GPT Management Holdings Limited
ABN: 67 113 510 188
Annual Financial Report
31 December 2021
This financial report covers both GPT Management Holdings Limited (the Company) as an individual entity and the Consolidated Entity consisting of
GPT Management Holdings Limited and its controlled entities.
GPT Management Holdings Limited is a company limited by shares, incorporated and domiciled in Australia.
Through GPT’s internet site, GPT has ensured that its corporate reporting is timely, complete and available globally at minimum cost to the Company. All
press releases, financial reports and other information is available on GPT’s website: www.gpt.com.au.
1
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
CONTENTS
Directors’ Report ........................................................................................................................................................................................ 3
Auditor’s Independence Declaration ..................................................................................................................................................... 27
Financial Statements ................................................................................................................................................................................. 28
Consolidated Statement of Comprehensive Income .......................................................................................................................... 28
Consolidated Statement of Financial Position ..................................................................................................................................... 29
Consolidated Statement of Changes in Equity .................................................................................................................................... 30
Consolidated Statement of Cash Flows ............................................................................................................................................... 31
Notes to the Financial Statements ......................................................................................................................................................... 32
Result for the year ........................................................................................................................................................................... 32
1. Segment information .................................................................................................................................................................... 32
Operating assets and liabilities ................................................................................................................................................... 32
2. Equity accounted investments .................................................................................................................................................... 32
3. Trade receivables .......................................................................................................................................................................... 34
4. Intangible assets .......................................................................................................................................................................... 35
5. Inventories ...................................................................................................................................................................................... 36
6. Property, plant and equipment .................................................................................................................................................... 36
7. Other assets .................................................................................................................................................................................. 37
8. Payables ......................................................................................................................................................................................... 37
9. Provisions ....................................................................................................................................................................................... 37
10. Taxation ........................................................................................................................................................................................ 38
Capital structure .............................................................................................................................................................................. 40
11. Equity and reserves .................................................................................................................................................................... 41
12. Earnings per share .................................................................................................................................................................... 42
13. Dividends paid and payable ...................................................................................................................................................... 42
14. Borrowings .................................................................................................................................................................................. 43
15. Financial risk management ...................................................................................................................................................... 44
Other disclosure items .................................................................................................................................................................. 46
16. Cash flow information ................................................................................................................................................................. 46
17. Commitments .............................................................................................................................................................................. 46
18. Lease receivables ....................................................................................................................................................................... 47
19. Contingent liabilities .................................................................................................................................................................... 47
20. Security based payments .......................................................................................................................................................... 47
21. Related party transactions ......................................................................................................................................................... 48
22. Auditors remuneration ................................................................................................................................................................ 51
23. Parent entity financial information ............................................................................................................................................ 51
24. Fair value disclosures ................................................................................................................................................................ 52
25. Change in accounting policy ..................................................................................................................................................... 52
26. Accounting policies ..................................................................................................................................................................... 57
27. Events subsequent to reporting date ...................................................................................................................................... 60
Directors’ Declaration ............................................................................................................................................................................... 61
Independent Auditor’s Report ................................................................................................................................................................. 62
2
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
The Directors of GPT Management Holdings Limited (the Company), present their report together with the financial statements of GPT Management
Holdings Limited and its controlled entities (the Consolidated Entity) for the full year ended 31 December 2021. The Consolidated Entity is a for profit
entity and is stapled to the General Property Trust (Trust). The GPT Group (GPT or the Group) financial statements include the results of the stapled
entity as a whole.
GPT Management Holdings Limited is a company limited by shares, incorporated and domiciled in Australia. The registered office and principal place of
business is Level 51, 25 Martin Place, Sydney NSW 2000.
1. OPERATING AND FINANCIAL REVIEW
The Consolidated Entity’s results are largely driven by the results of the Trust and the Wholesale Funds managed by the Consolidated Entity given that
management and other fees are driven by the asset value and performance of the underlying properties within these entities.
About GPT
GPT is a vertically integrated diversified property group that owns and actively manages a $26.9 billion portfolio of high quality Australian office, logistics
and retail assets. The Group leverages its real estate management platform to enhance returns through property development and funds management.
Listed on the Australian Securities Exchange (ASX) since 1971, today The GPT Group is a constituent of the S&P/ASX 50 Index with a substantial
investor base of more than 32,000 securityholders.
GPT's vision is to be the most respected property company in Australia in the eyes of our investors, people, customers and communities. Our purpose is
to create value for investors by providing high quality real estate spaces that enable people to excel and our customers and communities to prosper in a
sustainable way.
Review of operations and operating result
The Group commenced 2021 with solid momentum and expected to deliver an increase in Funds From Operations. Our interim results demonstrated
that we were on track to deliver on these expectations however momentum was disrupted at the end of the second quarter when governments
commenced instituting various measures to prevent the spread of the Delta variant of COVID-19 in the community. This culminated in restrictive
lockdown measures that extended into the fourth quarter of 2021. The measures implemented by the New South Wales and Victorian governments also
included the reintroduction of the Commercial Tenancy Code of Conduct requiring landlords to provide relief to eligible tenants in the form of rent waivers
and rent payment deferral. The impact was mainly felt across our Retail assets where only essential stores were able to continue trading. Leasing
activity in the Office sector also slowed as customers delayed leasing decisions while most office staff were working from home. Pleasingly, our Logistics
portfolio remained resilient throughout the period. When restrictions eased, we saw a strong recovery in Retail rent collection and leasing activity across
the Retail and Office portfolios.
Despite the lockdown measures; we continued to make good progress on implementing our strategy to increase our weighting to the Logistics sector,
successfully completing several acquisitions and developments. Logistics now represents approximately 27 per cent of the Group’s diversified property
portfolio.
Office developments at 32 Smith and the GPT Wholesale Office Fund’s Queen & Collins were completed during the year and the Fund’s development at
51 Flinders Lane commenced in December. We progressed masterplans for mixed-use development schemes at Highpoint Shopping Centre and the
Rouse Hill Town Centre. Post the period, we also announced the sale of a non-core retail asset Casuarina Square owned jointly by GPT and the GPT
Wholesale Shopping Centre Fund.
The Group’s gearing at the end of 2021 of 28.2 per cent remains below the mid-point of our target range of between 25 - 35 per cent, and our balance
sheet liquidity position remains strong providing additional capacity for growth.
The Consolidated Entity’s financial performance for the year ended 31 December 2021 is summarised below.
The net profit after tax for the year ended 31 December 2021 is $22,503,000 (2020: $67,373,000 loss).
Property management fees
Development management fees and revenue
Fund management fees
Management costs recharged
Proceeds from sale of inventory
Other income
Expenses
Profit/(loss) from continuing operations before income tax expense
Income tax credit/(expense)
Net profit/(loss) for the year
31 Dec 21
$'000
40,072
18,773
99,810
31,545
34,864
982
(203,992)
22,054
449
22,503
31 Dec 20
Restated(1)
$'000
36,374
19,693
83,647
29,621
1,196
4,706
(232,536)
(57,299)
(10,074)
(67,373)
Change
%
10 %
(5) %
19 %
6 %
2,815 %
(79) %
(12) %
138 %
(104) %
133 %
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
Consolidated Entity result
The net profit after tax compared to the loss recognised at 31 December 2020 is largely due to the revaluation increment of financial instruments in
2021, combined with increased proceeds from the sale of inventory and higher fund management fees, partially offset by increased remuneration
expense and impairment expense compared to 2020.
3
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Property Management
Retail
The Consolidated Entity is responsible for property management activities across the retail sector. Property management fees increased to $22,357,000
in 2021 (2020: $19,969,000) primarily as a result of increased property revenue associated with lower impacts of the COVID-19 pandemic compared to
2020 including lower recognition of rent waivers for tenants affected by the pandemic.
Office
The Consolidated Entity is responsible for property management activities across the office sector. Property management fees increased to $14,448,000
in 2021 (2020: $13,520,000) primarily as a result of lower membership fee waivers provided to Space&Co members during the COVID-19 pandemic
compared to the previous year and increased property management fees as more assets became operational.
Logistics
The Consolidated Entity is responsible for property management activities across the logistics sector. Property management fees increased to
$3,267,000 in 2021 (2020: $2,885,000) as a result of property acquisitions and the conversion of properties from development assets to operating
assets.
Development management fees and revenue
Development management fees have decreased by 5 per cent to $18,773,000 (2020: $19,693,000) compared to the previous year primarily due to a
decrease in development activity as a result of the impacts of the COVID-19 pandemic. There was lower utilisation amongst the teams with projects
being postponed, including the Melbourne Central Rooftop and the Rouse Hill developments, including the Rouse Hill developments held in inventory.
Funds Management
GPT Wholesale Office Fund (GWOF)
The fund delivered a one year equity IRR of 12.3 per cent. GWOF’s total assets increased to $9.8 billion, up $0.8 billion from 31 December 2020. The
management fee income earned from GWOF 31 December 2021increased by $1.8 million as compared to 31 December 2020 due to the increase in the
value of the portfolio.
GPT’s ownership reduced slightly to 21.81 per cent (Dec 2020: 21.87 per cent) due to not participating in GWOF’s Distribution Reinvestment Plan
(DRP).
GPT Wholesale Shopping Centre Fund (GWSCF)
The fund delivered a one year equity IRR of 6.2 per cent. GWSCF’s total assets decreased by $0.4 billion to $3.5 billion, compared to 31 December
2020 with the sale of Wollongong Central in December 2021. The management fee income earned from GWSCF decreased $1.5 million as compared to
31 December 2020 due to the decrease in the value of the portfolio in 2020.
GPT’s ownership in GWSCF was unchanged at 28.48 per cent (Dec 2020: 28.48 per cent).
GPT QuadReal Logistics Trust (GQLT)
The GPT QuadReal Logistics Trust is a partnership with QuadReal Property Group to create a prime Australian logistics portfolio with an original $800
million target, that has since been expanded to $1 billion. A number of assets were secured for this partnership during the year with approximately 70
per cent of the $1 billion committed, inclusive of pipeline projects, with $0.2 billion deployed to December 2021 (100 per cent).
Management costs recharged
Management costs recharged increased by 6 per cent to $31,545,000 compared to previous year due to increasing costs at the corporate level passed
onto the assets.
Proceeds from sale of inventory
Proceeds from sale of inventory increased sigificantly to $34,864,000 due to the compulsory acquisition of land at Rouse Hill and increased Metroplex
sales during the year.
Other income
Other income decreased during the period to $982,000 primarily due to a decrease in the share of profit recognised from the Lendlease GPT (Rouse
Hill) Pty Limited joint venture as no sales were made during the year..
Expenses
Expenses have decreased by 12 per cent overall to $203,992,000 compared to previous year primarily due to the revaluation increment of financial
arrangements, offset partially by an increase in remuneration expenses caused by the reinstatement of the bonus scheme in the current year and
increased costs relating to the sale of inventory.
4
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
31 Dec 21
$'000
109,991
217,060
327,051
67,784
198,742
266,526
31 Dec 20
Restated(1)
$'000
138,816
191,585
330,401
48,452
242,749
291,201
60,525
39,200
Change
%
(21) %
13 %
(1) %
40 %
(18) %
(8) %
54 %
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
Total assets decreased by 1 per cent to $327,051,000 in 2021 (2020: $330,401,000) primarily due to a decrease in inventories due to sales occurring in
2021, along with a decrease in intangible assets due to impairment of management rights, offset partially by an increase in other receivables due to the
balance owing on the compulsory acquisition of Rouse Hill land.
Total liabilities reduced by 8 per cent to $266,526,000 in 2021 (2020: $291,201,000) due to reduced related party borrowings due to the revaluation
increment recognised in 2021, partially offset by an increase in payables mostly in relation to people costs.
Capital management
The Consolidated Entity has an external loan of $2,370,000 relating to the Metroplex joint venture.
The Consolidated Entity has related party borrowings from the Trust and its subsidiaries and joint ventures. Under Australian Accounting Standards, the
loans are revalued to fair value at each reporting period.
Going Concern
The Consolidated Entity’s financial position is highly dependent on the financial position of GPT given that the Consolidated Entity is funded through
intercompany loans from GPT.
Due to the uncertainty created by the COVID-19 pandemic, GPT has performed additional procedures to assess going concern. GPT believes it is able
to meet its liabilities and commitments as and when they fall due for at least 12 months from the reporting date. In reaching this position, GPT has taken
into account the following factors:
•
•
•
•
•
Available liquidity, through cash and undrawn facilities, of $934.7 million (after allowing for refinancing of $750.0 million of outstanding
commercial paper as at 31 December 2021)
Weighted average debt expiry of 6.3 years, with less than $55.0 million of debt (excluding commercial paper outstanding) due between the
date of this report and 31 December 2022;
Interest rate hedging level of 60 per cent over the next 12 months
Primary covenant gearing of 28.4 per cent, compared to a covenant level of 50.0 per cent, and
Interest cover ratio at 31 December 2021 of 7.5 times, compared to a covenant level of 2.0 times.
Cash flows
The cash balance at 31 December 2021 decreased to $16,590,000 (2020: $22,968,000).
Operating activities:
Net cash inflows from operating activities have increased in 2021 to $28,362,000 (2020: $7,513,000) driven by higher proceeds on sale of inventory and
higher cash receipts throughout the course of the year.
The following table shows the reconciliation from net profit/(loss) to the cash flow from operating activities:
Net profit/(loss) for the year
Non-cash items included in net profit
Timing difference
Net cash inflows from operating activities
31 Dec 21
$'000
22,503
6,854
(995)
28,362
31 Dec 20
Restated(1)
$'000
(67,373)
109,037
(34,151)
7,513
Change
%
133 %
(94) %
(97) %
278 %
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details
Investing activities:
Net cash outflows from investing activities have decreased to $5,956,000 in 2021 (2020: $13,347,000) due to lower costs associated with the acquisition
of intangible assets and property, plant and equipment.
Financing activities:
Net cash outflows from financing activities have decreased to $28,784,000 in 2021 (2020: $7,125,000 inflow) primarily due to repayment of related party
borrowings.
Dividends
The Directors have not declared any dividends for the year ended 31 December 2021 (2020: nil).
5
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Prospects
The following details the prospects of the Group and the Wholesale Funds, as the management and other fees earned by the Consolidated Entity are
driven by the asset value and performance of the underlying properties within these entities.
The global COVID-19 pandemic continues to disrupt the Australian economy and GPT’s operating environment however, the governments’ acceleration
of vaccinations and booster programs in the second half of 2021 provides optimism that the impacts from COVID-19 should be less severe during the
course of 2022 than experienced in prior years.
With the rapid spread of the Omicron variant of COVID-19 in late 2021, health and safety measures were reintroduced in New South Wales (NSW) and
Victoria, including mandatory mask-wearing in indoor office and retail settings, and advice to work from home where possible. These measures remain
in place and continue to impact office space utilisation and visitations to shopping centres.
Current indications suggest that the Omicron variant will weigh on economic activity for a relatively short period, and severe lockdown measures
experienced in the second half of 2021 are less likely to be re-instated. The NSW and Victorian governments announced in January 2022 that the
Commercial Tenancy Code of Conduct requiring landlords to provide rent relief to eligible businesses impacted by COVID-19 had been extended to
March 2022.
In outlining the Group’s prospects, management considers it has applied its best judgement at this point in time. Clearly there remains a high level of
uncertainty as we continue to navigate pandemic related impacts, supply chain disruption and the outlook for interest rates and inflation.
GPT has a high quality diversified real estate portfolio currently valued at $16.2 billion. Valuations for high quality assets continue to be supported by
ongoing domestic and offshore investor demand particularly for Office and Logistics assets. Portfolio occupancy at 31 December 2021 was 97.7 per cent
and we are expecting that the quality of our portfolio will continue to attract ongoing tenant demand.
The Group has a Logistics development pipeline of approximately $1.6 billion, providing the opportunity for further growth in this sector. GPT is also
targeting to commence the Rouse Hill Town Centre expansion at the end of 2022.
At 31 December 2021, the Group’s net gearing was 28.2 per cent, with cash and undrawn bank facilities totalling $0.9 billion and no significant loan
expiries until 2023. GPT has strong credit ratings of ‘A negative’ and ‘A2 stable’ by S&P and Moody’s respectively.
Office
In 2021 broader adoption of hybrid work practices remained evident, as many of our tenants' employees worked from home for part of their working
week. While this trend is expected to continue, tenant feedback suggests that the physical workplace remains important for most organisations to shape
culture, facilitate collaboration and learning experiences, and implement business growth opportunities.
Following the lifting of COVID-19 restrictions in the last quarter of 2021, we saw a material increase in office attendance, particularly in Sydney, coupled
with a step up in new leasing enquiries. While this has slowed with the Omicron variant, lead indicators for Office demand remain positive, with ongoing
economic growth and unemployment falling to the lowest level since 2008. The jobless rate is expected to fall further through the course of 2022.
Office vacancy, however, remains elevated across each of the markets that GPT participates in. Vacancy is expected to remain above long-term
average levels for the year ahead and accordingly tenant incentives are likely to continue to be elevated. GPT currently has 7 per cent (by area) of its
Office portfolio vacant following the completion of two development projects in 2021. In 2022, 11 per cent of the portfolio’s leases (by income) expire,
and our team are actively pursuing opportunities to secure tenants for this space. Tenant demand is most robust for prime space, supporting our view
that many businesses will take the opportunity to upgrade their space and seek out accommodation in better quality office buildings. Our assets have an
average NABERS energy rating of 5.8 Stars and we expect an increasing number of office tenants will seek to be located in assets with strong
environmental credentials.
Logistics
The Logistics portfolio continues to deliver strong results for the Group, with structural tailwinds driving tenant and investor demand. Focus on the
efficient movement of goods and inventory management, along with increasing penetration of e-commerce is expected to underpin demand for prime
Logistics space. Vacancy rates remain low in the core markets nationwide and investor demand for Logistics assets has resulted in strong valuation
growth. These trends are expected to be sustained.
The Group successfully completed four developments in 2021 and expects to deliver a further four developments during 2022. The Group's Logistics
development pipeline currently has an estimated end value of approximately $1.6 billion, which positions GPT well to continue to benefit from ongoing
demand in this sector.1
The Group’s high quality Logistics portfolio, of which GPT has developed over 40 per cent, has a Weighted Average Lease Expiry of 6.5 years,
occupancy of 98.8 per cent and is well supported by a diverse tenant base, with 75 per cent of income generated from ASX listed and multinational
companies.
Retail
In the first half of 2021, the Group's Retail portfolio experienced an improvement in customer visitations and sales turnover compared to the previous
year. However, in the middle of the year, the reintroduction of lockdowns in NSW and Victoria significantly impacted trading conditions until restrictions
lifted towards the end of the year.
The emergence of the Omicron variant of COVID-19 and mandated mask-wearing for indoor retail settings in many of GPT’s markets are expected to
continue to disrupt the trading environment for the short term. However, as we have seen previously, as COVID-19 cases subside and measures such
as mandated mask-wearing lift, we expect an improvement in customer visitations and retail sales at our shopping centres.
1 Includes GPT direct and GQLT opportunities.
6
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
The recovery of Melbourne Central, our largest retail investment property and one of the leading retail destinations in Australia, is expected to be more
protracted than the broader portfolio. As workers return to their offices and the Melbourne CBD is reactivated, we expect the recovery of Melbourne
Central’s trading performance to accelerate.
In February 2022, GPT and the GPT Wholesale Shopping Centre Fund (GWSCF) announced the sale of Casuarina Square, with settlement expected
by the end of March 2022. Casuarina Square was considered a non-core asset for GPT. Capital proceeds from the sale will be redeployed into new
opportunities to generate long-term value for investors, such as the expansion of the Rouse Hill Town Centre, which we are targeting to commence at
the end of 2022.
Portfolio occupancy as at 31 December was 99.1 per cent, and all specialty store leases continue to have fixed base rents with annual increases. The
portfolio revaluation was stable over the year 0.5, with investment metrics supported by several significant transactions completed in the market.
The Group’s high quality Retail portfolio, located primarily in trade areas with above average population growth, is anticipated to benefit from the
expected economic growth, low unemployment and high household savings rates once conditions normalise.
Funds Management
GPT has a well-established Funds Management platform with $14.0 billion in Assets Under Management (AUM). The GPT Wholesale Office Fund
(GWOF) is Australia's largest wholesale office fund with AUM of $9.8 billion, and GWSCF has AUM of $3.5 billion. In 2021 we established a partnership
with global investment group QuadReal, to invest in the Logistics sector with an initial fund size of $800 million (GPT share 50.1 per cent). Given the
success GPT has had in identifying investment opportunities, GPT and QuadReal agreed to increase their capital allocation to the partnership to target
total investments of $1 billion, with GPT’s investment in the partnership remaining at 50.1 per cent.
GWOF has an extensive development pipeline of more than $3.5 billion which is continuing to activate to deliver enhanced returns for investors and
growth in AUM. The Queen & Collins, Melbourne development, currently valued at $506 million reached practical completion in June 2021, and the
development of 51 Flinders Lane, Melbourne, which has an estimated end value of $535 million also commenced during the period.
GWSCF divested Wollongong Central in December 2021 and post year-end exchanged on the sale of Casuarina Square. GWSCF intends to recycle
proceeds from these sales into a number of mixed-use development opportunities that it is progressing, which will create longer-term value and growth
for the fund.
Outlook
The global pandemic, inflationary pressure and the commencement of unwinding of Reserve Bank of Australia monetary stimulus, continues to provide
uncertainty in relation to GPT's operating conditions for the year ahead.
Our current expectation is that the impacts of the Omicron variant will be relatively short lived, and that before the end of the first quarter of 2022 we will
see a recovery in retail sales and foot traffic at our shopping centres and an improvement in office leasing conditions as businesses return to their
offices. We are also assuming that with high vaccination rates, severe lockdown measures will not be re-imposed.
