Annual Report | 2022
01. Overview
02. About GPT
03. About this Report
04. Letter to Securityholders
08. Megatrends
10. Our Strategy
26. Group Performance
65. Financial Statements
30. Retail
31. Office
32. Logistics
33. Prospects
34. Risk Management
66. Consolidated Statement of
Comprehensive Income
67. Consolidated Statement of
Financial Position
68 Consolidated Statement of
Changes in Equity
11. Our Business Activities
35. Key risks
69. Consolidated Statement of Cash Flows
12. How We Create Value
38. Climate-related risks and opportunities
70. Notes to the Financial Statements
14. Growing and predictable earnings
40. Governance
16. Thriving places
18. Empowered people
46. Director biographies
49. Directors’ Report
20. Sustainable environment
50. Remuneration Report
120. Directors’ Declaration
121. Independent Auditor’s Report
128. Securityholder Information
129. Investor information
24. Prospering customers,
suppliers and communities
64. Auditor’s Independence Declaration
130. Glossary
132. Corporate directory
Reporting suite
The Annual Report is the primary document in our reporting suite. It summarises the value created by GPT's business activities together with the
annual financial statements for the Group. Further information is available in our broader reporting suite, which includes:
RESULTS PRESENTATION
AND DATA PACK
A summary of GPT’s
operating and financial
performance and key
developments in our business
and portfolio, accompanied
by a data supplement
released every six months.
PROPERTY
COMPENDIUM
Consolidated
information about
the assets in the
Group’s property
portfolio, published
every six months.
CORPORATE
GOVERNANCE
STATEMENT
An annual statement
of how GPT addresses
the ASX Corporate
Governance Council’s
Corporate Governance
Principles and
Recommendations
(4th Edition).
SUSTAINABILITY
REPORT
A detailed report of
our sustainability
policies, priorities
and progress along
with future targets,
released annually.
CLIMATE
DISCLOSURE
STATEMENT
An annual statement of
the steps we are taking
to identify, assess and
manage climate change
risks and opportunities,
prepared in accordance
with the TCFD
recommendations.
MODERN
SLAVERY
STATEMENT
A summary of the
actions taken during
the year and those
proposed to be
taken in the future, to
assess and address
modern slavery risks
in our business.
Climate Disclosure Statement | 2022
Modern Slavery Statement
2022
Corporate Governance Statement | 2022
Sustainability Report
2021
DISCLAIMER
This Annual Report (Report) has been prepared by The GPT Group comprising GPT RE Limited (ACN 107 426 504; AFSL 286511), as responsible entity of the General
Property Trust, and GPT Management Holdings Limited (ACN 113 510 188) (together, GPT). It has been prepared for the purpose of providing GPT’s investors with general
information regarding GPT’s performance and plans for the future and risks.
The information provided in this Report is for general information only. It is not intended to be investment, legal or other advice and should not be relied upon as such.
You should make your own assessment of, or obtain professional advice about, the information in this Report to determine whether it is appropriate for you.
You should note that past performance is not necessarily a guide to future performance. While every effort is made to provide accurate and complete information,
The GPT Group does not represent or warrant that the information in this Report is free from errors or omissions, is complete or is suitable for your intended use. In
particular, no representation or warranty is given as to the accuracy, likelihood of achievement or reasonableness of any forward-looking statements contained in this Report
or the assumptions on which they are based. Such material is, by its nature, subject to significant uncertainties and contingencies outside of GPT’s control. Actual results,
circumstances and developments may differ materially from those expressed or implied in this Report.
To the maximum extent permitted by law, The GPT Group, its related companies, officers, employees and agents will not be liable to you in any way for any loss, damage,
cost or expense (whether direct or indirect) howsoever arising in connection with the contents of, or any errors or omissions in, this Report.
Information is stated as at 31 December 2022 unless otherwise indicated. Except as required by applicable laws or regulations, GPT does not undertake to publicly update
or review any forward-looking statements, whether as a result of new information or future events.
Front cover image: Highpoint Shopping Centre, VIC
THE GPT GROUP ANNUAL REPORT 2022
BUSINESS OVERVIEW BUSINESS
OVERVIEW
Welcome to The GPT Group 2022 Annual Report.
GPT is a vertically integrated diversified property group that owns and
actively manages a portfolio of high quality Australian retail, office
and logistics assets, with assets under management of $32.4 billion.
The Group utilises its real estate management platform to enhance
returns through property development and funds management.
The GPT Group (GPT) is a stapled entity comprised of the General Property Trust (the Trust) and its controlled entities and GPT Management
Holdings Limited (the Company) and its controlled entities.
General Property Trust is a registered scheme, registered and domiciled in Australia. GPT RE Limited is the Responsible Entity of the
General Property Trust. GPT Management Holdings is a company limited by shares, incorporated and domiciled in Australia. GPT RE Limited
is a wholly owned entity of GPT Management Holdings Limited.
