjustment, as well as other equity items reclassified between the Trust and the
Company under the new presentational format. These adjustments do not result in a change to overall Cromwell equity.
The above consolidated statements of changes in equity should be read in conjunction with accompanying notes.
69
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Consolidated Statements of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2021
Attributable to Equity Holders of the CDPT
Trust
Notes
$M
$M
$M
Contributed
equity
Reserve
Retained
earnings
Non-
controlling
interests
$M
Total
$M
Total
equity
$M
Balance at 1 July 2019
1,719.0
29.4
428.5
2,176.9
6.9
2,183.8
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 equity
issue costs
Distributions paid / payable
Total transactions with equity holders
Balance as at 30 June 2020
15(b)
4(a)
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 equity
issue costs
Distributions paid / payable
Total transactions with equity holders
15(b)
4(a)
-
-
-
352.4
-
352.4
2,071.4
-
-
-
1.1
-
1.1
-
0.6
0.6
-
-
-
152.0
-
152.0
152.0
0.6
152.6
1.8
-
1.8
153.8
0.6
154.4
-
352.4
-
352.4
(195.5)
(195.5)
(195.5)
156.9
30.0
385.0
2,486.4
-
293.9
(41.9)
(41.9)
-
293.9
293.9
(41.9)
252.0
-
-
-
-
1.1
(183.1)
(183.1)
(183.1)
(182.0)
(0.4)
(0.4)
8.3
(195.9)
156.5
2,494.7
-
-
-
-
(0.6)
(0.6)
7.7
293.9
(41.9)
252.0
1.1
(183.7)
(182.6)
2,564.1
Balance as at 30 June 2021
2,072.5
(11.9)
495.8
2,556.4
The above consolidated statements of changes in equity should be read in conjunction with accompanying notes.
70
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Consolidated Statements of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2021
Note
Cash flows from operating activities
Receipts in the course of operations
Payments in the course of operations
Distributions received
Interest received
Finance costs paid
Income tax paid
Net cash provided by operating activities
21(b)
Cromwell
Trust
2021
$M
413.5
(219.6)
54.3
8.8
(59.0)
(7.4)
190.6
2020
$M
375.4
(171.3)
57.6
5.2
(59.5)
(7.1)
200.3
2021
$M
298.3
(122.9)
49.4
8.9
(58.8)
(0.3)
174.6
2020
$M
275.8
(87.3)
55.6
14.9
(59.3)
(4.1)
195.6
Cash flows from investing activities
Proceeds from sale of investment properties
23.0
155.0
23.0
155.0
Payments for investment properties
(126.3)
(1,306.0)
(126.4)
(1,306.0)
Proceeds from sale of equity accounted investments
Payments for equity accounted investments
Proceeds from sale of investments at fair value through
profit or loss
Payments for investments at fair value through profit or loss
Receipt of capital return distributions from investments at
fair value through profit or loss
Payments for intangible assets
Payments for property, plant and equipment
Repayment of loans to related entities and directors
Loans to related entities and directors
Payments for other transaction costs
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payments for lease liabilities
Payment of loan transaction costs
Payments for settlement of derivative financial instruments
Proceeds from issue of stapled securities
Payment of equity issue transaction costs
Payment of dividends / distributions
Net cash (used in) / provided by financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at 30 June
2.5
-
-
(0.7)
2.3
(0.5)
(1.7)
71.1
(18.8)
(9.1)
(58.2)
169.8
(50.2)
3.6
-
1.0
(0.6)
(1.1)
57.1
(134.1)
(23.5)
(1,129.0)
-
-
-
-
-
-
-
149.0
(50.1)
-
-
-
-
-
78.7
(15.0)
(1.9)
(41.6)
100.7
(113.4)
(19.0)
(1,083.8)
338.1
(311.9)
2,050.4
(1,243.8)
338.1
(304.5)
2,050.4
(1,243.8)
(5.1)
(3.6)
(4.9)
1.4
-
(190.6)
(176.6)
(44.2)
194.1
(7.6)
142.3
(4.0)
(4.5)
-
408.1
(9.4)
(166.0)
1,030.8
102.1
101.6
(9.6)
194.1
(0.4)
(3.6)
(4.9)
1.1
-
(189.6)
(163.8)
(30.8)
117.8
(3.3)
83.7
(0.4)
(4.5)
-
343.3
(8.3)
(169.6)
967.1
78.9
47.7
(8.8)
117.8
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
71
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2021
Table of Contents
Cromwell’s annual financial report has been prepared in a format designed to provide users of the financial report with
a clearer understanding of relevant balances and transactions that drive Cromwell’s financial performance and financial
position free of immaterial and superfluous information. Plain English is used in commentary or explanatory sections
of the notes to the financial statements to also improve readability of the financial report. Additionally, amounts in the
consolidated financial statements have now been rounded off to the nearest one hundred thousand dollars, unless
otherwise indicated, in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191.
The notes have been organised into the following six sections for reduced complexity and ease of navigation:
P.122
Other Items
20. Leased assets and
related leases
21. Intangible assets
22. Cash flow information
23. Security based payments
24. Related parties
25. Auditors’ remuneration
26. Unrecognised items
27. Subsequent events
122
124
126
129
130
133
133
134
P.100
Finance and Capital
Structure
11. Interest bearing liabilities 100
12. Derivative financial
instruments
13. Other financial assets and
financial liabilities
14. Financial risk
management
15. Contributed equity
16. Reserves
103
105
106
114
115
P.116
Group Structure
17. Parent entity disclosures
18. Controlled entities
116
117
19. Equity attributable to the
Company and non-controlling
interests (CDPT)
120
P.73
About this report
1. Basis of preparation
73
P.77
Results
2. Operating segment
information
3. Earnings per security
4. Distributions
5. Revenue
6. Employee benefits,
administrative, finance and
other expenses
7. Income tax
P.90
Operating Assets
8. Investment properties
9. Equity accounted
investments
10. Investments at fair value
through profit or loss
77
81
82
83
85
87
90
95
99
72
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
About This Report
This section provides an overview of the basis upon which the financial statements of Cromwell and the Trust have been
prepared. Accounting policies relating to balances and transactions for which specific note disclosure is presented in
this financial report are contained in the relevant note. Accounting policies for other balances and transactions are also
contained in this section.
1. Basis of preparation
Shares of Cromwell Corporation Limited (Company) and units of Cromwell Diversified Property Trust (CDPT) are stapled
to one another forming the Cromwell Property Group and are quoted as a single stapled security on the ASX under the
code CMW. Australian Accounting Standards require an acquirer to be identified and an in-substance acquisition to be
recognised. In relation to the stapling of the Company and CDPT, the Company is identified as having acquired control
over the assets of CDPT.
As permitted by ASIC Corporations (Stapled Group Reports) Instrument 2015/838 the consolidated financial statements and
accompanying notes of the Cromwell Property Group (Cromwell), consisting of the Company and its controlled entities and
CDPT and its controlled entities are presented jointly with the consolidated financial statements and accompanying notes
of the CDPT and its controlled entities (Trust). In the consolidated financial statements of Cromwell, equity attributable to
the Trust is presented as a non-controlling interest.
Cromwell and the Trust are for-profit entities for the purpose of preparing the financial statements.
This financial report has been prepared on a going concern basis. Cromwell’s and the Trust’s current assets exceed
current liabilities by $75.5 million and $15.7 million respectively at 30 June 2021 (30 June 2020: $161.4 million and
$82.0 million). In addition, at 30 June 2021, Cromwell and the Trust had available a total of $534.9 million of undrawn but
committed bank debt facilities (2020: $472.9 million) and $142.3 million and $83.7 million of cash (2020: $194.1 million
and $117.8 million).
STATEMENT OF COMPLIANCE
The consolidated financial statements of Cromwell and the Trust are general purpose financial statements which have
been prepared in accordance with Australian Accounting Standards (including Australian Accounting Interpretations)
adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001 (Cth).
The financial statements also comply with International Financial Reporting Standards (IFRS) and Interpretations as
adopted by the International Accounting Standards Board (IASB).
HISTORICAL COST CONVENTION
The financial report is prepared on the historical cost basis except for the following:
• investment properties are measured at fair value;
• derivative financial instruments are measured at fair value;
• investments at fair value through profit or loss are measured at fair value; and
• receivables at fair value through profit or loss are measured at fair value.
ROUNDING OF AMOUNTS
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 amounts in these consolidated
financial statements have been rounded off to the nearest one hundred thousand dollars, unless otherwise indicated.
PRESENTATIONAL CHANGES AND COMPARATIVES
In order to improve the readability of this financial report, direct readers focus towards materially important information,
the format and the presentation of some disclosure items has been altered. This has included:
• the use of plain English to describe items including business activities, accounting policies;
• a reordering of notes that better informs readers about the structure of the business and how its components interact;
• the Profit & loss statement and Statement of other comprehensive income have been reformatted and condensed into
one Statement of comprehensive income, including certain reclassifications of expense categories;
• cash flows relating to interest on lease liabilities have been reclassified from cash flows from operating activities to
financing activities;
73
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
• improvements to the way in which amounts attributable to equity holders of the Company, CDPT and Cromwell is
presented; and
• the removal of immaterial disclosure items and related policy information.
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.
a) Impacts of COVID-19 upon financial statement preparation
COVID-19, a respiratory illness, was declared a world-wide pandemic by the World Health Organisation in March 2020.
Immediately following the global outbreak of COVID-19, Cromwell enacted its Business Continuity Plan (BCP). This,
coupled with Cromwell’s prior investment in systems, processes and people has ensured there has been no material
interruption to the operation of any of Cromwell’s business segments due to COVID-19.
However, COVID-19 itself, as well as measures to slow the spread of the virus, have had a significant impact on global
economies and equity, debt and other financial markets. Cromwell has considered the impact of COVID-19 and other
market volatility in preparing these financial statements. Whilst the specific areas of judgement noted previously did not
change materially, the impact of COVID-19 has resulted in the wider application of judgement within those identified areas.
Given the dynamic and evolving nature of the COVID-19 pandemic, changes to the estimates and outcomes that have been
applied in the measurement of Cromwell’s assets and liabilities may arise in the future.
Key items and related disclosures that have been impacted by COVID-19 were as follows:
• Rental income and recoverable outgoings – management engaged with all tenants in Australia, Poland and Italy in
order to achieve the best possible commercial outcomes for all parties. This process resulted in tenants being provided
with appropriate rent relief in the form of rental waivers ($0.6 million) and deferred payment plans (resulting in the
deferred collection of $9.6 million for periods ranging from 3 months to 24 months), coupled with lease extensions
(amortisation cost $1.1 million to 30 June 2021). Whilst Italy was unimpacted, earnings were negatively impacted by
$12.0 million (€7.5 million) as a result of the various lockdowns in Poland. For further information refer to note 5.
• Investment properties – management reviewed the appropriateness of inputs into investment property valuations,
taking into account the impacts of COVID-19. At balance date, the adopted valuations for 25 of Cromwell’s investment
properties are based on independent external valuations representing 92% of the value of the portfolio. Disclosures
with respect to Cromwell’s investment properties are provided in note 8.
• Interest in associates and joint ventures and investments in subsidiaries – Cromwell’s investments in associates and
joint ventures were assessed for indicators of impairment. No investments were found to be impaired. Disclosures with
respect to Cromwell’s equity accounted interests is provided in note 9.
• Receivables, loan assets, and amounts due from subsidiaries – in response to COVID-19, management has
undertaken a review of its relevant tenant receivable and loan asset portfolios, loans to subsidiaries and other financial
asset exposures. This process involved a thorough examination of all receivable balances to assess the extent of
expected credit losses that should be recognised. Relevant risk management disclosures are included in note 14.
b) Basis of consolidation
STAPLING
The stapling of the Company and CDPT was approved at separate meetings of the respective shareholders and unitholders
on 6 December 2006. Following approval of the stapling, shares in the Company and units in the Trust were stapled to one
another and are quoted as a single security on the Australian Securities Exchange.
Australian Accounting Standards require an acquirer to be identified and an in-substance acquisition to be recognised. In
relation to the stapling of the Company and CDPT, the Company is identified as having acquired control over the assets of CDPT.
The Trust’s contributed equity and retained earnings/accumulated losses are shown as a non-controlling interest. Even
though the interests of the equity holders of the identified acquiree (the Trust) are treated as non-controlling interests the
equity holders of the acquiree are also equity holders in the acquirer (the Company) by virtue of the stapling arrangement.
SUBSIDIARIES
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries at year end and the results
of all subsidiaries for the year then ended. Subsidiaries are entities controlled by Cromwell. Control exists when Cromwell
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. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control ceases.
The acquisition method of accounting is used to account for the business combinations by Cromwell. Inter-entity
transactions, balances and unrealised gains on transactions between Cromwell entities are eliminated. Unrealised losses
74
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by Cromwell.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the Statement of comprehensive
income and the Balance sheet respectively.
Investments in subsidiaries are accounted for at cost in the individual financial statements of the Company and CDPT. A
list of subsidiaries is included in the notes.
c) Foreign currency translation
FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the financial statements of each of Cromwell’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 the Company’s and the Trust’s functional and presentation currency.
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 attributable to part of the net
investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the Statement of comprehensive income,
within finance costs. All other foreign exchange gains and losses are presented in the Statement of comprehensive
income on a net basis. 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.
FOREIGN OPERATIONS
Subsidiaries, joint arrangements and associates that have functional currencies different from the presentation
currency translate their Statement of comprehensive income items using the average exchange rate for the year. Assets
and liabilities are translated using exchange rates prevailing at balance date. Exchange variations resulting from the
retranslation at closing rate of the net investment in foreign operations, together with their differences between their
Statement of profit or loss items translated at average rates and closing rates, are recognised in the foreign currency
translation reserve.
For the purpose of foreign currency translation, the net investment in a foreign operation is determined inclusive of
foreign currency intercompany balances. The balance of the foreign currency translation reserve relating to a foreign
operation that is disposed of, or partially disposed of, is recognised in the Statement of comprehensive income at the time
of disposal.
The following material spot and average rates were used:
Euro
Polish Złoty
Spot rate
Average rate
2021
0.63
2.86
2020
0.61
2.70
2021
0.63
2.83
2020
0.61
2.70
d) Impairment of assets
At each reporting date, and whenever events or changes in circumstances occur, Cromwell assesses whether there is any
indication that any relevant asset may be impaired. Where an indicator of impairment exists, Cromwell makes a formal
estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount, the asset is
considered impaired and 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 to sell 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). Assets other than goodwill that have been previously impaired are reviewed for possible reversal of the
impairment at each reporting date.
75
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT e) Inventories
Inventories relate to land and property developments that are held for sale in the normal course of business. Inventories
are carried at the lower of cost or net realisable value. Net realisable value is the estimated selling price in the normal
course of business, less the estimated costs of completion and selling expenses.
f) Property, plant and equipment
Property, plant and equipment relate to equipment used in the day-to-day operations of Cromwell as well as right-to-use
assets for property, plant and equipment held under operating leases.
Owned property, plant and equipment is initially recognised at cost and subsequently carried at cost less accumulated
depreciation and impairment losses. Owned property, plant and equipment is depreciated on a straight-line basis over the
period of the useful life of the asset.
Right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at
or before commencement, less any lease incentives received and any initial direct costs. Right-of-use assets are
subsequently measured at cost less accumulated depreciation and impairment losses. For further information in relation
to leased assets see note 20.
g) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
• Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense, or
• For receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables. Cash flows are included in the cash flow statement on a gross basis.
The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to,
the taxation authority is classified within operating cash flows.
h) Critical accounting estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Estimates and underlying assumptions are reviewed on an ongoing basis and are based on historical or professional
experience and other factors such as expectations about future events. Revisions to accounting estimates are recognised
in the period in which the estimate is revised and in any future periods affected.
The areas that involved a higher degree of judgement or complexity and may need material adjustment if estimates and
assumptions made in preparation of these financial statements are incorrect are:
Area of estimation
Revenue
Fair value of investment property
Equity accounted investments
Fair value of financial instruments
Intangible assets
Note
5
8
9
14
21
i) New accounting standards and interpretations adopted by Cromwell and the Trust
Cromwell and the Trust have adopted all applicable new Australian accounting standards and interpretations. There are
no new relevant accounting standards and interpretations that have been adopted in the current financial year. In the prior
year, Cromwell and the Trust adopted AASB 16 Leases and Interpretation 23 Uncertainty over Income Tax Treatments, both
of which were applicable to Cromwell and the Trust from the financial year commencing 1 July 2019.
There are currently no relevant accounting standards and interpretations that have been issued or amended but are not
yet effective and have not been adopted by Cromwell or the Trust.
j) Change to accounting policy - SaaS
During the year, the Accounting Policy with respect of Intangible assets was changed, specifically in relation to the
configuration and customisation costs incurred in implementing Software-as-a-Service (SaaS) arrangements. Key
disclosures, including the impact of the accounting policy change, critical accounting estimates and judgements and the
impact of the change to comparative and retrospective financial information is disclosed in note 20.
76
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Results
This section of the annual financial report provides further information on Cromwell’s and the Trust’s financial
performance, including the performance of each of Cromwell’s three segments, the earnings per security calculation,
details of distributions as well as information about Cromwell’s revenue, expense and income tax items.
2. Operating segment information
(A) OVERVIEW
Operating segments are distinct business activities from which Cromwell may earn revenues and incur expenses.
Cromwell reports the results of its operating segments on a regular basis to its Chief Executive Officer (CEO), the group's
chief operating decision maker (CODM), in order to assess the performance of each of Cromwell's operating segments
and allocate resources to them.
Operating segments below are reported in a manner consistent with the internal reporting provided to the CEO. These
have been updated to reflect changes in Cromwell’s business model and related internal reporting.
Operating segments:
Business activity:
Direct property investment
Indirect property investment
Funds and asset management
This involves the ownership of investment properties located in Australia, Poland
and Italy. These properties, which may be held for long term investment purposes
or warehoused whilst being repositioned for deployment into the fund and asset
management business, primarily contribute net rental income and associated cash
flows to results.
This activity encompasses Cromwell’s investments in assets it may not fully own
or over which it cannot exercise unilateral control. This includes investments in
the Cromwell European Real Estate Investment Trust (CEREIT), the Ursynów joint
venture, the LDK Seniors living joint venture and other investment vehicles. This
activity contributes the relevant share of profit of each investee to consolidated
results.
Fund management represents activities in relation to the establishment and
management of external funds for institutional and retail investors. Asset
management includes property and facility management, leasing and project
management and development related activities. These activities are carried out
by Cromwell itself and by associates and contributes related fee revenues or the
relevant share of profit of each investee to consolidated results.
77
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
(B) SEGMENT RESULTS
The table below shows segment results as presented to the CEO in his capacity as CODM. For further commentary on
individual segment results refer to the Directors’ Report:
2021
Segment revenue
Rental income and recoverable outgoings
Operating profit of equity accounted investments
Development income (1)
Fund and asset management fees
Distributions
Total segment revenue
Segment expenses
Property expenses
Development costs
Fund and asset management direct costs
Other expenses
Total segment expenses
EBITDA
Finance costs
Segment profit after finance costs
Unallocated items
Finance income
Corporate costs (2)
Income tax expense
Segment profit
Direct
property
investment
$M
Indirect
property
investment
$M
Fund
and asset
management
$M
Cromwell
$M
278.9
-
-
-
-
278.9
66.3
-
-
6.2
72.5
206.4
49.9
156.5
-
48.0
-
-
1.8
49.8
-
-
-
3.7
3.7
46.1
9.0
37.1
-
4.7
25.6
101.6
-
131.9
-
14.9
66.3
9.0
90.2
41.7
-
41.7
278.9
52.7
25.6
101.6
1.8
460.6
66.3
14.9
66.3
18.9
166.4
294.2
58.9
235.3
4.6
(38.8)
(8.9)
192.2
(1) Includes finance income attributable to development loans and fee revenue.
(2) Includes non-segment specific corporate costs pertaining to Group level functions such as finance and tax, legal, risk and compliance, corporate
secretarial and marketing and other corporate services.
2020
Segment revenue
Rental income and recoverable outgoings
Operating profit of equity accounted investments
Development fees
Fund and asset management fees
Distributions
Total segment revenue
Segment expenses
Property expenses
Fund and asset management direct costs
Other expenses
Total segment expenses
EBITDA
Finance costs
Segment profit after finance costs
Unallocated items
Finance income
Corporate costs(1)
Income tax expense
Segment profit
Direct
property
investment
$M
Indirect
property
investment
$M
Fund
and asset
management
$M
Cromwell
$M
269.9
–
–
–
–
269.9
62.7
–
4.6
67.3
202.6
47.6
155.0
–
51.4
–
–
2.0
53.4
–
–
5.1
5.1
48.3
7.2
41.1
–
2.9
34.6
132.0
–
169.5
–
80.8
10.6
91.4
78.1
3.6
74.5
269.9
54.3
34.6
132.0
2.0
492.8
62.7
80.8
20.3
163.8
329.0
58.4
270.6
4.4
(39.6)
(14.2)
221.2
(1) Includes non-segment specific corporate costs pertaining to Group level functions such as finance and tax, legal, risk and compliance, corporate
secretarial and marketing and other corporate services.
78
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (C) RECONCILIATION OF SEGMENT PROFIT TO STATUTORY PROFIT
Segment profit
Reconciliation to profit for the year
Gain on sale of investment properties
Fair value net gains - Investment properties
Fair value net gains - Derivative financial instruments
Lease cost and incentive amortisation and rent straight-lining
Relating to equity accounted investments (1)
Net exchange gain / (loss) on foreign currency borrowings
Tax expense relating to non-operating items (2)
Other non-cash expenses or non-recurring items (3)
Profit after tax for the year
Cromwell
2021
$M
192.2
5.9
97.5
14.2
(26.6)
30.9
26.1
7.8
(39.8)
308.2
2020
$M
221.2
3.3
17.5
18.4
(19.5)
(14.8)
(1.8)
10.5
(57.2)
177.6
(1) Comprises fair value adjustments included in share of profit of equity accounted entities.
(2) Comprises tax expense attributable to changes in deferred tax assets recognised as a result of carried forward tax losses.
(3) These expenses include but are not limited to:
• Amortisation of loan transaction costs.
• Amortisation of intangible assets and depreciation of property, plant and equipment.
• Other transaction costs.
(D) RECONCILIATION OF TOTAL SEGMENT REVENUE TO TOTAL REVENUE AND OTHER INCOME
Total segment revenue reconciles to total revenue and other income as shown in the consolidated Statement of profit or
loss as follows:
Total segment revenue
Reconciliation to total revenue and other income:
Inter-segmental management fee revenue
Straight-line lease income
Lease incentive amortisation
Operating profit from equity accounted investments
Finance income
Total revenue
(E) SEGMENT ASSETS AND LIABILITIES
Cromwell
2021
$M
460.6
(13.1)
3.7
(27.7)
(52.7)
4.7
375.5
2020
$M
492.8
(11.0)
9.7
(25.7)
(54.3)
4.5
416.0
2021
Segment assets
Segment liabilities
Segment net assets
Other segment information
Equity accounted investments
Acquisition / (disposal) of non-current segment assets (1):
Investments in associates
Investments at fair value through profit or loss
Intangible assets
Direct property
investment
$M
4,015.2
1,936.0
2,079.2
-
-
-
-
Indirect
property
investment
$M
Fund
and asset
management
$M
695.9
359.4
336.5
693.6
(0.8)
(1.6)
-
297.8
48.2
249.6
18.9
(2.5)
-
0.5
Cromwell
$M
5,008.9
2,343.6
2,665.3
712.5
(3.3)
(1.6)
0.5
(1) For additions to investment property, forming part of the Direct property investment segment, refer to Note 8.
79
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
2020
Segment assets
Segment liabilities
Segment net assets
Other segment information
Equity accounted investments
Acquisition / (disposal) of non-current segment assets(1):
Investments in associates
Investments at fair value through profit or loss
Intangible assets
Direct property
investment
$M
3,947.6
1,936.0
1,965.8
-
-
-
-
Indirect
property
investment
$M
Fund
and asset
management
$M
711.0
375.6
335.4
699.4
65.4
(4.6)
-
325.9
43.7
282.2
18.6
0.9
-
0.6
Cromwell
$M
4,984.5
2,401.1
2,583.4
718.0
66.3
(4.6)
0.6
(1) For additions to investment property, forming part of the Direct property investment segment, refer to Note 8.
(F) OTHER SEGMENT INFORMATION
Geographic information
Cromwell has operations in four distinct geographical markets. These are Australia through the Cromwell Property Group
and the Australian funds it manages, United Kingdom and Europe through its European business (including the property
portfolio in Poland), Asia through its investment in the Singapore-listed CEREIT and New Zealand through its Oyster
Property Funds Limited joint venture.
Non-current assets for the purpose of the disclosure below include investment property, equity accounted investments
and investments at fair value through profit or loss.
Revenue from external customers Non-current operating assets
2020
$M
2021
$M
2021
$M
2020
$M
Geographic location
Australia
United Kingdom and Europe
Asia
New Zealand
Total
291.1
114.8
51.0
3.7
460.6
288.6
142.1
59.7
2.4
492.8
3,252.8
885.0
621.6
17.0
4,776.4
3,181.3
783.8
646.3
15.2
4,626.6
Major customers
Major customers of Cromwell that account for more than 10% of Cromwell’s segmental revenue are listed below. All of
these customers form part of the Direct property investment segment.
Major customer
Commonwealth of Australia
Qantas Airways Limited
New South Wales State Government
Total income from major customers
(G) ACCOUNTING POLICY
Cromwell
2021
$M
47.2
32.8
29.1
109.1
2020
$M
44.9
31.8
29.3
106.0
Segment allocation
Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the
relevant portion that can be allocated to the segment on a reasonable basis. While most of these assets can be
directly attributable to individual segments, the carrying amounts of certain assets used jointly by segments are
allocated based on reasonable estimates of usage.
Property expenses and outgoings which include rates, taxes and other property outgoings and other expenses are
recognised on an accruals basis.
80
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT EBITDA
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) is a measure of financial performance and is
used as an alternative to operating profit or statutory profit.
Segment profit
Segment profit, internally referred to as operating profit, is based on income and expenses excluding adjustments for
unrealised fair value adjustments and write downs, gains or losses on all sale of investment properties and certain
other non-cash income and expense items.
3. Earnings per security
(A) OVERVIEW
Earnings per security (EPS) is a measure that makes it easier for users of Cromwell’s financial report to compare
Cromwell’s performance between different reporting periods. Accounting standards require the disclosure of basic EPS
and diluted EPS. Basic EPS information provides a measure of interests of each ordinary issued security of the parent
entity in the performance of the entity over the reporting period. Diluted EPS information provides the same information
but takes into account the effect of all dilutive potential ordinary securities outstanding during the period, such as
Cromwell’s performance rights.