While uncertainty remains, the Group currently expects to deliver 2022 FFO in the range of 31.7 to 32.4 cents per security and a distribution of 25.0
cents per security.
GPT maintains a strong balance sheet, a high quality diversified portfolio, and an experienced management team focused on creating long term value
for securityholders.
Risk Management
GPT's approach to risk management incorporates culture, conduct, compliance, processes and systems to enable the Group to realise potential
opportunities while managing potential adverse effects.
Our commitment to integrated risk management ensures an enterprise-wide approach to the identification, assessment and management of risk,
consistent with AS/NZS ISO 31000:2018.
Risk Management Framework
GPT's Risk Management Framework is overseen by the Board and consists of the following key elements:
1. Risk Policy – The Risk Policy sets out the Group’s approach to risk management, which is reviewed annually by the Board Sustainability and Risk
Committee. The Risk Policy is available on GPT's website.
2. Risk Appetite – The Board sets GPT’s risk appetite to align with strategy, having regard to GPT's operating environment and key risks. Risk appetite
is documented in our Risk Appetite Statement, against which all key investment decisions are assessed.
3. Risk Governance – The Board is supported in its oversight of the Risk Management Framework by the Sustainability and Risk Committee, which
reviews the effectiveness of the Framework, and by the Audit Committee, the Leadership Team and the Investment Committee.
4. Risk Culture – GPT maintains a transparent and accountable culture where risk is actively considered and managed in our day-to-day activities. Risk
culture is assessed as part of all internal audits and tracked using a Risk Culture Scorecard.
5. Risk Management Processes and Systems – GPT has robust processes and systems in place for the identification, assessment, treatment,
assurance and reporting of risk.
Managing risk in the COVID-19 operating environment
GPT has responded proactively to the COVID-19 pandemic at both the governance and operational levels, with pandemic processes and procedures
now incorporated into our usual business activities. In all aspects of our approach we have prioritised health and safety, followed government guidance
and directives, and been flexible as the situation continues to evolve.
The focus of our risk management response has been in the areas set out below.
7
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Health and Safety
The health and safety of our people, customers, contractors and other users of our assets has been our priority throughout the pandemic. We have
consulted widely in our industry and beyond, and implemented best practice safety initiatives across our portfolio. These include cleaning, hygiene and
social distancing measures, COVID-19 awareness training, and wellbeing support for our people.
Governance
GPT’s Risk Management Framework has been reviewed to ensure that it continues to function effectively in the COVID-19 operating environment,
where a large number of employees are working remotely and certain operations are required to be performed differently. Enhanced governance
remains in place to address ongoing disruption.
Materiality assessment
GPT defines what is material to our business by considering risks and opportunities that influence our ability to deliver on our vision, purpose and
strategy. Material matters are those that have the highest likelihood and/or consequence of impacting our business and our ability to create value for our
stakeholders over the long term, whether by directly impacting our assets or the communities in which we operate.
To identify what is material, GPT researches trends, consults advisors and regularly engages with our stakeholders to consider their views.
In addition, an external materiality assessment was undertaken during 2021 to inform our consideration of potentially material economic, environmental,
and social matters. The assessment used the 'double' or 'nested' materiality approach to prioritise topics that are both financially material as well being
material from an 'impact' perspective, in line with global best practice. The assessment confirmed that we are focused on the areas where we can make
the greatest impact, which include the transition to clean energy, transitioning to a circular economy, capitalising on e-commerce and the digital
economy, designing flexible and innovative workspaces, and managing efficient buildings.
We will continue to consider material risks and opportunities when developing our strategy, assessing key risks and opportunities, and preparing our
corporate reporting.
The following table sets out GPT’s material risks and our actions in response to them. Included in the table is an indication of the change in the level of
each risk during the year.
Risks
Portfolio Operating and
Financial Performance
Our portfolio operating and
financial performance is
influenced by internal and
external factors including
our investment decisions,
market conditions, interest
rates, economic factors
and potential disruption.
Our Response
• A portfolio diversified by sector and geography
• Structured review of market conditions twice a year,
including briefings from economists
• Scenario modelling and stress testing of assumptions
to inform decisions
• A disciplined investment and divestment approval
process, including extensive due diligence
requirements
• A development pipeline to enhance asset returns and
maintain asset quality
• Active management of our assets, including leasing, to
ensure a large and diversified tenant base with limited
single tenant exposure
• Experienced and capable management, supplemented
with external capabilities where appropriate
• A structured program of investor engagement
Development
• A disciplined acquisition and development approval
Development provides the
Group with access to new,
high quality assets.
Delivering assets that
exceed our risk adjusted
return requirements and
meet our sustainability
objectives is critical to our
success.
process, including extensive due diligence
requirements
• Oversight of developments through regular cross-
functional Project Control Group meetings
• Scenario modelling and stress testing of assumptions
to inform decisions
• Experienced management capability
• Application of a well defined development risk appetite
with metrics around the proportion of a portfolio under
development, contractor exposure and leasing pre-
commitments
Change in Risk for
2021
No change
Ongoing disruption as
a result of COVID-19,
particularly in the
second half of 2021,
continued to present
some risk to GPT’s
financial performance.
Value Creation Input
Affected
• Our investors
• Real estate
• Our people
• Environment
• Our customers,
suppliers and
communities
Decreased
GPT has delivered a
number of
developments in 2021
and has a significant
development pipeline,
particularly in the office
and logistics portfolios.
• Our investors
• Real estate
• Our people
• Environment
• Our customers,
suppliers and
communities
8
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Risks
Capital Management
Effective capital
management is imperative
to meet the Group’s
ongoing funding
requirements and to
withstand market volatility.
Our Response
Change in Risk for
2021
Value Creation Input
Affected
• Our investors
• Target gearing range of 25 to 35 per cent consistent
with stable investment grade credit ratings in the “A”
range
• Maintenance of a minimum liquidity buffer in cash and
surplus committed credit facilities
• Diversified funding sources
• Maintenance of a long weighted average debt term,
with limits on the maximum amount of debt expiring in
any 12 month period
• Hedging of interest rates to keep exposure within
prescribed limits
• Limits on currency exposure
• Limits on exposure to counterparties
No change
Debt funding market
conditions stabilised in
2021 following
significant volatility in
2020. Gearing has
increased and remains
below the mid-point of
the target range, with
significant liquidity in
place
Health and Safety
• A culture of safety first and integration of safety risk
management across the business
• Comprehensive health and safety management
systems
• Training and education of employees and induction of
contractors
• Engagement of specialist safety consultants to assist in
identifying risks and appropriate mitigation actions
• Prompt and thorough investigation of all safety
incidents to ascertain root causes and prevent future
occurrences
• Participation in knowledge sharing within the industry
• Comprehensive Crisis Management and Business
Continuity Plans, tested annually
• Real estate
• Our people
• Our customers,
suppliers and
communities
No change
COVID-19 continues to
present a risk to the
health, safety and
wellbeing of our
employees, customers,
contractors and users
of our assets. There
have been no other
changes in 2021 which
have materially
impacted health and
safety risk.
• Active adoption and promotion of GPT’s values
• A comprehensive employee Code of Conduct, including
consequences for non-compliance
• Employee Engagement Surveys every 18 to 24 months
with action plans to address results
• An annual performance management process, setting
Increased
The employment
market has tightened
and competition for
skilled resources has
increased during 2021.
• Our investors
• Our people
objectives and accountability
• Promotion of an inclusive workplace culture where
differences are valued, supported by policies and
training
• Monitoring of both risk culture and conduct risk
• An incentive system with capacity for discretionary
adjustments and clawback policy
• Benchmarking and setting competitive remuneration
• Development and succession planning
• Workforce planning
• A portfolio of climate resilient assets that we own,
develop and maintain through asset-level investment,
divestment and capital expenditure strategies
• A world-class Environment and Sustainability
Management System, including policies and
procedures for managing environmental and social
sustainability risks
• Participation in the S&P Global Corporate Sustainability
Assessment, Global Real Estate Sustainability
Benchmark and other industry benchmarks
• Climate related risks and potential financial impacts are
No change
GPT remains at the
forefront of
environmental and
social sustainability, but
acknowledges the
speed of change in this
area and the need to
adapt quickly. It is a
key focus area.
• Our investors
• Real estate
• Our people
• Environment
• Our customers,
suppliers and
communities
assessed within GPT’s enterprise-wide Risk
Management Framework
• Climate change reporting in line with the
recommendations of the Task Force on Climate-related
Financial Disclosures
• Active community engagement via The GPT
Foundation, GPT’s Reconciliation Action Plan and other
targeted programs
• A Modern Slavery Statement and program of work in
response to Modern Slavery legislation
9
GPT is committed to
promoting and protecting
the health, safety and
wellbeing of its people,
customers, contractors and
all users of our assets.
People and Culture
Our ongoing success
depends on our ability to
attract, engage and retain
a motivated and high-
performing workforce to
deliver our strategic
objectives and an inclusive
culture that supports GPT's
core values.
Environmental and
Social Sustainability
Delivering sustainable
outcomes for investors,
customers, communities
and the environment,
today and for future
generations, is essential.
GPT understands and
recognises that changes to
the environment and
society can affect our
assets and business
operations.
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Risks
Technology and Cyber
Security
Our ability to prevent
critical outages, ensure
ongoing available system
access and respond to
major cyber security
threats and breaches of
our information technology
systems is vital to ensure
ongoing business
continuity and the safety of
people and assets.
Our Response
• A comprehensive technology risk management
framework including third party risk management
procedures around cyber security
• Information Management policy, guidelines and
standards
• Policies, guidelines and standards for Information
Management and Privacy
• Security testing and training completed by a specialist
external security firm, including penetration testing,
phishing exercises and social engineering testing
• A Disaster Recovery Plan including annual disaster
recovery testing, and a comprehensive Cyber Security
Incident Response Plan
• Regular updates to technology hardware and software
incorporating recommended security patches
• External specialists and technology solutions in place
to monitor GPT platforms
• Annual cyber risk assessments
• An Information Security Risk and Compliance
Committee overseeing information security
• Alignment to the National Institute of Standards and
Technology (NIST) Cyber Security Framework
Value Creation Input
Affected
• Real estate
• Our people
• Our customers,
suppliers and
communities
Change in Risk for
2021
No change
There has been no
material change in
GPT's technology and
cyber security risk
profile during 2021.
Cyber security threats
are assessed on an
ongoing basis, with
systems and processes
to respond to threats
tested regularly.
Compliance and
Regulation
We ensure compliance
with all applicable
regulatory requirements
through our established
policies and frameworks.
• Our investors
• Real estate
• Our people
• Environment
• Our customers,
suppliers and
communities
• An experienced management team with Legal, Tax,
Finance, Compliance and Risk Management expertise
• Engagement of external expert advisors as required
• An internal and external audit program overseen by the
Audit Committee of the Board
• Active management of the Group’s Compliance Plans,
No change
There has been no
material change in
GPT's compliance and
regulatory risk during
2021.
in accordance with the requirements of the
Corporations Law
• Internal committees such as a Continuous Disclosure
Committee, a Data Privacy Committee and a Cyber
Security Governance Committee to monitor key
compliance risks
• An Anti-money Laundering and Counter-terrorism
Financing Policy, a Conflicts Management Policy, a
Whistleblower Policy, a Code of Conduct and other
internal policies and procedures which are reviewed
and enforced
• An ongoing program of training which addresses all key
compliance requirements
• Active involvement in the Property Council of Australia
and other industry bodies
2. CLIMATE-RELATED RISKS
GPT outlines the steps that we are taking to identify, assess and manage climate-related risks and opportunities in the Group's Climate Disclosure
Statement.
Summarised below, the Group's Climate Disclosure Statement has been prepared with reference to the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations and is available on GPT's website.
The need for urgent global action to address climate change was never clearer or more widely accepted than during 2021, with rising momentum
culminating in the COP26 United Nations Climate Change Conference. The outcome of COP26 highlights the importance of action in this decade to
halve emissions by 2030 and have the best chance of keeping global temperatures below 1.5 degrees Celsius.
As the owner and manager of a $26.9 billion portfolio of office, logistics and retail properties across Australia, GPT recognises the importance of
identifying, monitoring and transparently reporting the climate change risks and opportunities that could have a material impact on our assets and on the
communities in which we operate.
Climate risk considerations inform key decision-making across the Group, both to minimise our emissions and to ensure the resilience of our assets to
the changing environment. These range from resilience planning for a fast transition to a low carbon energy supply through to scenario modelling and
adaptation planning for future physical impacts during asset acquisitions, major development projects and major lifecycle upgrades.
10
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Governance
GPT’s approach to managing climate change risk is overseen by the Board and the Sustainability and Risk Committee (SRC). Management report to the
SRC on sustainability matters such as climate change risks and opportunities, compliance with GPT's Environmental Management System and the
delivery of environmental performance targets.
GPT’s Chief Executive Officer and Managing Director (CEO) is accountable for ensuring that the Group is identifying, assessing and managing material
risks including climate change and other sustainability risks, in accordance with GPT’s Risk Management Framework. The Chief Risk Officer manages
the Sustainability Team, which is responsible for formulating and driving the implementation of GPT’s environmental sustainability initiatives across the
Group. The Sustainability Team work closely with business unit managers to achieve this.
Strategy
The proactive identification and management of key risks and opportunities, including those related to climate change, supports the achievement of the
Group’s strategy.
In 2021, our strategy was refined to include sustainability (or ESG) leadership as a strategic priority that will drive our ability to create value into the
future.
Our business strategy of owning, managing and developing a diversified, high quality portfolio of property assets principally located in Australian capital
cities and established regional centres ensures that we are well positioned to manage stresses and shocks, including those from climate change.
This strategy also supports a long-term approach to investment in initiatives to help achieve our sustainability goals, including tools to inform building
design and operations, and climate scenario modelling. This benefits our tenants and our broader stakeholders, and improves the resilience of our
assets to the impacts of physical climate risks.
GPT has adopted two global warming scenarios to model the potential future impacts of climate change on our business and the resilience of our
strategy. The two scenarios we have adopted align with the Representative Concentration Pathways (RCP) recommended by the Intergovernmental
Panel on Climate Change (IPCC). We have adopted a low emissions scenario aligned with RCP 2.6 and a high emissions scenario aligned with RCP
8.5.
These scenarios are used to test the resilience of the Group's strategy and to develop strategies that address climate-related risks and opportunities.
Through a series of internal workshops, we have determined the risks, opportunities and strategy impacts by considering potential transitional impacts
and potential physical impacts under both the low and high emissions scenarios. Potential physical impacts could affect GPT’s assets and the regions
they are located in and could damage or limit their capacity to operate. Potential transitional impacts could result from policy, regulatory, or technological
change and shifts in market and stakeholder expectations.
A detailed summary of the scenarios adopted by GPT and the potential impacts identified by this analysis can be found in the Group’s Climate
Disclosure Statement.
We have implemented a range of mitigation and adaptation strategies in response to climate change, such as:
•
•
•
•
•
•
•
Our preference for assets in major cities and urban areas
Operating efficient carbon neutral buildings
Setting and achieving carbon neutral targets
Measuring and reducing embodied carbon
Ensuring long-term resilience through business and asset life-cycles
Ensuring our approach aligns with government resilience strategy, and
Considering the impact of a future carbon price
Further information about these strategies can be found in the Group's Climate Disclosure Statement.
Risk Management
Effective risk management is fundamental to GPT's ability to achieve our strategic and operational objectives. By understanding and effectively
managing risk, GPT can create and protect enterprise value and provide greater certainty and confidence for investors, employees, partners, and the
communities in which we operate.
Applying our enterprise-wide Risk Management Framework, GPT’s Risk Team monitors the operation of risk management processes and assists in the
identification, assessment, treatment and monitoring of identified risks. The Risk Team supports the Leadership Team, the GPT Board, the Funds
Management Board and their respective committees, in ensuring that we manage risk appropriately.
Climate change risk is included on GPT’s Key Risk Dashboard, which is reviewed every six months by the Board Sustainability and Risk Committee and
quarterly by the Leadership Team. The Committee receives quarterly updates on the status of the actions and commitments disclosed in the metrics and
targets section of GPT’s Climate Disclosure Statement.
GPT’s cross-functional Sustainability Reference Group meets twice a year to identify and assess the existing climate-related risks and opportunities for
each of the climate scenarios adopted by GPT, and to discuss and capture any new risks and opportunities.
In 2021, we developed a Risk Appetite Statement climate risk metric for asset acquisitions, which requires identification of potential physical climate
hazards in the long to very long term as part of the due diligence process.
Metrics & Targets
GPT monitors our direct climate impacts and reports on emissions, energy, water and waste for each property annually. Our Environment Data Pack
includes a portfolio-level summary for all key metrics — electricity, water, fuels, recycling, and emissions — since 2005.
GPT obtains independent external assurance over sustainability performance data including the following climate change metrics: energy consumption
and energy production in base building and tenancies, Scope 1 and Scope 2 greenhouse gas emissions, water consumption, waste generated, and
materials recycled by grade.
11
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
GPT sets annual asset-level operational targets for energy, water and waste, driven by operational optimisation programs and capital upgrades. Medium
to long term operational emissions targets are also set at a portfolio level to inform energy procurement and offsets.
GPT’s corporate activities and business premises, including our travel and consumables, has been certified as carbon neutral by Climate Active since
2011. This certification covers material Scope 1, 2 and 3 emissions. GPT aims to reduce emissions through initiatives such as energy efficiency
improvements at our offices and using technology to reduce the frequency of business-related flights. Emissions that can’t be avoided in these areas are
offset to ensure GPT’s net emissions from our operations are zero.
Find out more
GPT's Climate Disclosure Statement is available on our website: www.gpt.com.au
3. ENVIRONMENTAL REGULATION
GPT has policies and procedures in place that are designed to ensure that where operations are subject to any particular and significant environmental
regulation under a law of Australia (for example property development and property management), those obligations are identified and appropriately
addressed. This includes obtaining and complying with conditions of relevant authority consents and approvals and obtaining necessary licences. GPT
is not aware of any significant breaches of any environmental regulations under the laws of the Commonwealth of Australia or of a State or Territory of
Australia and has not incurred any significant liabilities under any such environmental legislation.
GPT is subject to the reporting requirements of the National Greenhouse and Energy Reporting Act 2007 (“NGER Act”). The NGER Act requires GPT to
report its annual greenhouse gas emissions and energy consumption and generation for the 12 month period from 1 July to 30 June. GPT has
implemented systems and processes for the collection and calculation of the data required. The data is assured and submitted to the Australian
Government Clean Energy Regulator by the legislative deadline of 31 October each year. GPT complied with the Regulator’s submissions requirements
for the period ended 30 June 2021 within the required timeframe.
Information about GPT's participation in the NGER program is available on our website: www.gpt.com.au.
4. EVENTS SUBSEQUENT TO REPORTING DATE
The COVID-19 pandemic has created unprecedented economic and societal impacts and there remains significant uncertainty. In the event the
COVID-19 impacts are more severe or prolonged than anticipated, this may have further adverse impacts to asset values and the operating result of the
Consolidated Entity. At the reporting date a definitive assessment of the future effects of COVID-19 on the Consolidated Entity cannot be made, as the
impact will depend on the magnitude and duration of the government restrictions, with the full range of possible effects unknown.
After the balance date, the Commercial Tenancy Code of Conduct was extended in New South Wales until 13 March 2022 and in Victoria until 15 March
2022, to provide rent relief to qualifying small and medium tenants. GPT continues to work with tenants to provide relief as required to assist with any
short-term cash flow impacts.
Other than the above, the Directors are not aware of any matter or circumstances occurring since 31 December 2021 that has significantly or may
significantly affect the operations of the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated Entity in the
subsequent financial years.
5. DIRECTORS AND SECRETARY
Information on Directors
Vickki McFadden – Chairman
Vickki joined the Board in March 2018 and was appointed Chairman in May 2018.
Vickki is an experienced company director and brings a broad range of skills and experience to the Group gained from her current and previous board
roles and her executive career spanning investment banking, corporate finance and corporate law.
Vickki holds a Bachelor of Commerce and a Bachelor of Laws. She is a member of Chief Executive Women and the Australian Institute of Company
Directors. She was also previously President of the Australian Takeovers Panel, Non-Executive Chairman of Skilled Group Limited, a Non-Executive
Director of Myer Family Investments Pty Limited and Leighton Holdings Limited, and a Member of the Executive Council and Advisory Board of the
UNSW Business School.
Listed Company Directorships (within the last three years):
Newcrest Mining Limited (since 2016)
•
Tabcorp Holdings Limited (2017–2020)
•
Other Current Appointments
•
Non-Executive Director Allianz Australia Limited
Board Committee Memberships
•
•
Chairman of the Nomination Committee
Member of the Human Resources & Remuneration Committee
As at the date of this report she holds 112,525 GPT stapled securities.
Robert Johnston – Chief Executive Officer and Managing Director
Bob joined the Board in September 2015.
12
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Bob has over 30 years’ experience in the property sector including investment, development, project management and construction in Australia, Asia,
the US and UK. Prior to joining GPT, Bob was the Managing Director of listed Australand Property Group which became Frasers Australand in
September 2014.
Bob holds a Bachelor of Engineering (Hons).
Listed Company Directorships (within the last three years):
•
Nil
Other Current Appointments
•
Director of the Property Council of Australia
Board Committee Memberships
•
Member of the Nomination Committee
As at the date of this report he holds 1,689,078 GPT stapled securities.
Tracey Horton AO - Independent Non-Executive Director
Tracey joined the Board in May 2019.
Tracey has held executive and senior management roles with Bain & Company in North America, and in Australia with Poynton and Partners and the
Reserve Bank of Australia.
Tracey holds a Bachelor of Economics (Hons) and a Masters of Business Administration (MBA). She is a Fellow of the Australian Institute of Company
Directors.