2022 Highlights
$620.6m
Funds from Operations (FFO)
(2021: $554.5m)
3.9%12 month Total Return
(2021: 14.1%)
25.0¢
Distribution per security
(2021: 23.2¢)
97.5%
Portfolio occupancy
(2021: 97.7%)
$5.98
Net Tangible Assets per security
(2021: $6.09)
86%Emissions intensity reduction
since 2005 (2021: 82%)
GPT acknowledges the
Traditional Custodians of the lands
on which our business operates.
We pay our respects to Elders
past, present and emerging; and
to their knowledge, leadership
and connections.
We honour our responsibility for
Country, culture and community
in the places we create and
how we do business.
Nulungu Dreaming at Rouse Hill Town Centre, NSW, National Reconciliation Week 2022.
THE GPT GROUP ANNUAL REPORT 2022 | 1
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATION About GPT
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 33,000 securityholders.
Our Vision
Our Purpose
To be the most respected property company in
Australia in the eyes of our investors, people,
customers and communities.
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.
Our values
Each day, our core values guide our people as they work to deliver on our purpose.
Safety First –
Everyone, Always
Deliver Today,
Create Tomorrow
Value Differences,
Play as a Team
We care about people above
everything else.
We focus on the present
and the future to deliver
consistent, dependable
performance.
We embrace our diverse
backgrounds, experiences and
perspectives, working together
for the best outcome.
Raise the Bar
Speak Up
We think big, take
initiative, share ideas and
challenge the status quo.
We are courageous
and speak up about
things that matter.
Our portfolio
GPT owns and manages a diversified portfolio of high quality properties across Australia.
Office
» 30 assets
Logistics
» 70 assets
Retail
» 16 shopping centres
» 1,120,000 square metres NLA
» 1,480,000 square metres GLA
» 1,310,000 square metres GLA
» 470+ tenants
» 90+ tenants
» 4000+ tenants
» $6.0 billion GPT owned portfolio
» $4.5 billion GPT owned portfolio
» $5.6 billion GPT owned portfolio
» $14.7 billion assets under management
» $4.7 billion assets under management
» $13.0 billion assets under management
Diversity across asset classes
Queensland
2 Office
13 Logistics
2 Retail
NSW
16 Office
28 Logistics
7 Retail
Canberra
1 Office
1 Logistics
Diversity across locations
Other, 1%
QLD,12%
NSW, 49%
VIC, 38%
Perth
4 Logistics
1 Retail
Adelaide
5 Logistics
Melbourne
11 Office
19 Logistics
6 Retail
2 | THE GPT GROUP ANNUAL REPORT 2022
Logistics, 28%Retail, 35%Office, 37%BUSINESS OVERVIEW BUSINESS
OVERVIEW
About this Report
This 2022 Annual Report provides a holistic overview of our business including information on our
strategy, our performance in financial, environmental, social and governance matters, and outlines how
we create value over the short, medium and long term. It is prepared with reference to the International
Integrated Reporting Framework (2021) and the Global Reporting Initiative (GRI). These frameworks
inform our determination of the material matters we report.
In addition, the content in the corporate reporting suite has been
formed by recommendations from other frameworks including the
Task Force on Climate-related Financial Disclosures (TCFD) and the
United Nations Sustainable Development Goals (UNSDGs).
Unless otherwise stated, references in this report to ‘GPT’, ‘Group’,
‘we’, ‘us’ and ‘our’ refer to the The GPT Group. All values are expressed
in Australian currency as at 31 December 2022 unless otherwise
indicated. Key statistics for the Retail, Office and Logistics divisions
include The GPT Group’s investment interest in the GPT Wholesale
Shopping Centre Fund (GWSCF), the GPT Wholesale Office Fund
(GWOF), and the GPT QuadReal Logistics Trust (GQLT) respectively.
The Board acknowledges its responsibility for the 2022 Annual
Report and has reviewed, considered and provided feedback during
its development. The 2022 Annual Report was approved by the Board
on 20 February 2023.
The statutory reporting elements of the Directors’ Report for the year
ended 31 December 2022, including the Operating and Financial
Review, have been prepared in accordance with the Corporations Act
2001 and includes information on the Group’s operations and financial
position, business strategies, and prospects on pages 26 to 33.
The primary audience of this report is our securityholders, potential
investors, our people, our customers, supply chain partners, the
communities in which we operate, non-profit organisations and
Traditional Custodians and First Nations people.
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 in
the prior year 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 as being material from an ‘impact’
perspective, in line with global best practice.
This assessment continued to be relevant in 2022 and we remain
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.