(B) EARNINGS PER STAPLED SECURITY / TRUST UNIT
Basic earnings per security (cents)
Diluted earnings per security (cents)
Earnings used to calculate basic and diluted earnings per
security:
Cromwell
Trust
2021
11.78
11.74
2020
(1) 6.83
(1) 6.80
2021
11.23
11.19
2020
5.91
5.89
Profit for the year attributable to securityholders ($M)
308.2
177.6
293.9
153.8
Weighted average number of securities used in calculating
basic and diluted earnings per security:
Weighted average number of securities used in calculating
basic earnings per security (number)
2,616,119,911
2,600,448,765
2,616,119,911
2,600,448,765
Effect of performance rights on issue (number)
9,731,502
9,467,485
9,731,502
9,467,485
Weighted average number of securities used in calculating
diluted earnings per security (number)
2,625,851,413
2,609,916,250
2,625,851,413
2,609,916,250
(1) These items have been updated to reflect the impact of the change to Accounting policy in relation to SaaS - refer to Note 21 for further information.
(C) EARNINGS PER COMPANY SHARE
Under Australian accounting standards, the issued units of the Trust are presented as non-controlling interests. As a
result, disclosed below is the basic and diluted profit per Company share based on the Company's profit for the year
excluding the profit attributable to Trust unitholders.
Basic earnings per share (cents)
Diluted earnings per share (cents)
Company
2021
0.55
0.54
2020
0.98
0.98
The profit used to calculate basic and diluted profit per share was $14.3 million (2020: $25.6 million). The weighted
average number of shares used to calculate basic and diluted profit per share was equal to the number of stapled
securities disclosed in (b) above.
81
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (D) INFORMATION IN RELATION TO THE CLASSIFICATION OF SECURITIES
Performance rights
Performance rights granted under Cromwell’s Performance Rights Plan are considered to be potential ordinary stapled
securities and have been included in the determination of diluted earnings per stapled security to the extent to which they
are dilutive. The performance rights have not been included in the determination of basic earnings per stapled security.
Convertible bond
The remaining convertible bond on issue is considered to be potential ordinary stapled securities, however has not been
included in the determination of diluted earnings. The ASX market price of Cromwell stapled securities at year end is below
the convertible bond conversion price of $1.141. Therefore, the convertible bond is currently considered to be antidilutive.
(E) ACCOUNTING POLICY
Basic earnings per security
Basic earnings per security is calculated by dividing profit attributable to security holders of the Company / Trust /
Cromwell, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary securities outstanding during the financial year, adjusted for bonus elements in ordinary securities issued
during the year.
Diluted earnings per security
Diluted earnings per security adjusts the figures used in the determination of basic earnings per security to take into
account the after income tax effect of interest and other financing costs associated with potentially ordinary securities
and the weighted average number of securities assumed to have been issued for no consideration in relation to
dilutive potential ordinary securities.
4. Distributions
(A) OVERVIEW
Cromwell’s objective is to generate sustainable returns for our securityholders, including stable annual distributions.
When determining distribution rates Cromwell’s board considers a number of factors, including forecast earnings,
anticipated capital and lease incentive expenditure requirements over the next three to five years and expected economic
conditions.
Distributions paid / payable by Cromwell and the Trust during the year were as follows:
2021
2020
20 November 2020
22 November 2019
19 February 2021
21 February 2020
21 May 2021
22 May 2020
20 August 2021
21 August 2020
Total
2021
cents
1.8750¢
1.8750¢
1.6250¢
1.6250¢
7.0000¢
2020
cents
1.8750¢
1.8750¢
1.8750¢
1.8750¢
7.5000¢
2021
$M
49.0
49.1
42.5
42.5
183.1
2020
$M
48.7
48.8
49.0
49.0
195.5
There were no dividends paid or payable by the Company in respect of the 2020 and 2021 financial years. All of Cromwell’s
and the Trust’s distributions are unfranked.
(B) FRANKING CREDITS
Currently, Cromwell’s distributions are paid from the Trust. Franking credits are only available for future dividends paid by
the Company. The Company’s franking account balance as at 30 June 2021 is $14,190,400 (2020: $13,851,000).
82
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 5. Revenue
(A) OVERVIEW
Cromwell derives revenue from its three main business activities / operating segments (described in note 2). These
revenue sources and the revenue items relating to them are as follows:
Direct property
investment:
Indirect property
investment:
Fund and asset
management:
Cromwell derives income from its commercial investment property portfolio in Australia, Poland
and Italy in the form of rental income and recoverable outgoings.
Cromwell holds investments in managed funds as part of its Invest to Manage strategy.
Where Cromwell does not control the fund but holds more than 20% of the issued capital the
investment is equity accounted and Cromwell recognises its share of the profit. Where Cromwell
holds less than 20% of the issued capital distributions from the investment are recognised as
revenue. Such investments include Cromwell's investment in the Singapore listed Cromwell
European REIT, the Ursynów joint venture, LDK Seniors living joint venture and European private
unlisted funds.
Cromwell receives various types of fund and asset management fees from external retail on
wholesale funds it manages. These include fees for the establishment and ongoing management
of funds as well as performance fees and asset management related fees such as property and
facility management fees, leasing fees and project management fees. Cromwell also derives
revenue from the sale of property developments carried as inventory in Cromwell's balance
sheet.
The table below presents information about revenue items recognised from contracts with customers and other sources:
Cromwell
Trust
Rental income – lease components
Recoverable outgoings – non-lease components
Rental income and recoverable outgoings
Other revenue from contracts with customers:
Fund and asset management fees
Development sales and fees
Total revenue
Other revenue items recognised:
Interest
Distributions
Other revenue
Total other revenue
Total revenue
2021
$M
209.2
45.6
254.8
90.8
15.0
360.6
12.9
1.8
0.2
14.9
375.5
2020
$M
210.8
43.0
253.8
122.1
32.0
407.9
5.8
2.0
0.3
8.1
416.0
2021
$M
209.4
44.6
254.0
–
–
2020
$M
211.2
42.0
253.2
–
–
254.0
253.2
12.8
–
–
12.8
266.8
9.0
–
0.2
9.2
262.4
83
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (B) DISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERS
The table below presents information about the disaggregation of revenue items from Cromwell’s contracts with relevant
customers:
Cromwell
Trust
2021
$M
28.1
17.5
45.6
50.9
20.9
7.1
4.4
4.3
3.2
90.8
15.0
151.4
86.6
64.8
151.4
2020
$M
32.0
11.0
43.0
58.9
37.9
12.8
2.6
6.6
3.3
122.1
32.0
197.1
96.8
100.3
197.1
2021
$M
28.2
16.4
44.6
–
–
–
–
–
–
–
–
44.6
28.2
16.4
44.6
2020
$M
32.0
10.0
42.0
–
–
–
–
–
–
–
–
42.0
32.0
10.0
42.0
Rental income and recoverable outgoings – non-lease
components:
Recoverable outgoings(1)
Cost recoveries(2)
Total rental income and recoverable outgoings –
non-lease components
Fund and asset management fees:
Fund and asset management fees(1)
Performance fees(2)
Asset acquisition and sale fees(2)
Project management fees(1)
Leasing fees(2)
Property management fees(1)
Total fund and asset management fees
Development sales and fees:
Development sales and fees(2)
Total revenue from contracts with customers
Timing of recognition of revenue items:
Recognised over time
Recognised at point in time
Total revenue from contracts with customers
(1) Revenue recognised over time.
(2) Revenue recognised at point in time.
(C) ACCOUNTING POLICIES
Rental income and recoverable outgoings
Rental income and recoverable outgoings comprises rental income from tenants under operating leases of investment
properties and amounts charged to tenants for property outgoings such rates, levies, utilities, cleaning etc.
Rental income is recognised on a straight-line basis over the lease term. Lease incentives granted are considered an
integral part of the total rental income and are recognised as a reduction in rental income over the term of the lease,
on a straight-line basis. Amounts charged for outgoings to tenants are expense recoveries and is recognised upon
incurring the expense.
Fund and asset management fees
Revenue from management services is measured based on the consideration specified in the contract with the
customer and recognised when control over the service is transferred to the customer. Fee income derived from
investment management and property services is recognised progressively as the services are provided.
Asset acquisition and disposal, project management and leasing fees are recognised upon completion of the service
when the customer derives the benefit from the service.
Performance fee income is recognised progressively as the services are provided but only when the revenue can
be reliably measured, and it becomes highly probably that there will be no significant reversal of revenue in future.
Performance fees are generally dependent on certain performance obligation specified in the contract with the
customer in respect of the management of the customer's assets or the outcome of transactions on behalf of
customers.
84
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Development sales and fees
Development sales comprises income from the disposal of property inventories. Revenue is recognised at the point in
time that control of the asset has been transferred to the customer, generally upon legal settlement date.
Development management fees are derived from the provision of development management services. Revenue is
recognised over time as the service is performed.
Unearned income
Payments from tenants and customers in relation to future periods, which are not due and payable are recognised as
unearned income in the balance sheet.
Interest revenue
Interest revenue is recognised as it accrues using the effective interest method. Interest revenue is predominately
earned from financial assets including cash and loan receivables.
Distributions
Revenue from distributions is earned from investments and is recognised when the right to receipt is established.
(D) CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Performance fees
Cromwell exercises judgement in estimating the amount of variable consideration it will be entitled to under the
relevant contract and constrains the amount of revenue recognised to the amount that is considered highly probable
will not result in a significant reversal. Variable consideration is assessed at each reporting period to account for any
changes in circumstances.
Impact of COVID-19
Australia – rental income and related collections were relatively unimpacted by COVID-19 due to the tenant population
being heavily skewed towards government and other tenants in markets not materially impacted by the pandemic.
Poland – In the 12 months to 30 June 2021, Poland was subject to a second and third round of lockdowns. During these
periods rent and service charges were invoiced but generally remain outstanding owing to the uncertain legal situation
regarding lockdown laws. As a result, Cromwell and the Trust have chosen to conservatively recognise an expected
credit loss provision at 30 June 2021 of €1.0 million ($1.5 million) at balance date.
Italy – due to the nature of the cornerstone tenant and the geographical location of the properties no COVID-19-related
support has been requested nor granted and none is expected for the foreseeable future.
For further information in relation to the treatment of expected credit losses in relation to receivables see notes 13 and 14.
6. Employee benefits, administrative, finance and other expenses
This note provides further details about Cromwell’s other operating business expenses, including Cromwell's employee
benefits expenses and its components as well as items included in administrative and other expenses and finance costs.
(A) EMPLOYEE BENEFITS EXPENSE
Salaries and wages, including bonuses and on-costs
Directors fees
Contributions to defined contribution superannuation plans
Security-based payments
Restructure costs
Other employee benefits expense
Total employee benefits expense
Cromwell
Trust
2021
$M
65.0
1.3
3.6
2.1
4.6
3.9
80.5
2020
$M
77.0
1.2
3.5
2.8
–
5.7
90.2
2021
$M
2020
$M
–
–
–
–
–
–
–
–
–
–
–
–
–
–
85
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (B) ADMINISTRATIVE AND OTHER EXPENSES
Audit, taxation and other professional fees
Administrative and overhead costs
Fund administration costs
Amortisation and depreciation
Loss on disposal of other assets
Impairment
Net foreign currency losses
Total administrative and other expenses
(C) FINANCE COSTS
Interest on borrowings
Interest on lease liabilities
Amortisation of loan transaction costs
Net exchange losses relating to finance costs
Total finance costs
(D) ACCOUNTING POLICIES
Cromwell
Trust
2021
$M
8.2
30.2
–
5.4
–
–
–
43.8
2020
$M
8.2
33.2
–
6.1
3.6
4.3
4.2
59.6
2021
$M
4.2
1.7
22.2
0.2
–
–
–
28.3
Cromwell
Trust
2021
$M
59.9
0.7
10.5
0.4
71.5
2020
$M
58.3
1.3
10.0
0.5
70.1
2021
$M
59.7
0.3
10.5
0.4
70.9
2020
$M
3.6
0.6
20.0
0.1
3.4
–
4.4
32.1
2020
$M
58.1
0.9
9.8
0.5
69.3
Salaries, wages and other short-term employee benefits obligations
Salaries, wages, including non-monetary benefits, and annual leave that are expected to be settled within 12 months
after the end of the period in which the employees render the related service are recognised in respect of employee's
services up to the end of the reporting period and are measured at the amounts expected to be paid when the
liabilities are settled.
Bonuses
A liability is recognised for bonuses where contractually obliged or where there is a past practice that has created a
constructive obligation.
Superannuation
Contributions are made to defined contribution superannuation funds and expensed as they become payable.
Other long-term employee benefits obligations
The liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months after the
end of the period in which the employees render the related service. They are recognised in the provision for employee
benefits and measured as the present value of expected future payments to be made in respect of services provided
by employees up to the end of the reporting period. Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of service. Expected future payments are discounted using
relevant discount rates at the end of the reporting period that match, as closely as possible, the estimated future
cash outflows. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are
recognised in profit or loss.
Security-based payments
Security-based compensation benefits are provided to employees via Cromwell's Performance Rights Plan (PRP).
Further information about the PRP is set out in note 22.
86
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT The fair value of options and performance rights granted is recognised as an employee benefit expense with a
corresponding increase in equity. The fair value is measured at grant date and recognised over the period during
which the employees become unconditionally entitled to the options or performance rights. The fair value at grant
date is determined using a pricing model that takes into account the exercise price, the term, the security price at
grant date and expected price volatility of the underlying security, the expected distribution yield and the risk free
interest rate for the term.
The fair value of the options or performance rights granted is adjusted to reflect the probability of market vesting
conditions being met, 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 options or
performance rights that are expected to become exercisable. At each balance date, Cromwell revises its estimate of
the number of options or performance rights that are expected to become exercisable. The employee benefit expense
recognised each period takes into account the most recent estimate. The impact of the revision to original estimates,
if any, is recognised in profit or loss with a corresponding adjustment to equity.
Finance costs
Information about Cromwell’s exposure to interest rate changes is provided in note 14(e).
7. Income tax
(A) OVERVIEW
Income tax expense comprises current and deferred tax expense. Current tax expense is the income tax payable on
expected taxable income for the financial year and adjustments to tax payable in respect of previous financial years.
Deferred tax expense is the result of different income and expense recognition principles between accounting standards
and tax laws and represents the future tax consequences of recovering or settling the carrying amount of an asset or
liability. Deferred tax liabilities are recognised for all taxable temporary differences whereas deferred tax assets are
recognised for all deductible temporary differences and unused tax losses.
Taxation of the Trust
Under current Australian income tax legislation, the Trust and its sub-Trusts are not liable for income tax on their taxable
income (including assessable realised capital gains) provided that the unitholders are presently entitled to the income
of the Trust. However, the Trust also controls a number of corporate entities that are subject to income tax. Income tax
shown for the Trust represents taxation of those corporate entities.
(B) INCOME TAX EXPENSE
Current tax expense
Deferred tax expense
Adjustment in relation to prior periods – current tax
Adjustment in relation to prior periods – deferred tax
Income tax expense / (benefit)
Deferred tax expense
Increase in deferred tax assets
Decrease / increase in deferred tax liabilities
Total deferred tax expense
Cromwell
Trust
2021
$M
1.3
(1.3)
1.4
(1.3)
0.1
0.7
(3.3)
(2.6)
2020
$M
10.6
(4.4)
(0.1)
(2.5)
3.6
(1.9)
(5.0)
(6.9)
2021
2020
$M
1.1
(0.8)
(0.2)
–
0.1
1.3
(2.1)
(0.8)
$M
2.9
(5.3)
(0.1)
(2.6)
(5.1)
(1.7)
(6.2)
(7.9)
87
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (C) RECONCILIATION BETWEEN INCOME TAX EXPENSE/(BENEFIT) AND PROFIT BEFORE INCOME TAX
Cromwell
Trust
Profit before income tax
Tax at Australian tax rate of 30% (2020: 30%)
Tax effect of amounts which are not deductible / (taxable) in
calculating taxable income:
Trust income
Fair value movements not deductible
Non-deductible expenses / (non-assessable income)
Movement in tax losses and deferred tax assets
(recognised) / derecognised
Movement in initial recognition exemption
Tax credits foregone on foreign earnings
Adjustment in relation to prior periods
Difference in overseas tax rates
Income tax (benefit) / expense
(D) DEFERRED TAX
(i) Deferred tax assets
Deferred tax assets are attributable to:
Interests in managed investment schemes
Investment properties
Employee benefits
Transaction costs and sundry items
Unrealised foreign currency gains
Tax losses recognised
Total deferred tax assets
Movements:
Balance at 1 July
(Charged) / credited to profit or loss
Credited to other comprehensive income
Adjustment in relation to prior periods
Other movements
Balance at 30 June
2021
$M
308.3
92.5
(68.9)
2.7
(9.3)
(15.5)
(0.7)
–
0.1
(0.7)
0.1
2020
$M
181.2
54.4
(52.5)
(2.9)
(2.4)
(0.8)
6.4
2.4
(2.6)
1.6
3.6
2021
$M
294.0
88.2
(68.9)
1.8
(5.8)
(13.2)
(0.7)
–
(0.2)
(1.1)
0.1
2020
$M
148.7
44.6
(52.5)
(2.6)
(4.0)
0.6
6.4
2.4
(2.6)
2.6
(5.1)
Cromwell
Trust
2021
$M
(8.3)
–
3.5
2.1
2.2
8.9
8.4
8.3
(0.8)
0.8
0.1
–
8.4
2020
$M
2021
$M
2020
$M
(4.1)
(0.7)
2.6
3.0
1.8
5.7
8.3
7.2
(0.5)
(0.3)
2.4
(0.5)
8.3
–
–
–
–
–
–
–
1.6
(1.3)
–
–
(0.3)
–
–
(0.7)
–
1.0
–
1.3
1.6
–
(0.9)
–
2.6
(0.1)
1.6
The amount of temporary differences and carried forward tax losses recognised as a deferred tax asset is based on
projected earnings over a limited period that the Directors considered to be probable. Projected earnings are re-assessed
at each reporting date. Unrecognised tax losses at balance date were $78,831,700 (2020: $26,646,300).
88
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (ii) Deferred tax liabilities
Deferred tax liabilities are attributable to:
Interests in managed investment schemes
Interests in other investments
Investment properties
Tax losses recognised
Transactions costs and other items
Total deferred tax liabilities
Movements:
Balance at 1 July
(Credited) / charged to profit or loss
Credited to other comprehensive income
Adjustment in relation to prior periods
Other movements
Balance at 30 June
(E) ACCOUNTING POLICIES
Cromwell
Trust
2021
$M
2020
$M
2021
$M
2020
$M
–
1.7
1.0
(0.3)
(1.8)
0.6
4.1
(2.1)
–
(1.2)
(0.2)
0.6
3.2
1.4
–
–
(0.5)
4.1
4.7
(4.9)
4.8
(0.1)
(0.4)
4.1
–
1.3
1.0
–
(1.7)
0.6
3.2
(2.1)
–
–
(0.5)
0.6
3.2
–
–
–
–
3.2
4.6
(6.2)
4.8
–
–
3.2
Income tax
Cromwell’s income tax expense for the period is the tax payable on the current period’s taxable income adjusted by
changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
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.
The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to
measure the deferred tax asset or liability.
Deferred tax is not recognised for the recognition of goodwill on business combination and 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 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. Current and deferred
tax balances attributable to amounts recognised in other comprehensive income or directly in equity are also
recognised in other comprehensive income or directly in equity.
Tax consolidation
The Company and its wholly-owned entities (this excludes the Trust and its controlled entities and foreign entities
controlled by the Company) have formed a tax-consolidated group and are taxed as a single entity. The head entity
within the tax-consolidated group is Cromwell Corporation Limited.
The head entity, in conjunction with other members of the tax-consolidated group, has entered into a tax funding
arrangement, which sets out the funding obligations of members of the tax-consolidated group in respect of tax
amounts. The head entity, in conjunction with other members of the tax-consolidated group, has also entered into a
tax sharing agreement.
89
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Operating Assets
This section of the financial report provides further information on Cromwell’s and the Trust’s operating assets. These
are assets that individually contribute to Cromwell’s revenue and include investment properties, equity accounted
investments and investments at fair value through profit or loss.
8. Investment properties
(A) OVERVIEW
Investment properties are land, buildings or both held solely for the purpose of earning rental income and / or for
capital appreciation. This note provides detailed overview of Cromwell's investment property portfolio, including details
movements.
(B) MOVEMENTS IN INVESTMENT PROPERTIES
A reconciliation of the carrying amounts of investment properties at the beginning and the end of the financial year is set
out below.
Cromwell
Trust
Balance at 1 July
Acquisitions
Capital works:
Construction costs
Finance costs capitalised
Property improvements
Lifecycle
Disposals
Straight-line lease income
Lease costs and incentive costs
Amortisation(1)
Net gain from fair value adjustments
Foreign exchange differences
Balance at 30 June
2021
$M
3,752.3
89.3
1.8
0.8
7.5
1.2
(44.0)
3.7
11.6
(30.3)
97.5
(27.9)
2020
$M
2,520.9
1,286.0
0.2
0.1
13.4
0.7
(150.8)
9.7
68.6
(29.2)
17.5
15.2
2021
$M
3,752.3
89.3
1.8
0.8
7.5
1.2
(44.0)
3.7
11.6
(30.3)
97.5
(27.9)
2020
$M
2,520.9
1,286.0
0.2
0.1
13.4
0.7
(150.8)
9.7
68.6
(29.2)
17.5
15.2
3,863.5
3,752.3
3,863.5
3,752.3
(1) Pertains to the amortisation of lease costs, lease incentive costs and right-of-use assets.
(C) INVESTMENT PROPERTIES ACQUIRED
During the year Cromwell completed the acquisition of seven logistics assets in Italy for $83.1 million, which are held in
the Cromwell Urban Logistics Fund (CIULF).
In the 2020 financial year, Cromwell acquired six retail centres in Poland for $770.6 million, which are held in the Cromwell
Polish Retail Fund (CPRF). Both CIULF and CPRF are warehoused by Cromwell for future sell-down to external investors
when market conditions have stabilised.
Cromwell also acquired 400 George Street in Brisbane for $524.5 million in the 2020 financial year.
(D) INVESTMENT PROPERTIES SOLD
During the year Cromwell disposed of 13 Keltie Street, ACT for $20.0 million and Wakefield Street, SA for $30.0 million,
$6.0 million above the last valuations.
In 2020 Cromwell disposed of 11 Farrer Place, NSW for $35.0 million, $3.0 million above valuation. Cromwell also sold
50% of its 475 Victoria Avenue, NSW property for $120.0 million.
90
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
(E) DETAILS OF CROMWELL’S INVESTMENT PROPERTY PORTFOLIO
Ownership
Title
Asset class
Independent valuation
Amount
$M
Date
Australia - Core portfolio
400 George Street, QLD
HQ North, QLD
203 Coward Street, NSW
2-24 Rawson Place, NSW
2-6 Station Street, NSW
84 Crown Street, NSW
117 Bull Street, NSW
Soward Way, ACT
700 Collins Street, VIC
Village Cinemas, VIC
Australia - Core+ portfolio
200 Mary Street, QLD
207 Kent Street, NSW
475 Victoria Avenue, NSW
Regent Cinema Centre, NSW
TGA Complex, ACT
243 Northbourne Avenue, ACT
Australia - Active portfolio
19 National Circuit, ACT
Tuggeranong Office Park, ACT
Poland portfolio
Janki, Warszawa
Korona, Wrocław
Ster, Szczecin
Rondo, Bydgoszcz
Tulipan Łódź
Kometa, Toruń
Italy portfolio
Carugate
Campegine
Torri di Quartesolo
Verona
Bologna Interporto
Campogalliano
San Mauro Torinese
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
Freehold
Freehold
Freehold
Freehold
Freehold
Freehold
Freehold
Leasehold
Freehold
Freehold
Freehold
Freehold
Freehold
Freehold
Leasehold
Leasehold
Office
Office
Office
Office
Office
Office
Office
Office
Office
Retail
Office
Office
Office
Retail
Office
Office
Jun 2021
Jun 2021
Jun 2021
Jun 2021
Dec 2020
Jun 2021
Dec 2020
Jun 2021
Jun 2021
Jun 2021
Dec 2020
Jun 2021
Dec 2020
Jun 2021
Jun 2021
Jun 2021
100%
100%
Leasehold
Leasehold
Office
Land
Dec 2020
May 2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Freehold
Leasehold
Leasehold
Freehold
Freehold
Leasehold
Freehold
Freehold
Freehold
Freehold
Freehold
Freehold
Freehold
Retail
Retail
Retail
Retail
Retail
Retail
Logistics
Logistics
Logistics
Logistics
Logistics
Logistics
Logistics
Jun 2021
Jun 2021
Jun 2021
Jun 2021
Jun 2021
Jun 2021
Jun 2021
Jun 2021
Jun 2021
Jun 2021
Jun 2021
Jun 2021
Jun 2021
Total - investment property portfolio
Add: Right-of-use assets – Polish leasehold properties
Total investment properties as shown in the balance sheet
Investment properties classified as Held for sale
13 Keltie Street, ACT
Wakefield Street, SA
Total - Held for sale
Total – all investment property
Sold
Sold
Leasehold
Freehold
Office
Office
N/A
N/A
Carrying amount
2021
$M
542.0
240.0
550.0
315.0
52.5
51.0
31.5
310.0
352.0
18.0
2020
$M
525.0
242.0
520.0
300.0
51.0
37.5
29.3
290.0
337.0
15.6
542.0
240.0
550.0
315.0
52.5
51.0
31.5
310.0
352.0
18.0
2,462.0
2,462.0
2,347.4
90.0
305.0
120.0
14.0
20.0
33.8
90.0
305.0
120.0
14.0
20.0
33.8
96.0
297.0
120.2
12.5
40.5
29.8
582.8
582.8
596.0
10.0
7.5(1)
17.5
357.1
133.5
87.3
85.2
24.5
20.2
10.0
8.3
18.3
357.1
133.5
87.3
85.2
24.5
20.2
10.0
8.3
18.3
372.3
138.9
91.9
89.8
25.4
21.6
707.8
707.8
739.9
37.1
15.8
8.7
8.5
8.1
4.6
3.5
37.1
15.8
8.7
8.5
8.1
4.6
3.5
86.3
86.3
-
-
-
-
-
-
-
-
3,856.4
3,857.2
3,701.6
6.3
6.7
3,863.5
3,708.3
-
-
-
-
-
-
14.0
30.0
44.0
3,856.4
3,863.5
3,752.3
(1) Vacant land only. Valued based upon observable market values for equivalent property (not techniques described at (g) below).
91
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (F) CRITICAL ACCOUNTING ESTIMATES - REVALUATION OF INVESTMENT PROPERTY PORTFOLIO
Cromwell’s investment properties, with an aggregate carrying amount of $3,863.5 million (2020: $3,752.3 million)
represent a significant balance on Cromwell’s and the Trust’s Balance sheets. Investment properties are measured at fair
value using valuation methods that utilise inputs based upon estimates.
All property valuations utilise valuation models based on discounted cash flow (DCF) models or income capitalisation
models (or a combination of both) supported by recent market sales evidence. See note 8(g) below for further information
in relation to the valuation of investment properties.