She was also previously a Non-Executive Director of Skilled Group and Automotive Holdings Group, President of the Chamber of Commerce and
Industry (WA), and Winthrop Professor and Dean of the University of Western Australia Business School.
Listed Company Directorships (within the last three years):
•
•
Nearmap Ltd (since 2019)2
Navitas Limited (2012–2019)
Other Current Appointments
•
•
•
•
Deputy Chairman of the Australian Institute of Company Directors National Board
Member of the Australian Takeovers Panel
Non-Executive Director of Campus Living Villages Pty Ltd
Chair of the Australian Industry and Skills Committee
Board Committee Memberships
•
•
•
Chairman of the Human Resources & Remuneration Committee
Member of the Sustainability & Risk Committee
Member of the Nomination Committee
As at the date of this report she holds 27,525 GPT stapled securities.
Angus McNaughton - Independent Non-Executive Director
Angus joined the Board in November 2018.
Angus brings extensive experience in property investment, development and management and funds investment to the Board.
Angus was previously the CEO and Managing Director of Vicinity Centres, Managing Director Property for Colonial First State Global Asset
Management, and CEO and Managing Director of ASX-listed Novion Property Group in 2014 which merged with Federation Centres and became known
as Vicinity in June 2015.
Angus holds a Bachelor of Management Studies (Hons) and is a Fellow of the Australian Property Institute and a Graduate Member of the Australian
Institute of Company Directors.
Listed Company Directorships (within the last three years):
•
Nil
Other Current Appointments
•
Member of the REST Property Due Diligence Panel
Board Committee Memberships
•
•
•
Member of the Audit Committee
Member of the Human Resources & Remuneration Committee
Member of the Nomination Committee
As at the date of this report he holds 25,088 GPT stapled securities.
Mark Menhinnitt - Independent Non-Executive Director
Mark joined the Board in October 2019.
2 Directorship concluded in February 2021.
13
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Mark has significant investment management, construction, development and urban regeneration experience in the real estate and infrastructure
sectors, drawn from his 30 year career at Lendlease including as CEO of Lendlease Australia.
Mark holds a Masters of Applied Finance, and a Bachelor of Engineering. He is a Graduate Member of the Australian Institute of Company Directors and
fellow of the Governance Institute of Australia.
Listed Company Directorships (within the last three years):
•
Nil
Other Current Appointments
•
Chairman and Non-Executive Director of Fluent Property Pty Ltd
Board Committee Memberships
•
•
•
Member of the Human Resources & Remuneration Committee
Member of the Sustainability & Risk Committee
Member of the Nomination Committee
As at the date of this report he holds 30,000 GPT stapled securities.
Michelle Somerville - Independent Non-Executive Director
Michelle joined the Board in December 2015.
Michelle was previously a partner of KPMG for nearly 14 years specialising in external audit and advising Australian and international clients both listed
and unlisted primarily in the financial services market in relation to business, finance risk and governance issues.
Michelle holds a Bachelor of Business and a Masters of Applied Finance. She is a Graduate Member of the Australian Institute of Company Directors
and a Fellow Chartered Accountant.
She was also previously an independent consultant to the UniSuper Ltd Audit, Risk and Compliance Committee and a Non-Executive Director of Bank
Australia Limited, Challenger Retirement and Investment Services Ltd, Save the Children (Australia) and Down Syndrome Australia.
Listed Company Directorships (within the last three years):
IOOF Holdings Limited (since 2019)
•
Other Current Appointments
•
•
Non-Executive Director of Epworth Foundation
Non-Executive Director of Summer Foundation
Board Committee Memberships
•
•
•
Chairman of the Audit Committee
Member of the Sustainability & Risk Committee
Member of the Nomination Committee
As at the date of this report she holds 36,663 GPT stapled securities
Robert Whitfield AM - Independent Non-Executive Director
Rob joined the Board in May 2020.
Rob has significant banking and finance experience in senior management roles across the public and private sectors. This includes a 30 year career
with Westpac Banking Corporation where he held various senior management positions, including Chief Executive Officer of the Institutional Bank, Chief
Risk Officer, Group Treasurer and Chairman of the Asia Advisory Board.
Rob holds a Bachelor of Commerce, a Post-Graduate degree in Banking & Finance and completed the Harvard Advanced Management Program. He is
a Senior Fellow of the Financial Services Institute of Australasia and a Fellow of the Australian Institute of Company Directors.
Rob was also previously Chairman and Director of NSW Treasury Corporation and Secretary of NSW Treasury and NSW Industrial Relations.
Listed Company Directorships (within the last three years):
•
•
Commonwealth Bank Australia Limited (since 2017)
Transurban Group (since 2020)
Other Current Appointments
•
Nil
Board Committee Memberships
•
•
•
Chairman of the Sustainability & Risk Committee
Member of the Audit Committee
Member of the Nomination Committee
As at the date of this report he holds 15,000 GPT Stapled securities
James Coyne – General Counsel and Company Secretary
James is responsible for the legal, compliance and company secretarial activities of GPT. He was appointed as the General Counsel and Company
Secretary of GPT in 2004. His previous experience includes company secretarial and legal roles in construction, infrastructure, and the real estate funds
management industry (listed and unlisted).
14
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Emma Lawler – Senior Legal Counsel and Company Secretary
Emma was appointed as a Company Secretary of GPT in October 2021. She has more than 20 years’ corporate governance and company secretarial
experience in public and private, listed and unlisted entities. Emma's previous roles include Company Secretary of Link Group, Senior Governance
Consultant with Company Matters Pty Limited, Company Secretary at Westpac Banking Corporation and Company Secretary for the former NSW State
Rail Authority.
Lisa Bau resigned as Company Secretary in October 2021.
Attendance of directors at meetings
The number of Board meetings, including meetings of Board Committees, held during the financial year and the number of those meetings attended by
each Director is set out below. There were also two special purpose Board Committees during the year, each attended by Vickki McFadden, Bob
Johnston and Michelle Somerville, as appointed by the Board.
Board
Audit Committee
Human Resources &
Remuneration
Committee
Nomination
Committee
Sustainability & Risk
Committee
No. of
No. of
No. of
No. of
No. of
meetings Attended
18
18
meetings Attended
—
—
meetings Attended
5
5
meetings Attended
2
2
meetings Attended
—
—
18
18
18
18
18
18
18
18
18
18
18
18
—
—
6
—
6
6
—
—
6
—
6
6
—
5
5
5
—
—
—
5
5
5
—
—
2
2
2
2
2
2
2
2
2
2
2
2
—
4
—
4
4
4
—
4
—
4
4
4
Vickki McFadden
Bob Johnston
Tracey Horton AO
Angus McNaughton
Mark Menhinnitt
Michelle Somerville
Robert Whitfield AM
.
6. OTHER DISCLOSURES
Indemnification and insurance of directors, officers and auditor
GPT provides a Deed of Indemnity and Access (Deed) in favour of each of the Directors and Officers of GPT and its subsidiary companies and each
person who acts or has acted as a representative of GPT serving as an officer of another entity at the request of GPT. The Deed indemnifies these
persons on a full indemnity basis to the extent permitted by law for losses, liabilities, costs and charges incurred as a Director or Officer of GPT, its
subsidiaries or such other entities.
Subject to specified exclusions, the liabilities insured are for costs that may be incurred in defending civil or criminal proceedings that may be brought
against Directors and Officers in their capacity as Directors and Officers of GPT, its subsidiary companies or such other entities, and other payments
arising from liabilities incurred by the Directors and Officers in connection with such proceedings.
During the financial year, GPT paid insurance premiums to insure the Directors and Officers of GPT and its subsidiary companies. The terms of the
contract prohibit the disclosure of the premiums paid.
GPT has agreed to indemnify the auditors out of the assets of GPT if GPT has breached the agreement under which the auditors are appointed.
Non-audit services
During the year PricewaterhouseCoopers, GPT’s auditor, has performed other services in addition to their statutory duties. Details of the amounts paid
to the auditor, which includes amounts paid for non-audit services and other assurance services, are set out in note 22 to the financial statements.
The Directors have considered the non-audit services and other assurance services provided by the auditor during the financial year. In accordance with
advice received from the Audit Committee, the Directors are satisfied that the provision of non-audit services by the auditor is compatible with, and did
not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:
•
•
•
The Audit Committee reviewed the non-audit services and other assurance services to ensure that they did not impact upon the integrity and
objectivity of the auditor
The Board’s own review conducted in conjunction with the Audit Committee concluded that the auditor independence was not compromised,
having regard to the Board’s policy with respect to the engagement of GPT’s auditor, and
The fact that none of the non-audit services provided by PricewaterhouseCoopers during the financial year had the characteristics of
management, decision-making, self review, advocacy or joint sharing of risks.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 27 and forms part of
the Directors’ Report.
Rounding of amounts
The amounts contained in this report and in the financial statements have been rounded to the nearest thousand dollars unless otherwise stated (where
rounding is applicable) under the option available to the Consolidated Entity under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Consolidated Entity is an entity to which the Instrument applies.
15
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
7. REMUNERATION REPORT
Introduction from the Chairman of the Human Resources And Remuneration Committee
On behalf of the Human Resources and Remuneration Committee (the Committee) of the Board, I am pleased to present the 2021 Remuneration
Report for the GPT Group. This report provides an overview of GPT's remuneration framework, including strategic objectives, the link to company and
individual performance and associated reward outcomes.
Entering 2021, the Committee was pleased to reinstate the Short Term Incentive Compensation (STIC) and Long Term Incentive (LTI) plans, and other
employee ownership schemes reflecting a return to more stable market conditions. This followed a difficult 2020, where these programs were withdrawn
and executives did not receive any increase to base salaries reflecting uncertainty and the negative impact of the pandemic on the Group's financial
performance and the experience of investors and customers.
Unfortunately, the return of stable market conditions was not sustained across all segments of the business for the entire year. Pleasingly, the Group's
financial performance for the first half of the year tracked above target. During the second half of the year, the strength of our diversified portfolio saw the
Funds Management, Office and Logistics sectors maintain momentum, while the return to pandemic conditions and resulting restrictions adversely
impacted Retail's financial performance for the remainder of the year. Regardless, the Retail team worked tirelessly to partner with retailers throughout
this period to ensure that they were ready to safely re-open for customers.
The reintroduction and prolonged nature of government restrictions posed significant challenges for many customers and employees. In line with our
safety culture, supporting the mental health and wellbeing of our employees was of paramount importance. We are proud of management's response
and our employees' resilience during this challenging period.
2021 Remuneration Outcomes
Performance rights granted under the 2019-21 LTI plan will lapse, as the hurdles of Total Return (TR) and Relative Total Securityholder Return (RTSR)
were not met. This is the second consecutive LTI plan that has not vested, given the 2018-20 LTI plan also had a nil vesting outcome. As the 2020-23
LTI plan was withdrawn, executives will experience three consecutive years of nil vesting outcomes.
To determine the STIC outcome to be paid in 2022, the Committee considered the achievement of excellent outcomes against our non-financial strategic
objectives achieved throughout 2021 (a performance assessment is available in the Group Scorecard on pages 19-20). However, the return to lockdown
conditions and the associated effects on the retail sector meant the Group did not meet its primary target financial measure of FFO per security growth
for the year, which had been set assuming a return to “normal” conditions. The Committee also carefully weighed the considerations of all stakeholders
and each of the Group’s remuneration principles, placing importance on the Group's ability to attract and retain high calibre employees, amidst an
increasingly competitive labour market and in the context of nil 2020 STIC and three years of nil vesting for the LTI plan. As a result, the Committee
recommended that the Board use its discretion to fund the STIC pool up to $14.0m (equivalent to a target result) allocated to reward strong performance
in challenging circumstances also permitting the General Employee Security Ownership Plan (GESOP) and Broad Based Employee Security Ownership
Plans (BBESOP) to operate. The Committee retained oversight of any STIC awards for the CEO's direct reports.
In taking this decision, the Committee recognises the incredible efforts demonstrated by our people over a challenging two year period to mitigate the
impact of the pandemic for securityholders and we thank employees for their ongoing professionalism, dedication and commitment.
In 2021, the Committee approved a modest budget to implement a base pay review that excluded senior executives, representing an average increase
of approximately 1.2 per cent for eligible employees. The budget made available for the 2022 base pay review for employees will be no more than 3 per
cent. As GPT remunerates employees on a total package basis, there will be no further increase for the legislated superannuation increase effective 1
July 2022.
Following benchmarking, the Committee determined that no changes to Non-Executive Director fees occur in 2021 (or ahead in 2022).
The Committee also considered the composition of the ASX200 AREIT Accumulation Index (the Index) for the RTSR measure for the 2021 LTI plan, and
made a minor change (detailed in Section 4 on page 54) to determine a more appropriate benchmark for the Group’s performance. During the year, a
review of the Group's remuneration platform was also undertaken to ensure that it strikes an appropriate balance between retaining and motivating our
people to deliver superior performance while aligning reward outcomes to the securityholder experience. Through this review, the Committee determined
that the current platform remains fit for purpose and all elements will be retained for the 2022 performance period.
In 2021, the Committee focused on the organisation's response to the Respect@Work Inquiry, and as a result, the Board as well as all employees
received sexual harassment and bullying training and reviewed the Group's policies and processes. The Committee retained oversight of all incidences
and GPT's response to any sexual harassment or bullying matters.
We welcome feedback and comments from investors and stakeholders regarding this Remuneration Report
Tracey Horton AO
Chairman of the Human Resources & Remuneration Committee
The information provided in this Report has been audited in accordance with section 308(3C) of the Corporations Act 2001.
Sydney
14 February 2022
16
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Key Management Personnel
GPT’s Remuneration Report discloses information regarding our Key Management Personnel (KMP). In accordance with AASB 124 the KMP identified
are the individuals responsible for planning, controlling and managing the GPT Group (being the Non-Executive Directors, Chief Executive Officer and
Managing Director (CEO), Chief Financial Officer (CFO), and the Chief Operating Officer (COO)). The individuals appointed to these roles have
responsibility for determining the outcomes of key decisions relating to the Group under a diversified business model. In contrast, other executives on
the Leadership Team are solely responsible for decisions concerning the relevant divisional area.There have been no changes to the composition of
KMP during the reporting period.
17
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
GPT's Values and Culture
GPT provides a workplace where its people can realise their potential and consistently deliver high performance in a safe and inclusive work
environment. Its diverse workforce benefits from a dynamic and flexible work environment, investment in technology and a culture where people feel
they can bring their whole selves to work. These key elements that drive value are underpinned by GPT’s shared sense of purpose – to create value by
delivering superior returns to investors, and to provide environments that enable our people to excel and customers and communities to prosper in a
sustainable way.
•
•
•
•
•
•
Our culture is underpinned by the following core values:
Safety First - Everyone, Always
Deliver Today, Create Tomorrow
Value Differences, Play as a Team
Speak Up
Raise the Bar
2021 presented another uncertain and challenging operating environment for the business and its stakeholders. The resilience, dedication and collective
effort of our people to respond to the challenges of the pandemic brought the strength of GPT's organisational values and culture to the fore. Key areas
of focus throughout the year, monitored by the Human Resources and Remuneration Committee via a quarterly review of the Culture Dashboard
include:
Focus Area
Safety
Engagement
Equal Opportunity
Behaviour and
Consequences
Risk Culture
Commentary
Safety is the number one priority for every employee, underpinned by the ‘Safety First – Everyone, Always’ value. All
GPT employees play a part in ensuring that colleagues, stakeholders and visitors to GPT’s workplaces or assets go
home safely. Initiatives to embed the ‘Safety First’ culture continue to be implemented, including ensuring that all new
employees participate in the safety leadership program initially launched during 2020. In addition to the members of
the Board, People Managers also received bespoke sexual harassment and bullying training enabling them to continue
to actively identify and respond to issues, protecting our employees and allowing the organisation to take a proactive
stance against any sexual harassment and bullying matter. Regular and comprehensive training for all employees also
continued. An ongoing focus on employee wellbeing was of paramount importance during 2021 given the sustained
impact of the pandemic. GPT’s people have access to mental health days in addition to sick/carers leave and were
also able to access increased support through the Wellness@GPT program throughout the year. Initiatives focused on
mental fitness and resilience in response to long periods working from home and managing stress and anxiety due to
the impact of the pandemic. Programs to maintain physical fitness were also made available, such as Tai Chi, yoga,
and dance classes. In alignment with the framework for workplace action on Domestic and Family Violence published
by the Champions of Change Coalition in November 2021 (entitled ‘Playing Our Part’), we revised our Domestic and
Family Violence Policy to ensure it aligns with best practice. We have also consulted resources produced by Diversity
Council Australia and Parents@Work in undertaking our review. In 2022 we will endeavour to run targeted education
for employees on domestic and family violence.
GPT has an energised, high calibre and committed workforce. Throughout 2021 GPT focused on enabling our people
to remain connected, engaged, supported and productive whilst working remotely for many parts of the year, and built
management and leadership capability to adapt this new way of working. We also invested heavily in learning and
development programs that reflected the shifting capabilities and skills required to navigate through the pandemic.
GPT provides a consultative work environment where employee views are sought, respected, and, where appropriate,
acted on. This included the approach to Flexible Working and moving to a hybrid model post pandemic. Employee
Engagement and Pulse Surveys were conducted throughout the year, allowing the ability to gauge people’s wellbeing
and satisfaction with the organisation, their altered work arrangements, working from home or working in reduced or
hybrid on and off-site teams. The results enabled management to identify priorities and opportunities to support GPT’s
people in continued engagement, performance and development. The retention and development of our top talent also
remained a key area of focus, with turnover for this cohort pleasingly at a lower level than the organisation overall.
GPT promotes an inclusive workplace where the rich diversity of its workforce is respected, supported and valued. Our
people possess a unique combination of characteristics: gender, age, ethnicity, cultural or spiritual background,
disability, gender identity, sexuality, socio-economic status, education, professional and life experience. GPT provides
a safe and welcoming workplace for everyone, recognising that an inclusive culture enhances the Group’s
performance and delivers long-term benefits for all its stakeholders. GPT is committed to consistently ensuring equal
opportunity in all aspects of employment, including recruitment, learning and talent development, promotion,
succession and remuneration. In 2021, the Group applied to renew its Workplace Gender Equality Agency (WGEA)
Employer of Choice citation, with GPT’s performance in this area among Australia’s best employers each year since
2018. GPT is also among the first in the property industry to seek external certification as a Family Friendly Workplace.
Sponsorship of the Property Council of Australia 500 Women in Property program also continued, as did GPT’s
commitment to the CareerTrackers Indigenous Internship Program. The Group also was again recognised as a Bronze
ranked employer for LGBTQ+ inclusion in the Australian Workplace Equality Index Small Employer category.
GPT is proud of our reputation for applying the highest ethical and moral standards in all dealings. The Code of
Conduct (the Code) describes the standard of behaviour expected of all employees and aligns with GPT’s vision to be
the most respected property company in Australia. Directors monitor breaches concerning the Code and Equal
Employment Opportunity and Workplace Behaviour Policy, complaints received and resolved and any warnings issued
during the reporting period. GPT regularly reinforces its expectations of employees via compulsory training and direct
communications from management.
GPT’s approach to risk management incorporates culture, people, processes and systems to enable the organisation
to realise potential opportunities whilst managing possible unintended adverse effects. GPT seeks to maintain a
transparent and accountable culture where all employees are encouraged to actively consider, discuss and respond to
risk as part of their daily activities. Directors monitor several organisational risk culture indicators each quarter aligned
to Risk Committee reporting metrics. These include metrics concerning internal audits, compliance and unauthorised
Risk Appetite Statement breaches, compliance breaches and reports to the Whistleblower Officer.
18
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Group Financial Performance and Incentive Outcomes
1. Five year Group financial performance
Total Securityholder Return (TSR)1
Total Return2
NTA per security3
FFO per security
FFO per security growth
Security price at end of calendar year
%
%
$
cents
%
$
2021
27.8
14.1
6.09
28.82
1.2
5.42
2020
(17.7)
(2.4)
5.57
28.48
(12.9)
4.50
2019
9.6
8.7
5.80
32.68
2.6
5.60
2018
9.6
15.8
5.58
31.84
3.5
5.34
2017
6.6
15.2
5.04
30.77
3.0
5.11
1.
2.
3.
TSR is calculated as the percentage growth in GPT’s security price from the last trading date of the previous financial year to the last trading date of the current financial year, together with the
value of distributions received during the year, assuming that all of those distributions are reinvested into new securities. For LTI purposes, the average security price for the last 30 trading days is
utilised in the calculation of the TSR.
Total Return is defined as the sum of the change in Net Tangible Assets (NTA) per security plus distributions per security over the Performance Period, divided by the NTA per security at the
beginning of the performance period.
Includes all right-of-use assets of The GPT Group.
2. Summary of Group Scorecard objectives and performance outcomes
An assessment of performance against the primary objectives in the 2021 Group Scorecard is summarised in the table below.
Category
Safety and
People
Performance measure
Achievement Commentary
Reduce the number of
notifiable incidents at GPT
managed assets
Improve awareness of and
engagement with GPT's safety
culture
Improve responsiveness to
identified safety hazards
Maintain and improve a strong
and healthy culture
Deliver on diversity and
inclusion targets and initiatives
to support further
advancement
Continue to retain and develop
our talent
FFO and distribution growth
per security target of at least 9
per cent and 12 per cent,
respectively
Financial
GPT's safety focus continued throughout 2021, with a 29 per cent decrease
in material incidents at all sites under GPT's management / control
compared to the previous year.
Safety engagement at GPT scored 94 per cent in the 2021 survey,
marginally higher than the prior survey. Our Safety Leadership Program
continued to be consistently embedded, with 100 per cent of new hires
receiving a safety induction within their first three weeks of commencement.
100 per cent of safety hazard risk audit action items were closed out by year
end.