Melbourne Central, Melbourne
THE GPT GROUP ANNUAL REPORT 2022 | 3
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATION Letter to Securityholders
Vickki McFadden
CHAIRMAN
Bob Johnston
CHIEF EXECUTIVE OFFICER
& MANAGING DIRECTOR
2022 was a year of uncertainty and external
challenges as we transitioned from COVID-19
restrictions in the early part of the year, to
an environment of high inflation and higher
interest rates. Despite these challenges,
GPT has remained resilient and it is pleasing
to report that the Group delivered solid
growth in Funds From Operations (FFO)
and distributions in line with guidance.
While the macroeconomic environment
has shifted, and this is being reflected in
expectations for asset valuations, GPT has
remained focused on its strategic priorities of
driving resilient and growing income from its
owned and managed high quality diversified
property portfolio, expanding its funds under
management which provides scale and
leverage for the Group, while maintaining a
prudent approach to capital management.
Given our priority of growing our funds
management platform, it is particularly
pleasing to report that GPT was appointed
by UniSuper to manage its $2.8 billion
direct real estate portfolio which was
transitioned to GPT in September 2022.
Subsequently GPT was selected by
UniSuper and Cbus Property to manage
the $2.7 billion Australian Core Retail Trust
(ACRT) which commenced in December
2022. These mandates include some
of Australia’s premier retail destinations
including Karrinyup Shopping Centre in
Perth, Pacific Fair Shopping Centre on
the Gold Coast and Macquarie Centre in
Sydney. The transfer of these mandates
to GPT is a strong endorsement of the
Group’s capabilities and robust governance
processes. With these, our total funds under
management is $19.1 billion and our total
assets under management is $32.4 billion,
and we look forward to continuing to grow
our funds management platform.
The Group delivered FFO of $620.6 million
for the 12 months ended 31 December 2022,
up 11.9 per cent on the prior year. All three
business segments reported increased
FFO on the prior period. This was partially
offset by significantly higher financing
costs reflecting interest rate rises, whilst
corporate expenses declined in the period.
FFO per security increased 12.4 per cent
to 32.40 cents, reflecting the reduction in
securities due to the on-market buy-back
that was active in the prior period.
Our Statutory Net Profit After Tax was
$469.3 million compared to $1,422.8 million
in the prior year, predominantly due to a
net investment property valuation decrease
of $159.3 million compared with a net
revaluation gain of $924.3 million in the prior
year. The Group’s Total Return for the year
decreased to 3.9 per cent due to investment
property revaluation losses resulting in a
decrease in Net Tangible Assets (NTA) per
security of 1.8 per cent to $5.98. The Board
declared a second half 2022 distribution of
12.3 cents which will be paid on 28 February
2023. The full year distribution of 25.0 cents
per security represents an increase
of 7.8 per cent over the prior year.
Prudent capital management remained
a focus for the Group while continuing
to deliver on our strategic objectives,
with strong credit ratings of ‘A negative’
and ‘A2 stable’ by S&P and Moody’s
respectively, and gearing of 28.5 per cent.
The office sector faced headwinds during
2022 as organisations remained uncertain
about their future requirements. Office
lease enquiry improved over the second
half of the year after a muted first half,
although leasing conditions remain subdued
with elevated market vacancy and larger
occupiers continuing to evaluate future space
requirements as the adoption of hybrid work
arrangements becomes more normalised.
High quality, sustainable buildings with
distinctive spaces continue to be sought out
by customers and the rollout of GPT’s turnkey
‘DesignSuites by GPT’ offering has been well
supported by smaller tenants. The Group’s
Office portfolio occupancy at 31 December
2022 was 87.9 per cent.
Our Logistics portfolio continues to deliver
strong results with robust levels of tenant
enquiry and market vacancy rates at historic
lows. Portfolio occupancy was 99.2 per cent
at 31 December 2022. We are making
excellent progress in developing our Logistics
pipeline, with seven1 assets completed and
four more scheduled to complete over the
next 12 months. GPT’s joint venture with
QuadReal has now committed $1 billion of the
$2 billion target, inclusive of pipeline projects,
with assets under management of $0.5 billion
as at December 2022.
We have seen ongoing momentum across
GPT’s Retail portfolio, with portfolio
occupancy remaining high at 99.4 per cent
and portfolio leasing metrics continuing
to strengthen. Total Centre sales across
the portfolio were up 6.8 per cent and
Total Specialty sales were up 9.4 per cent,
when compared to the same period in 2019
(prior to COVID-19). In March, Casuarina
Square in Darwin, co-owned by GPT and the
GPT Wholesale Shopping Centre Fund was
divested, with sale proceeds to be redeployed
into new opportunities to generate long-term
value for investors. While rising interest rates
and inflationary pressures are expected
to begin to impact consumer spending,
GPT’s high quality Retail portfolio is well
positioned with strong sales productivity
and high occupancy.