At balance date the adopted valuations for 25 of Cromwell’s investment properties are based on independent external
valuations representing 92% of the value of the portfolio. The balance of the portfolio is subject to internal valuations
having regard to previous external valuations and comparable sales evidence, or, in the case of investment properties held
for sale, with reference to the relevant sale price. Cromwell’s valuation policy requires all properties to be valued by an
independent professionally qualified valuer with a recognised relevant professional qualification at least once every two
years.
Impact of COVID-19 on property valuations
For the year ended 30 June 2021 Cromwell’s approach to property valuations was substantially consistent with prior
years, being in accordance with the established Valuations policy, but with an added emphasis in relation to the impact of
COVID-19 upon inputs relevant to the valuation model for each property.
It should be noted that external valuers have specified in their reports that their valuations at 30 June 2021 were
performed in an unusual market context, notably the absence of transactions initiated after the outbreak of the pandemic
and difficulties associated with estimating the outlook for changes in the investment property market given the nature of
the recent health crisis, and they were working within the context of valuation uncertainty.
The table below shows the year end revaluation gains / (losses) for each portfolio.
Australia - Core
Australia - Core+
Australia - Active
Poland
Italy
Total revaluation gain / portfolio weighted average cap. rate
(1) Input not applicable to valuations in Active portfolio at balance date.
Revaluation
Weighted average cap. rate
2021
$M
112.9
(11.2)
(0.5)
(6.5)
2.8
97.5
2020
$M
92.2
14.7
(23.5)
(65.9)
-
17.5
2021
%
5.1%
6.2%
N/A(1)
6.5%
5.1%
5.5%
2020
%
5.4%
6.5%
7.3%
6.4%
-
5.7%
92
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (G) FAIR VALUE MEASUREMENT
As noted below in Cromwell's accounting policy, investment properties are measured at fair value. The fair value of
Cromwell's investment properties is determined using property valuation models that rely on the use of inputs that are not
based on readily observable market data. Such valuation methods for determining fair value are called level 3 fair value
measurements. These valuation methods and inputs are described in more detail below.
Valuation methodologies
Income
capitalisation
method
DCF method
This method involves assessing the total net market income receivable from the property and
capitalising this perpetually, using an appropriate, market derived capitalisation rate, to derive
a capital value, with allowances for capital expenditure reversions such as lease incentives and
required capital works payable in the near future and overs / unders when comparing market rent
with passing rent.
Under the DCF method, a property's fair value is estimated using assumptions regarding the
benefits and liabilities of ownership over the asset's life including an exit terminal value. The DCF
method involves the projection of expected cash flows from a real property asset over a period
of time (generally five years) discounted to present value using an appropriate discount rate. An
exit terminal value is added to the present value of the property cash flows using an appropriate
terminal yield, to derive the value of the property.
Both methods require the determination of net market rent for a particular property, being the income capitalised or used
to determine the present value of cash flows from the properties.
Unobservable inputs
Annual net
property income
Annual net property income is the contracted amount for which the property space is leased. In the
net property income, the property owner recovers outgoings from the tenant.
Capitalisation rate
The rate at which net market income is capitalised to determine the value of the property. The
rate is determined with regards to market evidence (and the prior external valuation for internal
valuations).
Discount rate
The rate of return used to convert a monetary sum, payable or receivable in the future, into present
value. It reflects the opportunity cost of capital, that is, the rate of return the capital can earn if put
to other uses having similar risk. The rate is determined with regards to market evidence (and the
prior external valuation for internal valuations).
Terminal yield
The capitalisation rate used to estimate the residual value of the cash flows associated with the
investment property at the end of the expected holding period.
Changes in these unobservable inputs have the following impact on the valuation of the properties:
Inputs
Annual net property income
Capitalisation rate
Discount rate
Terminal yield
Impact of increase
in input on fair
value
Impact of decrease
in input on fair
value
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Increase
93
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Range and weighted average of unobservable inputs used in the valuation methods to determine the fair value of
Cromwell's investment properties in the current and prior year are as follows:
Annual net property
income
($M)
Capitalisation
rate
(%)
Discount
rate
(%)
Terminal
yield
(%)
Range
Weighted
average
Range
Weighted
average
Range
Weighted
average
Range
Weighted
average
2021
Core
Core +
Active(1)
Poland
Italy
Portfolio
2020
Core
Core +
1.7 – 31.3
1.3 – 18.4
-
1.4 – 13.7
0.1 – 1.2
0.0 – 31.3
1.3 – 30.0
1.1 – 16.3
Active / H.F.S.(1)
0.0 – 11.4
Poland
Portfolio
1.1 – 8.8
0.0 – 30.0
21.7
12.3
-
9.4
0.7
4.8 – 6.8
5.8 – 9.5
N/A(3)
5.8 – 7.4
5.1
6.2
N/A(3)
6.5
5.8 – 8.0
6.5 – 9.8
N/A(3)
N/A(2)
N/A(2)
N/A(2)
5.0 – 5.5
17.4
4.8 – 9.5
5.6
5.0 – 9.8
20.2
12.3
5.4
6.3
5.0 – 7.0
5.8 – 8.8
0.0 – 7.3
5.8 – 7.3
15.9
0.0 – 8.8
5.4
6.5
7.3
6.4
5.7
6.3 – 8.0
6.0 – 8.0
0.0 – 7.8
6.0
6.8
N/A(3)
N/A(2)
5.1
6.2
6.4
6.7
7.8
5.0 – 7.0
6.0 – 9.8
N/A(3)
N/A(2)
5.2 – 5.9
5.0 – 9.8
5.3 – 7.3
6.3 – 9.0
0.0 – 7.5
5.5
6.5
N/A(3)
N/A(2)
5.4
5.7
5.7
7.0
7.5
N/A(2)
6.0(4)
N/A(2)
N/A(2)
N/A(2)
0.0 – 8.0(4)
6.5(4)
0.0 – 9.0(4)
(1) The unobservable inputs are not applied to Active / H.F.S. assets where this is not considered an appropriate method of valuation for the particular asset.
(2) No equivalent metric in Polish and Italian valuation methodologies.
(3) Input not applicable to valuations in Active portfolio at balance date.
(4) Australian portfolio only.
(H) NON-CANCELLABLE OPERATING LEASE RECEIVABLE FROM INVESTMENT PROPERTY TENANTS
The table below reflects the gross property income, excluding recoverable outgoings, based on existing lease agreements.
It assumes, that leases will not be extended by tenants beyond the current lease period, even if the lease contains options
for lease extensions by tenants.
Within one year
Later than one year but not later than five years
Later than five years
Total non-cancellable operating lease receivable from
investment property tenants
(I) ACCOUNTING POLICY
Cromwell
Trust
2021
$M
221.9
714.8
532.1
2020
$M
231.0
726.2
624.4
2021
$M
221.9
714.8
532.1
2020
$M
231.0
726.2
624.4
1,468.8
1,581.6
1,468.8
1,581.6
Investment properties
Investment properties are initially measured at cost including transaction costs and subsequently measured at fair
value, with any change therein recognised in profit or loss.
Fair value is based upon active market prices, given the assets’ highest and best use, adjusted if necessary, for any
difference in the nature, location or condition of the relevant asset. If this information is not available, Cromwell
uses alternative valuation methods such as discounted cash flow projections and / or the capitalised earnings
approach. The highest and best use of an investment property refers to the use of the investment property by market
participants that would maximise the value of that investment property.
94
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT The carrying value of the investment property includes components relating to lease incentives and other items
relating to the maintenance of, or increases in, lease rentals in future periods.
Investment properties under construction are classified as investment property and carried at fair value. Finance
costs incurred on investment properties under construction are included in the construction costs.
Lease incentives
Lessees may be offered incentives as an inducement to enter into non-cancellable operating leases. These incentives
may take various forms including up-front cash payments, rent free periods, rental abatements over the period or a
contribution to certain lessee costs such as fit out costs or relocation costs. They are recognised as an asset in the
Balance sheet as a component of the carrying amount of investment property and amortised over the lease period as
a reduction of rental income.
Initial direct leasing costs
Initial direct leasing costs incurred by Cromwell in negotiating and arranging operating leases are recognised as an
asset in the Balance sheet as a component of the carrying amount of investment property and are amortised as an
expense on a straight-line basis over the lease term.
9. Equity accounted investments
(A) OVERVIEW
This note provides an overview and detailed financial information of Cromwell’s and the Trust’s investments that are
accounted for using the equity method of accounting. These include joint arrangements where Cromwell or the Trust
have joint control over an investee together with one or more joint venture partners (these can take the form of either joint
arrangements or joint ventures depending upon the contractual rights and obligations of each party) and investments
in associates, which are entities over which Cromwell is presumed to have significant influence but not control or joint
control by virtue of holding 20% or more of the associates’ issued capital and voting rights, but less than 50%.
Cromwell’s and the Trust’s equity accounted investments are as follows:
Cromwell
Trust
2021
%
$M
2020
%
$M
2021
%
28.0
50.0
50.0
-
-
620.7
30.7
645.4
51.5
21.4
18.9
712.5
-
-
-
712.5
-
50.0
94.1
28.3
-
6.7
16.1
668.2
47.3
2.5
49.8
718.0
27.5
50.0
-
50.0
-
-
$M
610.0
51.5
-
0.5
662.0
-
-
-
662.0
2020
%
$M
30.1
633.2
-
-
94.1
-
-
-
0.5
633.7
47.3
-
47.3
681.0
Equity accounted investments
CEREIT
Ursynów
LDK
Others
Equity accounted investments
Held for sale
Ursynów
Other - Portgate
Total – Held for sale
Total – all equity accounted
investments
(B) DETAILS OF ASSOCIATE
Cromwell European Real Estate Investment Trust
Cromwell and the Trust have an investment in CEREIT with a carrying amount of $620.7 million (2020: $645.4 million)
and $610.0 million (2020: $633.2 million) respectively. CEREIT is a real estate investment trust (REIT) listed on the
mainboard of the Singapore Exchange (SGX) managed by Cromwell through its 100% owned subsidiary Cromwell EREIT
Management Pte. Ltd. (the Manager). CEREIT invests in commercial property, mainly office and urban logistics, in
western and central Europe with a current portfolio of 108 properties located in 9 European countries with an aggregate
95
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT portfolio value of €2.3 billion ($3.6 billion). The Manager of CEREIT has its own majority independent board of directors
acting solely in the interest of all CEREIT unitholders. As such, Cromwell and the Trust does not control CEREIT, however
has significant influence by virtue of their unitholdings.
(C) DETAILS OF JOINT VENTURES
Ursynów
Cromwell and the Trust have an investment in Ursynów with a carrying amount of $51.5 million (2020: $47.3 million).
Ursynów forms part of the Cromwell Polish Retail Fund (CPRF). Ursynów is a Polish company limited by shares that owns
a single retail asset in Warsaw, Poland. Cromwell and the Trust hold 50% of the voting rights of the company. The other
50% is held by joint venture partner, Unibail Rodamco Westfield (URW). The company is governed by a supervisory board
that decides on all relevant activities of the company. Both investors have equal participation rights in the supervisory
board and all decisions require unanimous consent establishing joint control.
By the virtue of having historically injected a higher proportion of equity, Cromwell had rights to a weighted average share
of profit of 88.1% of the profits from the company for the majority of the current year (2020: 94.1%).
In the prior year, the investment was transferred to non-current assets held for sale because URW exercised a call option
to acquire Cromwell's and the Trust's 50% equity share. Subsequently, URW expressed its desire to continue with the joint
venture on revised terms. Cromwell has now agreed terms with URW in respect of continuing the joint venture, which
included an equalisation of the equity injected into the company. Accordingly, the investment has been transferred from
non-current assets held for sale to equity accounted investments and the share of profits will be split 50% to each joint
venture partner going forward.
LDK Healthcare Unit Trust
Cromwell has an investment in LDK with a carrying amount of $21.4 million (2020: $ 6.7 million). LDK is a senior living
operator currently operating two senior living villages, being Greenway Views in Tuggeranong, ACT and The Landings in
North Turramurra on the Upper North Shore of Sydney, NSW. Cromwell holds 50% of the units in LDK with the other 50%
held by a single investor. By virtue of the unitholder agreement all decisions about the relevant activities of LDK require
unanimous consent of both unitholders establishing joint control. Both parties have only rights to the net assets of the
venture which is therefore classed as a joint venture that is equity accounted. Currently, Cromwell has rights to all profits
from LDK until a certain internal rate of return (IRR) threshold is achieved in respect of its capital invested at which point
in time profits will be shared between the joint venture partners.
Other joint ventures and associates
Other equity accounted investments include Cromwell's investment in Oyster Property Funds Limited (Oyster) (50%
interest), a New Zealand based fund and property manager which is jointly owned with six other shareholders, and
Phoenix portfolio’s (45% interest), an Australian based equity fund manager.
(D) ACCOUNTING POLICY
Interests in associates and joint venture entities are accounted for in Cromwell’s financial statements using the
equity method. Cromwell’s share of its associates and joint ventures’ post-acquisition profits or losses is recognised
in profit or loss and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative
post-acquisition movements are adjusted against the carrying amount of the investment. Dividends or distributions
receivable from associates and joint ventures are recognised in Cromwell’s financial statements as a reduction of the
carrying amount of the investment.
When Cromwell’s share of losses in an associate or joint venture equals or exceeds its investment in the joint venture,
including any other relevant unsecured receivables, Cromwell does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate or joint venture. Unrealised gains on transactions between
Cromwell, its associates and joint ventures are eliminated to the extent of Cromwell’s investment in the associate or
joint venture. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred.
(E) CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires management to make judgements and assumptions that affect
the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The
judgements and assumptions regarding the investments in Cromwell European Real Estate Investment Trust (CEREIT),
Ursynów and LDK Healthcare Pty Ltd (LDK) are detailed below.
96
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Cromwell European Real Estate Investment Trust
Cromwell and the Trust are considered to be able to exert significant influence, but not control, over the entity.
This determination is pursuant to the assessment of control and the consideration of key factors regarding the
management of CEREIT as governed by Cromwell’s Capital Markets Service Licence as issued by the Monetary
Authority of Singapore (MAS) and the composition of the Board.
Cromwell’s investment in CEREIT was assessed for indicators of impairment. This process included investigations
by management in relation to salient components of the CEREIT operations and financial metrics and an analysis of
movements in the CEREIT’s price on the Singapore Stock Market (SGX). Whilst the CEREIT share price on the SGX was
below that of the carrying value per unit at which Cromwell and the Trust carry their investments, the diminution in
price was not considered to be either significant or prolonged. Hence, no indicators of impairment were identified and
no impairment was recognised as a result.
Ursynów
Cromwell and the Trust can only exercise joint control over the relevant decisions but not control, over the entity.
This determination is pursuant to the assessment of control and the consideration of key factors regarding the
management of Ursynów, the composition of the Board and other relevant agreements and joint control over relevant
decisions.
LDK Healthcare Unit Trust
Cromwell can only exercise joint control over the relevant decisions but not control, over the entity. This determination
is pursuant to the assessment of control and the consideration of key factors regarding the management of LDK, the
composition of the Board and other relevant agreements and joint control over relevant decisions.
Cromwell has rights to a disproportionate share of profits (currently 100%) from LDK until a certain internal rate of
return (IRR) threshold is achieved in respect of its capital invested. This determination is pursuant to an assessment
of relevant agreements.
97
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 7
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98
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
10. Investments at fair value through profit or loss
(A) OVERVIEW
This note provides an overview and detailed financial information of Cromwell’s investments that are classified as financial
assets at fair value through profit or loss. Below is information about Cromwell’s investments in unlisted property related
entities whereby Cromwell holds less than 20% of the issued capital in the investee. Such investments are classified as
investments at fair value through profit or loss which are carried at fair value in the Balance sheet with adjustments to the
fair value recorded in profit or loss and include co-investments in European wholesale funds managed by Cromwell and
any other relevant financial assets.
Investment in wholesale funds
Total investments at fair value through profit or loss
(B) ACCOUNTING POLICY
Cromwell
Trust
2021
$M
8.9
8.9
2020
$M
12.9
12.9
2021
$M
-
-
2020
$M
-
-
Investments at fair value through profit or loss are financial assets held for trading which are acquired principally for
the purpose of selling in the short term with the intention of making a profit. Financial assets at fair value through
profit or loss also include financial assets which upon initial recognition are designated as such. These include
financial assets that are not held for trading purposes and which may be sold. These are investments in exchange
traded equity instruments and unlisted trusts.
At initial recognition, Cromwell measures a financial asset at its fair value. Transaction costs of financial assets
carried at fair value through profit or loss are expensed in the Statement of comprehensive income.
Subsequent to initial recognition, Cromwell continues to measure all equity investments at fair value. The fair values
of quoted investments are based on current bid prices. If the market for a financial asset is not active (e.g. for unlisted
securities), Cromwell establishes fair value by using valuation techniques. These include reference to the fair values
of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the
same, discounted cash flow analysis and pricing models to reflect the issuer’s specific circumstances.
Changes in the fair value of equity investments at fair value through profit or loss are recognised in the Statement of
comprehensive income as applicable.
For methods used to measure the fair value measurement of Cromwell’s and the Trust’s investments at fair value
through profit or loss refer to note 14.
99
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Finance and Capital Structure
This section of the annual financial report provides further information on Cromwell's and the Trust's capital that
comprises debt and stapled securityholders' equity and reserves. The Board of Directors is responsible for Cromwell's
capital management strategy. Capital management is an integral part of Cromwell’s risk management framework and
seeks to safeguard Cromwell’s ability to continue as a going concern while maximising securityholder value through
optimising the level and use of capital resources and the mix of debt and equity funding.
This section outlines the financial risks that Cromwell and the Trust are exposed to and how these risks are managed
as part of Cromwell's capital management.
11. Interest bearing liabilities
(A) OVERVIEW
Cromwell and the Trust borrow funds from financial institutions and investors (the latter in the form of convertible bonds)
to partly fund the acquisition of income producing assets. A significant proportion of these borrowings are generally fixed
either directly or through the use of interest rate swaps/options and have a fixed term. This note provides information
about Cromwell’s debt facilities, including maturity dates, security provided and facility limits.
Cromwell
Trust
2021
2020
2021
2020
Limit
Drawn
Limit
Drawn
Limit
Drawn
Limit
Drawn
$M
$M
$M
$M
$M
$M
$M
$M
3.8
3.8
319.7
350.8
18.9
355.2
350.8
368.2
360.2
3.7
3.7
368.2
360.2
17.6
355.2
350.8
0.4
0.4
319.7
350.8
5.4
0.4
0.4
368.2
360.2
5.9
368.2
360.2
Current
Unsecured
Lease liabilities
Total current
Non-current
Unsecured
Euro / GBP facility
Convertible bond
Lease liabilities
Secured
Bilateral loan facilities
1,560.0
1,099.0
1,460.0
1,028.0
1,560.0
1,099.0
1,460.0
1,028.0
Development loan facility – AUD
113.1
74.7
113.1
113.1
74.7
113.1
Development loan facility - Euro
Polish Euro facilities
Italian Euro facilities
-
281.3
52.0
281.3
52.0
-
7.6
Unamortised transaction costs
-
(14.0)
72.2
7.6
351.0
351.0
-
-
-
(17.3)
-
281.3
52.0
-
281.3
52.0
-
(14.0)
72.2
-
-
351.0
351.0
-
-
-
(17.3)
Total non-current
2,712.4
2,182.4
2,660.1
2,187.5
2,712.4
2,168.9
2,652.5
2,168.2
Total interest bearing liabilities
2,712.4
2,186.2
2,660.1
2,191.2
2,712.4
2,169.3
2,652.5
2,168.6
100
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
(B) MATURITY PROFILE
At balance date, the notional principal amounts and period of expiry of all of Cromwell’s and the Trust’s interest bearing
liabilities, excluding lease liabilities, is as follows:
1 Year - FY22
2 Years - FY23
3 Years - FY24
4 Years - FY25
5 Years - FY26
7 Years - FY28
(C) DETAILS OF FACILITIES
Cromwell
Trust
2021
$M
-
725.8
305.1
700.5
366.1
80.0
2020
$M
176.0
1,318.8
200.0
432.4
60.0
-
2021
$M
-
725.8
305.1
700.5
366.1
80.0
2020
$M
168.4
1,318.8
200.0
432.4
60.0
-
i) Euro / GBP facility
This revolving facility is syndicated and allows drawdowns in both Euro and GBP. Interest was payable in arrears,
calculated as EURIBOR / LIBOR plus a margin. All principal amounts outstanding are due at the expiry of the facility in
September 2022.
ii) Secured bilateral loan facilities
Secured Bilateral Loan Facilities (SBLF) can be held with multiple providers. All SBLFs are secured pari passu by first
registered mortgages over a pool of investment properties. Interest is payable quarterly in arrears calculated as BBSY rate
plus a loan margin except for one facility (see below). Each provider individually contracts its commitment amount, expiry
date and fee structure and can be repaid individually.
Details of individual SBLFs for Cromwell and the Trust are as follows:
Facility 1
Facility 2
Facility 3
Facility 4
Facility 5
Facility 6
Facility 7
Facility 8 (1)
Facility 9
Total SBLF’s
Expiry
Jun-23
Mar-24
Jun-24
Mar-25
Jun-25
Feb-26
Jun-26
Jun-26
Feb-28
2021
2020
Limit
$M
325.0
50.0
200.0
50.0
525.0
20.0
250.0
60.0
80.0
Drawn
$M
225.0
-
200.0
-
275.0
20.0
239.0
60.0
80.0
Limit
$M
1,100.0
50.0
200.0
50.0
-
-
-
60.0
-
Drawn
$M
768.0
-
200.0
-
-
-
-
60.0
-
1,560.0
1,099.0
1,460.0
1,028.0
(1) This facility has a fixed rate applicable.
iii) Development loan facility - AUD
This is a secured facility in relation to the asset enhancement initiative at the property at 475 Victoria Avenue, NSW.
Interest is payable quarterly in arrears calculated as BBSY rate plus a loan margin. The facility expires in April 2025.
iv) Development loan facility - Euro
The facility was secured with a registered mortgage over a single inventory asset. Interest was payable monthly in arrears
calculated as EURIBOR plus a margin. The principal amount outstanding was repaid during the year.
101
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT v) Polish Euro facilities
These facilities are secured by first registered mortgage over investment property held by CPRF. Interest is payable
quarterly in arrears calculated as the 3-month EURIBOR rate plus a margin. During the year one of the existing facilities
was repaid and replaced with a new facility expiring in June 2024. The other facility expires in February 2023.
vi) Italian loan facilities
During the year Cromwell and the Trust entered into a new secured facility in relation to the investment into the Cromwell
Italy Urban Logistics Fund. Interest is payable quarterly in arrears calculated as the EURIBOR rate plus a loan margin.
The facility is composed of two tranches with expiry dates in October 2022 and October 2025.
vii) Convertible bond - 2025
Cromwell issued 2,300 convertible bonds with a face value of €100,000 each, amounting to a total gross face value of
€230.0 million ($370.0 million on date of issue). The bonds are convertible into stapled securities of Cromwell at the option
of the holder from 40 days after issue date up to seven business days prior to the final maturity date on 29 March 2025, at
which point all remaining bonds are mandatorily redeemed by Cromwell. The conversion price is $1.141 at year end (30
June 2020: $1.153) per stapled security, subject to adjustments such as consolidation or subdivision of stapled securities,
bonus issues or any issues at less than the prevailing market price of Cromwell's stapled securities, other than issues
upon exercise of performance rights issued to Cromwell's employees. The fixed conversion translation rate is $1.5936 per
Euro. Any conversion may be settled in cash, stapled securities of Cromwell or a combination thereof at the discretion of
Cromwell.
viii) Convertible bond – conversion features
The conversion feature of the convertible bonds represents an embedded derivative financial instrument in the host debt
contract. The embedded derivative is measured at fair value and deducted from the carrying amount of the convertible
bond (which is carried at amortised cost) and separately disclosed as a derivative financial liability on the face of the
balance sheet.
Convertible bond - movements
Face value of bonds issued – March 2018
Derivative financial instruments – conversion feature
Convertible bond carrying amount at inception
Movements in previous periods
Carrying amount at 1 July
Amortisation - effective interest rate
Movements in exchange rate
Total carrying amount at year end
Cromwell
Trust
2021
$M
370.0
(23.5)
346.5
13.7
360.2
3.3
(12.7)
350.8
2020
$M
370.0
(23.5)
346.5
6.8
353.3
3.2
3.7
360.2
2021
$M
370.0
(23.5)
346.5
13.7
360.2
3.3
(12.7)
350.8
2020
$M
370.0
(23.5)
346.5
6.8
353.3
3.2
3.7
360.2
ix) Operating lease liabilities
Cromwell recognises lease liabilities and related right-of-use assets in respect of various premises, property, plant and
equipment and motor vehicle leases. The leases in respect of assets in Australia, Europe and Singapore have varying
terms and are subject to varying rates of interest. See note 19 for further information.
Below is a maturity table of minimum lease payments in relation to leases in existence at the reporting date.
Within one year
Later than one year but not later than five years
Greater than five years
Total operating lease commitments
Cromwell
Trust
2021
$M
3.8
11.1
7.8
22.7
2020
$M
3.7
10.3
7.3
21.3
2021
$M
0.4
1.9
3.5
5.8
2020
$M
0.4
1.7
4.2
6.3
102
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (D) ACCOUNTING POLICY
Interest bearing liabilities are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost using the effective interest rate method. Under this method fees, costs,
discounts and premiums directly related to the financial liability are spread over its expected life.
The fair value of the borrowing portion of a convertible bond is determined using a market interest rate for an equivalent
non-convertible bond. This amount is recorded as a borrowing liability on an amortised cost basis until extinguished
on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the derivative conversion feature.
This is recognised as a financial liability if the convertible bond does not meet the “fixed-for-fixed” rule, otherwise it is
included in shareholders’ equity.
Borrowing costs incurred on funds borrowed for the construction of a property are capitalised, forming part of the
construction cost of the asset. Capitalisation ceases upon practical completion of the property. Other borrowing costs
are expensed.
For information in respect of accounting policies in relation to lease liabilities see note 19.
12. Derivative financial instruments
(A) OVERVIEW
Cromwell’s and the Trust’s derivative financial instruments consist of interest rate swap and interest rate cap contracts
and the conversion option on the convertible bond. Derivative financial instruments are accounted for at fair value. The
table below is a summary of Cromwell’s and the Trust’s fair values of derivative financial instruments disclosed in the
balance sheet.
Non-current assets
Interest rate cap contracts
Total derivative financial instruments
Current liabilities
Interest rate swap contracts
Conversion feature – convertible bond
Non-current liabilities
Interest rate swap contracts
Total derivative financial instruments
Cromwell
Trust
2021
$M
2020
$M
2021
$M
2020
$M
11.3
11.3
3.1
5.5
8.6
2.8
11.4
-
-
7.8
5.3
13.1
6.2
19.3
11.3
11.3
3.1
5.5
8.6
2.8
11.4
-
-
7.8
5.3
13.1
6.2
19.3
(B) INTEREST RATE SWAP AND CAP CONTRACTS
Interest rate swap contracts are used to fix interest on floating rate borrowings and interest rate cap contracts are used to
cap interest on floating rate borrowings.