The performance against the majority of indicators on the Culture
Dashboard was maintained or improved in 2021. Pulse surveys of our
employees noted that the measures GPT had put in place to support their
wellbeing have helped them navigate the professional and personal
challenges resulting from the pandemic. Our overall engagement score was
66 per cent with the introduction of a new engagement tool, with 85 per cent
of GPT's people stating they are proud to work at GPT and 86 per cent
consider GPT a Great Place to Work. There were no sexual harassment
complaints made in 2021.
GPT achieved 50 per cent gender diversity in the top quartile throughout
2021, exceeding our goal, as well as decreasing the gender pay gap to
20.73 per cent overall again exceeding target. The Group was also
recognised as a Bronze employer for LGBTQ+ inclusion in the Australian
Workplace Equality Index Small Employer category.
Employee turnover of our top talent was lower than GPT levels for the year,
illustrating our focus on retention and the development of our people.
GPT was well placed to achieve its FFO growth target in the first half of the
year. Unfortunately due to the impacts of COVID on our Retail segment in
the second half, FFO was impacted with FFO per security growth of 1.2 per
cent achieved.
A continued drive for leasing in Office, acquisitions in Logistics, and the
recovery of debt in Retail became the key drivers to minimise the economic
disruption and KPIs for performance outcomes. Spending to invest in the
business was balanced with prudent management of operating costs
throughout the second half of the year.
19
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Strategy
Portfolio occupancy greater
than 96 per cent at year end
Increase the Group’s exposure
to the Logistics sector through
appropriate acquisitions and
developments
QuadReal partnership
committed to at least 50 per
cent
Progress of key developments
in the Office and Logistics
sectors
GWOF and GWSCF to
outperform the relative MSCI
benchmarks for peer funds
Achieve and maintain
environmental certifications
Environment
and Social
Responsibility
Achieve Climate Disclosure
Statement operational targets
Advance and deliver on social
responsibility targets
Achieved 97.7 per cent per cent occupancy for combined Retail, Office and
Logistics portfolio.
GPT increased its exposure to Logistics, which now comprises 27 per cent
of the GPT portfolio.
GPT exceeded the QuadReal capital partnership target, with over 70 per
cent committed.
Two new logistics developments are underway, Berrinba Stage 3 and
Foundation Estate, Truganina.
In Office, Queen & Collins achieved practical completion, Cockle Bay Park
Stage 2 Development Application was submitted, the site-specific
Development Control Plan has been approved for 87-91 George Street,
Parramatta, and the 51 Flinders Lane, Melbourne development has
commenced.
The Fund's performance was slightly below the goal set, with GWOF at 12.4
per cent versus the benchmark of 12.5 per cent, and GWSCF performing at
6.2 per cent versus 7.2 per cent.
ISO 14001 Certification achieved for GPT's Environmental Management
System (EMS).
GWOF carbon neutral re-certification and new certifications for 4 Murray
Rose, Sydney Olympic Park and 60 Station Street, Parramatta achieved.
Carbon Neutral Certification pathway for Retail achieved through an aligned
NABERS process with Green Star - Performance pathway available for
ineligible NABERS assets.
GPT achieved the operational targets disclosed in the Climate Disclosure
Statement, except for waste recycling which was narrowly missed as a
result of planned tenant engagement and training sessions being postponed
due to lockdowns.
GPT continued to deliver on its Stretch Reconciliation Action Plan (RAP)
2018-2021 commitments until the next RAP is completed. Actions have
advanced in line with the plan for the next Stretch RAP, and stakeholder
consultation will commence in Q1, 2022.
88 per cent of employees were engaged in The GPT Foundation's
campaigns during 2021.
The Group's second Modern Slavery Statement was published on 17
December 2021.
3. 2021 STIC outcomes by Executive KMP
GPT's STIC provides executive KMP with the opportunity to be rewarded for their performance toward financial and non-financial objectives consistent
with the Group's strategic and operational goals. Performance measures for the Executive KMP are derived from the Group Scorecard in Table 2 above
and tailored to reflect their specific areas of responsibility.
The achievement of target FFO per security growth typically acts as a gateway for STIC to be awarded. In 2021 the Board used its discretion to fund a
pool of up to $14 million (at target rather than maximum) for payment of STIC awards allocated to reward strong performance in challenging
circumstances. The Committee reviewed the performance of KMP versus both the original KPIs and with regard to the activities essential to effectively
recover from the pandemic to determine the individual STIC outcomes. For executive KMP these ranged between 54.79 to 65.71 per cent of their
maximum STIC opportunity and are set out in the table below. STIC outcomes for the balance of the eligible employees1 are ordinarily determined in
March post the issue of the Remuneration Report.
Executive KMP2
Bob Johnston
Position
Chief Executive Officer and
Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
Actual STIC
awarded as a %
of maximum
STIC
54.79%
% of maximum
STIC award
forfeited
45.21%
Actual STIC
awarded
$1,000,000
Cash
component
$500,000
Equity
component
(# of GPT
securities)3
94,411
$575,000
$500,000
65.71%
59.52%
34.29%
40.48%
$287,500
$250,000
54,286
47,205
1.
2.
3.
i.e. Excluding the KMP.
Each KMP held the position as KMP for the whole of 2021.
The number of deferred GPT securities is calculated by dividing 50% of the Actual STIC awarded by GPT’s 30-day VWAP of $5.296 immediately before the end of the performance period. Vesting
subject to service on 31 December 2022.
20
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
4. Group performance measures for LTI plans currently relevant
LTI
performance
measurement
period
2019-21
LTI
2019
Performance
measure1,2
Relative TSR versus
ASX200 AREIT
Accumulation Index
Total Return
Performance measure hurdle Weighting
Result
10% of PR vest at Index
performance, up to 100% at
Index plus 10% (pro-rata vesting
in between)
10% of PR vest at 8.5% Total
Return, up to 100% at 10.0%
Total Return (pro-rata vesting in
between)
50% TSR result is
beneath the
Index by
27.89%
Compound
TR result of
6.57% is
beneath
threshold
50%
Overall Plan
Vesting
Outcome
%
Vesting % by
performance
measure
0%
0%
0%
2020
2020-22
Relative TSR versus
ASX200 AREIT
Accumulation Index
10% of PR vest at Index
performance, up to 100% at
Index plus 10% (pro-rata vesting)
2021
2021-23
Total Return
Relative TSR versus
ASX200 AREIT
Accumulation Index
Total Return
10% of PR vest at 7.5% Total
Return, up to 100% at 9.0% Total
Return (pro-rata vesting in
between)
10% of PR vest at Index
performance, up to 100% at
Index plus 10% (pro-rata vesting
in between)
10% of PR vest at 4% Total
Return, up to 100% at 6% Total
Return (pro-rata vesting in
between)
50%
50%
2020-22 LTI withdrawn
50%
N/A
N/A
50%
N/A
N/A
N/A
1.
2.
In early 2021, the HRRC determined that the Relative TSR comparator group in the ASX200 AREIT Accumulation Index be adjusted to exclude GPT and Goodman for LTI plans commencing from
2021 onward.
See Footnote 2, Table 1 on page 19
5. 2019-2021 LTI outcomes by Executive KMP
Executive KMP
Position
Bob Johnston
Chief Executive Officer and Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
Performance rights
granted
Performance rights
vested
Performance rights
lapsed
413,551
160,511
156,734
—
—
—
413,551
160,511
156,734
6. LTI outcomes - fair value and maximum value recognised in future years1
Executive KMP
Bob Johnston
Chief Executive Officer &
Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
Plan
2021
2020
2021
2020
2021
2020
Grant date
21 May 2021
—
26 April 2021
—
26 April 2021
—
Fair value per
performance right2
$3.038
—
$3.077
—
$3.077
—
Performance
rights granted as
at 31 Dec 21
470,199 3
—
Maximum value to
be recognised in
future years
$953,180
—
Vesting date
31 Dec 2023
—
187,865
31 Dec 2023
$385,763
—
—
—
180,350
31 Dec 2023
$370,331
—
—
—
1.
2.
3.
The GPT LTI plan is calculated on face value grants of performance rights based on the VWAP of GPT securities for specified periods; reference to fair value per performance right is included in
this table to comply with accounting standards.
Reflects fair value per performance right as at the grant date.
Approval of the issue of performance rights to Mr Johnston was obtained in accordance with ASX Listing Rule 10.14.
21
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
7. Remuneration - Executive KMP - Actual Amounts Received
This table discloses the cash, equity and other benefit amounts actually received by GPT’s executive KMP, as distinct from the accounting expense. As
a result, it does not align to Australian Accounting Standards.
Executive KMP
Bob Johnston
Chief Executive Officer &
Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
Total
Fixed Pay
Variable or “at risk” 1
Year
2021
2020
2021
2020
2021
2020
2021
2020
Base Pay Superannuation
$1,437,869
$1,438,709
$852,869
$853,709
$817,869
$818,709
$3,108,607
$3,111,127
$22,631
$21,348
$22,631
$21,348
$22,631
$21,348
$67,893
$64,044
Other2
$7,192
$7,061
$3,893
$3,840
$5,868
$7,279
$16,953
$18,180
STIC
$1,000,000
$0
$575,000
$0
$500,000
$0
$2,075,000
$0
LTI
$0
$0
$0
$0
$0
$0
$0
$0
Total
$2,467,692
$1,467,118
$1,454,393
$878,897
$1,346,368
$847,336
$5,268,453
$3,193,351
1.
2.
Gross dollar values for the equity components have been calculated by multiplying the number of securities by GPT’s 30-day VWAP immediately before the end of the relevant performance period
of $5.296.
Other may include death and total/permanent disability insurance premiums, service awards, GPT superannuation plan administration fees, professional memberships, subscriptions and/or other
benefits.
8. Reported remuneration - Executive KMP - AIFRS Accounting
This table provides a breakdown of remuneration for executive KMP in accordance with statutory requirements and Australian accounting standards.
Executive KMP
Bob Johnston
Chief Executive Officer &
Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
Total
Fixed Pay
Variable or “at risk” 2
Year
2021
2020
2021
2020
2021
2020
2021
2020
Base Pay 1
Superannuation
$1,478,149
$1,468,141
$863,289
$867,590
$832,013
$852,887
$3,173,451
$3,188,618
$22,631
$21,348
$22,631
$21,348
$22,631
$21,348
$67,893
$64,044
Other
$7,192
$7,061
$3,893
$3,840
$5,868
$7,279
$16,953
$18,180
STIC
$848,121
$272,254
$454,408
$141,662
$410,231
$135,020
LTI
Total
$578,569
$2,934,662
$165,691
$1,934,495
$258,350
$1,602,571
$95,489
$1,129,929
$249,102
$1,519,845
$94,664
$1,111,198
$1,712,760
$548,936
$1,086,021
$6,057,078
$355,844
$4,175,622
1.
2.
3.
Base pay includes the increase in provisions for annual leave and long service leave which are long-term benefits as per Corporations Regulation 2M.3.03(1) Item 8. These are $40,280 (2020:
$29,432) for Bob Johnston; $10,420 (2020: $13,881) for Anastasia Clarke; and $14,144 (2020: $34,178) for Mark Fookes.
This column records the amount of the fair value of the awards under the various STIC and LTI plans expensed in the relevant financial years, and does not represent actual awards made to
executives or the face value grant method.
The 2020 comparatives have been restated to reflect an amendment to the amortisation methodology for the 2018 and 2019 LTI and 2019 DSTIC.
9. GPT security ownership - Executive KMP as at 31 December 2021
Employee Security Scheme
(ESS)
GPT Holdings
(start of
period)1
1,689,078
2020
DSTIC
Nil
2018-20
LTI
Nil
Actual
ESS
received
in 2021
Nil
Purchase /
(Sales) during
period2
Nil
GPT Holdings
(end of
period)3
1,689,078
Value of
GPT
Holdings4
$8,945,357
MSHR
Guideline 5
$2,190,000
235,428
1,222,362
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
235,428
$1,246,827
$875,000
1,222,362
$6,473,629
$840,000
Executive KMP
Bob Johnston
Chief Executive Officer and
Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
1.
2.
3.
4.
5.
GPT Holdings (start of period) include GPT securities obtained via sign-on grants (Mr Johnston only), awards previously received under ESS up to and including the 2019 performance period,
private holdings less any prior sales.
Movement in GPT security holdings as a result of the sale of vested, unrestricted security holdings and/or the sale or purchase of additional private holdings on the individuals own account during
the 2021 calendar year.
GPT Holdings (end of period) is the sum of GPT Holdings (start of the period) plus any securities granted during 2021 in respect of the 2020 DSTIC (noting the plan was cancelled) and 2018-20 LTI
plan (with a nil vesting outcome) adjusted for any purchases or sales during the period.
The GPT Holdings (end of period) multiplied by GPT’s December 2021 30-day VWAP of $5.296 to derive a dollar value.
GPT’s Minimum Security Holding Requirement (MSHR) guideline requires the CEO to acquire and maintain a holding equal to 150% of base salary. For other KMP and Leadership Team members
the holding requirement is equal to 100% of base salary. Individuals have four years from commencement of employment to achieve the MSHR before it is assessed.
22
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
10. GPT performance rights - Executive KMP
Executive KMP
Bob Johnston
Chief Executive Officer and Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
Performance rights
Performance rights that
lapsed in 2021 1
Performance rights still on
foot at 31 Dec 21 2
413,551
160,511
156,734
470,199
187,865
180,350
1.
2.
The sum of performance rights allocated under the 2019-21 LTI that will not vest at the end of the performance period, and as a result will lapse.
The total of unvested performance rights currently on foot excluding any GPT securities or performance rights that may have lapsed up to 31 December 2021. This represents the current maximum
number of additional GPT securities to which the individual may become entitled subject to satisfying the applicable performance measures in the 2021-23 LTI plan. As such, these performance
rights represent the incentive opportunity over future years, are subject to performance and hence “at risk”, and as a result, may never vest.
Employment Terms
The information regarding the STIC and LTI participation for the CEO and other Executive KMP below reflects their maximum level of opportunity.
1. Employment terms
Employment Terms
Remuneration Package
Fixed Remuneration1
Range of STIC Opportunity as a
percentage of Fixed
Remuneration2
Range of LTI Opportunity as a
percentage of Fixed
Remuneration3
Contract duration
Notice period4
Termination by Company
without cause
Termination by Company for
cause
Post Employment Restraints
CEO and Managing Director
Other Executive KMP
Conditions
Bob Johnston
$1,460,000
0% to 125%
0% to 150%
Ongoing
6 months
Anastasia Clarke
$875,000
Mark Fookes
$840,000
0% to 100%
0% to 100%
Ongoing
3 months
12 months’ notice. Treatment of
unvested STIC and LTI will be at
the Board’s discretion under the
terms of the relevant plans and
GPT policy
3 months’ notice. Severance payment subject to GPT policy and
capped at the three year average of the executive’s annual fixed
remuneration. Treatment of unvested STIC and LTI will be at the
Board’s discretion under the terms of the relevant plans and GPT policy
No notice requirement or termination benefits (other than accrued entitlements).
6 months non-compete (CEO only), and 12 months non-solicitation of GPT employees
1.
2.
3.
4.
Fixed remuneration is inclusive of superannuation.
Performance assessed against equally weighted financial and non-financial objectives, with any award generally also subject to the Group achieving FFO performance targets set by the Board at
the beginning of each performance period.
Face value of performance rights at time of grant. Vesting outcomes dependent on performance and continued service, delivered in GPT securities.
GPT may elect to make a payment in lieu of notice.
2. Compensation mix at maximum STIC and LTI outcomes
The percentage of each component of variable or ‘at risk’ remuneration is calculated with reference to maximum or stretch potential opportunity as set
out in the Remuneration Packages detailed in Tables 1 and 2 of the Employment Terms section. It does not reflect the actual remuneration paid during
the period.
Executive KMP
Bob Johnston
Chief Executive Officer and Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
Fixed Remuneration
Variable or “at risk ” remuneration
Base Pay
26.7%
33.4%
33.4%
STIC
33.3%
33.3%
33.3%
LTI
40.0%
33.3%
33.3%
23
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Governance
Who are the members
of the Committee?
What is the scope of
work of the
Committee?
The Committee consists of the following four Non-Executive Directors:
» Tracey Horton AO (HRRC Chairman)
» Vickki McFadden
» Angus McNaughton
» Mark Menhinnitt
The Committee operates in accordance with the HRRC Charter and undertakes the following activities on behalf of
the Board:
» Oversee the management of culture
» Consider and recommend any changes to the remuneration framework to the Board for approval
» Oversee the implementation of key policies and practices in support of GPT’s remuneration framework and from
time to time, review their appropriateness
» Periodically review and make recommendations to the Board for approval in relation to the remuneration for Non-
Executive Directors
» Review annually and make recommendations to the Board for approval in relation to the remuneration package for
the CEO and any other executive Director. In consultation with the CEO, review and approve remuneration packages
for the Leadership Team (excluding the CEO) and approve the annual salary review budget for all other employees
» Recommend to the Board for approval the key performance indicators for the CEO and having regard to the
performance assessment undertaken by the Chairman of the Board, recommend to the Board incentive plan
outcomes for the CEO to the Board for approval
» Review the annual Remuneration Report and make recommendations to the Board for its inclusion in the Annual
Report
» Review and monitor the succession plan for the Leadership Team (excluding the CEO, which is a responsibility of
the Nomination Committee1)
» Review and approve GPT’s diversity & inclusion strategy, and oversee the implementation of key processes and
procedures in support of this and report progress to the Board
» Monitor and oversee talent development and employee engagement initiatives, and oversee the implementation of
processes and procedures to support the implementation of those initiatives.
1.
The full Board are members of the Nomination Committee and no additional fees are paid for membership. Further information about the role and responsibility of committees is set out in their
respective Charters, which are available on GPT’s website: www.gpt.com.au.
Remuneration - Non-Executive Directors
What are the key
elements of the Non-
executive Director
Remuneration Policy?
» The Board determines the remuneration structure for Non-executive Directors based on recommendations from the
Human Resources and Remuneration Committee.
» Non-executive Directors are paid one fee for participation as a Director in all GPT related companies (principally
GPT RE Limited, the Responsible Entity of General Property Trust and GPT Management Holdings Limited).
» Non-executive Director remuneration is composed of three main elements:
› Main Board fees
› Committee fees, and
› Superannuation contributions at the statutory superannuation guarantee contribution rate.
» Non-executive Directors do not participate in any short or long term incentive arrangements and are not entitled to
any retirement benefits other than compulsory superannuation.
» Non-executive Directors are subject to the Group’s Minimum Security Holding Policy as detailed on page 26 of this
Report.
» Non-executive Director remuneration is set by reference to comparable entities listed on the ASX (having regard to
GPT’s industry sector and market capitalisation).
» External independent advice on remuneration levels for Non-executive Directors is sought annually. In the event
that a review results in changes, the new Board and Committee fees are effective from 1 January in the applicable
year and advised in the ensuing Remuneration Report.
» Fees (including superannuation) paid to Non-executive Directors are subject to an aggregate limit of $1,800,000
per annum, which was approved by GPT securityholders at the Annual General Meeting on 5 May 2015. As an
Executive Director, Mr Johnston does not receive fees from this pool as he is remunerated as one of GPT’s senior
executives.
1. Board and committee fees1,2
Chairman
Members
2021
2020
2021
2020
Board Fee
Audit Committee
Sustainability and
Risk Committee
Human Resources
and Remuneration
Committee
$450,000
$450,000
$170,000
$170,000
$40,000
$40,000
$20,000
$20,000
$34,000
$34,000
$17,000
$17,000
$34,000
$34,000
$17,000
$17,000
1.
2.
In addition to the fees noted in the table, all Non-executive Directors receive reimbursement for reasonable travel, accommodation and other expenses incurred while undertaking GPT business.
Fees for Non-executive Directors are inclusive of superannuation.
24
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
2. Reported remuneration - Non-Executive Directors - AIFRS Accounting 1
This table provides a breakdown of remuneration for Non-executive Directors in accordance with statutory requirements and Australian accounting
standards.
Non-executive Director - Current
Base Fees
Superannuation
Fixed Pay
Vickki McFadden
Chairman
Tracey Horton AO
Mark Menhinnitt
Angus McNaughton
Michelle Somerville
Robert Whitfield AM3
Non-executive Director – Former
Gene Tilbrook 4
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
$449,942
$428,652
$201,368
$201,826
$185,878
$184,453
$188,611
$189,041
$206,835
$207,306
$225,372
$97,729
—
$21,348
$19,632
$19,173
$18,122
$17,523
$18,389
$17,959
$20,165
$19,694
$20,464
$9,284
Fixed Pay
Base Fees
Superannuation
—
$204,566
$1,458,006
$1,513,573
—
$19,434
$96,772
$124,415
Other2
—
—
—
—
—
—
—
—
—
—
—
—
Other2
—
$859
—
$859
Total
$449,942
$450,000
$221,000
$220,999
$204,000
$201,976
$207,000
$207,000
$227,000
$227,000
$245,836
$107,013
Total
—
$224,859
$1,554,778
$1,638,847
1.
2.
3.
4.
No termination benefits were paid during the financial year.
Other may include death and total/permanent disability insurance premiums and/or GPT superannuation plan administration fees.
Mr Whitfield joined GPT on 14 May 2020. Total fees for 2021 were $224,000, however an adjustment for unpaid fees in 2020 was made during the period.
Mr Tilbrook retired from the GPT Board on 31 December 2020.
3. Non-executive Director - GPT security holdings
Non-executive Director
Balance
31 Dec 20
Purchase /
(Sale)
Balance
31 Dec 21
MSHR
assessment 1
MSHR
guideline 2
MSHR
assessment
date
Private holdings (# of securities)
Minimum securityholding requirement (MSHR)
Vickki McFadden
Tracey Horton AO
Angus McNaughton
Mark Menhinnitt
Michelle Somerville
Robert Whitfield AM 3
112,525
22,525
25,088
30,000
36,663
—
—
5,000
—
—
—
15,000
112,525
27,525
25,088
30,000
36,663
15,000
$595,932
$145,772
$149,898
$164,475
$194,167
$450,000
March 2022
$170,000
May 2023
$170,000
November 2022
$170,000
October 2023
$170,000
December 2021
$79,440
$170,000
May 2024
1.