1. Includes post 31 December 2022 completions.
4 | THE GPT GROUP ANNUAL REPORT 2022
BUSINESS OVERVIEW BUSINESS
OVERVIEW
Highpoint Shopping Centre, VIC
Sustainability
ESG leadership is at the core of everything
we do at GPT. Our goals and efforts are
aligned with a commitment to be a positive
contributor to our people, communities,
stakeholders and the environment.
Sustainability practices underline
GPT’s operations and are integrated into
GPT’s organisational culture, stakeholder
engagement, governance and processes.
GPT’s sustainability strategies have been
successful in driving results across the
property portfolio and our continued
innovation will only strengthen this
point of difference. GPT was ranked
first among more than 800 listed real
estate companies in the 2022 S&P Global
Corporate Sustainability Assessment.
The assessment is an important measure
of ESG performance internationally.
We recognise that climate action is
an imperative and our environmental
sustainability vision: ‘Carbon Neutral
Now, Nature Positive Next’ aims to deliver
resilient assets that optimise environmental
outcomes. Underpinning our objectives is
our target to achieve Climate Active Carbon
Neutral (for Buildings) certifications for all
assets that we operationally control and in
which we have an ownership interest, by
the end of 2024. In August, we successfully
completed Australia’s first development
that has been certified by Climate Active
as being upfront embodied carbon neutral.
Additionally, the design of GPT Wholesale
Office Fund’s development at 51 Flinders
Lane has been verified by Green Star
to achieve upfront embodied carbon
neutrality and will be certified by Climate
Active upon completion.
During the year we also entered into a
partnership with Greenfleet to restore
native forests and are utilising the carbon
offsets created to ensure that our buildings
move beyond providing a positive legacy in
the built environment, to also delivering a
positive legacy in the natural environment.
You can read more about our efforts
to address climate change and our
alignment with the recommendations of
the Task Force on Climate related Financial
Disclosures (TCFD) in our fourth Climate
Disclosure Statement.
Safety remains a core value at GPT and all
employees play a part in ensuring that our
colleagues, stakeholders and visitors to
GPT’s workplaces or assets go home safely.
In 2022, we brought psychological safety
into the spotlight to ensure we are meeting
our commitment to supporting the holistic
wellbeing of our people. We continued to
evolve our Wellbeing@GPT program and
launched a wellbeing platform in July,
providing access to workouts, podcasts,
articles, videos and self-guided learning
modules covering health, work, family and
life matters.
Our people are empowered when everyone
feels represented and has a sense of
belonging. We continued our progress
towards our diversity, inclusion and equity
targets during 2022, and in recognition of
our efforts we were awarded our fourth
consecutive Employer of Choice for Gender
Equality citation from the Workplace Gender
Equality Agency (WGEA) in 2021-2023.
GPT participates in the Australian Workplace
Equality Index (AWEI) each year (run by
Pride in Diversity) and during the year GPT
received a Gold ranking in the AWEI small
employer category for the first time (up from
Bronze in 2021). GPT was accredited as a
Family Inclusive WorkplaceTM for the first
time in 2022, in recognition of the calibre
of GPT’s policies, practices and support for
working parents and carers.
GPT publicly commits to protecting and
respecting the human rights of its employees,
customers, suppliers and business partners.
As a member of the United Nations Global
Compact, we participated in the Early Adopter
program to support the pilot of its new
reporting framework enhancing transparency
in disclosure against the Global Compact’s
ten principles. Additionally, GPT became a
signatory to the United Nations Principles
for Responsible Investment (UN PRI), to
further publicly demonstrate the Group’s
commitment to human rights. Along with
other ESG issues, eliminating and preventing
modern slavery is a key focus for us and our
third Modern Slavery Statement, released in
October, describes how we are addressing
this complex global challenge.
Strong relationships with GPT Foundation
partners, First Nations partners and
community groups enable us to make
relevant and meaningful contributions. We
aim to work together to understand how we
can best progress towards our shared goals.
Throughout the year we engaged regularly
with our people, assets and communities
both internally and externally on key
social issues such as sexual harassment
and domestic violence, and key dates of
significance such as Wear it Purple Day and
International Women’s Day.
Our second Stretch Reconciliation Action
Plan (RAP) is progressing well and we aim
to release this in early 2023. As part of
our second Stretch RAP a broader people
engagement and employment plan is being
developed to identify ways in which GPT
can support First Nations employment
both internally at GPT and through our
relationships, assets and communities.
GPT will also continue to invest in cultural
awareness training for all our employees.
THE GPT GROUP ANNUAL REPORT 2022 | 5
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATION Letter to Securityholders CONTINUED
Summary and outlook
2022 has been a successful year for
GPT. We have delivered solid FFO and
distribution growth and continued to
execute on our strategic objectives. While
the macroeconomic environment remains
uncertain, we are confident that we
have the right strategy in place to deliver
sustainable long-term returns for investors.
GPT’s leading sustainability results are
driven by long-term thinking and data driven
decision making, coupled with a robust
environmental management system, and
transparent disclosures to grow trust. We
seek to continually increase the positive
impact we can make on our people,
investors, customers and communities.