Maturity profile
At balance date, the notional principal amounts and period of expiry of all of Cromwell’s and the Trust’s interest rate swap
and cap contracts is as follows:
Less than 1 year
1 – 2 years
2 – 3 years
3 – 5 years
Cromwell and Trust
2021
$M
575.0
150.6
-
652.0
2020
$M
186.3
510.0
156.1
180.0
103
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Hedging profile
The table below provides an overview of the hedging of Cromwell’s and the Trust’s borrowings through interest rate cap
and interest rate swap contracts as at balance date:
2021
2020
Hedge
contract
notional
Average
strike
price
Interest
bearing
liability
Percent
hedged
Hedge
contract
notional
Average
strike
price
Interest
bearing
liability
Percent
hedged
$M
%
$M
%
$M
%
$M
%
Secured bilateral loan facility
Interest rate cap contracts
Interest rate swap contracts
Fixed rate loan
520.0
420.0
60.0
1.30%
1.87%
3.20%
Total – Secured bilateral loan facility
1,000.0
1,099.0
90.99%
Secured loan facilities
2.18%
1.87%
3.20%
315.0
465.0
60.0
840.0
1,028.0
81.71%
Interest rate cap contracts
72.0
1.00%
74.7
96.39%
-
-
72.2
-
Secured Polish Euro facility 1
Interest rate cap contracts
Interest rate swap contracts
Total – Polish Euro facility 1
Secured Polish Euro facility 2
0.00%
0.00%
65.0
-
65.0
105.1
61.85%
0.32%
0.32%
48.2
48.2
96.4
168.4
57.24%
Interest rate swap contracts
150.6
(0.28)%
176.2
85.47%
156.1
0.48%
182.6
85.49%
Secured Italian Euro facilities 1 and 2
Secured Euro facility
Euro / GBP facility
Interest rate cap contract
Convertible Bond
Total
-
-
-
150.0
350.8
1,788.4
-
-
-
0.28%
2.50%
52.0
-
319.7
-
350.8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7.6
368.2
-
360.2
2.50%
360.2
-
-
-
-
-
2,177.5
82.13%
1,452.7
2,187.2
66.42%
(C) CONVERSION FEATURE – CONVERTIBLE BOND
The conversion option amount represents the additional value provided to convertible bond holders compared with
the same corporate bond that would have no feature to convert the bonds into Cromwell stapled securities at the end
or during the term of the bond. For accounting purposes such a conversion feature is accounted for separately from
the bond as a derivative financial instrument and is carried at fair value. Movements of the conversion features since
recognition since issue of the convertible bonds is as follows:
Derivative financial liability at 1 July
Fair value loss / (gain)
Foreign exchange difference
Balance at 30 June
Cromwell and Trust
2021
$M
5.3
0.4
(0.2)
5.5
2020
$M
28.5
(23.6)
0.4
5.3
For details about the fair value measurement of Cromwell’s and the Trust’s financial instruments refer to note 14(g).
(D) ACCOUNTING POLICY
Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered
into and are subsequently remeasured to fair value at balance date. Derivatives are carried as assets when their fair
value is positive and as liabilities when their fair value is negative.
104
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 13. Other financial assets and financial liabilities
(A) OVERVIEW
This note provides further information about material financial assets and liabilities that are incidental to Cromwell’s and
the Trust’s trading activities, being receivables and trade and other payables, as well as information about restricted cash.
(B) RECEIVABLES
Current
Trade and other receivables at amortised cost
Loan at amortised cost – vendor finance
Loans at amortised cost - other
Total receivables – current
Non-current
Loans at amortised cost – joint venture partners
Loans at amortised cost – inter-group
Loans at fair value through profit or loss – joint venture partner
Loans at amortised cost – other (1)
Total receivables – non-current
(1) Includes loans to related parties.
Cromwell
Trust
2021
$M
48.8
27.0
4.2
80.0
146.2
-
-
2.5
148.7
2020
$M
49.8
-
0.5
50.3
31.8
-
157.1
12.1
201.0
2021
$M
28.1
27.0
-
55.1
109.3
74.6
-
-
183.9
2020
$M
30.9
-
-
30.9
31.8
98.0
116.9
-
246.7
Loan – vendor finance
The Trust has provided a loan facility to the acquirer of the Wakefield Street, SA, property which terminates on 20
December 2021. The maximum loan facility is $27.0 million with a current interest rate of 7.0%.
Loans – joint venture partners
LDK joint venture
i) Working capital loan
Cromwell and the Trust have provided LDK with a ‘Working capital loan’ facility terminating on 31 December 2023. The
maximum loan facility is $10.0 million with an interest rate of 12%. The balance receivable at year end was $4.3 million
(2020: $0.9 million).
ii) “Waterfall” loans
Previously Cromwell and the Trust provided a number of loan facilities to LDK. At 31 December 2020 these loan facilities
(classified as being held at fair value through profit or loss) were cancelled and the loan balance at that time of $149.5
million (June 2020: $157.1 million) was transferred to new loan facilities of $173.0 million in aggregate (classified as
being held at amortised cost). The new facilities are secured by second ranking mortgages over the investment properties
owned by LDK. The balance receivable at year end was $141.9 million.
These facilities do not constitute a component of Cromwell’s net investment in the joint venture itself due to the loans
being either secured or their settlement being planned and likely.
Ursynów joint venture
Cromwell and the Trust provided a PLN-denominated loan facility to Ursynów of PLN 100.0 million. The loan, which had
a balance of $30.9 million at the end of the prior year, was repaid in full during the current year and the related facility
cancelled.
Loans - inter-group
The Trust has provided a loan facility to the Company of €100.0 million. The loan balance was €47.2 million ($74.6 million)
(2020: €59.9 million ($98.0 million)) at balance date. The facility is unsecured and expires in February 2029.
105
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (C) TRADE AND OTHER PAYABLES
Trade and other payables
Lease incentives payables
Tenant security deposits
Trade and other payables
(D) ACCOUNTING POLICY
Cromwell
Trust
2021
$M
36.8
44.5
1.8
83.1
2020
$M
46.0
62.7
2.4
111.1
2021
$M
14.5
44.5
1.8
60.8
2020
$M
20.5
62.7
2.4
85.6
Trade receivables and loans at amortised cost
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost, less
any expected credit losses. Operating lease receivables of investment properties are due on the first day of each month,
payable in advance.
Note: as a result of COVID-19 Cromwell has undertaken a comprehensive review of tenant receivables. All tenant
receivables not considered to be recoverable have been fully provided for.
Loans at fair value through profit or loss
Loans at fair value through profit or loss are recognised initially at fair value and subsequently measured at fair value
using techniques detailed in note 14.
Note: the recoverability and measurement of loans to related parties was assessed against the backdrop of COVID-19.
Recoverability was assessed based upon financial and non-financial information provided by the borrowers.
Recoverability was found to not be negatively impacted.
Trade payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost. These
amounts represent liabilities for goods and services provided to Cromwell prior to the end of the year and which are
unpaid. The amounts are usually unsecured and paid within 30-60 days of recognition.
14. Financial risk management
(A) OVERVIEW
Cromwell’s activities expose it to a variety of financial risks which include credit risk, liquidity risk and market risk.
Cromwell’s overall risk management program focuses on managing these risks and seeks to minimise potential adverse
effects on the financial performance of Cromwell.
Cromwell’s management of treasury activities is centralised and governed by policies approved by the Directors who
monitor the operating compliance and performance as required. Cromwell has policies for overall risk management
as well as policies covering specific areas such as identifying risk exposure, analysing and deciding upon strategies,
performance measurement, the segregation of duties and other controls around the treasury and cash management
functions.
106
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Cromwell’s risk exposures and techniques used to manage these are summarised below:
Risk
Definition of risk
Cromwell’s exposure
Cromwell’s management of risk
Credit risk
(Section 14(b))
The risk a counterparty
will default on its
contractual obligations
under a financial
instrument resulting
in a financial loss to
Cromwell.
• Cash and cash
equivalents;
• Receivables;
• Derivative financial
Cromwell manages this risk by:
• establishing credit limits for
counterparties and managing exposure
to individual entities;
instruments;
• monitoring the credit quality of all
• Investments in
equity accounted
investments;
• Investments at fair
value through profit
or loss.
Liquidity risk
(Section 14(c))
The risk Cromwell
will default on its
contractual obligations
under a financial
instrument.
• Payables;
• Borrowings;
• Derivative financial
instruments.
financial assets in order to identify any
potential adverse changes in credit
quality;
• derivative counterparties and cash
transactions, when utilised, are
transacted with high credit quality
financial institutions;
• regularly monitoring loans and
receivables on an ongoing basis; and
• regularly monitoring the performance of
associates on an ongoing basis.
Cromwell manages this by:
• maintaining sufficient cash reserves
and undrawn finance facilities to meet
ongoing liquidity requirements;
• preparation of rolling forecasts of
short-term and long-term liquidity
requirements;
• monitoring maturity profile of
borrowings and putting in place
strategies to ensure all maturing
borrowings are refinanced significantly
ahead of maturity.
Market risk – price
risk
(Section 14(d))
Market risk – interest
rate risk
(Section 14(e))
Market risk – foreign
exchange risk
(Section 14(f))
The risk that the fair
value of financial assets
at fair value through
profit or loss will
fluctuate.
The risk that the fair
value or cash flows of
financial instruments
will fluctuate due to
changes in market
interest rates.
The risk that the fair
value of a foreign
currency asset or
liability will fluctuate
due to changes in
foreign currency rates.
• Investments at fair
value through profit or
loss.
Cromwell has minimal exposure to this
risk and therefore does not actively
manage this risk.
• Borrowings at
variable or fixed rates;
• Derivative financial
instruments.
Cromwell manages this risk through
interest rate hedging arrangements (swap
or cap contracts) on not less than 50% of
Cromwell's borrowings.
Cromwell manages this risk by financing
Cromwell's foreign currency investments
through foreign currency borrowings
providing a natural hedge.
• Cash and cash
equivalents;
• Investments in foreign
subsidiaries;
• Investments in foreign
equity accounted
investments;
• Foreign currency
borrowings.
(B) CREDIT RISK
The maximum exposure to credit risk at balance date is the carrying amount of financial assets recognised in the Balance
sheet of Cromwell. Cromwell and the Trust hold collateral as security in relation to the following:
• Loan – vendor finance – this loan is secured by first ranking mortgage over the relevant investment property.
• Loans at amortised cost -LDK – these loans are secured by first and second raking mortgages over relevant investment
properties and other assets within the LDK structure.
107
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Cash is held with Australian, New Zealand, United Kingdom, Singapore and European financial institutions. Interest rate
derivative counterparties are all Australian and European financial institutions.
(C) LIQUIDITY RISK
The contractual maturity of Cromwell’s and the Trust’s financial liabilities at balance date are shown in the table below.
It shows undiscounted contractual cash flows required to discharge Cromwell’s financial liabilities, including interest at
current market rates.
Cromwell
Trust
1 year
or less
2-3
years
4-5
years
Over 5
years
$M
$M
$M
$M
83.1
42.5
-
-
-
-
-
-
1 year
or less
2-3
years
4-5
years
Over 5
years
$M
$M
$M
$M
60.8
42.5
-
-
-
-
-
-
Total
$M
83.1
42.5
Total
$M
60.8
42.5
49.6
766.8
1,435.8
83.2
2,335.4
49.6
766.8
1,435.8
83.2
2,335.4
3.8
3.1
5.6
1.5
5.5
1.3
7.8
22.7
-
5.9
0.4
3.1
1.0
1.5
0.9
1.3
3.5
-
5.8
5.9
2021
Trade and other payables
Dividends / distribution
payable
Borrowings
Lease liabilities
Derivative financial
instruments
Total financial liabilities
182.1
773.9
1,442.6
91.0
2,489.6
156.4
769.3
1,438.0
86.7
2,450.4
2020
Trade and other payables
Dividends / distribution
payable
111.1
49.0
-
-
-
-
-
-
111.1
49.0
85.6
49.0
-
-
-
-
-
-
85.6
49.0
Interest bearing liabilities
35.5
211.8
1,987.3
61.2
2,295.8
35.4
204.1
1,987.3
61.2
2,288.0
Lease liabilities
Derivative financial
instruments
3.7
9.6
5.2
3.7
5.2
6.0
7.3
-
21.4
19.3
0.4
9.6
0.9
3.7
0.9
6.0
4.2
-
6.4
19.3
Total financial liabilities
208.9
220.7
1,998.5
68.5
2,496.6
180.0
208.7
1,994.2
65.4
2,448.3
(D) MARKET RISK – PRICE RISK
Cromwell and the Trust are exposed to price risk in relation to its unlisted equity securities (refer note 10), although this
exposure is currently immaterial.
(E) MARKET RISK – INTEREST RATE RISK
Cromwell’s interest rate risk primarily arises from borrowings. Borrowings issued at variable rates expose Cromwell to
cash flow interest rate risk. Borrowings issued at fixed rates expose Cromwell to fair value interest rate risk. Cromwell’s
policy is to effectively maintain hedging arrangements on not less than 50% of its borrowings. At balance date interest on
a total of 82% (2020: 66%) of Cromwell’s total borrowings is effectively fixed by being at fixed rates or through interest rate
swap and cap contracts.
For details about notional amounts and expiries of Cromwell’s and the Trust’s interest rate swap and interest rate cap
contracts refer to note 12.
The below table shows the impact on profit after tax and equity if interest rates changed by 100 basis points based on
borrowings and interest rate derivatives held at year-end with all other variables held constant. The impact on profit after
tax and equity includes impact on finance costs (cash flow risk) and the fair value of derivative financial instruments (fair
value risk).
108
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Interest rate increase / (decrease) of:
2021
Cromwell
Trust
2020
Cromwell
Trust
+1%
-1%
Profit
$M
Equity
$M
Profit
$M
Equity
$M
(6.4)
(7.0)
(9.4)
(10.1)
(6.4)
(7.0)
(9.4)
(10.1)
6.4
7.0
9.4
10.1
6.4
7.0
9.4
10.1
(F) MARKET RISK – FOREIGN EXCHANGE RISK
Cromwell’s foreign exchange risk primarily arises from its investments in foreign subsidiaries and the investment in
CEREIT. The functional currency of these entities is Euro or Polish Zloty. No hedge accounting was applied in relation to
the net investment in the foreign subsidiaries.
Cromwell’s and the Trust’s exposure to Euro foreign currency risk due to the ownership, funding and operation of the
investment property portfolios in Poland and Italy and the investment in CEREIT as well as overseas subsidiaries,
expressed in Australian dollars, was as follows:
Euro foreign currency risk
Cash and cash equivalents
Receivables
Borrowings – financial institutions
Borrowings – convertible bond
Derivative financial instruments – conversion feature
Other
Total exposure
Cromwell
Trust
2021
$M
34.7
-
(319.7)
(350.8)
(5.5)
(2.3)
2020
$M
0.7
-
(368.2)
(360.2)
(5.3)
(0.7)
2021
$M
34.7
74.6
(319.7)
(350.8)
(5.5)
(2.3)
2020
$M
0.4
-
(368.2)
(360.2)
(5.3)
(1.1)
(643.6)
(733.7)
(569.0)
(734.4)
A change in the exchange rate of the Euro would have resulted in the following impact on Cromwell's profit after tax and
equity:
Euro – Australian Dollar gains 1 cent in exchange
Euro – Australian Dollar loses 1 cent in exchange
2021
2020
Profit
$M
10.0
(10.3)
Equity
$M
10.0
(10.3)
Profit
$M
11.7
(12.1)
Equity
$M
11.7
(12.1)
Cromwell and the Trust also have exposure to Polish Złoty foreign currency risk due to the ownership and operation of the
investment property portfolio in Poland. Expressed in Australian dollars, this was as follows:
Polish Złoty foreign currency risk
Cash and cash equivalents
Receivables
Other
Total exposure
Cromwell
Trust
2021
$M
28.6
-
0.4
29.0
2020
$M
21.3
30.9
0.5
52.7
2021
$M
28.6
-
0.4
29.0
2020
$M
21.3
30.9
0.5
52.7
A change in the exchange rate of the Polish Złoty would not result in a material impact on Cromwell's profit after tax and
equity.
109
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
(G) FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
Cromwell uses a number of methods to determine the fair value of its financial assets and financial liabilities. The
methods comprise the following:
Level 1
Level 2
Level 3
quoted prices (unadjusted) in active markets for identical assets or liabilities.
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).
inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
The table below presents Cromwell’s and the Trust’s financial assets and liabilities measured and carried at fair value at
30 June 2021 and 30 June 2020 and the type of fair value measurement applied:
Cromwell
Notes
$M
$M
2021
Level 2
Level 3
2020
Total
$M
Level 2
Level 3
$M
$M
Total
$M
Financial assets at fair value
Receivables
Loans at fair value through profit or
loss – associate
13(b)
Investments at fair value through
profit or loss
Unlisted equity securities
Derivative financial instruments
Interest rate caps
Total financial assets at fair value
Financial liabilities at fair value
Derivative financial instruments
Interest rate swaps
Conversion feature
Total financial liabilities at fair value
10(a)
12(a)
12(a)
12(a)
-
-
11.3
11.3
5.9
5.5
11.4
-
-
8.9
-
8.9
-
-
-
8.9
11.3
20.2
5.9
5.5
11.4
-
-
-
-
14.0
5.3
19.3
157.1
157.1
12.9
12.9
-
-
170.0
170.0
-
-
-
14.0
5.3
19.3
Trust
Notes
$M
$M
2021
Level 2
Level 3
2020
Total
$M
Level 2
Level 3
$M
$M
Total
$M
Financial assets at fair value
Receivables
Loans at fair value through profit or
loss – associate
13(b)
-
Derivative financial instruments
Interest rate caps
12(a)
Total financial assets at fair value
Financial liabilities at fair value
Derivative financial instruments
Interest rate swaps
Conversion feature
12(a)
12(a)
Total financial liabilities at fair value
11.3
11.3
5.9
5.5
11.4
-
-
-
-
-
-
-
11.3
11.3
5.9
5.5
11.4
-
-
-
14.0
5.3
19.3
116.9
116.9
-
-
116.9
116.9
-
-
-
14.0
5.3
19.3
There were no transfers between the levels of fair value measurement during the current and prior financial years.
110
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (H) DISCLOSED FAIR VALUES
i) Valuation techniques used to derive Level 1 fair values
At balance date, Cromwell held no Level 1 assets. The fair value of financial assets traded in active markets is based on
their quoted market prices at the end of the reporting period without any deduction for estimated future selling costs.
ii) Valuation techniques used to derive Level 2 fair values
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques.
These valuation techniques maximise the use of observable market data, assessed for the impact of COVID-19 where
it is applicable and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an
instrument are observable, the instrument is included in Level 2.
Fair value of investments at fair value through profit or loss
Level 2 assets held by Cromwell include unlisted equity securities in Cromwell managed investment schemes. The fair
value of these financial instruments is based upon the net tangible assets as publicly reported by the underlying unlisted
entity, adjusted for inherent risk where appropriate.
Fair value of interest rate swaps and caps
Level 2 financial assets and financial liabilities held by Cromwell include “Vanilla” fixed to floating interest rate swap and
interest rate cap derivatives (over-the-counter derivatives). The fair value of these derivatives has been determined using
pricing models based on discounted cash flow analysis which incorporates assumptions supported by observable market
data at balance date including market expectations of future interest rates and discount rates adjusted for any specific
features of the derivatives and counterparty or own credit risk.
Fair value of conversion feature – convertible bond
The fair value of the convertible bond conversion feature has been determined by comparing the market value of the
convertible bond to the value of a bond with the same terms and conditions but without an equity conversion feature (bond
floor). The difference between the two types of bonds is considered to represent the fair value of the conversion feature of
the convertible bond.
iii) Valuation techniques used to derive Level 3 fair values
If the fair value of financial instruments is determined using valuation techniques and if one or more of the significant
inputs is not based on observable market data, the instrument is included in Level 3.
Reconciliation from the opening balances to the closing balances for fair value measurements in Level 3 of the fair value
hierarchy:
Investments at fair value through profit or loss
Opening balance as at 1 July
Additions
Disposals
Fair value loss
Foreign exchange difference
Balance at 30 June
Cromwell
2021
$M
12.9
0.7
(2.3)
(2.0)
(0.4)
8.9
2020
$M
21.8
-
(4.6)
(4.3)
-
12.9
Receivables held at fair value through profit or loss
Level 3 assets held by Cromwell and the Trust included loans to the LDK joint venture. The fair value of these loans was
based on the relevant discounted net cash inflows from expected future inflows of principal and interest.
Fair value of investments at fair value through profit or loss
Level 3 assets held by Cromwell include co-investments in Cromwell Europe managed wholesale property funds. The
fair value of these investments is determined based on the value of the underlying assets held by the fund. The assets of
the fund are subject to regular external valuations which are based on discounted net cash inflows from expected future
income and/or comparable sales of similar assets. Appropriate discount rates determined by the independent valuer are
used to determine the present value of the net cash inflows based on a market interest rate adjusted for the risk premium
specific to each asset.
111
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (I) ACCOUNTING POLICY
Initial recognition and measurement
Financial assets and financial liabilities are recognised in Cromwell’s Balance sheet when it becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. On initial recognition, financial assets
and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are
recognised net of transaction costs directly attributable to the acquisition of these financial assets or financial
liabilities. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognised immediately in the Statement of comprehensive income.
Financial assets
Classification and subsequent recognition and measurement
Subsequent to initial recognition Cromwell classifies its financial assets in the following measurement categories:
• Those to be measured at fair value (either through other comprehensive income, or through profit or loss); and
• Those to be measured at amortised cost.
The classification depends upon whether the objective of Cromwell’s relevant business model is to hold financial
assets in order to collect contractual cash flows (business model test) and whether the contractual terms of the cash
flows give rise on specified dates to cash flows that are solely payments of principal and interest (cash flow test).
Financial assets recognised at amortised cost
Trade and other receivables are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest and are measured at amortised cost. Interest income from these financial assets is
included in finance income using the effective interest rate method.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable is recognised in the Statement of comprehensive income.
Collectability of trade and other receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off.
Financial assets recognised at fair value through profit or loss
Assets that do not meet the criteria for amortised cost or recognition at fair value through other comprehensive
income are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently
measured at fair value through profit or loss is recognised in the Statement of comprehensive income and presented
net within other gains / (losses) in the period in which it arises.
Impairment
Cromwell recognises a loss allowance for expected credit losses on trade receivables that are measured at amortised
cost and contract assets. The amount of expected credit losses is updated at each reporting date to reflect changes in
credit risk since initial recognition of the respective financial instrument.
For trade receivables, Cromwell applies the simplified approach permitted by AASB 9 Financial Instruments, which
requires expected lifetime credit losses to be recognised from initial recognition of the receivables. The expected
credit losses on these financial assets are estimated using a provision matrix based on Cromwell’s historical credit
loss experience adjusted for factors that are specific to the debtors, general economic conditions and an assessment
of both the current as well as the forecast direction of conditions at the reporting date, including time value of money
where appropriate.
Cromwell impairs a financial asset when there is information indicating that the debtor is in severe financial difficulty
and there is no realistic prospect of recovery.
Response to COVID-19
As a result of COVID-19 Cromwell has undertaken a comprehensive review of the tenant receivables schedule. Any
and all tenant receivables not considered to be recoverable have been fully provided for and are not included in the
tenant receivables balance at year end.
112
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Cromwell has also undertaken a review of its loan asset portfolio (including loans carried at fair value and loans
carried at amortised cost). This process involved a thorough examination of all loan receivable balances with
counterparties to assess the extent of expected credit losses that should be recognised. This resulted in minimal ($0.2
million) expected credit losses to be recognised.
Financial liabilities and equity
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities.
Equity instruments issued by Cromwell are recognised at the value of the proceeds received, net of direct issue costs.
Repurchase of the Cromwell’s own equity instruments is recognised and deducted directly in equity. No gain or loss is
recognised in the Statement of comprehensive income on the purchase, sale, issue or cancellation of Cromwell’s own
equity instruments.
Compound instruments
The component parts of convertible loan notes issued by Cromwell are classified separately as financial liabilities and
equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and
an equity instrument. A conversion option that will not be settled by the exchange of a fixed amount of cash or another
financial asset for a fixed number of Cromwell’s own equity instruments is an embedded derivative and not an equity
instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate
for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the
effective interest method until extinguished upon conversion or at the instrument’s maturity date.
The conversion option classified as an embedded derivative is determined by deducting the amount of the liability
component from the fair value of the compound instrument in its entirety. This component is recognised and classified
as a financial liability and categorised as being at fair value through profit or loss. This amount is subsequently
remeasured (see Embedded derivatives section below).
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at fair
value through profit or loss.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not contingent consideration of an acquirer in a business combination, held-for-trading,
or designated as at fair value through profit or loss, are subsequently measured at amortised cost using the effective
interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where
appropriate) a shorter period, to the amortised cost of a financial liability.
Derecognition of financial liabilities
Cromwell derecognises financial liabilities when, and only when, its obligations are discharged, cancelled or have
expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid
and payable is recognised in the Statement of comprehensive income.
When Cromwell exchanges one debt instrument for another with substantially different terms with an existing lender,
such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new
financial liability. Similarly, Cromwell accounts for the substantial modification of terms of an existing liability or part
of it as an extinguishment of the original financial liability and the recognition of a new financial liability.
113
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Derivative financial instruments
For information in relation to the accounting policies for derivative financial instruments, refer note 12(d).
15. Contributed equity
(A) OVERVIEW
Issued capital of Cromwell includes ordinary shares in Cromwell Corporation Limited and ordinary units of Cromwell
Diversified Property Trust which are stapled to create Cromwell's stapled securities. The shares of the Company and units
of the CDPT cannot be traded separately and can only be traded as stapled securities.
Stapled securities entitle the holder to participate in dividends and distributions as declared from time to time and the
proceeds on winding up. On a show of hands every holder of stapled securities present at a meeting in person, or by proxy,
is entitled to one vote, and upon a poll each stapled security is entitled to one vote.
Cromwell's and the Trust's issued capital at year-end were as follows:
Cromwell stapled
securities
2021
M
2020
M
Issued capital
2,617.5
2,612.9
(B) MOVEMENTS IN CONTRIBUTED EQUITY
Company shares
CDPT units
2021
$M
207.3
2020
$M
207.1
2021
$M
2020
$M
2,072.5
2,071.4
The following reconciliation summarises the movements in contributed equity. Issues of a similar nature have been
grouped and the issue price shown is the weighted average. Detailed information on each issue of stapled securities is
publicly available via the ASX.