2.
3.
The MSHR is assessed by the higher of cost or the current market value (derived by multiplying the number of holdings at the end of the period by GPT's December 2021 30-day VWAP of $5.296).
The MSHR for Non-Executive Directors is equal to 100% of board fees. Individuals have four years from commencement of employment to achieve the MSHR before it is assessed for the first time.
Mr Whitfield was appointed to the Board in May 2020.
25
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
For the year ended 31 December 2021
Remuneration Advisors
During the year, advisors did not provide any remuneration recommendations in relation to KMPs, as defined in Section 9B of the Corporations Act
2001.
Clawback and Malus
GPT’s Clawback Policy provides the Board with the discretion to modify remuneration outcomes as a result of adverse circumstances that arise or
become known after remuneration has been granted, paid or vested. Individuals who participate in the STIC and LTI are subject to these awards being
adjusted, cancelled or clawed back if a trigger event occurs. No trigger events occurred in 2021, and the Board did not enact the Clawback Policy during
the reporting period.
Minimum Security Holding Requirement
GPT’s Minimum Security Holding Policy requires Non-executive Directors, the CEO, other KMPs and members of the Leadership Team to build (initially
over four years from appointment) and maintain a minimum holding of GPT securities. The guideline requires the CEO to maintain a holding equal to
150% of fixed remuneration. For Non-executive Directors, other KMP and Leadership Team members, the MSHR is equal to 100% of fixed remuneration
or board fees.
The Directors’ Report, including the Remuneration Report, is signed in accordance with a resolution of the Directors of the GPT Group.
________________________________ _____________________________________
Vickki McFadden Bob Johnston
Chairman Chief Executive Officer and Managing Director
Sydney
14 February 2022
26
Auditor’s Independence Declaration
As lead auditor for the audit of GPT Management Holdings Limited for the year ended 31 December
2021, I declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of GPT Management Holdings Limited and the entities it controlled
during the period.
Susan Horlin
Partner
PricewaterhouseCoopers
Sydney
14 February 2022
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
27
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2021
Revenue
Fund management fees
Property management fees
Development management fees
Management costs recharged
Other income
Note
31 Dec 21
$'000
31 Dec 20
Restated(1)
$'000
99,810
40,072
18,773
31,545
83,647
36,374
19,693
29,621
190,200
169,335
Share of after tax profit of equity accounted investments
2(c)
Interest revenue
Proceeds from sale of inventory
Total revenue and other income
Expenses
Remuneration expenses
Cost of sale of inventory
Property expenses and outgoings
Technology expenses
Professional fees
Depreciation of right-of-use asset
Depreciation
Amortisation
Revaluation of financial arrangements
Impairment expense
Finance costs
Other expenses
Total expenses
Profit/(loss) before income tax
Income tax (credit)/expense
Net profit/(loss) for the year
Other comprehensive income
Items that may be reclassified to profit and loss
Net foreign exchange translation adjustments
Total comprehensive profit/(loss) for the year
Net profit/(loss) attributable to:
- Members of the Company
- Non-controlling interest
Total comprehensive income/(loss) attributable to:
- Members of the Company
- Non-controlling interest
10(a)
11(b)
903
79
34,864
35,846
226,046
122,744
30,794
3,602
14,935
5,566
10,223
2,510
2,154
(33,396)
18,302
3,369
23,189
203,992
22,054
(449)
22,503
(1)
22,502
22,070
433
22,069
433
4,480
226
1,196
5,902
175,237
84,432
990
3,659
10,209
6,091
9,448
3,597
2,600
94,497
4,609
3,592
8,812
232,536
(57,299)
10,074
(67,373)
(17)
(67,390)
(69,665)
2,292
(69,682)
2,292
Earnings per share attributable to the ordinary equity holders of the Company
Basic and diluted earnings/(loss) per share (cents per share) - total
12(a)
1.15
(3.58)
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
28
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2021
Note
31 Dec 21
$'000
31 Dec 20
Restated(1)
$'000
ASSETS
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Inventories
Prepayments
Total current assets
Non-current assets
Intangible assets
Property, plant and equipment
Inventories
Equity accounted investments
Right-of-use assets
Deferred tax asset
Other assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Current tax liability
Provisions
Borrowings
Lease liabilities
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
3
5
4
6
5
2
10(d)
7
8
10(c)
9
14
14
9
11(a)
11(b)
11(c)
Total equity attributable to Company members
Non-controlling interests
Total equity
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
16,590
52,018
19,777
14,565
7,041
22,968
46,316
1,685
61,412
6,435
109,991
138,816
13,029
9,154
94,115
24,634
44,436
26,625
5,067
217,060
327,051
29,337
6,083
19,641
2,370
10,353
67,784
144,367
6,269
48,106
198,742
266,526
60,525
24,739
10,605
64,078
26,011
45,850
15,609
4,693
191,585
330,401
15,107
2,000
17,579
5,005
8,761
48,452
192,923
3,250
46,576
242,749
291,201
39,200
331,842
18,235
(307,422)
42,655
17,870
60,525
331,974
17,982
(329,329)
20,627
18,573
39,200
29
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2021
Company
Non-controlling interests
Contributed
equity
$'000
Reserves Accumulated
losses
$'000
$'000
Total
$'000
Contributed Accumulated
losses
$'000
equity
$'000
Equity attributable to Company Members
At 31 December 2019
Change in accounting policy(1)
At 1 January 2020
Foreign currency translation reserve
Other comprehensive income for the year
(Loss)/profit for the year(1)
Total comprehensive income for the year
Note
25(a)
11(b)
11(c)
Transactions with Members in their capacity as Members
Movement in employee incentive security scheme reserve net of tax
11(b)
Reclassification of employee incentive security scheme reserve to
accumulated losses
11(b)
At 31 December 2020
Equity attributable to Company Members
At 1 January 2021
Foreign currency translation reserve
Other comprehensive income for the year
Profit for the year
Total comprehensive income for the year
Transactions with Members in their capacity as Members
On-market share buy back
Movement in employee incentive security scheme reserve net of tax
Reclassification of employee incentive security scheme reserve to
accumulated losses
Distributions
At 31 December 2021
11(b)
11(c)
11(a)
11(b)
11(b)
11(c)
331,974
—
331,974
—
—
—
—
—
—
331,974
331,974
—
—
—
—
(132)
—
—
—
331,842
20,144
—
20,144
(17)
(17)
—
(17)
(2,114)
(31)
17,982
17,982
(1)
(1)
—
(1)
—
91
(248,104)
(11,591)
(259,695)
—
—
(69,665)
(69,665)
—
31
(329,329)
(329,329)
—
—
22,070
22,070
—
—
163
—
18,235
(163)
—
(307,422)
104,014
(11,591)
92,423
(17)
(17)
(69,665)
(69,682)
(2,114)
—
20,627
20,627
(1)
(1)
22,070
22,069
(132)
91
—
—
42,655
(1)
The Consolidated Entity’s opening accumulated losses and profit for the year have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Total
$'000
16,281
—
16,281
—
—
2,292
2,292
—
—
21,172
—
21,172
—
—
—
—
—
—
(4,891)
—
(4,891)
—
—
2,292
2,292
—
—
21,172
(2,599)
18,573
21,172
—
—
—
—
—
—
—
(2,599)
—
—
433
433
—
—
—
18,573
—
—
433
433
—
—
—
—
21,172
(1,136)
(3,302)
(1,136)
17,870
Total
equity
$'000
120,295
(11,591)
108,704
(17)
(17)
(67,373)
(67,390)
(2,114)
—
39,200
39,200
(1)
(1)
22,503
22,502
(132)
91
—
(1,136)
60,525
30
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Full year ended 31 December 2021
Note
31 Dec 21
$'000
31 Dec 20
Restated(1)
$'000
Cash flows from operating activities
Receipts in the course of operations (inclusive of GST)
Payments in the course of operations (inclusive of GST)
Proceeds from the sale of inventories
Payments for inventories
Interest received
Finance costs paid
Income taxes (paid)/received
Net cash inflows from operating activities
16
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Net cash outflows from investing activities
Cash flows from financing activities
Payment for on-market buy-back of securities
Repayments of related party borrowings
Proceeds from related party borrowings
Repayments of borrowings
Proceeds from borrowings
Principal elements of lease payments
Net cash (outflows)/inflows from financing activities
Net cash (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
205,399
(170,148)
14,864
(13,448)
50
(2,044)
(6,311)
28,362
184,108
(169,261)
1,196
(7,866)
193
(2,156)
1,299
7,513
(1,570)
(4,386)
(5,956)
(3,539)
(9,808)
(13,347)
(132)
(175,622)
158,975
(2,900)
263
(9,368)
(28,784)
(6,378)
22,968
16,590
—
(198,640)
213,462
(169)
509
(8,037)
7,125
1,291
21,677
22,968
31
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
These are the consolidated financial statements of GPT Management Holdings Limited and its controlled entities (the Consolidated Entity).
The notes to these financial statements have been organised into sections to help users find and understand the information they need to know.
Additional information has also been provided where it is helpful to understand the Consolidated Entity’s performance.
The notes to the financial statements are organised into the following sections:
Note 1 - Result for the full year: focuses on results and performance of the Consolidated Entity.
Notes 2 to 10 - Operating assets and liabilities: provides information on the assets used to generate the Consolidated Entity’s trading performance.
Notes 11 to 15 - Capital structure: outlines how the Consolidated Entity manages its capital structure and various financial risks.
Notes 16 to 27 - Other disclosure items: provides information on other items that must be disclosed to comply with Australian Accounting Standards
and other regulatory pronouncements.
Key judgements, estimates and assumptions
In applying the Consolidated Entity’s accounting policies, management have made a number of judgements, estimates and assumptions regarding
future events.
The Consolidated Entity has assessed key judgements and estimates in light of COVID-19 and adjusted the underlying assumptions accordingly. Items
marked with (*) contain judgements and estimates which have been significantly impacted by COVID-19 in either the current or comparative period.
The following judgements and estimates have the potential to have a material impact on the financial statements:
Area of judgements and estimates
Equity accounted investments
Management rights with indefinite life
IT development and software
Inventories
Property, plant and equipment
Provisions
Deferred tax assets
Related party borrowings at fair value
Security based payments*
Investment in financial assets
Lease liabilities
Right-of-use assets*
RESULT FOR THE YEAR
1. SEGMENT INFORMATION
Assumptions underlying
Assessment of control versus disclosure guidance
Impairment trigger and recoverable amounts
Impairment trigger and recoverable amounts
Lower of cost and net realisable value
Useful life
Estimates of future obligations and probability of outflow
Recoverability
Fair value
Fair value
Fair value
Lease term and incremental borrowing rate
Impairment trigger and recoverable amounts
Note
2
4
4
5
6
9
10
14
20
24
26(d)(viii)
26(d)(viii)
The chief operating decision makers monitor the performance of the business in a manner consistent with that of the financial report. Refer to the
Consolidated Statement of Comprehensive Income for the segment financial performance and the Consolidated Statement of Financial Position for the
total assets and liabilities.
OPERATING ASSETS AND LIABILITIES
2. EQUITY ACCOUNTED INVESTMENTS
Investments in joint ventures
Investments in associates
Total equity accounted investments
Note
(i)
(ii)
31 Dec 21
$'000
31 Dec 20
$'000
14,633
10,001
24,634
16,010
10,001
26,011
32
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
(a) Details of equity accounted investments
Name
Principal activity
Ownership interest
31 Dec 21
%
31 Dec 20
%
31 Dec 21
$'000
31 Dec 20
$'000
(i) Joint ventures
Lendlease GPT (Rouse Hill) Pty Limited (1)
Total investment in joint ventures
(ii) Associates
DPT Operator No. 1 Pty Limited
DPT Operator No. 2 Pty Limited
GPT Funds Management Limited
Total investment in associates
Property development
50.00
50.00
Management
Management
Funds management
91.67
91.67
100.00
91.67
91.67
100.00
14,633
14,633
16,010
16,010
—
1
—
1
10,000
10,001
10,000
10,001
(1)
The entity has a 30 June balance date. The Consolidated Entity has a 50 per cent interest in Lendlease GPT (Rouse Hill) Pty Limited, a joint venture developing
residential and commercial land at Rouse Hill, in partnership with Landcom and the NSW Department of Planning. The Consolidated Entity’s interest is held through a
subsidiary that is 52 per cent owned by the Consolidated Entity and 48 per cent owned by the Trust.
(b) Summarised financial information for joint ventures and associates
The information disclosed reflects the amounts presented in the financial results of the relevant joint ventures and associates and not the Consolidated
Entity’s share of those amounts. They have been amended to reflect adjustments made by the entity when using the equity method, including fair value
adjustments and modifications for differences in accounting policy.
Cash and cash equivalents(1)
Other assets
Property investments and loans
Total assets
Liabilities
Total liabilities
Net assets
Consolidated entity's share of net assets
Additional ownership costs
Total equity accounted investment
(1) Dec 2021: $10,000,000 relates to the investment in associates (Dec 2020: $10,000,000).
(c) Share of after tax profit of equity accounted investments
Revenue
Expenses
Profit before income tax expense
Income tax expense
Profit after income tax expense
Share of after tax profit of joint ventures and associates
Additional ownership costs
Share of after tax profit of equity accounted investments
31 Dec 21
$'000
31 Dec 20
$'000
25,103
22
16,917
42,042
3,468
3,468
38,574
24,288
346
24,634
21,342
18
25,023
46,383
4,887
4,887
41,496
25,748
263
26,011
31 Dec 21
31 Dec 20
$'000
$'000
6,968
(4,552)
2,416
(611)
1,805
903
—
903
23,303
(9,600)
13,703
(4,151)
9,552
4,776
(296)
4,480
33
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
(d) Reconciliation of the carrying amount of investments in joint ventures and associates
Opening balance at the beginning of the year
Share of after tax profit of joint ventures and associates
Distributions paid
Closing balance at the end of the year
Additional ownership costs
Carrying amount of equity accounted investments
3. TRADE RECEIVABLES
Trade receivables(1)
Less: impairment of trade receivables
Accrued income
Related party receivables(2)
Trade receivables
31 Dec 21
$'000
31 Dec 20
$'000
26,011
903
(2,364)
24,550
84
24,634
21,367
4,776
—
26,143
(132)
26,011
31 Dec 21
$'000
31 Dec 20
$'000
27,440
—
27,440
306
24,272
52,018
26,909
(219)
26,690
529
19,097
46,316
(1) The trade receivables balance includes amounts receivable from GWOF and GWSCF. See note 21 for more details on related party transactions.
(2) The related party receivables are from the Trust and have been agreed on commercial terms and conditions.
The table below shows the ageing analysis of the Consolidated Entity’s receivables.
31 Dec 21
31 Dec 20
Less
than 30
days
$'000
50,535
—
50,535
31-60
days
$'000
821
—
821
61-90
days
$'000
250
—
250
90+
days
$'000
Total
$'000
Less
than 30
days
$'000
412
—
412
52,018
45,094
—
—
52,018
45,094
31-60
days
$'000
630
—
630
61-90
days
$'000
175
—
175
90+
days
$'000
636
(219)
417
Total
$'000
46,535
(219)
46,316
Trade receivables
Impairment of trade receivables
Total trade receivables
Loans and receivables are initially recognised at fair value and subsequently at amortised cost using the effective interest rate method less any
allowance under the ‘expected credit loss’ (ECL) model. The Consolidated Entity holds these financial assets in order to collect the contractual cash
flows and the contractual terms are solely payments of outstanding principal and interest on the principal amount outstanding.
All loans and receivables with maturities greater than 12 months after the balance date are classified as non-current assets.
Recoverability of loans and receivables
At each reporting date, the Consolidated Entity assesses whether financial assets carried at amortised cost are ‘credit-impaired’. A financial asset is
‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset is expected to occur.
The Consolidated Entity recognises loss allowances at an amount equal to lifetime ECL on trade and other receivables. Loss allowances for financial
assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of the trade receivable and are a probability-weighted
estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the
entity in accordance with the contract and the cash flows that the Consolidated Entity expects to receive).
The Consolidated Entity analyses the age of outstanding receivable balances and applies historical default percentages adjusted for other current
observable data as a means to estimate lifetime ECL. Other current observable data may include:
•
•
forecasts of economic conditions such as unemployment, interest rates, gross domestic product and inflation; and
financial difficulties of a counterparty or probability that a counterparty will enter bankruptcy.
.
Debts that are known to be uncollectible are written off when identified.
34
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
4. INTANGIBLE ASSETS
Cost
At 1 January 2020
Additions
Transfers
Write-off
At 31 December 2020
Additions
Write-off
At 31 December 2021
Accumulated amortisation and impairment
At 1 January 2020
Amortisation
Impairment
Write-off
At 31 December 2020
Amortisation
Impairment
Write-off
At 31 December 2021
Carrying amounts
At 31 December 2020
At 31 December 2021
Management
rights
$'000
IT development
and software(1)
$'000
55,825
—
—
(3,783)
52,042
—
—
52,042
(45,606)
(34)
—
3,783
(41,857)
—
(10,185)
—
(52,042)
10,185
—
53,820
8,672
(17)
(8,252)
54,223
4,357
(12,268)
46,312
(45,253)
(2,566)
(102)
8,252
(39,669)
(2,154)
(3,728)
12,268
(33,283)
14,554
13,029
Total
$'000
109,645
8,672
(17)
(12,035)
106,265
4,357
(12,268)
98,354
(90,859)
(2,600)
(102)
12,035
(81,526)
(2,154)
(13,913)
12,268
(85,325)
24,739
13,029
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
Management Rights
Management rights include property management and development management rights. Rights are initially measured at cost and rights with a definite
life are subsequently amortised over their useful life.
For the management rights of Highpoint Shopping Centre, management considers the useful life as indefinite as there is no fixed term included in the
management agreement. Therefore, the Consolidated Entity tests for impairment at balance date. Assets are impaired if the carrying value exceeds their
recoverable amount. The recoverable amount is determined using a discounted cashflow. A 13 per cent pre-tax discount rate and 2.98 per cent growth
rate have been applied to these asset specific cash flow projections.
During the full year management tested all inputs in the fair value assessment of the management rights and have adjusted these inputs where they
have been impacted by the COVID-19 pandemic. Based on this assessment management has identified that the carrying value is zero at year end and
as such the asset has been fully impaired.
IT development and software
Costs incurred in developing systems and acquiring software and licenses that will contribute future financial benefits and which the Consolidated Entity
controls (therefore excluding Software as a Service) are capitalised until the software is capable of operating in the manner intended by management.
These include external direct costs of materials and services and direct payroll and payroll related costs of employees’ time spent on the project.
Amortisation is calculated on a straight-line basis over the length of time that benefits are expected to be received, generally ranging from 3 to 10 years.
IT development and software are assessed for impairment at each reporting date by evaluating if any impairment triggers exist. Where impairment
indicators exist, management calculates the recoverable amount. The asset is impaired if the carrying value exceeds the recoverable amount. Critical
judgements are made by management in setting appropriate impairment indicators and assumptions used to determine the recoverable amount.
Impairment is also recognised where management intends to transition software from an on premises solution to a Software as a Service (SaaS)
solution in accordance with the IFRIC agenda decision.
Management have reviewed the impairment indicators for the year and have recorded an impairment where appropriate. Management believe the
carrying value reflects the recoverable amount.
35
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
5. INVENTORIES
Properties held for sale
Development properties
Current inventories
Development properties
Non-current inventories
Total inventories
31 Dec 21
$'000
31 Dec 20
$'000
8,400
6,165
14,565
94,115
94,115
108,680
—
61,412
61,412
64,078
64,078
125,490
Properties held as inventory to be sold are stated at the lower of cost and net realisable value (NRV).
Cost
Cost includes the cost of acquisition and any subsequent capital additions. For development properties, cost also includes development, finance costs
and all other costs directly related to specific projects including an allocation of direct overhead expenses. Post completion of the development, finance
costs and other holding charges are expensed as incurred. When inventories are sold, the carrying amount of those inventories is recognised as an
expense in the period in which the related revenue is recognised . For wholly owned, internally managed developments, this expense is determined on a
forward looking, revenue proportional basis.
NRV
The NRV is the estimated selling price in the ordinary course of business less estimated costs to sell. At each reporting date, management reviews
these estimates by taking into consideration:
the most reliable evidence; and
•
•
any events which confirm conditions existing at the period end and cause any fluctuations of selling price and costs to sell.
The amount of any inventory write down is recognised as an impairment expense in the Consolidated Statement of Comprehensive Income.
The Consolidated Entity completed NRV assessments for each inventory asset for the full year and has compared the results to the cost of each asset.
As a result impairment expense of $123,000 was reversed during the period in relation to 121 Foundation Road, Truganina.
On 29 November 2021, the Consolidated Entity acquired three assets from the Ascot property portfolio. On the date of acquisition, the cost of the three
assets was greater than the valuation performed by an independent third party. As a result, an impairment expense of $319,000 has been recognised.
The assets are expected to be sold in the next 12 months and are therefore classified as properties held for sale.
23,448 sqm of the Rouse Hill development site was compulsorily acquired by NSW Health on 16 July 2021. The Consolidated Entity has recorded the
disposal at the most recent offer price of $19.9 million as a current receivable. The final sale price to be received is yet to be determined.