This year’s results could not have been
achieved without the dedication and
professionalism of the people who work at
GPT. We are a people centric business and
care about our people above everything
else. Through the efforts and continued
development of our people we have been
able to deliver on our purpose and we
thank them for their hard work.
On behalf of the Board and management,
we would like to take this opportunity
to thank our Board colleagues for
their leadership and for providing our
stakeholders with high-quality governance.
We thank our investors for their continued
support of GPT. We look forward to building
on the successes of the last 12 months
as we continue to deliver long-term value
for securityholders.
Vickki McFadden
CHAIRMAN
Bob Johnston
CHIEF EXECUTIVE OFFICER AND
MANAGING DIRECTOR
Corporate governance
The GPT Board was actively engaged in
its governance responsibilities throughout
the year, fulfilling their role in accordance
with the Board and Committee charters.
In addition, following the end of COVID-19
travel restrictions, the Board was able
to resume tours of GPT’s assets and
engagement with our people.
Our Board and Nomination Committee
regularly reviews the Board’s composition
to ensure that we have the appropriate
mix of skills, experience, attributes and
diversity to provide the required oversight
of the business. The Board and Nomination
Committee also considers tenure to ensure
ongoing independence and an orderly and
well considered Board succession process.
Angus McNaughton retired from the Board
in May 2022. During his tenure, Angus
made a significant contribution to the Board
and the Committees on which he served.
We thank Angus for his commitment and
valuable contribution to GPT and wish him
well with his future endeavours.
Anne Brennan joined the Board during the
year and brings with her extensive financial,
property funds management and public
company experience, complementing the
existing skills and experience of the Board.
The Board continues to actively consider
Board succession and renewal to ensure
that it has the right skills and experience
to provide the stewardship and governance
to the Group and to deliver value to all
our stakeholders.
As announced on 10 February 2023, it is
Bob Johnston’s current intention to retire
by the end of this year. The Board has
commenced a formal Chief Executive
Officer search process to select a suitably
qualified successor with the right leadership
skills and experience to continue the
successes of the Group.
6 | THE GPT GROUP ANNUAL REPORT 2022
BUSINESS OVERVIEW BUSINESS
OVERVIEW
Ratings and benchmarks
S&P Dow Jones Sustainability Index
Ranked first among more than 800 listed
real estate companies in the 2022 S&P Global
Corporate Sustainability Assessment (CSA)
and listed in the Dow Jones Sustainability
World Index in December 2022.
Global Real Estate Sustainability Benchmark
Achieved 5 Star (top quintile) ratings for the
Group, the GPT Wholesale Office Fund (GWOF)
and the GPT Wholesale Shopping Centre Fund
(GWSCF).
WGEA
Received an Employer of Choice for Gender
Equality citation from the Workplace Gender
Equality Agency (WGEA) for the fourth
consecutive year.
World GBC
GWOF is a signatory to the World Green
Building Council Net Zero Carbon Buildings
Commitment.
MSCI
As at May 2022 GPT has a rating of AAA
(on a scale of AAA-CCC) in the MSCI
ESG Ratings assessment.
AWEI
Named a Gold Employer for LGBTIQ+
Inclusion in the Australian Workplace Equality
Index (AWEI) small employer category.
FTSE4Good
Constituent of the FTSE4Good Global Index Series.
ISS
Prime Corporate ESG performance.
Climate Bonds Initiative
Certification of green bonds and green loans
where applicable.
Reconciliation Australia
Endorsed to develop our second Stretch
Reconciliation Action Plan in 2022.
Euronext Vigeo Eiris
Included in the World 120 Index as one
of the highest-ranking listed companies
in corporate responsibility performance.
Family Inclusive WorkplaceTM
Certified as a Family Inclusive Workplace
by Family Friendly Workplaces.
STOXX
Included in the Global ESG Leaders Indices.
Principles for Responsible Investment
Signatory to the United Nations Principles
for Responsible Investment
UN Global Compact
Participant of the United Nations Global Compact since 2012,
contributing to the UN Sustainable Development Goals.
THE GPT GROUP ANNUAL REPORT 2022 | 7
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATION Megatrends
A key consideration in formulating the Group’s strategy is the impact of megatrends that continue
to shape how people live, work and play, and the spaces businesses need in order to thrive.
Emerging trends provide opportunities and challenges for the Group in creating value over the short, medium and long term. They include matters
affecting the economy, environment, technology, society, regulation and politics. The key trends and potential implications currently shaping our
strategy and business activities are set out below.1
Demographic change, evolving communities and inequality
Demographic change is driving needs around
health care, retirement, workplace flexibility,
and workforce diversity.
GPT’s approach
» Continue to invest in our properties to evolve our offering and meet the
changing preferences of customers and the communities in which we operate.