Cromwell stapled
securities
Company
shares
CDPT
units
Number of
securities
Issue
Price
Opening balance at 1 July 2019
2,236,642,691
Exercise of performance rights
4,920,055
Distribution reinvestment plan(1)
16,927,663
Security placement and SPP
354,381,191
Equity issue costs
-
Balance at 30 June 2020
2,612,871,600
40.0¢
124.3¢
115.0¢
-
Issue
Price
6.3¢
21.2¢
18.6¢
-
$M
1,857.4
1.9
21.0
407.6
(9.4)
2,278.5
Exercise of performance rights
4,599,075
30.0¢
1.3
5.2¢
Balance at 30 June 2021
2,617,470,675
2,279.8
$M
138.4
0.3
3.6
65.9
(1.1)
207.1
0.2
207.3
Issue
Price
33.7¢
103.1¢
96.4¢
-
24.8¢
$M
1,719.0
1.6
17.4
341.7
(8.3)
2,071.4
1.1
2,072.5
(1) The Company / CDPT has established a dividend/distribution reinvestment plan under which holders of stapled securities may elect to have all of their
dividend/distribution entitlement satisfied by the issue of new stapled ordinary securities rather than being paid in cash. The plan has been suspended
since the payment of the December 2019 in February 2020.
(C) ACCOUNTING POLICY
The ordinary shares of the Company are stapled with the units of the Trust and are together referred to as stapled
securities. Stapled securities are classified as equity. Incremental costs directly attributable to the issue of new
shares, units or options are shown in equity as a deduction, net of tax, from the proceeds.
Where any group company purchases Cromwell’s equity instruments, for example as the result of a share buy-back
or a share-based payment plan, the consideration paid, including any directly attributable incremental costs (net of
income taxes) is deducted from equity attributable to the securityholders as treasury shares until the securities are
114
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT cancelled or reissued. Where such ordinary securities are subsequently reissued, any consideration received, net
of any directly attributable incremental transaction costs and the related income tax effects, is included in equity
attributable to securityholders.
16. Reserves
(A) OVERVIEW
Reserves are balances that form part of equity that record other comprehensive income amounts that are retained in the
business and not distributed until such time the underlying balance sheet item is realised. This note provides information
about movements in the other reserves disclosed in the Balance sheet and a description of the nature and purpose of
each reserve.
Security based
payments reserve
(SBP)
This reserve is used to recognise the fair value of equity settled security based payments
in respect to employee services. Refer to note 22 for details of Cromwell’s security based
payments.
Fair value through
other comprehensive
income reserve
(FVTOCI)
Foreign currency
translation reserve
(FCTR)
This reserve records changes in the fair value of investments classified as being at fair value
through other comprehensive income. The amount recorded in the reserve relates to a pre-
stapling interest of a subsidiary of the Company in a subsidiary trust of the Trust.
This reserve records exchange differences arising on translation of the foreign subsidiaries. In
addition, any foreign currency differences arising from inter-group loans are also transferred to
the foreign currency translation reserve upon consolidation as such loans form part of the net
investment in the foreign subsidiary.
Security based
payments reserve
Fair value through
other comprehensive
income reserve
Foreign currency
translation reserve
Total other reserves
Cromwell
$M
Trust
$M
Cromwell
$M
Trust
$M
Cromwell
$M
Trust
$M
Cromwell
$M
49.1
-
29.4
-
61.8
2.8
Trust
$M
29.4
-
Balance at 1 July 2019
Security based payments
Foreign exchange differences
recognised in other
comprehensive income
Attributable to non-controlling
interests
Balance at 30 June 2020
Net security based payments
Foreign exchange differences
recognised in other
comprehensive income
Attributable to non-controlling
interests
10.4
2.8
-
-
13.2
0.7
-
-
Balance at 30 June 2021
13.9
-
-
-
-
-
-
-
-
-
2.3
-
-
-
2.3
-
-
-
2.3
-
-
-
-
-
-
-
-
-
(3.5)
0.6
(3.5)
0.6
-
45.6
-
-
30.0
-
-
61.1
0.7
-
30.0
-
(45.2)
(41.9)
(45.2)
(41.9)
-
0.4
-
-
-
(11.9)
16.6
(11.9)
115
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT GROUP STRUCTURE
This section provides information about the Cromwell Property Group structure including parent entity information and
information about controlled entities (subsidiaries).
17. Parent entity disclosures
(A) OVERVIEW
The Corporations Act 2001 (Cth) requires the disclosure of summarised financial information for the parent entity of a
consolidated group. Further, Australian Accounting Standards require stapled groups to identify the parent entity of
the group and identify equity attributable to the parent entity separately from other entities stapled to the parent entity.
The equity attributable to other entities stapled to the parent entity is considered to be a non-controlling interest in the
Balance sheet of the group.
The parent entity of the Cromwell stapled group is Cromwell Corporation Limited (the Company). The equity attributable to
the Trust is considered to be the non-controlling interest in the Balance sheet of Cromwell. The parent entity of the Trust
group is Cromwell Diversified Property Trust (CDPT).
(B) SUMMARISED FINANCIAL INFORMATION OF THE COMPANY AND CDPT
Company
CDPT
Results
Profit for the year
Total comprehensive income for the year
Financial position
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings / (accumulated losses)
Total equity
(C) COMMITMENTS
2021
$M
8.7
8.7
6.2
154.0
0.1
73.0
81.0
207.3
14.4
(140.7)
81.0
2020
$M
25.4
25.4
65.1
173.7
4.0
102.0
71.7
207.1
14.0
(149.4)
71.7
2021
$M
165.5
165.5
67.4
3,153.5
57.1
1,421.8
1,731.7
2020
$M
157.9
157.9
78.2
3,170.7
72.7
1,422.5
1,748.2
2,072.5
2,071.4
-
(340.8)
1,731.7
-
(323.2)
1,748.2
At balance date the Company and CDPT had no commitments (2020: none) in relation to capital expenditure contracted for
but not recognised as liabilities.
(D) GUARANTEES PROVIDED
The Company and CDPT have both provided guarantees in relation to the convertible bonds disclosed at note 11(c). Both
entities unconditionally and irrevocably guarantee the due and punctual payment of all amounts at any time becoming due
and payable in respect of the convertible bond. These guarantees were provided in a prior year.
(E) CONTINGENT LIABILITIES
At balance date the Company and CDPT had no contingent liabilities (2020: none).
116
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
(F) ACCOUNTING POLICY
The financial information for the Company and CDPT is prepared on the same basis as the consolidated financial
statements, except for:
• Investments in subsidiaries and equity accounted investments – these are accounted for at cost less accumulated
impairment charges in the financial report of the parent entity. Distributions and dividends received from
subsidiaries and equity accounted investments are not eliminated and recognised in profit or loss.
• Tax consolidation legislation – the Company is the head entity of a tax consolidated group as discussed. As the head
entity, the Company recognises the current tax balances and the deferred tax assets for unused tax losses and
credits assumed from other members as well as its own current and deferred tax amounts. Amounts receivable
from or payable to the other members are recognised by the Company as intercompany receivables or payables.
18. Controlled entities
(A) COMPANY AND ITS CONTROLLED ENTITIES
Name
Cromwell Aged Care Holdings Pty Ltd
Cromwell BT Pty Ltd
Cromwell Capital Pty Ltd
Cromwell Development Trust
Cromwell Finance Pty Ltd
Cromwell Funds Management Limited
Cromwell Holdings No 1 Pty Ltd
Cromwell Holdings No 2 Pty Ltd
Cromwell Infrastructure Pty Ltd
Cromwell Operations Pty Ltd
Cromwell Project & Technical Solutions Pty Ltd
Cromwell Property Securities Limited
Cromwell Property Services Pty Ltd
Cromwell Real Estate Partners Pty Ltd
Cromwell Seven Hills Pty Limited
Lovett Developments Pty Limited
Cromwell Carparking Pty Ltd
Valad Australia Pty Ltd
Votraint No. 662 Pty Limited
Gateshead Investments Limited
Upperastoria Trading & Investments Limited
Cromwell Property Group Czech Republic s.r.o.
LiNK Hradec Králové s.r.o.
Cromwell Denmark A/S
Cromwell Finland O/Y
Cromwell France SAS
Cromwell EREIT Management Germany GmbH
Cromwell Germany GmbH
Equity Partnerships Fund Management (Guernsey) Limited
Nordic Aktiv General Partner Limited
Nordic Aktiv General Partner 2 Limited
Cromwell Property Group Italy SRL
CPRF GP S.à r.l.
Cromwell CPR Promote S.à r.l.
Cromwell EREIT Management Luxembourg S.à r.l.
Equity Holding
2021
2020
Country of registration
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Cyprus
Cyprus
Czech Republic
Czech Republic
Denmark
Finland
France
Germany
Germany
Guernsey
Guernsey
Guernsey
Italy
Luxembourg
Luxembourg
Luxembourg
%
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
-
100
100
100
100
100
100
-
100
100
100
100
100
-
-
-
100
100
-
100
%
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
100
100
100
-
100
100
100
100
100
100
100
100
117
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Equity Holding
Country of registration
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Netherlands
Netherlands
Poland
Romania
Singapore
Sweden
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
2021
%
100
-
-
100
100
100
100
-
100
100
100
100
100
100
83
100
90
100
90
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
2020
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
83
100
90
100
90
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
Name
Cromwell Investment Luxembourg S.à r.l.
Cromwell Italy Urban Logistics S.à r.l.
Cromwell Luxembourg SA
Cromwell REIM Luxembourg S.à r.l.
Cromwell Central Europe B.V.
Cromwell Netherlands B.V.
Cromwell Property Group Poland Sp Zoo
Cromwell Property Group Romania SRL
Cromwell EREIT Management Pte. Ltd.
Cromwell Sweden A/B
Cromwell Asset Management UK Limited
Cromwell Capital Ventures UK Limited
Cromwell CEE Coinvest LP
Cromwell CEE Development Holdings Limited
Cromwell CEE Promote LP
Cromwell CEREIT Holdings Limited
Cromwell Coinvest CEIF LP
Cromwell Coinvest CEVAF l LP
Cromwell Coinvest ECV LP
Cromwell Corporate Secretarial Limited
Cromwell Development Holdings UK Limited
Cromwell Development Management UK Limited
Cromwell Director Limited
Cromwell Europe Limited
Cromwell European Holdings Limited
Cromwell European Management Services Limited
Cromwell GP
Cromwell Holdings Europe Limited
Cromwell Investment Holdings UK Limited
Cromwell Investment Management Services Limited
Cromwell Investment Services Limited
Cromwell Management Holdings Limited
Cromwell Poland Retail LLP
Cromwell Poland Retail UK Limited
Cromwell Promote CEIF LP
Cromwell Promote CEVAF l LP
Cromwell Promote CPRF LP
Cromwell Promote ECV LP
Cromwell Promote HIG LP
Cromwell WBP Poland LP
Cromwell YCM Coinvest LP
Cromwell YCM Promote LP
D.U.K.E. Combined GP Limited
Equity Partnerships (Osprey) Limited
IO Management Services Limited
Parc D’Activities 1 GP Limited
The IO Group Limited
Valad Salfords Custodian Limited
118
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (B) TRUST AND ITS CONTROLLED ENTITIES
Name
CDPT Finance Pty Ltd
CDPT Finance No. 2 Pty Ltd
Cromwell Diversified Property Trust No. 2
Cromwell Diversified Property Trust No. 3
Cromwell George Street Trust
Cromwell Holdings Trust No 1
Cromwell Holding Trust No 2
Cromwell Holdings Trust No 4
Cromwell HQ North Head Trust
Cromwell HQ North Trust
Cromwell Italy Partnership
Cromwell Mary Street Property Trust
Cromwell Mary Street Planned Investment
Cromwell McKell Building Trust
Cromwell Newcastle Trust
Cromwell Poland Holdings Trust
Cromwell Northbourne Planned Investment
Cromwell NSW Portfolio Trust
Cromwell Penrith Trust
Cromwell Poland Holdings Trust
Cromwell Property Fund
Cromwell Property Fund Trust No 2
Cromwell Property Fund Trust No 3
Cromwell Queanbeyan Trust
Cromwell SPV Finance Pty Ltd
Cromwell Symantec House Trust
Cromwell TGA Planned Investment
Cromwell VAC Finance Pty Ltd
Cromwell Wakefield Property Trust
Cromwell Wollongong Trust
EXM Head Trust
EXM Trust
Mascot Head Trust
Mascot Trust
Tuggeranong Head Trust
Tuggeranong Trust
Cromwell Italy Urban Logistics Fund
CPRF S.C.A.
Cromwell Logistics Fund
Next Real Estate Polish Retail S.à r.l.
Next Real Estate Polish Retail Holdco S.à r.l.
CH Bydgoszcz Sp Zoo
CH Toruń Sp Zoo
CH Janki Sp Zoo
CH Łódź Sp Zoo
CH Szczecin Sp Zoo
CH Wrocław Sp Zoo
CPRF Co Sp Zoo
HEL Poland Sp Zoo
Cromwell Singapore Holdings Pte. Ltd.
Country of registration
Australia
Australia
Equity Holding
2021
%
100
100
2020
%
100
100
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Italy
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Poland
Poland
Poland
Poland
Poland
Poland
Poland
Poland
Singapore
100
100
100
100
100
100
100
100
100
100
92
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
92
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
-
100
100
100
100
100
100
100
100
100
100
100
All new entities have been incorporated or acquired during the year. There were no business combinations during the year.
Entities, which Cromwell or the Trust controlled in the prior year with no equity holding in the current year have either been
deregistered or disposed of in the current year.
119
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 19. Equity attributable to the Company and non-controlling interests (CDPT)
(A) OVERVIEW
Stapled entities are required to separately identify equity attributable to the parent entity from equity attributable to other
entities stapled to the parent. The equity attributable to the entity stapled to the parent is presented as non-controlling
interests in the statement of financial position of Cromwell.
(B) EQUITY ATTRIBUTABLE TO THE COMPANY
The table below summarises equity, profit for the year and total comprehensive income for the year attributable to the
Company.
Attributable to Equity Holders of the Company
Contributed
equity
SBP
reserve
FVTOCI
reserve
FCT
Reserve
Accumulated
losses
$M
138.4
$M
10.4
$M
2.3
$M
19.7
-
(4.1)
(4.1)
-
-
-
15.6
-
(3.3)
(3.3)
-
-
-
$M
(166.8)
25.6
-
25.6
-
-
-
(141.2)
14.3
-
14.3
-
-
-
Total
$M
4.0
25.6
(4.1)
21.5
68.7
2.8
71.5
97.0
14.3
(3.3)
11.0
0.2
0.7
0.9
2.3
12.3
(126.9)
108.9
-
-
-
68.7
-
68.7
207.1
-
-
-
0.2
-
0.2
207.3
-
-
-
-
2.8
2.8
13.2
-
-
-
-
0.7
0.7
13.9
-
-
-
-
-
-
2.3
-
-
-
-
-
-
Balance at 1 July 2019
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 equity issue costs
Employee performance rights
Total transactions with equity holders
Balance as at 30 June 2020
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 equity issue costs
Employee performance rights
Total transactions with equity holders
Balance as at 30 June 2021
120
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (C) EQUITY ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (CDPT)
The table below summarises equity, profit for the year and total comprehensive income for the year attributable to CDPT,
the entity stapled to the Company (non-controlling interest).
Attributable to Equity Holders of the CDPT
Reserve
Retained
earnings
Balance at 1 July 2019
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 equity issue costs
Distributions paid / payable
Total transactions with equity holders
Balance as at 30 June 2020
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 equity issue costs
Distributions paid / payable
Total transactions with equity holders
Contributed
equity
$M
1,719.0
-
-
-
352.4
-
352.4
2,071.4
-
-
-
1.1
-
1.1
$M
29.4
-
0.6
0.6
-
-
-
30.0
-
(41.9)
(41.9)
-
-
-
$M
428.5
152.0
-
152.0
-
(195.5)
(195.5)
385.0
293.9
-
293.9
-
(183.1)
(183.1)
495.8
Balance as at 30 June 2021
2,072.5
(11.9)
Total
$M
2,176.9
152.0
0.6
152.6
352.4
(195.5)
156.9
2,486.4
293.9
(41.9)
252.0
1.1
(183.1)
(182.0)
2,556.4
121
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT OTHER ITEMS
This section of the annual financial report provides information about individually significant items to the Balance
sheets, Statements of comprehensive income and Cash flow statements and items that are required to be disclosed by
Australian Accounting Standards.
20. Leased assets and related leases
(A) OVERVIEW
Cromwell and the Trust are lessees in a number of leasing arrangements. Leases grant Cromwell and the Trust the
"right-of-use" for the leased asset for the contractual period of the lease in return for fixed lease payments. The right-of-
use is recognised as an asset within the Balance sheet category the relating leased asset would ordinarily be classified in
and depreciated over the shorter of the contractual lease period or the useful life of the leased asset. The present value of
remaining lease payments is recognised as a liability within borrowings.
Cromwell and the Trust are lessees in the following leasing arrangements:
• Leasehold land – leases of land upon which some of Cromwell's and the Trust investment properties are situated
(leasehold properties). The right-of-use assets relating to such leases are recognised within investment properties. See
note 8 for more information in relation to Cromwell's and the Trust's investment properties situated on leasehold land.
• Office leases – leases of office space in Australia, Singapore and Europe. The relating right-of-use assets are
recognised within property, plant and equipment.
• Equipment leases – leases of office equipment. The right-of-use assets are recognised within property, plant &
equipment.
122
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (B) AMOUNTS RECOGNISED IN THE FINANCIAL STATEMENTS
The below table shows the information in relation to Cromwell and Trust’s leased assets and relevant lease liabilities for
the year ending and as at 30 June 2021 (see note 11(c) also for further information):
Investment
property(1) (2)
$M
Office
premises (3)
$M
Property, plant
and equipment (3)
$M
Total
$M
Right-of-use assets
Reconciliation of movements in right-of-use assets:
Right-of-use assets recognised on 1 July 2019
Additions
Disposals, terminations and modifications
Amortisation (4)
Balance as at 30 June 2020
Additions
Disposals, terminations and modifications
Amortisation (4)
Foreign exchange movements
Right-of-use assets at 30 June 2021
Lease liabilities
Reconciliation of movements in lease liabilities:
Lease liabilities recognised on 1 July 2019
Additions
Principle payments
Finance costs (5)
Disposals, terminations and modifications
Balance as at 30 June 2020
Additions
Principle payments
Finance costs (5)
Disposals, terminations and modifications
Foreign exchange movements
Lease liabilities at 30 June 2021
Payments in relation to lease liabilities recognised
above (6):
2020
2021
-
6.8
-
(0.1)
6.7
-
-
(0.2)
(0.2)
6.3
-
6.9
(0.4)
0.2
(0.4)
6.3
-
(0.4)
0.3
-
(0.3)
5.9
(0.4)
(0.4)
14.3
3.2
(2.0)
(2.6)
12.9
5.5
(1.1)
(2.3)
0.1
15.1
14.3
3.1
(2.9)
0.4
(1.9)
13.0
5.5
(3.7)
0.4
(0.4)
1.0
15.8
(2.9)
(3.7)
1.1
1.1
(0.2)
(0.6)
1.4
0.6
(0.2)
(0.4)
(0.1)
1.3
1.1
1.1
(0.7)
-
(0.1)
1.4
0.6
(1.0)
-
-
-
1.0
(0.7)
(1.0)
15.4
11.1
(2.2)
(3.3)
21.0
6.1
(1.3)
(2.9)
(0.2)
22.7
15.4
11.1
(4.0)
0.6
(2.4)
20.7
6.1
(5.1)
0.7
(0.4)
0.7
22.7
(4.0)
(5.1)
(1) Represents relevant information in respect of the Trust.
(2) Right-of-use assets included as a component of Investment property in the Balance sheet. See note 8 for further information.
(3) Right-of-use assets included as a component of Property, plant and equipment in the Balance sheet.
(4) Included as a component of Amortisation and depreciation in the Statement of comprehensive income.
(5) Included as a component of Finance costs in the Statement of comprehensive income.
(6) Represents total cash flows in respect of leases.
(C) ACCOUNTING POLICY
Accounting as lessee
Cromwell recognised a lease liability and a corresponding right-of-use asset at the commencement of a lease.
The lease liability is initially measured as the present value of the lease payments that are unpaid at the
commencement date, discounted using the rate implicit in the lease or relevant incremental borrowing rate.
Subsequently the lease liability is adjusted for interest and lease payments, as well as the impact of lease
modifications. The lease liability is presented as a component of borrowings.
123
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made
at or before commencement, less any lease incentives received and any initial direct costs. The right-of use asset is
subsequently measured as cost less accumulated depreciation and impairments. Right-of-use assets are depreciated
on a straight-line basis over the shorter period of the lease term and useful life of the underlying asset.
21. Intangible assets
(A) OVERVIEW
This note provides an overview and detailed financial information of Cromwell’s intangible assets, which consist solely of
software assets. During the year, as a result of a relevant IFRIC Agenda Decision, Cromwell changed its accounting policy
with regard to the capitalisation of specific software ‘configuration and customisation costs’ in relation to ‘Software-as-a-
Service’ (SaaS) arrangements. The rationale and financial impact of the change in accounting policy is below:
Application to Cromwell
The impact of the accounting policy change in relation to SaaS includes:
• accounting policy change is applied to the current year and retrospectively, leading to a retrospective restatement of
historical financial information;
• derecognition of relevant capitalised Software-as-a-Service ('SaaS') costs and reversal of associated amortisation in
the current year and retrospectively, which has resulted in the restatement of prior year comparatives as disclosed
below; and
• an opening balance adjustment at 1 July 2019 of $2.0 million.
Adjusted intangible assets
The schedule below provides information about the movements in intangible assets, including the derecognition of
previously capitalised SaaS costs and the restated prior year comparatives.
Software
Cost
Less: derecognition of previously capitalised SaaS costs
Adjusted cost
Accumulated amortisation
Less: derecognition of previously amortised SaaS costs
Adjusted amortisation
Foreign exchange movements
Balance at 30 June
Adjusted opening balance as at 1 July
Additions
Amortisation
Foreign exchange difference
Balance at 30 June
(B) ACCOUNTING POLICY
Cromwell
2021
$M
9.6
(2.6)
7.0
8.7
(2.8)
5.9
-
1.1
1.6
0.3
(1.2)
0.4
1.1
2020
$M
14.8
(7.8)
7.0
7.2
(2.2)
5.0
(0.4)
1.6
2.4
0.5
(0.9)
(0.4)
1.6
Implementation of IFRIC Agenda Decision
During the year Cromwell revised its accounting policy in relation to the treatment of configuration and customisation
costs incurred in implementing SaaS service arrangements. The new accounting policy is presented below. As a result
of the change in accounting policy, a retrospective restatement of the historical financial information is presented in
section (d) below.
124
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Change in Accounting Policy
Costs incurred to configure or customise Cromwell's SaaS application software are expensed when the costs are
incurred. Costs which relate to the development of software code that enhances or modifies on-premise software, or
costs incurred for software which meet the recognition criteria for an intangible asset, are capitalised as incurred.
Intangible assets acquired and recognised under these criteria are measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated
impairment losses. Cromwell currently carries only on-premise software as intangible assets. Software is amortised
on a straight-line basis over two to five years.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the
asset is derecognised.
(C) CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Capitalisation of configuration and customisation costs in SaaS arrangements
Costs incurred to configure or customise Cromwell's SaaS application software are expensed when the costs are
incurred. Costs which relate to the development of software code than enhances or modifies or creates additional
capability to existing on-premise software to enable it to connect with cloud-based SaaS applications may meet the
definition of an intangible asset and can be capitalised.
Judgement is required to determine whether these costs meet the definition of and recognition criteria for an intangible
asset. Management applies judgement to the concept of ‘control’ of these software enhancements, whereby an
assessment is made whether the SaaS provider, as the supplier, or Cromwell, as the customer, has control of these
assets. When Cromwell consider that ‘control’ remains with the supplier, these costs are expensed. Where Cromwell
consider it has control over the software code, it may recognise these costs as assets.
(D) RETROSPECTIVE RESTATEMENT
The schedule below provides information about the retrospective impact to previously recognised capitalised and
amortised SaaS costs, which includes the derecognition of previously capitalised costs as if they had not been recognised.
The 30 June 2020 restatement recognises the derecognition of all SaaS costs capitalised and amortised during that
year. The 1 July 2019 opening balance adjustment represents the derecognition of cumulative historical capitalised and
amortised SaaS costs.
Cromwell
30 June 2020
1 July 2019
Financial Statement impact
Balance Sheet
Intangible assets – software
Total assets
Retained earnings
Total equity
Profit and loss
IT related expense
Software amortisation
Profit before tax
Statement of Cash Flows
Payments in the course of operations
Net Cash provided by operating activities
Payments for intangible assets
Net Cash used in investing activities
Earnings per share impact
Basic earnings per stapled security
Diluted earnings per stapled security
$M
(3.6)
(3.6)
-
-
4.9
(1.3)
3.6
4.9
4.9
(4.9)
(4.9)
(0.13)
(0.14)
$M
(2.0)
(2.0)
2.0
2.0
-
-
-
-
-
-
-
125
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 22. Cash flow information
(A) OVERVIEW
This note provides further information on the consolidated cash flow statements of Cromwell and the Trust. It reconciles
profit for the year to cash flows from operating activities and information about non-cash transactions.