6. PROPERTY, PLANT AND EQUIPMENT
Computers
At cost
Less: accumulated depreciation
Total computers
Office fixtures and fittings
At cost
Less: accumulated depreciation
Less: impairment
Total office fixtures and fittings
Total property, plant and equipment
31 Dec 21
$'000
31 Dec 20
$'000
21,527
(16,151)
5,376
15,971
(11,858)
(335)
3,778
9,154
19,541
(14,539)
5,002
16,563
(10,960)
—
5,603
10,605
Reconciliations of the carrying amount of property, plant and equipment at the beginning and end of the financial period are set out below:
36
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
At 1 January 2020
Opening carrying value
Additions
Disposals
Transfers
Depreciation
At 31 December 2020
At 1 January 2021
Opening carrying value
Additions
Disposals
Transfers
Depreciation
Impairment
At 31 December 2021
Computers
$'000
2,443
3,547
(26)
7
(969)
5,002
5,002
1,492
(57)
551
(1,612)
—
5,376
Office
fixtures
& fittings
$'000
8,049
172
—
10
(2,628)
5,603
5,603
93
(134)
(551)
(898)
(335)
3,778
Total
$'000
10,492
3,719
(26)
17
(3,597)
10,605
10,605
1,585
(191)
—
(2,510)
(335)
9,154
The value of property, plant and equipment is measured as the cost of the asset less depreciation and impairment. The cost of the asset includes
acquisition costs and any costs directly attributable to bring the asset to the location and condition necessary for it to be capable of operating in the
manner intended by management. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Consolidated Entity and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to the Consolidated Statement of Comprehensive Income during the financial period in
which they are incurred.
Depreciation
Items of property, plant and equipment are depreciated on a straight-line basis over their useful lives. The estimated useful life is between 3 and 40
years.
Impairment
The Consolidated Entity tests property, plant and equipment for impairment where there is an indicator that the asset may be impaired. An asset’s
carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
The Consolidated Entity has assessed the property plant and equipment for impairment indicators and as a result impairment expense of $335,000 was
recognised.
Disposals
Gains and losses on disposals are determined by comparing proceeds from disposals with the carrying amount of the property, plant and equipment and
are included in the Consolidated Statement of Comprehensive Income in the year of disposal.
7. OTHER ASSETS
Lease incentive assets
Other assets
Total other assets
8. PAYABLES
Trade payables
Accruals
Other payables
Total payables
31 Dec 21
$'000
31 Dec 20
$'000
307
4,760
5,067
364
4,329
4,693
31 Dec 21
$'000
31 Dec 20
$'000
1,232
25,642
2,463
29,337
2,089
9,983
3,035
15,107
Trade payables and accruals represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year which
are unpaid. They are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.
37
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
9. PROVISIONS
Current provisions
Employee benefits
Other
Total current provisions
Non-current provisions
Employee benefits
Other
Total non-current provisions
Total provisions
At 1 January 2020
Arising during the year
Utilised during the year
At 31 December 2020
At 1 January 2021
Arising during the year
Utilised during the year
At 31 December 2021
31 Dec 21
$'000
31 Dec 20
$'000
17,079
2,562
19,641
4,420
1,849
6,269
25,910
Other
$'000
5,162
831
(1,836)
4,157
4,157
853
(599)
4,411
15,206
2,373
17,579
1,466
1,784
3,250
20,829
Total
$'000
41,344
9,855
(30,370)
20,829
20,829
10,335
(5,254)
25,910
Employee
benefits
$'000
36,182
9,024
(28,534)
16,672
16,672
9,482
(4,655)
21,499
Provisions are recognised when:
•
•
•
the Consolidated Entity has a present obligation (legal or constructive) as a result of a past event;
it is probable that resources will be expended to settle the obligation; and
a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the obligation.
Provision for employee benefits
The provision for employee benefits represents annual leave, long service leave and parental leave entitlements accrued for employees. The employee
benefit liability expected to be settled within twelve months after the end of the reporting period is recognised in current liabilities. The non-current
provision relates to entitlements, including long service leave, which are due to be payable after more than twelve months from the reporting date. It is
measured as the present value of expected future payments for the service provided by employees up to the reporting date. Consideration is given to
expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using
market yields at balance date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible to the estimated
future cash outflows. Employee benefit on-costs are recognised together with the employee benefits and included in employee benefit liabilities.
38
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
10. TAXATION
(a) Income tax (credit)/expense
Current income tax expense
Deferred income tax (credit)/expense
Income tax (credit)/expense in the Consolidated Statement of Comprehensive Income
Income tax (credit)/expense attributable to:
Profit from continuing operations
Aggregate income tax (credit)/expense
(b) Reconciliation of income tax (credit)/expense to prima facie tax payable
31 Dec 21
$'000
31 Dec 20
$'000
10,394
(10,843)
(449)
(449)
(449)
2,864
7,210
10,074
10,074
10,074
Profit/(loss) from continuing operations before income tax expense
Profit/(loss) which is subject to taxation at 30% tax rate
Tax effect of amounts not deductible/assessable in calculating income tax expense:
(Non-assessable)/non-deductible revaluation items
Equity accounted profits from joint ventures
(Loss)/profit used to calculate effective tax rate
Other non-deductible items
Income tax (credit)/expense
Effective tax rate
(c) Current tax (liability)/asset
Opening balance at the beginning of the year
Income tax credit/(expense)
Tax payments to the tax authorities
Other deferred tax asset charged to income
Movements in employee benefits
Movement in provisions and accruals
Movement in reserves
Closing balance at the end of the year
31 Dec 21
Gross
$'000
22,054
22,054
31 Dec 21
Tax effect
$'000
31 Dec 20
Gross
$'000
31 Dec 20
Tax effect
$'000
6,616
6,616
(57,299)
(57,299)
(17,189)
(17,189)
(22,876)
(6,862)
(903)
(1,725)
228
(1,497)
(271)
(517)
68
(449)
26 %
94,497
(4,480)
32,718
860
33,578
28,349
(1,344)
9,816
258
10,074
31 %
31 Dec 21
$'000
31 Dec 20
$'000
(2,000)
449
6,311
(5,386)
(5,629)
(1)
173
(6,083)
2,163
(10,074)
(1,299)
(1,700)
10,557
76
(1,723)
(2,000)
39
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
(d) Deferred tax asset
Employee benefits
Provisions and accruals
Right-of-use assets
Lease liabilities
Other
Net deferred tax asset
Movement in temporary differences during the year
Opening balance at the beginning of the year
Income tax credit/(expense)
Movement in reserves
Closing balance at the end of the year
31 Dec 21
$'000
31 Dec 20
$'000
10,628
1,939
(13,286)
17,866
9,478
26,625
15,609
10,843
173
26,625
4,999
1,938
(13,401)
16,601
5,472
15,609
24,542
(7,210)
(1,723)
15,609
Adoption of Voluntary Tax Transparency Code
The Board of Taxation has released a voluntary Tax Transparency Code (TTC). The TTC sets out a recommended set of principles and minimum
standards regarding the disclosure of tax information for businesses. The Consolidated Entity is committed to the TTC. The non-IFRS income tax
disclosures above and in note 10(b) include the recommended additional disclosures.
The Australian Accounting Standards Board have issued a Draft Appendix to the TTC outlining the method to calculate the effective tax rate as shown in
the table above, using:
•
•
accounting profit before tax adjusted to exclude transactions which are not reflected in the calculation of income tax expense; and
tax expense adjusted to exclude carry forward tax losses that have been recognised and prior year under/overstatements.
Income tax expense
Income tax expense for the financial year is the tax payable on the current year’s taxable income. This is adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences.
Deferred income tax liabilities and assets – recognition
Deferred income tax liabilities are recognised for all taxable temporary differences.
Deferred income tax assets are recognised for all deductible temporary differences, carried forward unused tax assets and unused tax losses, to the
extent it is probable that taxable profit will be available to utilise them. The carrying amount of deferred income tax assets is reviewed and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available.
Deferred income tax assets and liabilities – measurement
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is
settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.
Deferred income tax is provided on temporary differences at the reporting date between accounting carrying amounts and the tax cost bases of assets
and liabilities, other than for the following where taxable temporary differences relate to investments in subsidiaries, associates and interests in joint
ventures:
–
Deferred tax liabilities are not recognised if the timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred tax assets are not recognised if it is not probable that the temporary differences will reverse in the foreseeable future and taxable
profit will not be available to utilise the temporary differences.
–
Tax relating to equity items
Income taxes relating to items recognised directly in equity are recognised in equity and not in the Consolidated Statement of Comprehensive Income.
40
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
CAPITAL STRUCTURE
11. EQUITY AND RESERVES
(a)
Contributed equity
Ordinary stapled securities
Opening securities on issue at 1 January 2020
Closing securities on issue at 31 December 2020
Opening securities on issue at 1 January 2021
On-market share buy-back1
Closing securities on issue at 31 December 2021
Number
$'000
1,947,929,316
1,947,929,316
1,947,929,316
(32,351,886)
1,915,577,430
331,974
331,974
331,974
(132)
331,842
(1)
On 15 February 2021, GPT announced an on-market buy-back of GPT securities, with transactions occurring between 3 March 2021 and 1 June 2021 at an average
price of $4.54 per security. The proportion of the proceeds of the share buy back allocated to the Company was based on the relative net asset value between the
Trust and the Company.
Ordinary securities are classified as equity and recognised at the fair value of the consideration received by the Consolidated Entity. Any transaction
costs arising on the issue and buy back of ordinary securities are recognised directly in equity as a reduction, net of tax, of the proceeds received.
(b)
Reserves
Balance at 1 January 2020
Net foreign exchange translation adjustments
Reclassification to accumulated losses
Employee incentive schemes expense, net of tax
Tax on incentives valued at reporting date
Vesting of securities
Balance at 31 December 2020
Balance at 1 January 2021
Net foreign exchange translation adjustments
Reclassification to accumulated losses
Employee incentive schemes expense, net of tax
Tax on incentives valued at reporting date
Vesting of securities
Balance at 31 December 2021
Foreign
currency
translation
reserve
$'000
Employee
incentive
scheme
reserve
$'000
18,168
(17)
—
—
—
—
18,151
18,151
(1)
—
—
—
—
18,150
1,976
—
(31)
1,394
(1,723)
(1,785)
(169)
(169)
—
163
52
173
(134)
85
Total
reserves
$'000
20,144
(17)
(31)
1,394
(1,723)
(1,785)
17,982
17,982
(1)
163
52
173
(134)
18,235
Nature and purpose of reserves
Foreign currency translation reserve
The reserve is used to record exchange differences arising on translation of foreign controlled entities and associated funding of foreign controlled
entities. The movement in the reserve is recognised in the net profit when the investment in the foreign controlled entity is disposed.
Employee incentive scheme reserve
The reserve is used to recognise the fair value of equity-settled security-based payments provided to employees, including key management personnel,
as part of their remuneration. Refer to note 20 for further details of security based payments.
41
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
(c)
Accumulated losses
Balance at 1 January 2020
Net (loss)/profit for the year
Reclassification from employee incentive security scheme
Balance at 31 December 2020
Balance at 1 January 2021
Net profit for the year
Reclassification from employee incentive security scheme
Distributions
Balance at 31 December 2021
Company(1)
$'000
(259,695)
(69,665)
31
(329,329)
Non-
controlling
interest
$'000
(4,891)
2,292
—
(2,599)
Total
$'000
(264,586)
(67,373)
31
(331,928)
(329,329)
(2,599)
(331,928)
22,070
(163)
—
(307,422)
433
—
(1,136)
(3,302)
22,503
(163)
(1,136)
(310,724)
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
12. EARNINGS PER SHARE
(a) Basic and diluted earnings per share
Total basic and diluted earnings/(loss) per share
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
(b)
The profit/(loss) used in the calculation of the basic and diluted earnings per share is as follows:
Profit/(loss) reconciliation - basic and diluted
Profit/(loss) from continuing operations
Profit attributed to external non-controlling interest
31 Dec 21
Cents
1.15
31 Dec 21
$'000
22,070
433
22,503
31 Dec 20
Restated(1)
Cents
(3.58)
31 Dec 20
Restated(1)
$'000
(69,665)
2,292
(67,373)
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
(c) WANOS
The earnings and weighted average number of ordinary shares (WANOS) used in the calculations of basic and diluted earnings per ordinary share are
as follows:
WANOS used as denominator in calculating basic earnings per ordinary share
Performance security rights (weighted average basis)(1)
WANOS used as denominator in calculating diluted earnings per ordinary share
31 Dec 21
Number of
shares
‘000s
31 Dec 20
Number of
shares
‘000s
1,924,332
1,947,929
677
3
1,925,009
1,947,932
(1)
Performance security rights granted under the Long Term Incentive plan are only included in dilutive earnings per ordinary share where the performance hurdles are
met as at the year end.
Calculation of earnings per share
Basic earnings per share is calculated as net profit or loss attributable to ordinary shareholders of the Company, divided by the WANOS outstanding
during the financial year which is adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share is calculated as net profit or loss attributable to ordinary shareholders of the Company divided by the WANOS and dilutive
potential ordinary securities. Where there is no difference between basic earnings per share and diluted earnings per share, the term basic and diluted
earnings per ordinary share is used.
13. DIVIDENDS PAID AND PAYABLE
No dividends have been paid or declared for the 2021 financial year (2020: nil).
42
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
14. BORROWINGS
Current borrowings at amortised cost - secured
Current borrowings
Non-current borrowings from joint ventures at amortised cost
Non-current related party borrowings from GPT Trust at amortised cost
Non-current related party borrowings from GPT Trust at fair value
Non-current borrowings
Total borrowings
31 Dec 21
31 Dec 20
Carrying
amount(1)
$'000
2,370
2,370
6,636
100,862
36,869
144,367
146,737
Fair
value(2)
$'000
2,373
2,373
6,636
100,862
36,869
144,367
146,740
Carrying
amount(1)
$'000
5,005
5,005
9,000
113,656
70,267
192,923
197,928
Fair
value(2)
$'000
5,010
5,010
9,000
113,656
70,267
192,923
197,933
(1)
(2)
Including unamortised establishment costs.
For the majority of borrowings, the carrying amount approximates its fair value. The fair value of fixed rate interest-bearing borrowings is estimated by discounting the
future contractual cash flows at the current market interest rate curve. Excluding unamortised establishment costs.
The related party borrowings from GPT Trust at fair value are subject to limited recourse based on available funds determined by the repayment fund
calculation in the loan agreement. During the period, management determined the fair value of these borrowings by forecasting a best estimate of future
repayments. The repayments have been discounted at a risk adjusted rate appropriate to the Consolidated Entity to determine the fair value. This has
resulted in a revaluation gain of $33,398,000 being recognised on the face of the Consolidated Statement of Comprehensive Income during the period
as a result of the historical loans with the Trust being valued at $36,869,000 at 31 December 2021 (2020: $70,267,000). Refer to note 24 for further
information on the fair value calculations.
GPT Trust has suspended interest in connection with the above loans from 3 September 2015. The lender has the option to reinstate interest. The loans
are accounted for as non-revolving interest free borrowings that are revalued each reporting date in accordance with accounting standards.
Borrowings other than interest free loans are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
rate method. Under this method, any transaction fees, costs, discounts and premiums directly related to the borrowings are recognised in the
Consolidated Statement of Comprehensive Income over the expected life of the borrowings.
All borrowings with maturities greater than 12 months after reporting date are classified as non-current liabilities.
When the terms of a financial liability are modified, AASB 9 requires an entity to perform an assessment to determine whether the modified terms are
substantially different from the existing financial liability. Where a modification is substantial, it will be accounted for as an extinguishment of the original
financial liability and a recognition of a new financial liability. Where the modification does not result in extinguishment, the difference between the
existing carrying amount of the financial liability and the modified cash flows discounted at the original effective interest rate is recognised in the
Consolidated Statement of Comprehensive Income as gain/loss on modification of financial liability. Management has assessed the modification of
terms requirements within AASB 9 and have concluded that these will not have a material impact for the Consolidated Entity for the year ended
31 December 2021.
The maturity profile of borrowings is provided below:
Due within one year
Due between one and five years
Due after five years
Cash and cash equivalents
Less: cash and cash equivalents held for AFSLs
Total financing resources available at the end of the year
(1)
Excludes unamortised establishment costs and fair value adjustments.
Total
facility(1)
$'000
2,723
148,590
410,918
562,231
Used
facility(1)
$'000
2,373
106,257
397,159
505,789
Unused
facility
$'000
350
42,333
13,759
56,442
16,590
(10,150)
62,882
Cash and cash equivalents includes cash on hand, cash at bank and short term money market deposits.
The borrowings set out in the maturity tables above includes the full outstanding balance of the loans that have been revalued on the face of the
Consolidated Statement of Financial Position.
43
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
15. FINANCIAL RISK MANAGEMENT
The Board approves the Consolidated Entity’s treasury policy which:
•
•
•
establishes a framework for the management of risks inherent to the capital structure;
defines the role of the Consolidated Entity’s treasury; and
sets out the policies, limits, monitoring and reporting requirements for cash, borrowings, liquidity, credit risk, foreign exchange and interest rate
instruments.
(a) Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The
Consolidated Entity’s primary interest rate risk arises from interest bearing borrowings. The table below provides a summary of the Consolidated Entity’s
gross interest rate risk exposure on interest bearing borrowings together with the net effect of interest rate risk management transactions. This excludes
unamortised establishment costs.
Floating rate interest-bearing borrowings
Gross exposure
Net exposure
31 Dec 21
31 Dec 20
31 Dec 21
31 Dec 20
$'000
$'000
$'000
$'000
103,235
103,235
118,661
118,661
103,235
103,235
118,661
118,661
The impact on interest expense and interest revenue of a 0.25 per cent increase or decrease in market interest rates is shown below.
A 0.25 per cent increase or decrease is used for consistency of reporting interest rate risk across the Consolidated Entity and represents management's
assessment of the potential change in interest rates.
Impact on Consolidated Statement of Comprehensive Income
Impact on interest revenue increase/(decrease)
Impact on interest expense (increase)/decrease
31 Dec 21
(+0.25%)
$'000
31 Dec 21
(-0.25%)
$'000
31 Dec 20
(+0.25%)
$'000
31 Dec 20
(-0.25%)
$'000
41
(258)
(217)
(41)
258
217
57
(297)
(240)
(57)
297
240
(b) Liquidity risk
Liquidity risk is the risk that the Consolidated Entity, as a result of its operations:
•
•
•
will not have sufficient funds to settle a transaction on the due date;
will be forced to sell financial assets at a value which is less than what they are worth; or
may be unable to settle or recover a financial asset at all.
The Consolidated Entity manages liquidity risk by maintaining:
•
•
•
•
sufficient cash;
an adequate amount of committed credit facilities;
a minimum liquidity buffer in cash and surplus committed facilities for the forward rolling twelve month period; and
the ability to close out market positions.
The table below shows an analysis of the undiscounted contractual maturities of liabilities which forms part of the Consolidated Entity’s assessment of
liquidity risk.
1 year
or less
$'000
29,337
10,353
2,373
2,490
44,553
6,440
38,113
Over 1
year to
2 years
$'000
31 Dec 21
Over 2
years to
5 years
$'000
Over 5
years
Total
$'000
$'000
—
10,888
—
2,693
13,581
—
13,581
—
26,266
106,257
4,641
137,164
—
137,164
—
10,952
397,159
99
408,210
—
408,210
29,337
58,459
505,789
9,923
603,508
6,440
597,068
Liabilities
Non-derivatives
Payables
Lease liability
Borrowings(1)
Projected interest cost from borrowings
Total liabilities
Less cash and cash equivalents net of cash held for
AFSLs
Total liquidity exposure
(1) Excluding unamortised establishment costs and fair value adjustments.
44
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
Liabilities
Non-derivatives
Payables
Lease liability
Borrowings(1)
Projected interest cost from borrowings
Total liabilities
Less cash and cash equivalents net of cash held for
AFSLs
Total liquidity exposure
1 year
or less
$'000
15,107
8,761
5,010
2,967
31,845
12,968
18,877
Over 1
year to
2 years
$'000
—
9,493
—
3,341
12,834
—
12,834
31 Dec 20
Over 2
years to
5 years
$'000
—
28,877
69,519
7,761
106,157
—
106,157
Over 5
years
Total
$'000
$'000
—
8,206
449,055
122
457,383
—
457,383
15,107
55,337
523,584
14,191
608,219
12,968
595,251
(1) Excluding unamortised establishment costs and fair value adjustments.
(c) Refinancing risk
Refinancing risk is the risk that credit is unavailable or available at unfavourable interest rates and credit market conditions result in an unacceptable
increase in the Consolidated Entity’s interest cost. Refinancing risk arises when the Consolidated Entity is required to obtain debt to fund existing and
new debt positions. The Consolidated Entity manages this risk by spreading sources, counterparties and maturities of borrowings in order to minimise
debt concentration risk, allow averaging of credit margins over time and reducing refinance amounts.
As at 31 December 2021, the Consolidated Entity’s exposure to refinancing risk can be monitored by the spreading of its contractual maturities on
borrowings in the liquidity risk table above or with the information in note 14.
(d) Foreign exchange risk
Foreign exchange risk refers to the risk that the value of a financial commitment, asset or liability will fluctuate due to changes in foreign exchange rates.
The Consolidated Entity’s foreign exchange risk arises primarily from:
•
•
firm commitments of highly probable forecast transactions for receipts and payments settled in foreign currencies or with prices dependent on
foreign currencies; and
investments in foreign assets.
Sensitivity to foreign exchange is deemed insignificant.
(e) Credit risk
Credit risk is the risk that a contracting entity will not complete its obligations under a contractual agreement, resulting in a financial loss to the
Consolidated Entity. The Consolidated Entity has exposure to credit risk on all financial assets included in the Consolidated Statement of Financial
Position.
The Consolidated Entity manages this risk by:
•
•
•
•
•
establishing credit limits for financial institutions and monitoring credit exposures for customers to ensure that the Consolidated Entity only
trades and invests with approved counterparties;
providing loans to joint ventures, associates and third parties, only where the Consolidated Entity is comfortable with the underlying property
exposure within that entity;
regularly monitoring loans and receivables balances;
regularly monitoring the performance of its associates, joint ventures and third parties; and
obtaining collateral as security (where appropriate).