Australia’s income and wealth inequality is
increasing. Millennials and Gen Z now represent
almost half our workforce and one out of every
three dollars spent, and they have distinctly different
spending habits from previous generations. 2
» Unlock additional productivity within the Group’s workforce via flexible work
arrangements, work-anywhere technology, changed expectations regarding
workplace attendance, and continued active promotion of diversity and inclusion.
Environment, resource scarcity and resilience
Growing populations and household wealth will
increase pressure on environmental resources,
including food, water, energy and mineral
resources. At the same time, the impacts of
human-induced climate change may be rapid and
unpredictable.
Climate change, protecting nature and the
environment, natural disasters and pandemics
are increasing the urgency towards solving critical
environmental and social issues.
ESG considerations are becoming increasingly
critical for corporates and investors as markets,
globally look to enhance and standardise
sustainability disclosures.
GPT’s approach
» Progress towards the Group’s carbon neutral targets while actively identifying
and managing the potential risks and opportunities of climate change,
biodiversity and water.
» Develop climate resilience strategies as outlined in our Climate Disclosure
Statement.
» Continue to enhance the efficient operations of our properties to use fewer
natural resources, produce less waste and fewer emissions, and achieve
intensity and efficiency targets.
» Progress our offset strategy which focuses on carbon removal with co-benefits
that align with principles of a just transition, through Australian reforestation
projects that improve biodiversity and provide ecosystem services for water.
» Consider how new technologies, innovations and partnerships can provide new
ways of managing and monitoring environmental impacts.
» Use external ratings and accreditations to validate that our properties and
developments meet or exceed best practice standards.
Transformative technology and blurring boundaries
Broad based and rapid technological change,
including automation, is transforming and
disrupting traditional ways that society and
businesses operate, communicate, and interact,
changing ways of working and facilitating
e-commerce.
Hypervigilance in cybersecurity will be necessary
to ensure operational continuity, and customer
and broad stakeholder confidence.
GPT’s approach
» Leverage technological advances to enhance experience for customers at our
properties.
» Remain vigilant across our employees, partners, core systems and operations
regarding privacy, data security, and business continuity to earn and retain
stakeholder trust as the role of technology changes.
» Grow our capital allocation in sectors that will benefit from transformative
technology, such as logistics.
» Maintain strong customer, supplier and stakeholder relationships to enable rapid
adaptation of operations and supply chains if needed.
1. Sydney Business Insights, Austrade, CSIRO, GPT Strategy Team.
2. Alphabeta strategy x economics paper, ‘How Millennials Manage Money: Facts on the spending habits of young Australians’.
8 | THE GPT GROUP ANNUAL REPORT 2022
BUSINESS OVERVIEW BUSINESS
OVERVIEW
Urbanisation, densification and enabling infrastructure
Population, jobs and economic growth
concentrated in major cities, and demographic
change are impacting patterns of urban life and
economic activity. Governments are being required
to make a significant investment in enabling
social and economic infrastructure to improve
the liveability and affordability of major cities. It is
estimated that by 2050, 68 per cent of the world
population will live in urban areas.1
The long-term fundamental drivers of urbanisation
and densification have returned as we shift towards
post-COVID-19 stabilisation and as the Australian
economy re-opens and mobility returns.
GPT’s approach
» Ensure our real estate portfolio is concentrated in markets which will benefit
from urbanisation, densification and enabling infrastructure with a focus on
premium CBD real estate.
» Continue to allocate capital to markets that are likely to benefit from existing
and future infrastructure investment.
» Consider viability of mixed-use developments to increase the social value of
properties and manage land scarcity within existing site footprints.
Empowering individuals and hyperconnectivity
Technological advances, ubiquitous connectivity,
and improvements in access to education and
health are empowering individuals. Social media
platforms have fundamentally changed the way
people communicate, interact, and organise
their lives.
Consumers have an increasing expectation for
experience, personalisation, and customisation,
as well as digital access and connectivity
following its widespread adoption during the
pandemic.
GPT’s approach
» Continue to invest in technology that improves connectivity with our customers,
removing friction points and enhancing their experience.
» Maintain initiatives to continually improve our investment strategy and asset
selection criteria to incorporate the ongoing impact of technological advances
and evolving customer expectations.
» Continue to partner with our retailers to evolve our shopping centres to
meet shopper expectations for enhanced experience, personalisation and
customisation.
» Offer new opportunities to integrate logistics, fulfilment and retail as business
models transform to manage the rise of the digital economy, acceleration of
online shopping, and growth in omnichannel retail.
» Work with our office customers to ensure that our buildings remain desirable places
to collaborate, team-build and develop skills in connected, purpose-built spaces.
» Foster a culture at GPT that is open to new ideas and ways of working and
celebrates diversity and inclusiveness in all its forms.