(B) RECONCILIATION OF PROFIT FOR THE YEAR TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Cromwell
Trust
Net profit
Amortisation and depreciation
Amortisation of lease costs and incentives
Operating lease costs
Straight-line rentals
Security based payments
Share of (profits) / losses – equity accounted investments (net of
distributions and impairments)
Net foreign exchange loss / (gain)
Amortisation of loan transaction costs
Gain on sale of investment properties
Loss on sale of other assets
Asset, fund and development management fees non-cash settled
Impact of dilution of equity holding / impairment
Finance costs attributable to discounted lease incentives
Fair value net (gain) / loss from:
Investment properties
Derivative financial instruments
Investments at fair value through profit or loss
Payment for other transaction costs
Changes in operating assets and liabilities
(Increase) / decrease in:
Receivables
Tax assets / liabilities
Other current assets
Increase / (decrease) in:
Trade and other payables
Provisions
Unearned income
2021
$M
308.2
5.4
30.1
2.3
(3.7)
0.7
(31.2)
(26.2)
10.5
(5.9)
-
-
8.6
1.0
(97.5)
(14.2)
1.8
7.7
(3.5)
(6.2)
1.4
4.6
(1.4)
(1.9)
2020
$M
177.2
7.4
29.2
0.9
(9.7)
2.8
(11.7)
4.6
10.0
(3.3)
3.6
(16.0)
4.3
0.8
(17.5)
(18.4)
4.3
23.4
19.0
(3.3)
(0.2)
(11.9)
1.4
3.4
2021
$M
293.9
0.2
30.1
0.1
(3.7)
-
(13.4)
(23.3)
10.5
(5.9)
-
-
7.4
1.0
(97.5)
(14.2)
-
1.9
(2.8)
(0.2)
1.7
(9.6)
-
(1.6)
Net cash provided by operating activities
190.6
200.3
174.6
2020
$M
153.8
-
29.2
0.4
(9.7)
-
(4.5)
4.9
9.8
(3.3)
3.6
-
-
0.8
(17.5)
(18.4)
-
19.0
15.6
(9.2)
(0.6)
18.7
-
3.0
195.6
126
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (C) NON-CASH FINANCING AND INVESTING TRANSACTIONS
Stapled securities / units issued on reinvestment of distributions
CEREIT fees received in units:
Acquisition fees
Management fees
Restructure costs
Non-cash financing and investing transactions
Cromwell
Trust
2021
$M
-
-
-
0.8
0.8
2020
$M
21.0
12.5
3.5
-
37.0
2021
$M
-
-
-
-
-
(D) RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
Interest
bearing
liabilities
Dividends /
distributions
payable
Derivative
financial
instruments
Cromwell
Opening balance at 1 July 2019
Changes from financing cash flows:
Proceeds from borrowings
Repayments of borrowings
Payments for lease liabilities
Payment of dividends / distributions
Total changes from financing cash flows
Other movements:
Exchange rate gains / losses
Fair value net gains / losses
Other lease liability movements
Amortisation of loan transaction costs
Stapled securities / units issued on reinvestment of distributions
Distributions for the year
Balance at 30 June 2020
Changes from financing cash flows:
Proceeds from borrowings
Repayments of borrowings
Payments for lease liabilities
Payment of loan transaction costs
Payments for derivative financial instruments
Payment of dividends / distributions
Total changes from financing cash flows
Other movements:
Exchange rate gains / losses
Fair value net gains / losses
Other lease liability movements
Amortisation of loan transaction costs
Distributions for the year
Balance at 30 June 2021
$M
1,356.4
2,050.4
(1,243.8)
(4.0)
-
802.6
(2.5)
-
24.7
10.0
-
-
2,191.2
338.1
(311.9)
(5.1)
(3.6)
-
-
17.5
(39.4)
-
6.4
10.5
-
2,186.2
$M
40.5
-
-
-
(166.0)
(166.0)
-
-
-
-
(21.0)
195.5
49.0
-
-
-
-
-
(190.6)
(190.6)
-
-
-
-
184.1
42.5
2020
$M
17.4
-
-
-
17.4
Total
$M
1,434.0
2,050.4
(1,243.8)
(4.0)
(166.0)
636.6
(1.9)
(18.4)
24.7
10.0
(21.0)
195.5
$M
37.1
-
-
-
-
-
0.6
(18.4)
-
-
-
-
19.3
2,259.5
-
-
-
-
4.9
-
4.9
1.4
(14.2)
-
-
-
338.1
(311.9)
(5.1)
(3.6)
4.9
(190.6)
(168.2)
(38.0)
(14.2)
6.4
10.5
184.1
11.4
2,240.1
127
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Trust
Opening balance at 1 July 2019
Changes from financing cash flows:
Proceeds from borrowings
Repayments of borrowings
Payments for lease liabilities
Payment of loan transaction costs
Payment of dividends / distributions
Total changes from financing cash flows
Other movements:
Exchange rate gains / losses
Other lease liability movements
Fair value net gains / losses
Amortisation of loan transaction costs
Stapled securities / units issued on
reinvestment of distributions
Distributions for the year
Balance at 30 June 2020
Changes from financing cash flows:
Proceeds from borrowings
Repayments of borrowings
Payments for lease liabilities
Payment of loan transaction costs
Payments for derivative financial instruments
Payment of dividends / distributions
Total changes from financing cash flows
Other movements:
Exchange rate gains / losses
Fair value net gains / losses
Other lease liability movements
Amortisation of loan transaction costs
Distributions for the year
Balance at 30 June 2021
(E) ACCOUNTING POLICY
Interest
bearing
liabilities
$M
1,349.0
2,050.4
(1,243.8)
(0.4)
(4.5)
-
801.7
1.4
6.7
-
9.8
-
-
2,168.6
338.1
(304.5)
(0.4)
(3.6)
-
-
29.6
(39.7)
-
0.3
10.5
-
2,169.3
Dividends /
distributions
payable
Derivative
financial
instruments
$M
40.5
-
-
-
-
(169.6)
(169.6)
-
-
-
-
(17.4)
195.5
49.0
-
-
-
-
-
(189.6)
(189.6)
-
-
-
-
183.1
42.5
$M
37.1
-
-
-
-
-
-
0.6
-
(18.4)
-
-
-
19.3
-
-
-
-
4.9
-
4.9
1.4
(14.2)
-
-
-
11.4
Total
$M
1,426.6
2,050.4
(1,243.8)
(0.4)
(4.5)
(169.6)
632.1
2.0
6.7
(18.4)
9.8
(17.4)
195.5
2,236.9
338.1
(304.5)
(0.4)
(3.6)
4.9
(189.6)
(155.1)
(38.3)
(14.2)
0.3
10.5
183.1
2,223.2
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and other short-
term highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
128
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT 23. Security based payments
(A) OVERVIEW
Cromwell operates a security based compensation scheme, the Performance Rights Plan (PRP). Under the PRP, eligible
employees, including executive directors, have the right to acquire Cromwell securities at a consideration of between
$0.00 and $0.50 subject to certain vesting conditions. Eligibility is by invitation of the Board of Directors and participation in
the PRP by executive directors is subject to securityholder approval. The PRP is designed to provide long-term incentives
for employees to continue employment and deliver long-term securityholder returns.
(B) PRP
All full-time and part-time employees who meet minimum service, remuneration and performance requirements,
including executive directors, are eligible to participate in the PRP at the discretion of the Board. Under the PRP, eligible
employees are allocated performance rights. Each performance right enables the participant to acquire a stapled security
in Cromwell, at a future date and exercise price, subject to conditions. The number of performance rights allocated to
each participant is set by the Board or the Nomination & Remuneration Committee and based on individual circumstances
and performance.
The amount of performance rights that will vest under the PRP depends on a combination of factors which may include
Cromwell’s total securityholder returns (including price growth, dividends and capital returns), internal performance
measures and the participant’s continued employment. Performance rights allocated under the PRP generally vest in
three years. Until performance rights have vested, the participant cannot sell or otherwise deal with the performance
rights except in certain limited circumstances. It is a condition of the PRP that a participant must remain employed by
Cromwell in order for performance rights to vest. Any performance rights which have not yet vested on a participant
leaving employment must be forfeited.
Set out below is a summary of movements in the number of performance rights outstanding at the end of the financial
year:
As at 1 July
Granted during the year
Exercised during the year
Forfeited during the year
As at 30 June
Vested and exercisable
2021
2020
Weighted
average exercise
price
Number of
performance
rights
Weighted
average exercise
price
Number of
performance
rights
$0.26
-
$0.30
$0.03
$0.12
-
13,818,156
5,969,553
(7,585,942)
(2,016,074)
10,185,693
-
$0.32
$0.17
$0.40
$0.00
$0.26
-
15,632,820
3,366,614
(4,920,055)
(261,223)
13,818,156
-
The weighted average price per security at the date of exercise of options exercised during the year ended 30 June 2021
was $0.87 (2020: $1.21). No options expired during the years covered in the table above.
The weighted average remaining contractual life of the 10,185,693 performance rights outstanding at the end of the
financial year (2020: 13,818,156) was 1.5 years (2020: 1.3 years).
Fair value of performance rights granted
The fair value of performance rights granted during the year was between $0.77 and $1.04 per option for PRP with an
exercise price of $nil (2020: fair value between $0.57 and $1.06 and exercise prices of $nil and $0.50).
Performance rights do not have any market-based vesting conditions. The fair values at grant date are determined using a
Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the security price at
grant date and expected price volatility of the underlying security, the expected dividend/distribution yield and the risk-free
interest rate for the term of the option. The model inputs for performance rights granted during the year included:
129
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Exercise price:
Grant date(s):
Share price at grant date(s):
Expected price volatility:
Expected dividend yield(s):
Risk free interest rate(s):
2021
$0.00
2020
Range between $0.00 to $0.50
23-Dec-20
Range between 4-Oct-19 and 27-Mar-20
$0.88
40%
8.5%
0.11%
Range between $1.27 and $0.80
Range between 16% and 15%
Range between 5.91% and 9.6%
Range between 0.78% and 0.56%
Expiry date(s):
30-Jul-23 and 30-Sept-23
Range between 31-Oct-22 and 30-Sept-22
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any
expected changes to future volatility due to publicly available information.
(C) EXPENSE ARISING FROM SECURITY BASED PAYMENTS
Expenses arising from share-based payments recognised during the year as part of employee benefits expense were as follows:
Performance rights issued under the PRP
Cromwell
Trust
2021
$M
2.1
2020
$M
2.8
2021
$M
-
2020
$M
-
See note 6(d) for information in relation to the accounting policy in relation to security based payments.
24. Related parties
(A) OVERVIEW
Related parties include directors and other key management personnel and their close family members and any entities
they control as well as subsidiaries, associates and joint ventures of Cromwell. They also include entities which are
considered to have significant influence over Cromwell, that is securityholders that hold more than 20% of Cromwell’s
issued securities.
This note provides information about transactions with related parties during the year. All of Cromwell’s transactions with
related parties are on normal commercial terms and conditions and at market rates.
(B) KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Security-based payments
Total key management personnel compensation
Cromwell
2021
$
2020
$
7,151,179
6,006,118
143,882
136,323
916,474
8,347,358
126,998
79,103
2,234,262
8,446,481
Loans to key management personnel
Cromwell provided loans to Mr P Weightman, a now former Director of the Company, for the exercise of his employee
options under Cromwell’s Performance Rights Plan. Each loan term was three years, limited recourse and interest
free. The final balance owing of $3,080,000 was repaid during the year (2020: balance owing of $2,736,980) and facility
cancelled.
130
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT (C) OTHER RELATED PARTY TRANSACTIONS
i) Parent entity and subsidiaries
Cromwell Corporation Limited is the ultimate parent entity in Cromwell. Cromwell Diversified Property Trust is the
ultimate parent entity in the Trust. Details of subsidiaries for both parent entities are set out in note 18.
ii) Transactions with joint ventures and associates
Cromwell European Real Estate Investment Trust
Cromwell and the Trust hold 28.0% and 27.5% interests in CEREIT (2020: 30.7% and 30.1% - refer to note 9(b) for further
details). Cromwell and the Trust received $50.3 million and $49.4 million in distributions from CEREIT during the year
(2020: $28.1 million and $27.8 million).
Cromwell EREIT Management Pte. Ltd. (CEM), a wholly owned subsidiary of Cromwell, is the Manager for CEREIT. A
number of other wholly owned, Europe-domiciled, subsidiaries of Cromwell provide property related services to CEREIT at
normal commercial terms.
The following income was earned by Cromwell from CEREIT:
Paid / payable by CEREIT to Cromwell and its subsidiaries:
Asset management fees
Development sales
Fund management fees
Leasing fees
Project management fees
Distributions
Balances outstanding with CEREIT at year end:
Aggregate amounts receivable
Cromwell
2021
$M
25.2
15.0
11.1
2.5
1.7
50.3
2020
$M
24.2
-
17.0
1.5
0.8
28.1
12.0
9.0
Oyster Property Funds Limited
During the year, the Trust provided a NZD-denominated short-term loan facility of $17.1 million in aggregate to a
subsidiary of Oyster for the initial funding of a property syndication. The Trust earned a fee of $475,000 for the provision of
this facility, which was never drawn upon and has now ceased.
LDK Healthcare Unit Trust
Cromwell holds a 50% interest in the LDK Healthcare Unit Trust (LDK), a joint venture conducting an aged care operation.
Cromwell has the following loans and related party transactions with the LDK joint venture:
a) Working capital loans
Refer to note 13(b) for further information.
“Waterfall” loans
b)
During the prior year, Cromwell and the Trust provided a number of loan facilities to LDK Healthcare Unit Trust and
a number of its subsidiaries in order to assist in the development of the LDK business. Refer to note 13(b) for further
information.
c) Project management fees
During the year, Cromwell provided project management services to a subsidiary of LDK in relation to the development
of the LDK 'Greenway Views' aged care facility. Cromwell derived $0.9 million in project management fees at normal
commercial terms during the year (2020: $1.1 million).
Ursynów
Cromwell derived $0.7 million in property management fees at normal commercial terms during the year (2020: $0.4
million).
131
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT iii) Transactions between the Trust and the Company and its subsidiaries (including the responsible
entity of the Trust)
Cromwell Property Securities Limited (CPS), a wholly owned subsidiary of Cromwell Corporation Limited (CCL) acts as
responsible entity for the Trust. For accounting purposes the Trust is considered to be controlled by CCL. CCL and its
subsidiaries provide a range of services to the Trust. A subsidiary of CCL rents commercial property space in a property
owned by the Trust. All transactions are performed on normal commercial terms.
The Trust made the following payments to and received income from CCL and its subsidiaries:
Trust
Paid / payable by the Trust to the Company and its subsidiaries:
Development fees
Fund management fees
Property management fees
Leasing fees
Project management fees
Accounting fees
Received / receivable by the Trust from the Company and its subsidiaries:
Interest
Rent and recoverable outgoings
Balances outstanding at year-end with the Company and its subsidiaries:
Aggregate amounts payable
Aggregate amounts receivable
2021
$M
-
20.0
6.3
0.6
0.7
1.0
2.2
2.2
0.7
74.6
2020
$M
32.0
18.8
6.4
2.7
0.3
0.8
4.2
2.7
2.9
98.3
The amount receivable from the Company and its subsidiaries includes loans of $74.6 million (2020: $98.0 million). For
further details regarding these loans refer to note 13(b).
132
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
25. Auditors’ remuneration
(A) OVERVIEW
The independent auditors of Cromwell in Australia (Deloitte Touche Tohmatsu) and component auditors of overseas
subsidiaries and their affiliated firms have provided a number of audit and other assurance related services as well as
other non-assurance related services to Cromwell and the Trust during the year.
Below is a summary of fees paid for various services to Deloitte Touche Tohmatsu and component audit firms during the
year:
Deloitte Touche Tohmatsu
Audit and other assurance services
Auditing or reviewing of financial reports
Auditing of controlled entities’ AFS licences
Auditing of component financial reports
Other assurance services
Other services
Due diligence services
Australian taxation advice
International taxation advice
Cromwell
Trust
2021
$
2020
$
2021
$
2020
$
452,760
7,000
793,588
25,000
465,260
7,000
899,246
20,000
340,020
299,420
-
-
376,192
299,896
-
-
1,278,348
1,391,506
716,212
599,316
-
18,690
9,118
111,801
34,436
44,261
-
-
-
-
-
-
Total remuneration of Deloitte Touche Tohmatsu
1,306,156
1,582,004
716,212
599,316
Pitcher Partners
Audit and other assurance services
Auditing of the Trust’s compliance plan
Other services
Valuation services
Total remuneration of Pitcher Partners
39,000
39,000
11,000
50,000
36,000
36,000
14,500
50,500
Total auditors’ remuneration
1,356,156
1,632,504
39,000
39,000
-
39,000
755,212
36,000
36,000
-
36,000
635,316
26. Unrecognised items
(A) OVERVIEW
Items that have not been recognised on Cromwell’s and the Trust’s Balance sheet include contractual commitments for
future expenditure and contingent liabilities which are not sufficiently certain to qualify for recognition as a liability on the
Balance sheet. This note provides details of any such items.
(B) COMMITMENTS
Operating leases
Operating leases primarily comprise the lease of Cromwell’s Sydney and European office premises. The Company has
entered into a number of leases with the Trust and its subsidiaries and as such the commitment is not recognised on
consolidation.
For further information in relation to commitments for minimum lease payments in relation to non-cancellable operating
leases in existence at the reporting date but not recognised as liabilities see note 11(c).
133
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Capital expenditure commitments
Commitments in relation to capital expenditure contracted for at reporting date but not recognised as a liability are as
follows:
Investment property
Total capital expenditure commitments
Cromwell
Trust
2021
$M
6.2
6.2
2020
$M
5.3
5.3
2021
$M
6.2
6.2
2020
$M
5.3
5.3
(C) CONTINGENT ASSETS AND CONTINGENT LIABILITIES
The Directors are not aware of any material contingent assets or contingent liabilities of Cromwell or the Trust (2020:
$nil).
27. Subsequent events
Other than those disclosed below, no matter or circumstance has arisen since 30 June 2021 that has significantly affected
or may significantly affect:
• Cromwell’s and the Trust’s operations in future financial years; or
• the results of those operations in future financial years; or
• Cromwell’s and the Trust’s state of affairs in future financial years.
The financial statements were approved by the Board of Directors and authorised for issue on 25 August 2021.
134
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT DIRECTORS' DECLARATION
In the opinion of the Directors of Cromwell Corporation Limited and Cromwell Property Securities Limited as Responsible
Entity for the Cromwell Diversified Property Trust (collectively referred to as “the Directors”):
the attached financial statements and notes are in accordance with the Corporations Act 2001 (Cth), including:
i) complying with Australian Accounting Standards (including the Australian Accounting Interpretations),
the Corporations Regulations 2001; and
ii) giving a true and fair view of Cromwell’s and the Trust’s financial position as at 30 June 2021 and of their
performance, for the financial year ended on that date; and
the financial report also complies with International Financial Reporting Standards as disclosed in About this report
- note 1 Basis of preparation; and
there are reasonable grounds to believe that Cromwell and the Trust will be able to pay its debts as and when they
become due and payable.
The Directors have been given the declarations by the chief executive officer and chief financial officer for the financial
year ended 30 June 2021 required by section 295A of the Corporations Act 2001 (Cth).
This declaration is made in accordance with a resolution of the Directors.
Dr Gary Weiss AM
Chair
25 August 2021
Sydney
135
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Riverside Centre
123 Eagle Street
Brisbane QLD 4000
GPO Box 1463
Brisbane QLD 4001 Australia
DX: 10307SSE
Tel: +61 (0) 7 3308 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report to the Stapled Security Holders of
Cromwell Property Group and the Unitholders of
Cromwell Diversified Property Trust
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of:
•
•
Cromwell Property Group (the “Group”) which comprises the consolidated balance sheet as at 30 June 2021,
the consolidated statement of profit and loss and consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies and other
explanatory information, and the directors’ declaration of the consolidated stapled entity. The consolidated
stapled entity compromises Cromwell Corporation Limited (“the Company”), Cromwell Diversified Property
Trust, and the entities they controlled at the year end or from time to time during the year; and
Cromwell Diversified Property Trust (the “Trust”) which comprises the consolidated balance sheet as at 30
June 2021, the consolidated statement of profit and loss and consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, and notes to the financial statements, including a summary of significant accounting
policies and other explanatory information, and the directors’ declaration of Cromwell Property Securities
Limited (the “Responsible Entity”), as Responsible Entity of the Trust. The consolidated entity comprises
Cromwell Diversified Property Trust and the entities it controlled at the year end or from time to time during
the year.
In our opinion, the accompanying financial reports of the Group and Trust are in accordance with the Corporations Act
2001, including:
•
•
giving a true and fair view of the Group’s and Trust’s financial position as at 30 June 2021 and of their financial
performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We
are independent of the Group in accordance with the auditor independence requirements of the Corporations Act
2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the
directors of the Company and Cromwell Property Securities Limited as the Responsible Entity for the Trust, would be
in the same terms if given to the directors as at the time of this auditor’s report.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation
Cromwell Property Group | Annual Financial Report | Page 109 of 112
136
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report for the current period. These matters were addressed in the context of our audit of the financial report
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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Valuation of investment properties
Our procedures included but, were not limited to:
•
•
•
•
•
At 30 June 2021, Cromwell Property Group
recognised
investment properties valued at
$3,864 million as disclosed in Note 8.
The Group owns either directly or through joint
ventures a portfolio of property consisting of
properties across Australia, Italy and Poland.
Valuations were carried out by internal and third
party valuers for all investment properties in
Australia, Italy and Poland during the year.
Within the 30 June 2021 valuations, valuers
included observations as to the general market
uncertainty caused by COVID-19. This highlights
a higher degree of caution should be attached to
the valuations than would normally be the case.
Note 8 describes the valuation methodologies
adopted by the Group:
•
•
the capitalisation approach applies a
capitalisation rate to normalised market
net operating income.
the discounted cash
flow method
involves the projection of cash flows
discounted to present value.
The valuation processes requires significant
judgment and estimation in the following:
•
•
•
•
•
•
•
net market income
net operating income
compound annual growth rates
terminal yields
capitalisation rates; and
discount rates.
testing
the design and
Assessing
the operating
effectiveness of relevant controls within management’s
valuation framework and assessing the oversight applied by
the directors
Enquiring of management to obtain an understanding of
portfolio movements and their
identification of any
additional property specific matters, as well as their
assessment of the impact of COVID-19 on the valuations,
including the uncertainty statement
in the
valuation reports
Assessing the independence, competence and objectivity of
the external valuers, as well as competence and objectivity
of internal valuers (where relevant).
Performing an analytical review and risk assessment of the
portfolio, assessing the key inputs and assumptions
Testing on a sample basis, both externally and internally
valued properties, for:
‒
included
the completeness and accuracy of the information in
the valuation by agreeing key inputs such as annual
net operating income to underlying audited records
and source evidence
the forecasts used in the valuations with reference to
current financial results such as net operating income,
capital expenditure requirements, occupancy and
lease renewals; and
the mathematical accuracy of the valuation models
‒
Assessing the assumptions used in the valuations, including
the capitalisation rate used, and net market income
adjustments made in the capitalisation approach and the
discount rate, compound annual growth rate, and terminal
in the discounted cashflow method with
yield used
reference to external market trends & transactions,
property specific factors such as tenant mix and changes
since the prior valuation.
‒
We also assessed the appropriateness of the disclosures included
in the Notes to the financial statements.
Cromwell Property Group | Annual Financial Report | Page 110 of 112
137
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Other Information
The directors of the Company and the Responsible Entity (“the Directors”) are responsible for the other information.
The other information comprises the Directors’ Report,, which we obtained prior to the date of this auditor’s report,
and also includes the following information which will be included in the Group’s annual report (but does not include
the financial report and our auditor’s report thereon): Financial Highlights, Chairman’s Report, CEO’s Report, Corporate
Governance Statement and Securityholder Information, which is expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and we do not and will not express any form
of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information identified above
and, in doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have
performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there
is a material misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
When we read the Financial Highlights, Chairman’s Report, CEO’s Report, Corporate Governance Statement and
Securityholder Information, if we conclude that there is a material misstatement therein, we are required to
communicate the matter to the directors and use our professional judgement to determine the appropriate action.
Responsibilities of the Directors for the Financial Report
The directors are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group and the Trust to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or the Trust or to cease operations, or has
no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Group’s and Trust’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.
Cromwell Property Group | Annual Financial Report | Page 111 of 112
138
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT •
•
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accoun�ng and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or condi�ons that
may cast significant doubt on the Group’s and Trust’s ability to con�nue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw a�en�on in our auditor’s report to the related
disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or condi�ons may cause the Group and Trust to cease to con�nue as a going concern.
Evaluate the overall presenta�on, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transac�ons and events in a manner that achieves fair
presenta�on.
Obtain sufficient appropriate audit evidence regarding the financial informa�on of the en��es or business
ac�vi�es within the Group and Trust to express an opinion on the financial report. We are responsible for the
direc�on, supervision and performance of the Group’s and Trust’s audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other ma�ers, the planned scope and �ming of the audit and
significant audit findings, including any significant deficiencies in internal control that we iden�fy during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all rela�onships and other ma�ers that may reasonably be thought to
bear on our independence, and where applicable, ac�ons taken to eliminate threats or safeguards applied.
From the ma�ers communicated with the directors, we determine those ma�ers that were of most significance in the
audit of the financial report of the current period and are therefore the key audit ma�ers. We describe these ma�ers
in our auditor’s report unless law or regula�on precludes public disclosure about the ma�er or when, in extremely
rare circumstances, we determine that a ma�er should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communica�on.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remunera�on Report included in pages 45 to 62 of the Directors’ Report for the year ended 30
June 2021.
In our opinion, the Remunera�on Report of Cromwell Property Group, for the year ended 30 June 2021, complies with
sec�on 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the prepara�on and presenta�on of the Remunera�on Report in
accordance with sec�on 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remunera�on Report, based on our audit conducted in accordance with Australian Audi�ng Standards.
DELOITTE TOUCHE TOHMATSU
David Rodgers
Partner
Chartered Accountants
Brisbane, 25 August 2021
11
139
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
CORPORATE GOVERNANCE
STATEMENT
The Board is committed to Cromwell Property Group meeting securityholders’ and stakeholders’ expectations of good
corporate governance. The Board is proactive with respect to corporate governance and actively reviews developments
to determine which corporate governance arrangements are appropriate for Cromwell Property Group and its
securityholders and stakeholders.
This Corporate Governance Statement (Statement) reports on how Cromwell Property Group (or Cromwell or Group)
complied with the fourth edition of the ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations (the Recommendations) during the 2021 financial year.
This Statement is current as at 25 August 2021 and has been approved by the Board.
Cromwell Property Group comprises Cromwell Corporation Limited (or the Company) and the Cromwell Diversified
Property Trust (or the CDPT), the Responsible Entity of which is Cromwell Property Securities Limited (or CPS).
Principle 1: Lay solid foundations for management and oversight
RECOMMENDATION 1.1
The Board of Directors of Cromwell Corporation Limited is identical to the Board of Directors of Cromwell Property
Securities Limited (together, the Board; severally, the Directors). The Board’s responsibilities include to provide leadership
to Cromwell Property Group and to set its strategic objectives. The Board has adopted a formal, written Board Charter,
which sets out the Board’s role and responsibilities, including to:
• oversee the process for ensuring timely and balanced disclosure of all ‘price sensitive’ information in accordance with
the Corporations Act 2001 (Cth) (Corporations Act) and the ASX Listing Rules; and
• satisfy itself that an appropriate risk management framework that covers both financial and non-financial risks is in
place, and to set the risk appetite within which the Board expects management to operate.
The Board generally holds a scheduled meeting every calendar month and additional meetings are convened as required.
The Directors’ Report discloses the names of the Directors, the number of times that the Board met during the 2021
financial year and the attendances of individual Directors at those meetings. For easy reference, the information (including
percentages of total) is shown below:
Director
Meetings attended
(% of meetings
eligible to attend)
Meetings
eligible to
attend (100%)
Dr Gary Weiss AM (Chair) (elected 18 September 2020 and elected as Chair 17 March 2021)
17 (94.5%)(1)
18 (100%)
Mr Eng Peng Ooi (Deputy Chair) (appointed 8 March 2021 and elected as Deputy Chair 17 March 2021)
7 (100%)
Mr Robert Blain (appointed 8 March 2021)
Ms Tanya Cox
6 (85.7%)
25 (100%)
7 (100%)
7 (100%)
25 (100%)
Mr Joseph Gersh AM (elected 18 September 2020)
17 (94.5%)(2)
18 (100%)
Ms Lisa Scenna
Mr Leon Blitz (Chair) (retired from the Board and as Chair 18 November 2020)
Mr Andrew Fay (Deputy Chair) (retired from the Board and as Deputy Chair 18 November 2020)
25 (100%)
10 (100%)
10 (100%)
Mr John Humphrey (appointed 8 September 2020 and retired from the Board 18 November 2020)
5 (100%)
25 (100%)
10 (100%)
10 (100%)
5 (100%)
Mr Paul Weightman (retired from the Board 31 December 2020)
Ms Jane Tongs (Chair) (retired from the Board and as Chair 17 March 2021)
14 (87.5%)(3)
16 (100%)
20 (100%)
20 (100%)
(1) Dr Weiss AM gave notice to the other Directors of a material personal interest and recused himself from receiving the materials and from attending the
meeting on 14 October 2020.