Receivables are reviewed regularly throughout the year.
The maximum exposure to credit risk as at 31 December 2021 is the carrying amounts of financial assets recognised on the Consolidated Statement of
Financial Position. For more information, refer to note 3.
45
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
OTHER DISCLOSURE ITEMS
16. CASH FLOW INFORMATION
(a) Cash flows from operating activities
Reconciliation of net profit/(loss) after income tax to net cash inflows from operating activities:
Net profit/(loss) for the year
Share of after tax (profit) of equity accounted investments (net of distributions)
Impairment expense
Non-cash employee benefits - security based payments
Fair value movement of investment in Trust
Interest capitalised
Amortisation of rental abatement
Depreciation expense
Depreciation of right-of-use assets
Amortisation expense
Non-cash finance costs
Revaluation of financial arrangements
Profit on sale of inventory
Payments for inventories
Proceeds from inventories
(Increase)/decrease in operating assets
Increase/(decrease) in operating liabilities
Other
Net cash inflows from operating activities
31 Dec 21
$'000
22,503
(903)
18,302
4,727
—
(1,554)
89
2,510
10,223
2,154
4,690
(33,396)
15,930
(13,448)
14,864
(31,498)
13,157
12
28,362
31 Dec 20
Restated(1)
$'000
(67,373)
(4,480)
4,609
(3,426)
230
(1,802)
199
3,597
9,448
2,600
5,039
94,267
(206)
(7,866)
1,196
12,761
(40,036)
(1,244)
7,513
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
(b) Net debt reconciliation
Reconciliation of net debt movements during the year:
At 1 January 2020
Cash inflows/(outflows)
Other non-cash movements
At 31 December 2020
At 1 January 2021
Cash inflows/(outflows)
Other non-cash movements
At 31 December 2021
Lease liability
$'000
Borrowings(1)
$'000
Less: cash
$'000
Net Debt
$'000
63,384
(8,037)
(10)
55,337
55,337
(9,368)
12,490
58,459
85,529
39,162
73,237
197,928
197,928
(19,284)
(31,907)
146,737
21,677
1,291
—
22,968
22,968
(6,378)
—
16,590
127,236
29,834
73,227
230,297
230,297
(22,274)
(19,417)
188,606
(1)
There were no repayments of unsecured borrowings provided by the Trust at fair value (2020: Repayments of $24,000,000)
17. COMMITMENTS
(a) Capital expenditure commitments
Capital expenditure commitments at 31 December 2021 were $3,256,000 (2020: $1,073,000).
Commitments arise from the purchase of plant and equipment and intangibles, which have been contracted for at balance date but not recognised on
the Consolidated Statement of Financial Position.
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
46
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
(b) Commitments relating to equity accounted investments
Capital expenditure commitments
Total joint venture and associates commitments
31 Dec 21
$'000
61
61
31 Dec 20
$'000
32
32
The capital expenditure commitments in the Consolidated Entity’s equity accounted investments at 31 December 2021 relate to Lendlease GPT (Rouse
Hill) Pty Limited (2020: Lendlease GPT (Rouse Hill) Pty Limited).
18. LEASE PAYMENTS TO BE RECEIVED
Lease amounts to be received not recognised in the financial statements at balance date are as follows:
Less than 1 year
2 years
3 years
4 years
5 years
Due after 5 years
Total lease payments to be received
19. CONTINGENT LIABILITIES
31 Dec 21
31 Dec 20
$'000
2,039
688
451
464
478
1,959
6,079
$'000
1,538
1,614
251
—
—
—
3,403
A contingent liability is a liability that is not sufficiently certain to qualify for recognition as a provision where uncertainty may exist regarding the outcome
of future events.
The Company has provided guarantees over GPT RE Limited as responsible entity of the Trust’s obligations under various financing arrangements
(including bank facilities, US Private Placement issuances, medium term notes and commercial paper program) and derivative obligations. As at
31 December 2021, the maximum value of these obligations assuming all the loans are fully drawn is A$5.4 billion, with the latest maturity covered by
these guarantees in December 2035.
Apart from the matter referred to above, there are no other material contingent liabilities at reporting date.
20. SECURITY BASED PAYMENTS
GPT currently has four employee security schemes – the General Employee Security Ownership Plan (GESOP), the Broad Based Employee Security
Ownership Plan (BBESOP), the Deferred Short Term Incentive Plan (DSTI) and the Long Term Incentive (LTI) Scheme.
(a) GESOP
The Board believes in creating ways for employees to build an ownership stake in the business. As a result, the Board introduced the GESOP in March
2010 for individuals who do not participate in the LTI.
Under the plan individuals who participate receive an additional benefit equivalent to 10 per cent of their short term incentives (STIC) which is (after the
deduction of income tax) invested in GPT securities to be held for a minimum of one year. The cost of this benefit is recognised as an expense during
the year.
(b) BBESOP
Under the plan individuals who are not eligible to participate in any other employee security scheme may receive $1,000 worth of GPT securities or
$1,000 cash if GPT achieves at least target level performance. Securities must be held for the earlier of three years or the end of employment. The cost
of this benefit is recognised as an expense during the year.
(c) DSTI
Since 2014, STIC is delivered to the senior executives as 50 per cent in cash and 50 per cent in GPT stapled securities (a deferred component). The
deferred component is rewarded in restricted securities which vest one year after award, subject to continued employment up to the vesting date.
(d) LTI
At the 2009 Annual General Meeting (AGM), GPT securityholders approved the introduction of a LTI plan based on performance rights.
The LTI plan covers each three year period. Awards under the LTI to eligible participants are in the form of performance rights which convert to GPT
stapled securities for nil consideration if specified performance conditions for the applicable three year period are satisfied. Please refer to the
Remuneration Report for detail on the performance conditions.
The Board determines those executives eligible to participate in the plan and, for each participating executive, grants a number of performance rights
calculated as a percentage of their base salary divided by GPT’s volume weighted average price (VWAP) for the 30-day period immediately prior to the
commencement of the performance period.
47
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
Fair value of performance rights and restricted securities under DSTI and LTI
The fair value of the performance rights is recognised as an employee benefit expense with a corresponding increase in the employee benefits provision
and in the employee security scheme reserve in equity. For 2021, employee benefit expense is $4,727k (2020: ($3,425k)) and employee benefit
provision is $4,720k as at 31 December 2021 ($344k as at 31 December 2020). Fair value is measured at each reporting period, recognised over the
period from the service commencement date to the vesting date of the performance rights. Non-market vesting conditions are included in the calculation
of the number of rights that are expected to be vested. At each reporting date, GPT revises its estimate of the number of performance rights that are
expected to be exercisable and the employee benefit expense recognised each reporting period takes into account the most recent estimate. The
impact of the revision to original estimates, if any, is recognised in the Consolidated Statement of Comprehensive Income with a corresponding
adjustment to employee expense and employee benefits provision.
Management have assessed the number of rights that are expected to vest for the 2019 LTI plan in relation to non-market vesting conditions (Total
Return) as a result of the impacts of the COVID-19 pandemic and determined that no rights are expected to vest. In the period to 31 December 2020
management reassessed the number of rights expected to vest under the 2018 and 2019 plans, resulting in the reversal of prior period amortisation. No
plan was offered in 2020.
Fair value of the performance rights issued under LTI is determined using the Monte Carlo simulation and the Black Scholes methodologies. Fair value
of the restricted securities under DSTI is determined using the security price. The following key inputs are taken into account:
Fair value of rights / restricted securities at valuation date
Security price at valuation date
Out / (under) performance vs Index - plan to date
Expected vesting dates
Distribution yield
Risk free interest rate
Volatility (1)
Correlation
2021 LTI
2021 DSTIC
$3.81
$5.42
3.8%
$5.42
$5.42
N/A
31 December 2023
31 December 2022
4.7%
0.6%
39.5%
83.2%
4.7%
N/A
N/A
N/A
(1)
(2)
The volatility is based on the historic volatility of the security.
For 2021 LTI, the grant date is 21 May 2021 for CEO and 26 April 2021 for other participants. For 2021 DSTIC, the grant date is based on award date which is
expected to be in the first half of 2022.
(e) Summary table of all employee security schemes
Rights outstanding at 1 January 2020
Rights forfeited during 2020
Rights converted to GPT stapled securities during 2020 1
Rights outstanding at 31 December 2020 2
Rights outstanding at 1 January 2021
Rights granted during 2021
Rights forfeited during 2021
Rights converted to GPT stapled securities during 2021 3
Rights outstanding at 31 December 2021
Number of rights
DSTI
LTI and Sign on
Total
1,234,704
(365,633)
(869,071)
—
—
—
—
—
—
7,511,010
(3,578,849)
(1,566,137)
2,366,024
2,366,024
2,690,585
(2,340,846)
(81,549)
2,634,214
8,745,714
(3,944,482)
(2,435,208)
2,366,024
2,366,024
2,690,585
(2,340,846)
(81,549)
2,634,214
(1) Rights under the 2019 DSTI plan were converted to GPT stapled securities on 19 March 2020 and rights under the 2017 LTI Plan were converted
to GPT stapled securities on 13 February 2020.
(2) The 31 December 2020 balance has been restated to exclude rights under the 2018 LTI which were lapsed on 31 December 2020.
(3) Rights under the sign on plans were converted to GPT stapled securities on 31 December 2021.
Number of stapled securities
GESOP
BBESOP
Total
Securities outstanding at 1 January 2020
Securities granted during 2020
Securities vested during 2020
Securities outstanding at 31 December 2020
Securities outstanding at 1 January 2021
Securities vested during 2021
Securities outstanding at 31 December 2021
40,920
53,226
(44,153)
49,993
49,993
(49,993)
—
97,138
46,330
(51,119)
92,349
92,349
(32,773)
59,576
138,058
99,556
(95,272)
142,342
142,342
(82,766)
59,576
48
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
21. RELATED PARTY TRANSACTIONS
GPT Management Holdings Limited is the ultimate parent entity. The Consolidated Entity is stapled to the Trust and the Group financial statements
include the results of the stapled entity as a whole.
Equity interests in joint ventures and associates are set out in note 2. Payables and loans with the Trust are set out in note 8 and note 14 respectively.
All related party transactions have been agreed on commercial terms and conditions.
Key management personnel
Key management personnel compensation was as follows:
Short term employee benefits
Post employment benefits
Long term incentive award accrual
Total key management personnel compensation
Information regarding individual Directors’ and Senior Executives’ remuneration is provided in the Remuneration Report.
There have been no other transactions with key management personnel during the year.
31 Dec 21
31 Dec 20
$
$
6,361,170
164,665
1,086,021
7,611,856
5,270,165
188,460
355,844
5,814,469
49
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
Transactions with related parties
Transactions with General Property Trust (Trust):
Revenue and expenses
Fund management fees from Trust
Property management fees from Trust
Development management fees from Trust
Management costs recharged from Trust
Property rent and outgoings paid to Trust
Interest expense payable to Trust
Receivables
Current receivables
Other non-current asset receivable
Borrowings
Borrowings from Trust - secured
Borrowings from Trust - unsecured
Other transactions
Revaluation of arrangements with Trust
Transactions with employees
31 Dec 21
31 Dec 20
$
$
36,395,018
13,661,284
12,343,466
7,461,065
(1,939,506)
(2,718,430)
21,706,560
12,300,271
14,153,001
6,506,559
(2,061,288)
(2,959,164)
24,227,329
3,126,967
19,097,158
3,100,922
3,003,939
97,858,218
14,325,027
99,331,164
(33,398,000)
94,267,000
Contributions to superannuation funds on behalf of employees
(7,267,296)
(6,643,689)
Transactions with GWOF and GWSCF:
Revenue
Responsible Entity fees
Asset management fees
Development management fees
Directors fees recharged
Management costs recharged
Payroll costs recharged
Expense
Rent expenses
Receivables and payables
Current receivable outstanding
Current fund management fee receivable
Transactions with GQLT:
Revenue
Responsible Entity fees
Development management fees
Receivables and payables
Current receivable outstanding
Current fund management fee receivable
61,440,571
14,318,589
8,527,519
659,320
6,540,157
8,902,539
61,101,769
12,958,674
7,220,995
659,320
6,094,614
8,390,465
(3,974,113)
(4,496,179)
6,905,921
15,564,734
7,845,236
15,016,499
498,657
937,285
118,025
155,354
—
—
—
—
50
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
22. AUDITORS REMUNERATION
Audit services
PricewaterhouseCoopers Australia
Statutory audit and review of financial reports
Total remuneration for audit services
Other assurance services
PricewaterhouseCoopers Australia
Regulatory and contractually required audits
Other assurance services
Total remuneration for other assurance services
Total remuneration for audit and assurance services
Non-audit related services
PricewaterhouseCoopers Australia
Other services
Total remuneration for non-audit related services
Total auditor's remuneration
23. PARENT ENTITY FINANCIAL INFORMATION
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
31 Dec 21
31 Dec 20
$
$
468,244
468,244
318,361
318,361
144,394
111,500
255,894
724,138
—
—
724,138
109,076
100,000
209,076
527,437
18,000
18,000
545,437
Parent entity
31 Dec 21
$'000
31 Dec 20
Restated(1)
$'000
406,461
149,220
555,681
212,545
64,588
277,133
278,548
331,842
2,658
(55,952)
278,548
388,238
178,109
566,347
215,820
82,675
298,495
267,852
331,974
2,567
(66,689)
267,852
Profit/(loss) attributable to members of the parent entity
10,737
(11,306)
Total comprehensive income/(loss) for the year attributable to members of the parent entity
10,737
(11,306)
(1)
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
Capital expenditure commitments
The parent entity has $1,970,000 capital expenditure commitments at 31 December 2021 (2020: $591,000).
The comparatives have been restated to reflect the implementation of an IFRIC agenda decision, refer to note 25 for details.
Parent entity financial information
The financial information for the parent entity of the Consolidated Entity, GPT Management Holdings Limited, has been prepared on the same basis as
the consolidated financial statements, except where set out below.
51
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are accounted for at cost in the financial statements of the parent entity. Distributions received
from subsidiaries, associates and joint ventures are recognised in the parent entity’s profit or loss rather than being deducted from the carrying amount
of these investments.
24. FAIR VALUE DISCLOSURES
Information about how the fair value of financial instruments is calculated and other information required by the accounting standards, including the
valuation process and critical assumptions underlying the valuations are disclosed below.
(a)
Fair value measurement, valuation techniques and inputs
Class of assets /
liabilities
Investment in financial
assets
Interest free loans from
the Trust
Fair value
hierarchy
Level 1
Level 3
Valuation
technique
Market price
Discounted cash
flow
Classification under
AASB 9
Fair value through the
profit and loss
Fair value through the
profit and loss
Inputs used to
measure fair value
Market price
Range of unobservable inputs
31 Dec 21
Not applicable - observable input
31 Dec 20
Discount rate
5.81%
6.13%
The different levels of the fair value hierarchy have been defined as follows:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).
25. CHANGE IN ACCOUNTING POLICY
Implementation costs relating to Software as a Service (SaaS) platforms
In March 2021, the IFRS Interpretations Committee (IFRIC) released an agenda decision relating to the application of IAS 38 Intangible Assets to
Configuration or Customisation Costs in a Cloud Computing Arrangement. Based on the observations made in IFRIC’s agenda decision, the
Consolidated Entity considers costs an organisation incurs in relation to the configuration and customisation of SaaS platforms does not meet the criteria
for recognition as an intangible asset, as the supplier of the software and not the organisation, controls the software. As a result, these costs should be
immediately expensed as incurred.
Under the Consolidated Entity's previous accounting policy, these costs were capitalised and amortised on a straight-line basis over the length of time
the benefits were expected to be received (refer to note 4). The Consolidated Entity has updated its accounting policy to comply with the IFRIC agenda
decision, and applied AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors to reflect this change.
The Consolidated Entity has restated comparative information in the financial statements to reflect this change in accounting policy, and has adjusted
opening balances in the Consolidated Statement of Financial Position as at 1 January 2020.
The notes below disclose the impact of the change in accounting policy in the financial information of the Consolidated Entity at the beginning of the
comparative period, during and at the end of the comparative period. Note 25(c) discloses the impact during and at the end of the current period.
(a) Adjustments as at 1 January 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
Non-current assets
Intangible assets
Deferred tax asset
Total non-current assets
Total assets
Net assets
EQUITY
Accumulated losses
Total equity attributable to Company Members
Total equity
1 Jan 20
Prior year
$'000
Increase /
(decrease)
$'000
1 Jan 20
Restated
$'000
35,344
19,576
263,600
346,720
(16,558)
4,967
(11,591)
(11,591)
18,786
24,543
252,009
335,129
120,295
(11,591)
108,704
(248,104)
104,014
120,295
(11,591)
(11,591)
(11,591)
(259,695)
92,423
108,704
52
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
(b) Adjustments for the period to 31 December 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Extract)
Expenses
Technology expenses
Amortisation
Impairment expense
Total expenses
Loss before income tax
Income tax expense
Net loss for the year
Total comprehensive loss for the half year
Net loss attributable to:
- Members of the Company
Total comprehensive loss attributable to:
- Members of the Company
31 Dec 20
Prior year
$'000
Increase /
(decrease)
$'000
31 Dec 20
Restated
$'000
5,299
5,172
6,786
232,375
(57,138)
10,122
(67,260)
(67,277)
4,910
(2,572)
(2,177)
161
(161)
(48)
(113)
(113)
10,209
2,600
4,609
232,536
(57,299)
10,074
(67,373)
(67,390)
(69,552)
(113)
(69,665)
(69,569)
(113)
(69,682)
Earnings per share attributable to the ordinary equity holders of the Company
Basic and diluted earnings per share (cents per share) from continuing operations
Basic and diluted earnings per share (cents per share) - Total
(3.57)
(3.57)
(0.01)
(0.01)
(3.58)
(3.58)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Extract)
ASSETS
Non-current assets
Intangible assets
Deferred tax asset
Total non-current assets
Total assets
Net assets
EQUITY
Accumulated losses
Total equity attributable to Company Members
Total equity
31 Dec 20
Prior year
$'000
Increase /
(decrease)
$'000
31 Dec 20
Restated
$'000
41,457
10,595
203,289
342,105
(16,718)
5,014
(11,704)
(11,704)
24,739
15,609
191,585
330,401
50,904
(11,704)
39,200
(317,625)
32,331
50,904
(11,704)
(11,704)
(11,704)
(329,329)
20,627
39,200
53
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Extract)
Equity attributable to Company Members
Company accumulated losses
Loss for the year
Total comprehensive income for the year
Company total
Loss for the year
Total comprehensive income for the year
Total equity
Loss for the year
Total comprehensive income for the year
Transactions with Members in their capacity as Members
Company accumulated losses
At 31 December 2020
Company total
At 31 December 2020
Total equity
At 31 December 2020
CONSOLIDATED STATEMENT OF CASHFLOWS
(Extract)
Cash flows from operating activities
Payments in the course of operations (inclusive of GST)
Net cash inflows from operating activities
Cash flows from investing activities
Payments for intangibles
Net cash outflows from investing activities
31 Dec 20
Prior year
$'000
Increase /
(decrease)
$'000
31 Dec 20
Restated
$'000
(69,552)
(69,552)
(69,552)
(69,569)
(67,260)
(67,277)
(113)
(113)
(113)
(113)
(113)
(113)
(69,665)
(69,665)
(69,665)
(69,682)
(67,373)
(67,390)
(317,625)
(11,704)
(329,329)
32,331
(11,704)
50,904
(11,704)
20,627
39,200
31 Dec 20
Prior year
$'000
Increase /
(decrease)
$'000
31 Dec 20
Restated
$'000
(164,404)
12,370
(14,665)
(18,204)
(4,857)
(4,857)
4,857
4,857
(169,261)
7,513
(9,808)
(13,347)
54
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
(c) Adjustments for the period to 31 December 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Extract)
Expenses
Technology expenses
Amortisation
Impairment expense
Total expenses
Profit before income tax
Income tax expense
Net profit for the year
Total comprehensive profit for the year
Net profit attributable to:
- Members of the Company
Total comprehensive income attributable to:
- Members of the Company
31 Dec 21
Original policy
$'000
Increase /
(decrease)
$'000
31 Dec 21
New policy
$'000
6,679
6,613
14,618
196,511
8,256
(4,459)
3,684
7,481
14,935
2,154
18,302
203,992
29,535
(7,481)
22,054
1,795
(2,244)
27,740
27,739
(5,237)
(5,237)
(449)
22,503
22,502
27,307
(5,237)
22,070
27,306
(5,237)
22,069
Earnings per share attributable to the ordinary equity holders of the Company
Basic and diluted earnings per share (cents per share) from continuing operations
Basic and diluted earnings per share (cents per share) - Total
1.42
1.42
(0.27)
(0.27)
1.15
1.15
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Extract)
ASSETS
Non-current assets
Intangible assets
Deferred tax asset
Total non-current assets
Total assets
Net assets
EQUITY
Accumulated losses
Total equity attributable to Company Members
Total equity
31 Dec 21
Original policy
$'000
Increase /
(decrease)
$'000
31 Dec 21
New policy
$'000
37,228
19,366
234,000
343,991
—
77,465
(290,482)
59,595
77,465
(24,199)
7,259
(16,940)
(16,940)
13,029
26,625
217,060
327,051
(16,940)
60,525
(16,940)
(16,940)
(16,940)
(307,422)
42,655
60,525
55
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Extract)
Equity attributable to Company Members
Company accumulated losses
Profit for the year
Total comprehensive income for the year
Company total
Profit for the year
Total comprehensive income for the year
Total equity
Profit for the year
Total comprehensive income for the year
Transactions with Members in their capacity as Members
Company accumulated losses
At 31 December 2021
Company total
At 31 December 2021
Total equity
At 31 December 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
(Extract)
Cash flows from operating activities
Payments in the course of operations (inclusive of GST)
Net cash inflows from operating activities
Cash flows from investing activities
Payments for intangibles
Net cash outflows from investing activities
31 Dec 21
Original policy
$'000
Increase /
(decrease)
$'000
31 Dec 21
New policy
$'000
27,307
27,307
27,307
27,306
27,740
27,739
(5,237)
(5,237)
(5,237)
(5,237)
(5,237)
(5,237)
22,070
22,070
22,070
22,069
22,503
22,502
(290,482)
(16,940)
(307,422)
59,595
(16,940)
77,465
(16,940)
42,655
60,525
31 Dec 21
Original policy
$'000
Increase /
(decrease)
$'000
31 Dec 21
New policy
$'000
(161,861)
36,649
(12,673)
(14,243)
(8,287)
(8,287)
8,287
8,287
(170,148)
28,362
(4,386)
(5,956)
56
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
26. ACCOUNTING POLICIES
(a) Basis of preparation
The general purpose financial report has been prepared:
•
•
•
•
•
in accordance with the requirements of the Company’s constitution, Corporations Act 2001, Australian Accounting Standards (AAS) and other
authoritative pronouncements of the Australian Accounting Standards Board and International Financial Reporting Standards;
on a going concern basis. The Consolidated Entity has prepared an assessment of its ability to continue as a going concern, taking into
account all available information for a period of 12 months from the date of these financial statements. As set out in note 14, the Consolidated
Entity has access to $62,882,000 in cash and undrawn loan facilities and future cashflow assessments have been made, taking into
consideration appropriate probability-weighted factors. The Consolidated Entity is confident in the belief that it will realise its assets and settle
its liabilities and commitments in the normal course of business and for at least the amounts stated in the financial statements. (Refer to
section (b) for further information);
under the historical cost convention, as modified by the revaluation for financial assets and liabilities at fair value through the Consolidated
Statement of Comprehensive Income;
using consistent accounting policies and adjustments to bring into line any dissimilar accounting policies being adopted by the controlled
entities, associates or joint ventures; and
in Australian dollars with all values rounded to the nearest thousand dollars, in accordance with ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191, unless otherwise stated.