Economic power shifts, geopolitical risk and unfunded liabilities
Over the coming years the structure of the global
economy will shift, with non-OECD economies
expected to account for 57 per cent of the global
output by 2030, creating new patterns of trade
and investment. 2 This growth is also creating a
new middle “mass affluent” class, with two-
thirds of the global middle class to reside in Asia
Pacific by 2030. At the same time, the richer
economies are also the most indebted, and
retirees are facing underfunded pension plans.
Human rights due diligence is a critical input
to managing supply chain risks. COVID-19 has
exposed fundamental vulnerabilities in global
supply chains, which, in turn, is heightening
public scrutiny and expectations on business.
GPT’s approach
» Continue to focus on financial and capital management with a strong balance
sheet, appropriate gearing, and an approach consistent with stable ‘A category’
credit ratings.
» Continue to develop the GPT Funds Management platform to access alternative
sources of capital, fund growth opportunities and deliver returns.
» Position GPT as an attractive investment to a variety of funding sources
including domestic and international pension and superannuation funds.
» Communicate our sector-leading ESG credentials to current and potential
investors.
» Pursue opportunities to assist with supply chain security for Australian
businesses focused on localisation.
» Continue GPT’s comprehensive program to minimise the risk of modern slavery
in the supply chain with regular and transparent reporting on our progress.
1. United Nations, World Cities Report 2022 https://unhabitat.org/wcr/.
2. Organisation for Economic Co-operation and Development (OECD) Development Centre, Working Paper No. 285,
‘The Emerging Middle Class in Developing Countries’.
THE GPT GROUP ANNUAL REPORT 2022 | 9
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATION Our Strategy
GPT’s strategy aims to deliver growing and predictable earnings for investors through owning,
developing and managing a diversified portfolio of high quality real estate.
Our strategy is influenced by the megatrends that continue to shape how people live, work and play and the spaces businesses need in order to thrive.
Owning and managing a diversified portfolio of high quality real estate in Australia’s largest cities is core to our strategy and provides us with the
opportunity to benefit from sectors with favourable trends while reshaping our exposure to others.
Our strategy leverages our extensive real estate experience to create value through disciplined investment, development, asset management,
and funds management.
Executing on our strategic priorities
Optimise the portfolio
Exceed customer expectations
We intend to optimise our portfolio by prioritising investment
in assets and sectors benefiting from structural tailwinds,
such as the growth in e-commerce driving demand in the
logistics sector. Our medium term capital allocation target is
30 per cent logistics, 30 per cent office and 30 per cent retail,
with the potential for the balance to be invested in sectors
which will benefit from the structural changes associated
with the identified megatrends, including the mixed-use
opportunities identified across our investment portfolio.
A strategic priority is to understand our customers and
deliver tailored solutions with investment in technology
and sustainability. Building deep customer relationships
and ongoing engagement is providing rich insights and
informing how we can meet changing expectations.
42 Cox Place, Glendenning
Highpoint Shopping Centre, VIC
Funds Management growth
Leadership in ESG
The continued global demand for Australian real estate,
combined with our strong relationships with domestic and
foreign institutional investors and integrated management
platform provides the foundation to further grow our Funds
Management business. This is underpinned by a range
of development opportunities across the portfolio that will
add value for investors.
Leadership in environmental, social and governance (ESG)
matters is a key capability of the Group and underpins our
growth objectives. We remain focused on achieving our
sustainability targets and commitments, ensuring that we
engage in sustainable development that meets the needs
and expectations of our customers and stakeholders
into the future.
Marrickville Metro, NSW
Liberty Place, Sydney
10 | THE GPT GROUP ANNUAL REPORT 2022
BUSINESS OVERVIEW BUSINESS
OVERVIEW
Our Business Activities
GPT undertakes four core business activities. We invest in, develop and manage Australian real estate
assets and funds to create value for our stakeholders.
Keylink South, Keysborough
51 Flinders Lane, Melbourne
Investment
Combining our property expertise with our understanding of
the economic drivers and market dynamics of each sector
enables GPT to capitalise on opportunities, acquiring and
divesting properties at the right time to deliver reliable returns
for our investors.
Together with our directly held assets, GPT co-invests capital
to benefit from the returns that can be derived from high quality
core assets in wholesale funds and joint ventures.
Development
Our development capability and pipeline enables the creation
of new opportunities and enhances the value of our well
located existing properties for the Group and our third party
investors.
Our placemaking expertise provides added benefit, ensuring
that the properties we design and develop are sustainable
and prosperous places for our tenants, customers and
communities.
Queens & Collins, Melbourne
Karrinyup Shopping Centre, WA
Asset Management
We manage $32.4 billion of commercial properties in the
office, logistics and retail sectors. We apply our portfolio
and asset management skills to ensure that we attract,
secure and retain tenants, delight and satisfy our customers
and visitors, operate efficiently and sustainably, and aim to
deliver growing and predictable earnings for investors.