(2) Mr Gersh AM gave notice to the other Directors of a material personal interest and recused himself from receiving the materials and from attending the
meeting on 14 October 2020.
(3) Mr Weightman gave notice to the other Directors of a material personal interest and recused himself from receiving the materials and from attending
the meeting on 7 December 2020 and on 17 December 2020.
140
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT On 9 July 2021, Ms Jialei Tang was appointed as a Non-executive Director.
Management prepares Board papers to inform and focus the Board’s attention on key issues. Standing items include
progress against strategic objectives, financial performance, corporate governance and sustainability (including
compliance with material legal and regulatory requirements and any conduct that is materially inconsistent with Cromwell
Property Group’s values and Code of Conduct).
The Board has the following long-established Board Committees to assist it in carrying out its responsibilities, to share
detailed work and to consider certain issues and functions in detail:
• Audit and Risk Committee;
• Investment Committee; and
• Nomination and Remuneration Committee.
Details of the role, responsibilities and composition of the Board Committees are contained elsewhere in this Statement.
The Directors’ Report discloses (for each Board Committee) the members of the Board Committee, the number of times
that the Board Committee met during the 2021 financial year and the individual attendances of the members at those
meetings. For easy reference, the information (including percentages of total) is shown below:
Audit and Risk Committee
Director
Meetings attended
(% of meetings
eligible to attend)
Meetings
eligible to
attend (100%)
Mr Eng Peng Ooi (Committee Chair) (appointed to Committee and as Committee Chair 28 April 2021)
1 (100%)
Ms Tanya Cox
Mr Joseph Gersh AM (appointed to Committee 28 April 2021)
Ms Lisa Scenna (appointed as Committee Chair 18 November 2020 and retired as Committee Chair
28 April 2021)
Dr Gary Weiss AM (appointed to Committee 18 November 2020)
Mr Andrew Fay (retired from Committee 18 November 2020)
Ms Jane Tongs (retired as Committee Chair and from Committee 18 November 2020)
8 (100%)
1 (100%)
8 (100%)
4 (100%)
4 (100%)
4 (100%)
1 (100%)
8 (100%)
1 (100%)
8 (100%)
4 (100%)
4 (100%)
4 (100%)
Investment Committee
Director
Meetings attended
(% of meetings
eligible to attend)
Meetings
eligible to
attend (100%)
Mr Robert Blain (Committee Chair) (appointed to Committee and as Committee Chair 28 April 2021)
1 (100%)
Mr Joseph Gersh AM (appointed to Committee 18 November 2020)
Mr Eng Peng Ooi (appointed to Committee 28 April 2021)
Ms Lisa Scenna (retired as Committee Chair 28 April 2021)
Dr Gary Weiss AM (appointed to Committee 18 November 2020)
Mr Leon Blitz (retired from Committee 18 November 2020)
Mr Andrew Fay (retired from Committee 18 November 2020)
Mr Paul Weightman (retired from Committee 31 December 2020)
3 (100%)
1 (100%)
3 (100%)
3 (100%)
0 (100%)
0 (100%)
1 (100%)
1 (100%)
3 (100%)
1 (100%)
3 (100%)
3 (100%)
0 (100%)
0 (100%)
1 (100%)
141
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Nomination and Remuneration Committee
Director
Ms Tanya Cox (Committee Chair)
Mr Robert Blain (appointed to Committee 28 April 2021)
Mr Joseph Gersh AM (appointed to Committee 18 November 2020)
Ms Lisa Scenna (appointed to Committee 18 November 2020)
Mr Leon Blitz (retired from Committee 8 September 2020)
Mr Andrew Fay (retired from Committee 18 November 2020)
Meetings attended
(% of meetings
eligible to attend)
Meetings
eligible to
attend (100%)
8 (100%)
1 (100%)
2 (100%)
2 (100%)
3 (100%)
6 (100%)
3 (100%)
8 (100%)
1 (100%)
2 (100%)
2 (100%)
3 (100%)
6 (100%)
3 (100%)
Mr John Humphrey (appointed to Committee 8 September 2020 and retired from Committee 18
November 2020)
Dr Gary Weiss AM (appointed to Committee 18 November 2020 and retired from Committee 28
April 2021)
1 (100%)
1 (100%)
Day to day management of Cromwell Property Group’s affairs and implementation of agreed strategic objectives are
delegated by the Board to management under the direction of the Chief Executive Officer (CEO). This has been formalised
in the Board Charter and the Board-approved Delegation of Authority Policy. The Board reviews these documents at least
annually to ensure their effectiveness and appropriateness (given the evolving needs of Cromwell Property Group).
What you can find on the Corporate Governance page on our website:
Board Charter
Delegation of Authority Policy
Audit and Risk Committee Charter
Constitution of Cromwell Corporation Limited
Nomination and Remuneration Committee Charter
Constitution of the Cromwell Diversified Property Trust
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 1.2
Cromwell Property Group undertakes appropriate checks before appointing a Director or senior executive, or putting
forward to securityholders a candidate for election or re-election as a Director. The checks are into matters such as
the person’s character, experience, education, criminal record and bankruptcy history. The Board and Nomination and
Remuneration Committee also consider whether or not the candidate has sufficient time available, given their other roles
and activities, to meet expected time commitments to Cromwell.
When securityholders are asked at Cromwell Property Group’s annual general meeting (AGM) to elect, or re-elect, a
Director to the Board, Cromwell will provide them with the following information to enable them to make an informed
decision:
• biographical information, including relevant qualifications, experience and the skills the candidate brings to the Board;
• details of any other current material directorships;
• a statement as to whether the Board supports the candidate’s election or re-election and a summary of the reasons
why; and
• (for a candidate standing for election as a Director for the first time) a confirmation that appropriate checks into
the candidate’s background and experience have been conducted; any material adverse information revealed by
background checks; details of any interest, position, association or relationship that might influence, or reasonably
be perceived to influence, in a material respect the candidate’s capacity to bring an independent judgement to bear
on issues before the Board and to act in the best interests of the Group as a whole rather than in the interests of an
individual securityholder or other party; and a statement from the Board as to the candidate’s independence; or
• (for a candidate standing for re-election) the term of office currently served and a statement from the Board as to the
candidate’s independence.
The information will be provided in the relevant notice of meeting. Securityholders also have the opportunity to ask
questions of candidates at the AGM.
In this Statement, AGM means (together) the Annual General Meeting of the Company and the General Meeting of the CDPT.
142
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT RECOMMENDATION 1.3
Cromwell Property Group has provided each Non-executive Director with a written letter of appointment which details the
terms of their appointment, including:
• the requirement to disclose interests and any matters which could affect the Director’s independence;
• remuneration and expected time commitments;
• the requirement to comply with key corporate policies, including Cromwell Property Group’s Code of Conduct and
Securities Trading Policy;
• the requirement to seek the Chair’s consent before accepting any new role that could impact on the time commitment
expected of the Director, and to notify the Board about anything that may lead to an actual or potential conflict of
interest or duty;
• Cromwell Property Group’s policy on when Directors may seek independent professional advice at the expense of the
entity;
• indemnity and insurance arrangements and ongoing rights of access to corporate information; and
• ongoing confidentiality obligations.
The CEO has a written formal job description, an employment contract (outlining the terms of appointment as a senior
executive) and, when also appointed as an Executive Director, a letter of appointment for the role as Executive Director.
Other senior executives have written employment contracts that outline the terms of their appointment.
Cromwell Property Group has a Board-approved Securities Trading Policy under which Directors, senior executives and
employees are restricted in their ability to deal in Cromwell Property Group securities. Appropriate closed periods are in
place during which Directors, senior executives and employees are not permitted to trade. Directors, senior executives and
employees are made aware of the policy and receive training annually. The policy is reviewed at least annually.
What you can find on the Corporate Governance page on our website:
Code of Conduct
Securities Trading Policy
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 1.4
The Company Secretary is accountable to the Board (through the Chair) on all matters to do with the proper functioning of
the Board.
The Company Secretary’s responsibilities include:
• advising the Board and Board Committees on governance matters;
• monitoring that Board and Board Committee policies and procedures are followed;
• guiding the continuous improvement, and coordinating the timely completion and despatch, of the Board and Board
Committee papers;
• ensuring that the business at the Board and Board Committee meetings is accurately captured in minutes; and
• helping to organise and facilitate the induction and professional development of Directors.
Directors can, and do, communicate directly and regularly with the Company Secretary on Board matters. Similarly, the
Company Secretary communicates directly and regularly with the Directors on such matters.
The Board Charter states that the Board is responsible for appointing and removing the Company Secretary.
What you can find on the Corporate Governance page on our website:
Board Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
143
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
RECOMMENDATION 1.5
Cromwell Property Group recognises the many benefits of diversity and strives, through its recruitment and selection
practices, to ensure that a diverse range of candidates is considered and that conscious and unconscious biases that
might discriminate against candidates are avoided.
Cromwell Property Group has a Board-approved Diversity Policy which sets out the framework the Group has in place
to achieve appropriate diversity in its Board, senior executive and broader workforce. Pursuant to the Diversity Policy,
each financial year the Board (on recommendation from the Nomination and Remuneration Committee) sets measurable
objectives for achieving diversity. An annual assessment of progress against those objectives is also undertaken.
The table below shows the gender diversity objectives set for the 2021 financial year and the Group’s performance against
those objectives as at 30 June 2021.
Number FY21 gender diversity objective
The Group’s performance as at 30 June 2021
1
2
3
4
5
Develop and execute Cromwell’s FY21 Diversity and
Inclusion (D&I) action plan
Initiatives in support of the objective are largely
completed with one in progress
Foster a culture of respect and inclusion
Create a culture that is supportive of employees
achieving their work and career goals
Value and foster diversity in our workforce
Ensure diversity of Cromwell’s Board (ie, the
Cromwell Board will have at least 30% of each gender
representation on the Board)
All key results in support of this initiative have been
achieved with one initiative still in progress
All initiatives in support of the objective have been
completed and all bar one key result have been
achieved. Cromwell has implemented Agile Working
All key results in support of this objective have been
achieved and all initiatives have been completed
The Board was made up of 33.33% females as at 30
June 2021
As at the date shown, the respective proportions of males and females on the Board, in senior executive positions and
across the employee workforce were as follows:
Date
As at 30 June 2021
Body
Board
As at 30 June 2021
Senior executive(1)
As at 30 June 2021
Employees(2)
Females (% of total)
Males (% of total)
Total (100%)
2 (33%)
0 (0%)
76 (51%)
4 (67%)
3 (100%)
73 (49%)
6 (100%)
3 (100%)
149 (100%)
(1) Recommendation 1.5(c)(3)(A) requires the Group to define what it means by ‘senior executive’. In this case, ‘senior executive’ means the key management
personnel (KMP) other than Non-executive Directors. As at 30 June 2021, the ‘senior executive’ comprised the Acting Chief Executive Officer, the Chief
Investment Officer and the Acting Chief Financial Officer. Please refer to the FY21 Remuneration Report for further information about KMP.
(2) Excludes European business, Singapore business, Phoenix Portfolios, Oyster Property Group and LDK Healthcare.
Cromwell Property Group is a ‘relevant employer' under the Workplace Gender Equality Act 2012 (Cth) (WGEA). Cromwell’s
latest WGEA reporting is available on the Corporate Governance page on the Group’s website.
What you can find on the Corporate Governance page on our website:
Diversity Policy
Gender Diversity Objectives (current financial year and
previous financial years)
Nomination and Remuneration Committee Charter
WGEA reporting
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
In line with footnote 31 of the Recommendations, the webpage on the WGEA website where its latest Gender Equality
Indicators are available is:
www.wgea.gov.au/what-we-do/compliance-reporting/wgea-procurement-principles
What you can find on the Sustainability page on our website:
Sustainability Report (current report and previous reports)
www.cromwellpropertygroup.com/sustainability
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Cromwell Property Group recognises that Inclusion links very closely with its corporate values and purpose. The Group’s
Diversity and Inclusion principles stem from its values, which, in turn, are embedded in the performance management
framework.
Cromwell Property Group’s Diversity and Inclusion principles are as follows:
Inclusion links very closely with our values and our purpose.
Our D&I principles stem from our values which are entrenched in our
performance management framework. They are:
We
recruit from a
diverse pool
We
select objectively,
based on Key Skill
Behaviours and
common values
We
address
inequality
We
call out behaviour
which doesn’t align with
these D&I Principles
We
schedule
meetings
and events
inclusively
We are
empathetic to
our people's
commitments
We ensure everyone gets an
equal opportunity
to contribute
We use
inclusive
language
We
remunerate
fairly
We recognise the
value of
diversity
We
assess
performance
objectively
We are
conscious of
our biases
What you can find on the Corporate Governance page on our website:
Our Values
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
145
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
RECOMMENDATION 1.6
The Board undertakes an annual formal performance assessment, which includes an evaluation of the performance of
the Board, Board Committees and individual Directors and also a self-evaluation. Under the annual formal performance
assessment, Directors complete a questionnaire and can make comments or raise any issues they have in relation to
the performance. The results are compiled by the Company Secretary and discussed at a subsequent Board meeting.
A process to renew the Board was undertaken during the 2021 financial year. Therefore, the formal performance
assessment was conducted to the extent applicable for the 2021 financial year and did not raise any governance issues
that needed to be addressed. The Board considers periodically using external facilitators to conduct its performance
reviews. The Deputy Chair of the Board and senior independent director is responsible for the performance evaluation of
the Chair of the Board, after having canvassed the views of the other Directors. Dr Gary Weiss AM was elected Chair of the
Board on 17 March 2021 therefore the next performance evaluation of the Chair of the Board will be undertaken for the
2022 financial year.
What you can find on the Corporate Governance page on our website:
Nomination and Remuneration Committee Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 1.7
Cromwell Property Group has an established, rigorous process for the performance review of all employees, including
senior executives. The performance of senior executives and whether they have met their individual key performance
indicators is formally evaluated annually by the CEO, with regular feedback being provided during the performance
period. At the time of the reviews, the professional development of the senior executive is also discussed, along with any
training which could enhance their performance. Both qualitative and quantitative measures are used in the evaluation. A
performance evaluation for each senior executive was completed during the reporting period.
Under its Charter, the Nomination and Remuneration Committee is responsible for facilitating an annual review of the
performance of the CEO (an Executive Director). This annual review was completed for the Acting CEO (not an Executive
Director) during the 2021 financial year.
What you can find on the Corporate Governance page on our website:
Nomination and Remuneration Committee Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
Principle 2: Structure the board to add value
RECOMMENDATION 2.1
Nomination and Remuneration Committee
The Board’s Nomination and Remuneration Committee has four members, all of whom are independent Directors. The
Committee is chaired by an independent Director who is not the Chair of the Board.
The Nomination and Remuneration Committee operates under a Board-approved written Charter. The Charter
sets out the Nomination and Remuneration Committee’s various responsibilities, including reviewing and making
recommendations to the Board in relation to:
• Board succession planning generally;
• induction and continuing professional development programmes for Directors;
• the development and implementation of a process for evaluating the performance of the Board, Board Committees and
Directors;
• the process for recruiting new Directors;
• the appointment, or re-election, of Directors to the Board;
• the performance and education of Directors;
• reviewing and recommending remuneration arrangements for the Directors, the CEO and senior executives; and
• ensuring succession plans are in place with regard to the CEO and other senior executives.
146
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT The Nomination and Remuneration Committee:
• may seek any information it considers necessary to fulfil its responsibilities;
• has access to management to seek explanations and information;
• may seek professional advice from employees of the Group and independent professional advice and services from
appropriate external advisors (independent of management), at Cromwell Property Group’s cost; and
• may meet with external advisors without management being present.
The minutes of each Nomination and Remuneration Committee meeting are included in the papers for the next Board
meeting after the Committee has approved those minutes. The Chair of the Nomination and Remuneration Committee
reports the Committee’s findings to the next Board meeting after each meeting of the Committee.
The Directors’ Report discloses the members of the Nomination and Remuneration Committee, the number of times that
the Committee met during the 2021 financial year and the individual attendances of the members at those meetings. For
easy reference, the information (including percentages of total) is shown in this Statement under recommendation 1.1.
What you can find on the Corporate Governance page on our website:
Nomination and Remuneration Committee Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 2.2
Board Skills Matrix
The Board reviews, on a regular basis, the mix of skills, experience, independence, knowledge and diversity represented by
Directors on the Board and determines whether the composition and mix remain appropriate for Cromwell’s purpose and
strategic objectives and whether they cover the skills needed to address existing and emerging business and governance
issues relevant to Cromwell Property Group.
The Board has adopted a Board Skills Matrix, which sets out the collective skills and attributes of the Board.
Skills and experience
Leadership and Culture
• Non-executive Director and Board Committee experience in a publicly listed company in Australia
or overseas
• Experience at an executive level in business including the ability to assess the performance of the
CEO and senior management
• Understanding, implementing and monitoring good organisational culture
Property and Asset
Management
• Experience in, and appropriate knowledge of, the Australian and European commercial property
market in one or more of the following areas: acquisitions and disposals; asset management;
property management; leasing; facilities management; and development
Funds / Investment
Management
• Experience in, and knowledge of, other property markets in other relevant jurisdictions (ie,
international) and other property market sectors
• Significant experience in, and knowledge of, wholesale and retail funds management, in Australia
and globally
Commercial Capability
• Deep experience at a Board or executive level with a listed company(ies) in the ASX300 or
Financial Acumen
international equivalent, with an understanding of capital raising, takeovers, continuous disclosure
and corporate governance
• Ability to think strategically and identify and critically assess strategic opportunities and threats
and develop effective strategies to meet Cromwell Property Group’s identified objectives
• Ability to understand key financial statements; critically assess financial viability and performance;
contribute to financial planning; monitor operating and capital expenditure budgets; and monitor
debt levels and funding arrangements; and/or
• Experience as a partner in a top tier accounting firm, or as a CFO in a listed company in the
ASX300 or international equivalent, with a deep understanding of the accounting standards
applicable to Cromwell Property Group’s financial reports and Cromwell Property Group’s financial
accountability process
Risk Oversight
• Ability to identify or recognise key risks to Cromwell Property Group across its various operations
and monitor risk management frameworks
147
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Debt Management
• Experience in the banking industry or in a corporate treasury department giving an understanding
of the debt market in Australia, Europe or elsewhere
People
• Experience in managing human capital, remuneration and reward, industrial relations, workplace
health and safety and strategic workforce planning
Public Policy,
Government, Economics
• Experience with either federal or state (or equivalent) government ministers or departments giving
a knowledge of agendas, policies or processes
• Understanding of key macro and micro economic indicators and market cycles and their impact on
Cromwell Property Group and the environment in which it operates
Sustainability
• Demonstrate an understanding of health and safety practices
• Understanding of risks and opportunities regarding climate change
• Former or current role with direct accountability for environment practices including energy, water
management, emissions and land management
The above table outlines detailed descriptions of the experience and skills represented by the current composition of
the Board, and considered by the Board as desirable. The Board regularly reviews and updates its Board Skills Matrix to
reflect the strategy and direction of Cromwell Property Group.
The Board considers that its current members have an appropriate mix of skills, personal attributes and experience that
allows the Directors individually, and the Board collectively, to discharge their duties effectively and efficiently. The Board
comprises individuals who understand the business of the Group and the environment in which it operates and who can
effectively assess management’s performance in meeting agreed objectives and goals.
The Directors’ Report provides the following information about each Director:
• profile, including qualifications and experience; and
• special responsibilities and attendances at Board and Board Committee meetings. For easy reference, attendances at
meetings are reproduced in this Statement.
The Nomination and Remuneration Committee refers to the Board Skills Matrix when considering Board succession
planning and professional development initiatives for the Directors.
What you can find on the Corporate Governance page on our website:
Nomination and Remuneration Committee Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 2.3
The Board
The Group recognises that independent Directors are important in reassuring securityholders that the Board properly
fulfils its role. As at 30 June 2021, the Board comprised six Directors, with a Non-executive Chair, an independent Non-
executive Deputy Chair and a majority of independent Non-executive Directors:
Director (age)
First appointed
Status
Dr Gary Weiss AM (Chair) (68)
18 September 2020
Non-executive Director/Chair
Mr Eng Peng Ooi (65)
Mr Robert Blain (66)
Ms Tanya Cox (60)
8 March 2021
8 March 2021
21 October 2019
Independent Non-executive Director/Deputy Chair
Independent Non-executive Director
Independent Non-executive Director
Mr Joseph Gersh AM (65)
18 September 2020
Independent Non-executive Director
Ms Lisa Scenna (53)
21 October 2019
Independent Non-executive Director
On 18 November 2020, Mr Leon Blitz (57) retired as independent Non-executive Chair, Mr Andrew Fay (56) retired as
independent Non-executive Deputy Chair and Mr John Humphrey (66) retired as an independent Non-executive Director.
On 31 December 2020, Mr Paul Weightman (59) retired as Managing Director/CEO (an Executive Director). On 17 March
2021, Ms Jane Tongs (61) retired as independent Non-executive Chair.
148
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT On 18 September 2020, Mr Joseph Gersh AM joined the Board as a non-independent Non-executive Director. As disclosed
in the Group’s ASX announcement of 12 February 2021, the Cromwell Board has confirmed its assessment of Mr Gersh AM
as ‘independent’ for the purposes of the Recommendations. In making its assessment, the Cromwell Directors (but not
Mr Gersh AM) considered all relevant factors, including those factors set out in the Recommendations as being relevant
to assessing the independence of a director, and also Mr Gersh AM’s contributions to Cromwell Board discussions and
decisions since his election as a Cromwell Director on 18 September 2020.
On 9 July 2021, Ms Jialei Tang (26) was appointed as a Non-executive Director.
Each year, independence status is assessed using the guidelines and factors set out in the Recommendations and each
independent Non-executive Director also confirms to the Board, in writing, their continuing status as an independent
Director.
In assessing a Director’s independence status, the Board has adopted a materiality threshold of 5% of the Group’s net
operating income or 5% of the Group’s net tangible assets (as appropriate) as disclosed in its last audited financial
accounts.
The length of time that each independent Director has served on the Board is shown in the table above.
The Board is comfortable that no Director has served for a period such that their independence may have been
compromised. The Board also recognises that the interests of Cromwell Property Group and its securityholders are likely
to be well served by having a mix of Directors, some with a longer tenure with a deep understanding of Cromwell and its
business and some with a shorter tenure with fresh ideas and perspective.
Cromwell Property Group’s independent Non-executive Directors are considered by the Board to meet the test of
independence under the Recommendations.
Each independent Non-executive Director has undertaken to inform the Board as soon as practical if they think their
status as an independent Director has or may have changed.
What you can find on the Corporate Governance page on our website:
Board Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 2.4
As at 30 June 2021, the Board comprised six Directors, with a Non-executive Chair, an independent Non-executive Deputy
Chair and a majority of independent Non-executive Directors. Following Ms Jialei Tang’s appointment as a Non-executive
Director on 9 July 2021, the Board comprises seven Directors, with a Non-executive Chair, an independent Non-executive
Deputy Chair and a majority of independent Non-executive Directors.
The Non-executive Directors confer periodically as a group without senior executives present.
What you can find on the Corporate Governance page on our website:
Board Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 2.5
The Chair of the Board – Dr Gary Weiss AM – is a Non-executive Director and the Deputy Chair of the Board and senior
independent director – Mr Eng Peng Ooi – is an independent Non-executive Director. Former Chairs of the Board – Mr
Leon Blitz and Ms Jane Tongs – were independent Non-executive Directors.
Until 31 December 2020, Mr Paul Weightman was an Executive Director and the CEO of Cromwell Property Group. From 1
January 2021, Mr Michael Wilde has been the Acting CEO of Cromwell Property Group. From 5 October 2021, Mr Jonathan
Callaghan will be the CEO of Cromwell Property Group and is expected to be appointed as an Executive Director shortly
thereafter.
149
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT This is consistent with the Board Charter, which stipulates that the Chair of the Board will not be the same person as the
CEO and, if the Chair of the Board is not an independent Non-executive Director, then the Board will elect an independent
Non-executive Director as Deputy Chair of the Board or as the ‘senior independent director’. The Deputy Chair of the
Board or senior independent director will act as Chair of the Board if the Chair faces a conflict of interest.
The Board Charter sets out the responsibilities of the Chair, including:
• leading the Board and Cromwell Property Group;
• facilitating the effective contribution and ongoing development of all Directors;
• promoting constructive and respectful relations between Board members and between the Board and management;
and
• facilitating Board discussions to ensure that core issues facing Cromwell Property Group are addressed.
What you can find on the Corporate Governance page on our website:
Board Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 2.6
An induction programme ensures that new Directors can discharge their responsibilities effectively, participate fully and
actively in decision making, and add value, upon their appointment. The programme includes:
• meeting with fellow Directors and the senior executive team and receiving briefings on Cromwell Property Group’s
strategy, structure, business operations, history, culture and key risks;
• reviewing materials and policies in relation to corporate governance, legal duties and responsibilities and key
accounting matters and directors’ responsibilities; and
• undertaking Cromwell Property Group property asset and office site visits (during the 2021 financial year, this
component of the induction programme has been limited by the implementation of restrictions associated with the
COVID-19 pandemic).
Each year, the Nomination and Remuneration Committee assessed whether the Directors, as a group, have the skills,
knowledge and experience to deal with new and emerging business and governance issues and recommends to the Board
a professional development programme for Directors. This includes training relevant to each skill area of the Board
Skills Matrix and on key issues relevant to Cromwell Property Group’s operations, financial affairs and governance. The
professional development programme is compiled in light of recent or potential developments (internal and external)
as well as any skills or knowledge gaps identified by the Nomination and Remuneration Committee. Directors also have
access to the inhouse training sessions provided by Cromwell Property Group’s Risk and Compliance team and Finance
team. On an ongoing basis, Directors are provided with briefings on material changes to accounting standards, laws and
regulations relevant to Cromwell Property Group.
During the 2021 financial year, to the extent possible given the implementation of restrictions associated with the
COVID-19 pandemic, Directors undertook Cromwell Property Group property asset and office site visits.
What you can find on the Corporate Governance page on our website:
Nomination and Remuneration Committee Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
150
CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT Principle 3: Act ethically and responsibly
RECOMMENDATION 3.1
Cromwell Property Group is a ‘values led’ organisation. Its corporate values, as disclosed on the website and in the Board-
approved Code of Conduct, are as follows:
Such values underpin Cromwell Property Group’s:
• purpose – to exist to look after people; and
• vision – to be globally recognised as the value driven real estate investor and manager of choice.