Comparatives in the financial statements have been restated to the current year presentation.
The financial report was approved by the Board of Directors on 14 February 2022.
(b) Going Concern
The Consolidated Entity’s financial position is highly dependent on the financial position of GPT given that the Consolidated Entity is funded through
intercompany loans from GPT.
Due to the uncertainty created by the COVID-19 pandemic, GPT has performed additional procedures to assess going concern. GPT believes it is able
to meet its liabilities and commitments as and when they fall due for at least 12 months from the reporting date. In reaching this position, GPT has taken
into account the following factors:
•
•
•
•
•
Available liquidity, through cash and undrawn facilities, of $934.7 million (after allowing for refinancing of $750.0 million of outstanding
commercial paper as at 31 December 2021)
Weighted average debt expiry of 6.3 years, with less than $55.0 million of debt (excluding commercial paper outstanding) due between the
date of this report and 31 December 2022;
Interest rate hedging level of 60 per cent over the next 12 months
Primary covenant gearing of 28.4 per cent, compared to a covenant level of 50.0 per cent, and
Interest cover ratio at 31 December 2021 of 7.5 times, compared to a covenant level of 2.0 times.
(c) Basis of consolidation
Controlled entities
The consolidated financial statements of the Consolidated Entity report the assets, liabilities and results of all controlled entities for the financial year.
Controlled entities are all entities over which the Consolidated Entity has control. The Consolidated Entity controls an entity when the Consolidated
Entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to
direct the activities of the entity.
Controlled entities are consolidated from the date on which control is obtained to the date on which control is disposed. The acquisition of controlled
entities is accounted for using the acquisition method of accounting. All intercompany balances and transactions, income, expenses, profits and losses
resulting from intra-group transactions have been eliminated.
Associates
Associates are entities over which the Consolidated Entity has significant influence but not control, generally accompanying voting or decision making
rights of between 20 per cent and 50 per cent. Management considered if the Consolidated Entity controls its associates and concluded that it does not
based on its level of control over each associate.
Investments in associates are accounted for using the equity method. Under this method, the Consolidated Entity’s investment in associates is carried in
the Consolidated Statement of Financial Position at cost plus post acquisition changes in the Consolidated Entity’s share of net assets. The
Consolidated Entity’s share of the associates’ result is reflected in the Consolidated Statement of Comprehensive Income. Where the Consolidated
Entity’s share of losses in associates equals or exceeds its interest in the associate, including any other unsecured long term receivables, the
Consolidated Entity does not recognise any further losses, unless it has incurred obligations or made payments on behalf of the associate.
Joint arrangements
Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations each
investor has, rather than the legal structure of the joint arrangement. The Consolidated Entity has assessed the nature of its joint arrangements and
determined it has joint ventures only.
Joint ventures
Investments in joint ventures are accounted for in the Consolidated Statement of Financial Position using the equity method which is the same method
adopted for associates.
(d) Other accounting policies
Significant accounting policies that summarise the recognition and measurement basis used and are relevant to an understanding of the financial
statements are provided throughout the notes to the financial statements.
57
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
Other accounting policies include:
(i) Revenue
Revenue from contracts with customers
Revenue is recognised over time if:
•
•
•
the customer simultaneously receives and consumes the benefits as the entity performs;
the customer controls the asset as the entity creates or enhances it; or
the seller’s performance does not create an asset for which the seller has an alternative use and there is a right to payment for performance to
date.
Where the above criteria is not met, revenue is recognised at a point in time.
The following table summarises the revenue recognition policies.
Type of revenue
Description
Fund management fees
Fee income - property
management fees
Fee income - property
management leasing fees -
over time
Fee income - property
management leasing fees -
point in time
Development management
fees
Sale of inventory
The Consolidated Entity provides fund management services to GPT Wholesale Office
Fund (GWOF), GPT Wholesale Shopping Centre Fund (GWSCF) (the Funds) and GPT
QuadReal Logistics Trust (GQLT) in accordance with the Funds constitutions. The
services are utilised on an ongoing basis and revenue is calculated and recognised in
accordance with the relevant contractual arrangements. The fees are invoiced on a
quarterly basis and consideration is payable within 21 days of the quarter end.
The Consolidated Entity provides property management services to the owners of
property assets in accordance with property services agreements. The services are
utilised on an ongoing basis and revenue is calculated and recognised in accordance
with the specific agreement. The fees are invoiced monthly with variable payment terms
depending on the individual agreements. Should an adjustment, as calculated in
accordance with the property services agreement be required, this is recognised in the
Consolidated Statement of Comprehensive Income within the same reporting period.
Under some property management agreements, the Consolidated Entity provides a
lease management service to the owners. These services are delivered on an ongoing
basis and revenue is recognised monthly, calculated in accordance with the property
management agreement. The fees are invoiced monthly with variable payment terms
depending on the individual agreements.
Under some property management agreements, the Consolidated Entity provides
leasing management services to the owners. The revenue is recognised when the
specific service is delivered (e.g. on lease execution) and consideration is due 30 days
from invoice date.
The Consolidated Entity provides development management services to the owners of
property assets in accordance with development management agreements. Revenue is
calculated and recognised in accordance with the specific agreement. The fees are
invoiced on a monthly basis, in arrears, and consideration is due 30 days from invoice
date.
Proceeds from the sale of inventory are recognised by the Consolidated Entity in
accordance with a specific contract entered into with another party for the delivery of
inventory. Revenue is calculated in accordance with the contract. Consideration is
payable in accordance with the contract. Revenue is recognised when control has been
transferred to the buyer.
Recognised
Over time
Over time
Over time
Point in time
Over time/Point in time
Point in time
(ii) Other revenue
Rental revenue is recognised on a straightline basis over the lease term. When the Consolidated Entity provides lease incentives to tenants, any costs
are recognised on a straightline basis over the lease term.
Revenue from dividends and distributions are recognised when they are declared.
Interest income is recognised on an accruals basis using the effective interest method.
(iii) Government grants
In the period to 31 December 2020 the Consolidated Entity had received $8,764,500 under the Federal Government’s JobKeeper program. This was
accounted for as a government grant under AASB 120 Accounting for Government Grants and Disclosure of Government Assistance. The standard
provides the option to present these amounts as income or as a reduction in employee benefits expense. The Consolidated Entity elected to present
these amounts as a reduction in employee benefits expense as this best reflected the underlying substance of the transaction for the Consolidated
Entity. The Consolidated Entity has not received any government grants in the current period.
(iv) Expenses
Property expenses and outgoings which include rates, taxes and other property outgoings, are recognised on an accruals basis.
(v) Finance costs
Finance costs include interest, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection
with the arrangement of borrowings. Finance costs are expensed as incurred unless they relate to a qualifying asset.
A qualifying asset is an asset under development which generally takes a substantial period of time to bring to its intended use or sale. Finance costs
incurred for the acquisition and construction of a qualifying asset are capitalised to the cost of the asset until completion of the asset. Where funds are
borrowed specifically for a development project, finance costs associated with the development facility are capitalised. Where funds are used from group
borrowings, finance costs are capitalised using the relevant capitalisation rate taking into account the Group’s weighted average cost of debt.
58
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
(vi) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the GPT entities are measured using the currency of the primary economic environment in which
they operate (‘the functional 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.
Foreign operations
Non-monetary items that are measured in terms of historical cost are converted using the exchange rate as at the date of the initial transaction. Non-
monetary items 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 of non-monetary items, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss.
Exchange differences arising on monetary items that form part of the net investment in a foreign operation are taken against a foreign currency
translation reserve on consolidation.
Where forward foreign exchange contracts are entered into to cover any anticipated excesses of revenue less expenses within foreign joint ventures,
they are converted at the ruling rates of exchange at the reporting period. The resulting foreign exchange gains and losses are taken to the
Consolidated Statement of Comprehensive Income.
(vii) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST (or equivalent tax in overseas locations) except where the GST incurred on
purchase of goods and services is not recoverable from the tax authority, in which case the GST is recognised as part of the cost of acquisition of the
asset or as part of the expense item as applicable. Receivables and payables are stated inclusive of the amount of GST. The net amount of GST
receivable from, or payable to, the taxation authority is included with other receivables or payables in the Consolidated Statement of Financial Position.
Cash flows are presented on a gross basis in the Consolidated Statement of Cash Flows. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to, the taxation authority are presented as operating cash flows. Commitments and
contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(viii) Leases
Payments associated with short term leases and leases of low value assets are recognised on a straight-line basis as an expense in the Consolidated
Statement of Comprehensive Income. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment
and small items of office furniture.
Lease liabilities are initially measured at the present value of the lease payments discounted using the interest rate implicit in the lease. If that rate
cannot be determined, the Consolidated Entity’s incremental borrowing rate is used. The incremental borrowing rate is calculated by interpolating or
extrapolating secondary market yields on the Group’s domestic medium term notes (MTNs) for a term equivalent to the lease. If there are no MTNs that
mature within a reasonable proximity of the lease term, indicative pricing of where the Group can price a new debt capital market issue for a
comparative term will be used in the calculation.
Lease liabilities are subsequently measured by:
•
•
•
increasing the carrying amount to reflect interest on the lease liabilities;
reducing the carrying amount to reflect the lease payments made; and
remeasuring the carrying amount to reflect any reassessment or lease modifications.
Interest on the lease liabilities and any variable lease payments not included in the measurement of the lease liabilities are recognised in the
Consolidated Statement of Comprehensive Income in the period in which they relate. Interest on lease liabilities included in finance costs in the
Consolidated Statement of Comprehensive Income totalled $1,904,000 for the year (2020: $1,997,000).
There have been no changes to the lease term or incremental borrowing rate used for the measurement of lease liabilities in light of the COVID-19
pandemic.
Right-of-use assets are measured at cost less depreciation and impairment and adjusted for any remeasurement of the lease liability. The cost of the
asset include:
•
•
•
•
the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
restoration costs.
Additions to the right-of-use assets during the year were $13,063,000 (2020: nil).
Right-of-use assets are depreciated on a straight-line basis from the commencement date of the lease to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term.
The Consolidated Entity determines the lease term as the non-cancellable period of a lease together with both:
•
•
the periods covered by an option to extend the lease if it is reasonably certain to exercise that option; and
periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.
Management considers all the facts and circumstances that create an economic incentive to exercise an extension option or not exercise a termination
option. This assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is
within the control of the lessee. Management has considered this assessment and no significant events or changes in circumstances are deemed
necessary.
59
GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
The Consolidated Entity tests right-of-use assets for impairment where there is an indicator that the asset may be impaired. An asset’s carrying amount
is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
The Consolidated Entity has assessed the right-of-use assets for impairment indicators in light of the COVID-19 pandemic and has calculated the
recoverable amount where indicators exist. This has resulted in net impairment expense of $3,801,000 for the year (Dec 2020: $4,225,000).
The Consolidated Entity’s right-of-use assets are all property leases.
(e) New and amended accounting standards and interpretations adopted from 1 January 2021
AAAS 2020-8 Amendments to Australian Accounting Standards - Interest Rate Benchmark Reform Phase 2 AASB 2020-8
Amendments to Australian Accounting Standards - Interest Rate Benchmark Reform Phase 2 amends a number of existing Accounting Standards to
introduce practical expedients in relation to accounting for the modification of financial contracts and/or leases if a change results directly from IBOR
reform. IBOR reform refers to the global reform of interest rate benchmarks, which includes the replacement of some interbank offered rates (IBOR) with
alternative benchmark rates. Amendments also allow a series of exemptions from the regular hedge accounting rules and introduce additional disclosure
requirements.
The Company has no financial instruments that reference an impacted IBOR benchmark rate. Some impacted IBOR benchmark rates are however
utilised as inputs in the hedge accounting valuations and the transition to alternative benchmark rates by June 2023 is being assessed but is not
expected to be material to the Company.
The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period with the exception of
new and amended standards and interpretations commencing 1 January 2021 that have been adopted where applicable. The Group has restated
comparative information to reflect the March 2021 IFRIC agenda decision on Configuration or Customisation Costs in a Cloud Computing Arrangement
(IAS 38 Intangible Assets). Refer to note 25.
Other than the above, there are no significant changes to the Consolidated Entity’s financial performance and position as a result of the adoption of the
new and amended accounting standards and interpretations effective for annual reporting periods beginning on or after 1 January 2021.
(f) New accounting standards and interpretations issued but not yet adopted
Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31
December 2021 reporting periods and have not been early adopted by the Consolidated Entity. These standards, amendments or interpretations are not
expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
27. EVENTS SUBSEQUENT TO REPORTING DATE
The COVID-19 pandemic has created unprecedented economic and societal impacts and there remains significant uncertainty. In the event the
COVID-19 impacts are more severe or prolonged than anticipated, this may have further adverse impacts to asset values and the operating result of the
Consolidated Entity. At the reporting date a definitive assessment of the future effects of COVID-19 on the Consolidated Entity cannot be made, as the
impact will depend on the magnitude and duration of the government restrictions, with the full range of possible effects unknown.
After the balance date, the Commercial Tenancy Code of Conduct was extended in New South Wales until 13 March 2022 and in Victoria until 15 March
2022, to provide rent relief to qualifying small and medium tenants. GPT continues to work with tenants to provide relief as required to assist with any
short-term cash flow impacts.
Other than the above, the Directors are not aware of any matter or circumstances occurring since 31 December 2021 that has significantly or may
significantly affect the operations of the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated Entity in the
subsequent financial year.
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GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ DECLARATION
Year ended 31 December 2021
In the directors of GPT Management Holdings Limited’s opinion:
(a)
the consolidated financial statements and notes set out on pages 28 to 60 are in accordance with the Corporations Act 2001, including:
–
–
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
and
giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2021 and of its performance for the
financial year ended on that date; and
(b)
the consolidated financial statements and notes comply with International Financial Reporting Standards as disclosed in note 26 to the
financial statements.
(c)
there are reasonable grounds to believe that the Consolidated Entity 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 as required by Section 295A of the
Corporations Act 2001.
This declaration is made in accordance with the resolution of the directors.
_____________________________________ _____________________________________
Vickki McFadden Bob Johnston
Chairman Chief Executive Officer and Managing Director
GPT Management Holdings Limited
Sydney
14 February 2022
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Independent auditor’s report
To the members of GPT Management Holdings Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of GPT Management Holdings Limited (the Company) and its
controlled entities (together the Consolidated Entity) is in accordance with the Corporations Act 2001,
including:
(a) giving a true and fair view of the Consolidated Entity's financial position as at 31 December 2021
and of its financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Consolidated Entity financial report comprises:
•
•
•
•
•
•
the Consolidated Statement of Financial Position as at 31 December 2021
the Consolidated Statement of Comprehensive Income for the year then ended
the Consolidated Statement of Changes in Equity for the year then ended
the Consolidated Statement of Cash Flows for the year then ended
the Notes to the Financial Statements, which include significant accounting policies and other
explanatory information
the Directors’ Declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Consolidated Entity 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.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation.
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Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Consolidated Entity, its accounting processes and controls and the industry in which it
operates.
Materiality
Audit scope
Key audit matters
•
Our audit focused on where
the Consolidated Entity made
subjective judgements; for
example, significant
accounting estimates
involving assumptions and
inherently uncertain future
events.
•
•
Amongst other relevant topics,
we communicated the
following key audit matters to
the Audit Committee:
− Revenue recognition
− Carrying value of Inventory
These are further described in
the Key audit matters section
of our report.
•
For the purpose of our audit
we used overall Consolidated
Entity materiality of $2.26
million, which represents
approximately 1% of the
Consolidated Entity's total
revenue and other income.
• We applied this threshold,
together with qualitative
considerations, to determine
the scope of our audit and the
nature, timing and extent of
our audit procedures and to
evaluate the effect of
misstatements on the
financial report as a whole.
• We chose the Consolidated
Entity's total revenue and
other income as the
Consolidated Entity generates
income from funds
management, property
management and
development management
fees, whilst expenses within
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the Consolidated Entity are
recharged to General Property
Trust which can be altered
based on the recharge model
utilised.
• We selected a 1% threshold
based on our professional
judgement, noting it is also
within the range of commonly
acceptable revenue related
thresholds.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition
$190.20 million
Refer to Consolidated Statement of
Comprehensive Income
The Consolidated Entity earns revenue through its
role as a fund and property manager. It also earns
development revenue through the development of
property, either for third parties, or directly on its
own account for ultimate sale.
Total revenue for the year ended 31 December
2021 comprised the following:
For each material revenue stream, we developed an
understanding of how revenue is calculated and the
process by which revenue is recognised and recorded.
We also identified the key controls including bank
account reconciliations.
For fund and property management fees, we inspected a
sample of agreements to develop an understanding of
the basis for which revenue is earned. We recalculated a
sample of the fees by applying the fee percentage per
agreement to the relevant benchmark, such as funds’
gross asset value or property revenue.
•
•
•
•
Fund management fees
Property management fees
Management costs recharged
Development management fees
For management costs recharged during the year, we
discussed with management the terms under which
costs are recharged by the Consolidated Entity to assets
it manages. Additionally:
We considered this a key audit matter due to the
magnitude of revenue and there being multiple
revenue streams increasing the complexity of
recognition.
• We developed an understanding of the
budgeting process and obtained evidence of
management review of the 2021 related
budget, via signed-off memos.
• We reconciled the approved management cost
recharge budget to the general ledger.
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Key audit matter
How our audit addressed the key audit matter
Carrying value of inventories
$108.68 million
Refer to note 5
The Consolidated Entity develops a portfolio of
sites for future sale which are classified as
inventory. The Consolidated Entity’s inventories
are held at the lower of the cost and net realisable
value for each inventory project.
The cost of the inventory includes the cost of
acquisition, development, capitalised finance costs
and all other costs directly related to specific
projects including an allocation of direct overhead
expenses.
We considered the carrying value of inventories a
key audit matter given the significant judgement
required by the Consolidated Entity, for example
in estimating future selling prices. These
judgements may have a material impact on the
calculation of net realisable value and therefore in
determining whether the value of a project should
be written down or have a previous impairment
reversed.
• We agreed payroll recharge amounts to the
audit procedures performed over the
Consolidated Entity’s remuneration expense.
Development management fees are charged in
accordance with development management agreements.
We recalculated a sample of development management
fees and agreed relevant inputs of the calculation back
to source data, for example approved day rates.
For each project we obtained the Consolidated Entity’s
latest Net Realisable Value (NRV) models. We
developed an understanding of how the Consolidated
Entity identified the relevant assumptions and sources
of data that are appropriate for calculating the NRV. We
performed the following procedures, amongst others:
•
•
•
•
•
•
•
discussed project specifics with management,
for example the life cycle of the project, key
project risks and the impact of COVID-19 and
how it has been reflected in the NRV models.
compared the estimated selling prices to
market sales data in similar locations or to
recent sales in the project.
compared the carrying value to the NRV to
identify projects with potential impairments.
traced each inventory disposal to the
supporting settlement statement, contract and
cash support.
traced a sample of capital expenditure
additions to supporting documentation and
tested whether they were valid costs that could
be capitalised in accordance with the
requirements of Australian Accounting
Standards.
tested the operating effectiveness of the
control surrounding the Valuation
Committee’s review of inventory valuations.
assessed the reasonableness of the disclosures
relating to inventories in the Consolidated
Entity’s financial report against the
requirements of Australian Accounting
Standards.
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Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2021, but does not include
the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do 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
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
Consolidated Entity 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 Consolidated Entity or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
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Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 16 to 26 of the Directors’ report for the
year ended 31 December 2021.
In our opinion, the remuneration report of GPT Management Holdings Limited for the year ended 31
December 2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Susan Horlin
Partner
Sydney
14 February 2022
67