Cromwell Property Group’s Directors, senior executives and employees are required to act lawfully, ethically and
responsibly. This is reinforced by the values and the various practices and policies of the Group.
The Board and the senior executives reinforce Cromwell Property Group’s values in their interactions with Cromwell’s
wider team. Appropriate standards are communicated and reinforced to all employees at induction sessions, regular
refresher training and team meetings and in staff communications.
What you can find on the Corporate Governance page on our website:
Our Values
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 3.2
All Directors, senior executives and employees are expected to act with integrity and strive at all times to enhance the
reputation and performance of Cromwell Property Group. To reinforce this culture, Cromwell Property Group has a Board-
approved Code of Conduct to provide guidance about the attitudes and behaviour necessary to maintain stakeholder
confidence in the integrity of Cromwell Property Group and comply with the Group’s legal obligations. The Board-approved
Code of Conduct is made available to all Directors, senior executives and employees and they are reminded of the
importance of the Code of Conduct on a regular basis, including through refresher training. The Code of Conduct is also
published on Cromwell Property Group’s website.
Compliance with Board-approved policies (including the Code of Conduct) is monitored via monthly checklists completed
by key management and proactive testing programmes and by investigation following any report of a breach. Compliance
monitoring is undertaken by the Compliance team under the direction of the Head of Risk and Compliance. The Board
and the Audit and Risk Committee are notified of any material breaches of the Code of Conduct. The Directors and senior
executives take appropriate and proportionate disciplinary action against those who breach the Code of Conduct.
There were no material breaches of the Code of Conduct during financial year 2021.
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT RECOMMENDATIONS 3.3 AND 3.4
Cromwell Property Group has a Board-approved Whistleblower Protection Policy and a Code of Conduct encompassing
anti-bribery and corruption.
These policies actively encourage and support reporting to appropriate management of any actual or potential breaches
of the Group’s legal obligations and/or of the Code of Conduct and any concerns about any unlawful, unethical or
irresponsible behaviour within Cromwell Property Group.
The Audit and Risk Committee is informed of any incidents reported under Cromwell Property Group’s Whistleblower
Protection Policy and any incidents of bribery or corruption prohibited by the Code of Conduct.
What you can find on the Corporate Governance page on our website:
Whistleblower Protection Policy
Code of Conduct (encompassing anti-bribery and corruption)
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
Principle 4: Safeguard integrity in corporate reporting
RECOMMENDATION 4.1
Audit and Risk Committee
The Board is responsible for the integrity of the Group’s corporate reporting. To assist in discharging this function, the
Board has a long-established Audit and Risk Committee. The Board’s Audit and Risk Committee has five members, all of
whom are Non-executive Directors and a majority of whom are independent Directors. The Committee is chaired by an
independent Director who is not the Chair of the Board.
The Audit and Risk Committee operates under a Board-approved written Charter, which sets out the Audit and Risk
Committee’s:
• objectives, including to maintain and improve the quality, credibility and objectivity of the financial accountability
process (including financial reporting on a consolidated basis); and
• responsibilities, including reviewing and making recommendations to the Board in relation to:
• whether Cromwell Property Group’s financial statements reflect the understanding of the Audit and Risk Committee
members, and otherwise provide a true and fair view, of the financial position and performance of the Group;
• the appropriateness of any significant estimates or judgments in the financial reports (including those in any
consolidated financial statements); and
• the appointment or removal, and review of effectiveness and independence, of the external auditor.
The minutes of each Audit and Risk Committee meeting are included in the papers for the next Board meeting after the
Committee has approved those minutes. The Chair of the Audit and Risk Committee reports the Committee’s findings to
the next Board meeting after each meeting of the Committee.
The Directors’ Report discloses:
• the relevant qualifications and experience of the members of the Audit and Risk Committee; and
• the number of times that the Audit and Risk Committee met during the 2021 financial year and the individual
attendances of the members at those meetings. For easy reference, the information (including percentages of total) is
shown in this Statement under recommendation 1.1.
The Audit and Risk Committee:
• may seek any information it considers necessary to fulfil its responsibilities;
• has access to management to seek explanations and information;
• has access to auditors to seek explanations and information from them, without management being present;
• may seek professional advice from employees of the Group and independent professional advice from appropriate
external advisors, at Cromwell Property Group’s cost; and
• may meet with external advisors without management being present.
During the 2021 financial year, the external auditor attended the majority of the meetings of the Audit and Risk Committee
and time was made available for the Committee to meet with the external auditor without management being present.
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
The external auditor has declared its independence to the Board and to the Audit and Risk Committee. The Board is
satisfied the standards for auditor independence and associated issues have been met.
What you can find on the Corporate Governance page on our website:
Audit and Risk Committee Charter
External Auditor – Selection, Appointment and Rotation
Auditor Independence Policy
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 4.2
Before it approves the Group financial statements for a financial period, the Board receives from the CEO and CFO a
written declaration that, in their opinion, the financial records of the entity have been properly maintained and the financial
statements comply with the appropriate accounting standards and give a true and fair view of the financial position and
performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and
internal control which is operating effectively.
RECOMMENDATION 4.3
For any periodic corporate report that Cromwell releases to the market that is not audited or reviewed by an external
auditor, Cromwell has a robust review, verification and approval process to verify the integrity of those reports. Cromwell
undertakes an internal review and verification exercise, with material statements verified by relevant managers and
all verification materials retained in corporate records. Review by independent advisors is obtained where appropriate.
Cromwell Property Group’s Market Disclosure Protocol provides for a sign off protocol for each announcement to ensure
that Directors review and (where applicable) approve announcements prior to release; in addition, at least two Disclosure
Officers review and approve the announcement and, in accordance with ASX Listing Rule 15.5 (as amended from time to
time), authorise the lodgement of the announcement with the ASX.
Cromwell adopts this process to satisfy itself that the relevant report is materially accurate, balanced and provides
securityholders with appropriate information to make informed investment decisions.
What you can find on the Corporate Governance page on our website:
Market Disclosure Protocol
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
Principle 5: Make timely and balanced disclosure
RECOMMENDATIONS 5.1, 5.2 AND 5.3
Cromwell Property Group believes that all stakeholders should be informed in a timely and widely available manner of all
material information concerning the Group, including its financial position, performance, ownership and governance. In
particular, Cromwell Property Group strives to ensure that any price sensitive material for public announcement is lodged
with the ASX before external disclosure elsewhere and posted on the Group’s website as soon as reasonably practicable
after lodgement with the ASX.
The Group has a Market Disclosure Protocol which includes policies and procedures designed to ensure compliance with
the continuous disclosure obligations under the ASX Listing Rules.
The Board receives copies of all market announcements promptly after such announcements have been released. This
ensures that the Board has timely visibility of the nature and quality of information disclosed to the market and the
frequency of disclosures. Cromwell Property Group’s Market Disclosure Protocol provides for a sign off protocol to ensure
that Directors review and (where applicable) approve announcements prior to release.
When Cromwell Property Group is giving a presentation, a copy of the presentation materials is released on the ASX
Market Announcements Platform ahead of the presentation. Examples of such presentations are those delivered for
half year results and full year results and at the AGM and any general meeting. In addition, for the AGM and any general
meeting, a copy of the Chair’s address and the CEO’s address is released on the ASX Market Announcements Platform
before the commencement of the meeting.
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Cromwell Property Group is committed to providing securityholders with the opportunity to engage and participate in
presentations and meetings, while maintaining their health and safety in light of the COVID-19 pandemic.
For the general meeting on 18 September 2020, securityholders were invited to attend in-person at a Brisbane meeting
location or a Sydney meeting location or to participate in the meeting ‘virtually’ through an online platform provided by
Cromwell’s registry, Link Market Services Limited. Securityholders participating ‘virtually’ were able to participate in the
meeting by hearing the chair of the meeting’s address, viewing the presentation slides, asking questions and (if they had
not previously lodged a proxy) voting online.
For the AGM on 18 November 2020, securityholders were invited to attend in-person at the Group’s Brisbane office or
to participate in the meeting ‘virtually’ through an online platform provided by Cromwell’s registry, Link Market Services
Limited. Securityholders participating ‘virtually’ were able to participate in the meeting by hearing the chair of the
meeting’s address, viewing the presentation slides, asking questions and voting online.
For the general meeting on 12 February 2021, securityholders were invited to participate in the meeting ‘virtually’ through
an online platform provided by Cromwell’s registry, Link Market Services Limited. Securityholders participating ‘virtually’
were able to participate in the meeting by hearing the chair of the meeting’s address, viewing the presentation slides,
asking questions and voting online.
What you can find on the Corporate Governance page on our website:
Market Disclosure Protocol
Investor Relations Policy
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
Principle 6: Respect the rights of securityholders
RECOMMENDATION 6.1
Cromwell Property Group aims to keep securityholders informed on an ongoing basis of the Group’s performance and
all major developments. Securityholders receive regular reports and the Group uses its website as its primary means
of providing information to securityholders and the broader investment community about the Group’s business, history,
corporate structure, corporate governance and financial performance.
The Corporate Governance page on the Group’s website provides:
• a link to information about the Board of Directors;
• key corporate governance documents, including constitutions, charters and policies;
• a link to key events in the Corporate Governance calendar;
• a link to a description of the Group’s stapled security dividends/distributions policy and information about the Group’s
dividend/distribution history;
• a link to download relevant securityholder forms; and
• materials referred to in this Statement.
The Group’s website also provides:
• an overview of the Group’s current business;
• a description of how the Group is structured;
• a summary of the Group’s history;
• a statement of the Group’s values;
• documents that the Group releases publicly (such as annual reports, ASX announcements, notices of meeting and
company news items);
• historical information about the market prices of Cromwell Property Group securities;
• ahead of the AGM (or any general meeting), information including time and venue and a copy of the Chair’s address, the
CEO’s address and the presentation materials;
• contact details for enquiries from securityholders, analysts or the media; and
• contact details for its securities registry.
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
Our website address:
www.cromwellpropertygroup.com
The Corporate Governance page on our website:
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 6.2
Cromwell Property Group has a Board-approved Investor Relations Policy, which has been designed to facilitate
effective two-way communication with all Cromwell securityholders (institutional and retail) and other financial market
participants, and to ensure that Cromwell gives all Cromwell securityholders and other financial market participants
easy and timely access to balanced and understandable information about Cromwell’s business, governance, financial
performance and prospects.
The Policy also sets out the policies and processes that the Group has in place to encourage participation of
securityholders and financial market participants in the AGM. This is important to the Group because it assists with
ensuring a high level of accountability and identification with the Group’s strategies and goals.
What you can find on the Corporate Governance page on our website:
Investor Relations Policy
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 6.3
Cromwell Property Group facilitates and encourages participation at meetings of securityholders.
Prior to the meeting, securityholders will be provided with a notice of meeting outlining the resolutions to be voted upon.
This will be sent to securityholders in electronic or printed form (as elected) within the timeframe set by the Corporations
Act. This material relating to the meeting will be released via the ASX announcements platform and made available on the
Cromwell website.
A proxy form, allowing securityholders to appoint a proxy in the event they cannot attend the meeting, will accompany the
notice of meeting.
A copy of the Chair’s address, CEO’s address and the meeting presentation materials are released on the ASX Market
Announcements Platform before the commencement of the meeting.
At the AGM, the Chair and the CEO each address the meeting and provide securityholders with an update on the
Group’s business, governance, financial performance and prospects and any areas of concern or interest to the
Board and management. Cromwell will also ensure that the current external audit partner is in attendance to answer
securityholders’ questions about the audit.
Securityholders are encouraged to participate and ask questions at securityholder meetings. The Chair and CEO take any
comments and questions received from securityholders during or after their address. The Chair provides securityholders
with an opportunity to ask questions about and discuss the specific resolutions put to the meeting. Securityholders have
the opportunity to ask questions about or comment on the management of the Group.
The notice of meeting for the AGM advises that securityholders entitled to cast their vote at the AGM may submit written
questions to the auditor relevant to the content of the auditor’s report or the conduct of the audit of the annual financial
report being considered at the AGM, or otherwise may submit written questions about or comments on the management
of the Group. A securityholder wishing to submit a question is asked to submit the question in writing to the Company
Secretary up to a week before the AGM. A list of the questions submitted is made available to securityholders attending
the AGM at or before the start of the AGM. Where appropriate, these questions and comments are addressed at the
meeting by being read out and then responded to at the meeting. At the AGM, the Chair reminds securityholders of the
opportunity to ask questions, including questions about or comments on the management of the Group.
Securityholder meetings are held during business hours at the Group’s registered office in Brisbane, which is accessible
by public transport and near paid carparking locations. The notice of meeting invites securityholders to join the Directors
for morning tea or afternoon tea (as applicable) after the meeting, subject to any restrictions associated with the COVID-19
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT pandemic. Cromwell provides ‘virtual’ online participation through a platform provided by Cromwell’s registry, Link Market
Services Limited, so that securityholders can participate (including asking questions and voting online) if they are unable
to attend the meeting in person.
For the general meeting on 18 September 2020, securityholders were invited to attend in-person at a Brisbane meeting
location or a Sydney meeting location or to participate in the meeting ‘virtually’ through an online platform provided by
Cromwell’s registry, Link Market Services Limited. Securityholders participating ‘virtually’ were able to participate in the
meeting by hearing the chair of the meeting’s address, viewing the presentation slides, asking questions and (if they had
not previously lodged a proxy) voting online.
For the AGM on 18 November 2020, securityholders were invited to attend in-person at the Group’s registered office
in Brisbane or to participate in the meeting ‘virtually’ through an online platform provided by Cromwell’s registry, Link
Market Services Limited. Securityholders participating ‘virtually’ were able to participate in the meeting by hearing the
chair of the meeting’s address, viewing the presentation slides, asking questions and voting online.
For the general meeting on 12 February 2021, securityholders were invited to participate in the meeting ‘virtually’ through
an online platform provided by Cromwell’s registry, Link Market Services Limited. Securityholders participating ‘virtually’
were able to participate in the meeting by hearing the chair of the meeting’s address, viewing the presentation slides,
asking questions and voting online.
RECOMMENDATION 6.4
At the general meeting on 18 September 2020, the AGM on 18 November 2020 and the general meeting on 12 February
2021, all resolutions were decided by way of a poll rather than by a show of hands.
RECOMMENDATION 6.5
Cromwell Property Group gives its securityholders the option to receive communications from the Group and from its
securities registry electronically. Most securityholders have elected to receive all communications electronically, while
other securityholders have elected to receive all communications electronically with payment statements received by post.
Electronic communications sent by the Group and by the securities registry are formatted in a reader friendly and printer
friendly format.
Securityholders can send communications to the Group and to the securities registry electronically. The Contact page on
the Group’s website provides the email address for contacting the Group and the securities registry.
Principle 7: Recognise and manage risk
RECOMMENDATION 7.1
Audit and Risk Committee
The Group is exposed to various risks across its business operations and recognises the importance of effectively
identifying and managing those risks so that informed decisions on risk issues can be made. The Board’s Audit and
Risk Committee has five members, the majority of whom are independent Directors. The Committee is chaired by an
independent Director who is not the Chair of the Board. The Audit and Risk Committee operates under a Board-approved
written Charter, which sets out the Committee’s various responsibilities, including:
• assessing the effectiveness of the internal risk control system and management’s performance against the risk
management framework, including whether management is operating within the risk appetite set by the Board;
• receiving reports from management of any actual or suspected fraud, theft or other breach of internal controls and the
‘lessons learned’;
• receiving compliance assurance and internal risk control testing reports, including reviews of the adequacy of
processes for risk management, internal control and governance;
• receiving reports from management on new and emerging sources of risk and the risk controls and mitigation
measures that management has put in place to deal with those risks;
• making recommendations to the Board in relation to changes that should be made to the risk management framework
or to the risk appetite set by the Board;
• reviewing the general insurance programme, and assessing and recommending to the Board for adoption the scope,
cover and cost of corporate insurance; and
• receiving reports from management outlining the sustainability practices of the Group, including its assessment of the
potential impacts of climate change.
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT The Audit and Risk Committee:
• may seek any information it considers necessary to fulfil its responsibilities;
• has access to management to seek explanations and information;
• has access to auditors to seek explanations and information from them, without management being present;
• may seek professional advice from employees of the Group and independent professional advice from appropriate
external advisors, at Cromwell Property Group’s cost; and
• may meet with external advisors without management being present.
The minutes of each Audit and Risk Committee meeting are included in the papers for the next Board meeting after the
Committee has approved those minutes. The Chair of the Audit and Risk Committee reports the Committee’s findings to
the next Board meeting after each meeting of the Committee.
The Directors’ Report discloses:
• the relevant qualifications and experience of the members of the Audit and Risk Committee; and
• the number of times that the Audit and Risk Committee met during the 2021 financial year and the individual
attendances of the members at those meetings. For easy reference, the information (including percentages of total) is
shown in this Statement under recommendation 1.1.
What you can find on the Corporate Governance page on our website:
Audit and Risk Committee Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 7.2
The Board is responsible for:
• satisfying itself that an appropriate risk management framework that covers both financial and non-financial risks is in
place and setting the risk appetite within which the Board expects management to operate; and
• reviewing and ratifying systems of internal compliance and control and legal compliance to ensure appropriate
governance and compliance frameworks and controls are in place.
As outlined in its Board-approved Charter, the Audit and Risk Committee’s responsibilities include:
• overseeing the establishment and implementation of risk management and internal compliance and control systems
and ensuring there is a mechanism for assessing the efficiency and effectiveness of those systems at least annually;
• approving and recommending to the Board for adoption policies and procedures on risk oversight and management to
establish an effective and efficient system for:
• identifying, assessing, monitoring and managing risk; and
• disclosing any material change to the risk profile; and
• regularly reviewing and updating the risk profile.
Under the direction of the CEO, management is responsible for ensuring that the Group operates within the risk appetite
set by the Board. It does so by identifying relevant business risks, designing controls to manage those risks and ensuring
those controls are appropriately implemented. The Group has adopted an Enterprise Risk Management Policy, which is
a general statement of the Group’s approach to proactive, enterprise wide risk management. There is also a wide range
of underlying internal policies and procedures, which are designed to mitigate the Group’s material business risks. The
Group’s approach to enterprise risk management is guided by relevant International Standards and regulatory guidance
and the Recommendations.
Reviews of the enterprise risk management framework were completed in the 2021 financial year. The Audit and Risk
Committee and the Board were satisfied the framework continues to be sound and that Cromwell Property Group
operates within the risk appetite set by the Board.
Compliance Committee
A Compliance Committee – comprised of a majority of external members – monitors the extent to which Cromwell
Property Securities Limited (as Responsible Entity for the CDPT) complies with the CDPT’s compliance plan and the
underlying compliance framework. The Board of Cromwell Property Securities Limited receives regular reports from the
Compliance Committee. During the financial year, the Chair of the Compliance Committee meets with the Audit and Risk
Committee, with time made available for the Committee to meet with the Chair of the Compliance Committee without
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT management being present. The roles and responsibilities of the Compliance Committee are outlined in a Board-approved
Charter, which is reviewed annually by the Compliance Committee. The Board of the Responsible Entity may change the
Charter at any time by resolution.
What you can find on the Corporate Governance page on our website:
Board Charter
Audit and Risk Committee Charter
Enterprise Risk Management Policy
Compliance Committee Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 7.3
The Group’s Risk and Audit Universe, aligned with the Group’s Sustainability Framework, sets out each risk description
and auditable focus area. The Risk and Audit Universe details three internal levels of control: Level One (management
oversight and operational controls, policies and processes); Level Two (monitoring governance, compliance, risk
management and reporting); and Level Three (functionally independent assessments and reviews). Level Four under the
Risk and Audit Universe comprises external audit, assurance and verification of processes.
Although the Group does not have a designated internal audit function, throughout the year the Compliance team
conducts tests of the effectiveness of the controls and the appropriateness of the monitoring strategies in place for those
risks with an inherent risk rating of Very High or High. This forms part of Level Three under the Risk and Audit Universe.
Relevant management confirm (monthly, quarterly or annually as appropriate given the residual risk rating) that the
controls remain appropriate and identify any new risks and any new controls that should be put in place. The findings are
reported to the Audit and Risk Committee.
RECOMMENDATION 7.4
The Group’s Sustainability Report discloses the extent to which the Group has material exposure to environmental or
social risks and explains how such risks are and will be managed.
What you can find on the Sustainability page on our website:
Sustainability Report (current edition and previous editions)
www.cromwellpropertygroup.com/sustainability
Principle 8: Remunerate fairly and responsibly
RECOMMENDATION 8.1
Nomination and Remuneration Committee
The Board has a long-established Nomination and Remuneration Committee, which operates under a Board-approved
written Charter. The Charter sets out the Nomination and Remuneration Committee’s various responsibilities, including
reviewing and making recommendations to the Board in relation to:
• coherent remuneration policies and practices to attract, retain and motivate senior executives and directors who will
create value for securityholders;
• the remuneration framework for Non-executive Directors, including the allocation of the pool of Directors’ fees;
• Executive Director and senior executive total remuneration;
• the design of any equity based incentive plan; and
• whether there is any gender or other inappropriate bias in remuneration policies and practices.
The Nomination and Remuneration Committee:
• may seek any information it considers necessary to fulfil its responsibilities;
• has access to management to seek explanations and information;
• may seek professional advice from employees of the Group and independent professional advice and services from
appropriate external advisors (independent of management), at Cromwell Property Group’s cost; and
• may meet with external advisors without management being present.
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
The minutes of each Nomination and Remuneration Committee meeting are included in the papers for the next Board
meeting after the Committee has approved those minutes. The Chair of the Nomination and Remuneration Committee
reports the Committee’s findings to the next Board meeting after each meeting of the Committee. The Board’s Nomination
and Remuneration Committee has four members, all of whom are independent Directors. The Committee is chaired by an
independent Director who is not the Chair of the Board.
The Directors’ Report discloses the members of the Nomination and Remuneration Committee, the number of times that
the Committee met during the 2021 financial year and the individual attendances of the members at those meetings. For
easy reference, the information (including percentages of total) is shown in this Statement under recommendation 1.1.
What you can find on the Corporate Governance page on our website:
Nomination and Remuneration Committee Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
RECOMMENDATION 8.2
The Directors’ Report (the section titled Remuneration Report) discloses information, including the policies and practices
regarding the remuneration of:
• Non-executive Directors; and
• the Executive Director and other senior executives.
The respective policies and practices reflect the different roles and responsibilities of Non-executive Directors and the
Executive Director and other senior executives.
As disclosed in the Remuneration Report, the Group’s Non-executive Directors are paid a fixed remuneration, comprising
base and committee fees or salary and superannuation (if applicable). Non-executive Directors do not receive bonus
payments or participate in security-based compensation plans, are not provided with retirement benefits other than
statutory superannuation and are required to hold a minimum of one year’s fees (at the Non-executive Director fee rate)
within three years from their start date.
The Remuneration Report details the nature and amount of remuneration of the Chief Executive Officer (Executive
Director) and other senior executives (Key Management Personnel or KMP).
Remuneration packages are designed to align the KMP’s interests with those of securityholders. Objectives and key
results (OKRs) for each KMP consider their role within Cromwell generally as well as their expected contribution to the
achievement of Cromwell’s objectives. The OKRs are designed to best incentivise each KMP to meet Cromwell’s objectives
and therefore best serve the interests of securityholders. This is achieved by providing remuneration packages which
consist of the following three elements (or a combination thereof) where appropriate:
• Fixed component in the form of a cash salary;
• An at-risk cash and equity award that is linked solely to performance of a tailored set of objectives, where appropriate; and
• At-risk longer-term equity payment. This third element is equity based remuneration aimed at alignment with
securityholder outcomes and retention.
The Group has an official clawback policy on unvested rights and deferred securities and malus and clawback clauses
allow unvested securities to be clawed back where a recipient has acted fraudulently, dishonestly or where there has
been a material misstatement or omission in the Group’s financial statements leading to receipt of an unfair benefit.
Unvested stapled securities held by a participant under Cromwell Property Group’s Stapled Security Incentive Plan lapse
in certain circumstances including where, in the Plan Committee’s opinion, they are liable to clawback under the clawback
policy. Additionally, performance rights under Cromwell Property Group’s Performance Rights Plan lapse under certain
circumstances including a determination by the Plan Committee that the performance right should lapse because the
participant, in the Plan Committee’s opinion, has committed any act of fraud, defalcation or gross misconduct in relation
to the affairs of a body corporate in the Group.
For all KMP except the CEO and Non-executive Directors, the CEO is responsible for setting OKR targets which are
reviewed by the Board and assessing annually whether those targets have been met. The OKR targets for the CEO are set,
revised and reviewed annually by the Nomination and Remuneration Committee and the Board.
What you can find on the Corporate Governance page on our website:
Nomination and Remuneration Committee Charter
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT RECOMMENDATION 8.3
In accordance with the remuneration policy, the Group operates:
• a Performance Rights Plan and has issued performance rights to a number of senior executives, including the former
CEO Mr Paul Weightman (a former Executive Director). The terms of the Group’s Performance Rights Plan do not allow
participants, whether Executive Directors or other employees, to hedge or otherwise limit the economic risk of their
participation in the Plan; and
• a Stapled Security Incentive Plan and has offered Cromwell Property Group securities to a number of senior executives.
The terms of the Group’s Stapled Security Incentive Plan do not allow participants, whether Executive Directors or other
employees, to hedge or otherwise limit the economic risk of their participation in the Plan.
What you can find on the Corporate Governance page on our website:
Plan Rules for the Cromwell Property Group Performance Rights Plan
Plan Rules for the Cromwell Property Group Stapled Security Incentive Plan
www.cromwellpropertygroup.com/securityholder-centre/corporate-governance
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT SECURITYHOLDER
INFORMATION
The securityholder information set out below was applicable as at 31 August 2021, unless stated otherwise.
Spread of Stapled Securityholders
Category of Holding
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
Number of Securities
Number of Holders
2,316,883,011
124,957,376
155,439,191
12,822,986
6,838,773
529,338
2,617,470,675
1,172
1,784
6,110
1,679
2,427
1,392
14,564
Unmarketable Parcels
The number of stapled securityholdings held in a less than marketable parcel was 790.
Substantial Securityholders
Holder
ESR Cayman Limited
ARA Group
Tang family and related entities
Vanguard Group
Stapled Securities
Date of Notice
803,686,459
778,946,286
433,607,179
185,302,800
06/08/2021
23/09/2020
19/06/2020
22/06/2021
Voting Rights
On a show of hands, every securityholder present at a meeting in person or by proxy shall have one vote and, upon a poll,
every securityholder shall have effectively one vote for every security held.
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CROMWELL PROPERTY GROUP I 2021 ANNUAL REPORT
20 Largest Securityholders
Rank Holder
Number
of Stapled
Securities Held
% Held of
Issued Stapled
Securities
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
CITICORP NOMINEES PTY LIMITED
ARA REAL ESTATE INVESTORS XXI PTE LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ARA REAL ESTATE INVESTORS XXI PTE LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
ARA REAL ESTATE INVESTORS 28 LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
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