Funds Management
Our funds management and partnerships platform manages
$19.1 billion of investments focused on the Australian office,
logistics and retail sectors, leveraging our skills and experience
to enhance returns for fund investors and capital partners.
GPT invests alongside fund investors and capital partners to
jointly access income and growth opportunities. The funds
management platform provides the Group with income through
funds management, property management and development
management fees.
THE GPT GROUP ANNUAL REPORT 2022 | 11
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATION HOW WE
CREATE VALUE
How We Create Value
Our vision
To be the most respected property company in
Australia in the eyes of our investors, people,
customers and communities.
Our purpose
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.
To deliver our purpose, GPT uses resources and inputs in our
business activities to create value for our stakeholders.
Key inputs into the Group are our investors, real estate, our people,
environmental resources, and our customers, suppliers and
communities.
Through the application of our business model, GPT creates value
in the form of growing and predictable earnings, thriving places,
empowered people, a sustainable environment, and prospering
customers, suppliers, and communities.
This process of value creation is illustrated in the diagram below.
Inputs
Business model
E N T
M
E
G
A
IN
V
E
S
T
M
E
N
T
Office
Logistics
Retail
Funds
T
N
E
M
E
G
A
N
A
M
K
S
I
R
S M A N
D
N
U
F
E
C
N
A
N
R
E
V
O
G
A
S
S
E
T
M
A
N
A
G
E
M
E
NT
E L O P M ENT
V
E
D
Our investors
Equity and debt investors who
provide capital to support
strategy execution and growth
Real estate
Buildings and land that we own,
manage and develop
Our people
The capabilities and effort of
the people in our workforce
Environment
Natural resources and
environments impacted by
our business activities
Our customers, suppliers,
and communities
Relationships with customers, suppliers and
communities in the locations where we operate
12 | THE GPT GROUP ANNUAL REPORT 2022
HOW WE
CREATE VALUE
Our values
Each day, our core values guide our people as they work to deliver on our purpose.
Safety First –
Everyone, Always
Deliver Today,
Create Tomorrow
Value Differences,
Play as a Team
Raise the Bar
Speak Up
We care about people above
everything else.
We focus on the present
and the future to deliver
consistent, dependable
performance.
We embrace our diverse
backgrounds, experiences
and perspectives, working
together for the best outcome.
We think big, take
initiative, share ideas
and challenge the
status quo.
We are courageous
and speak up about
things that matter.
Value created
Growing and predictable earnings
Our aim is to deliver growing and predictable earnings and maximise total returns for our investors, through the successful execution
of our strategy
MORE ON PAGE 14 -15
Thriving places
Our properties are community places where people come together for work, connection and enjoyment
MORE ON PAGE 16-17
Empowered people
Through their effort and continued development, our talented, engaged and motivated workforce deliver on our purpose to create value
for customers, investors and communities
MORE ON PAGE 18-19
Sustainable environment
We develop and manage sustainable places that operate efficiently and minimise our impact on the environment
MORE ON PAGE 20-23
Prospering customers, suppliers and communities
Strong relationships with customers, supply chain partners and communities enable us to meet their current and emerging needs
and ensure our mutual future success
MORE ON PAGE 24 -25
THE GPT GROUP ANNUAL REPORT 2022 | 13
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTSECURITYHOLDERINFORMATIONBUSINESSOVERVIEW HOW WE
CREATE VALUE
Growing and predictable earnings
Our aim is to deliver growing and predictable earnings and maximise total returns over
the long term, through the successful execution of our strategy.
2022 performance
Creating value
$469.3m
Statutory profit after tax
GPT uses financial resources sourced from our equity and debt investors to fund the Group’s
investments and developments.
We generate income in the form of rents from our portfolio of diversified properties and
fees from our funds management activities. Distributions are based on free cash flow, with
a target to distribute between 95 to 105 per cent of free cash flow. In addition to income,
the capital growth of our portfolio drives the total return for our investors.
$620.6m
Funds From Operations (FFO)
Our aim is to deliver growing and predictable earnings. In 2022, the Group delivered a solid
result in a first half trading environment impacted by the global pandemic and uncertain
economic conditions, with rising interest rates and inflationary pressures, which persisted
in the second half.
Effective capital management is essential to meeting the Group’s ongoing funding
requirements and to ensure we generate sustained returns for investors over the long term.
The Group maintains its long-term commitment to a target gearing range of 25 to 35 per cent
and investment grade credit ratings in the “A” range.
MORE ON PAGES 26-33
Group Five Year Funds
From Operations (FFO) ($M)
613.7
574.6
554.7
554.5
620.6
2018
2019
2020
2021
2022
Group Five Year Total Return (%)
15.8
14.1
8.7
3.9
-2.4
2018
2019
2020
2021
2022
Engaging with stakeholders
GPT undertakes regular structured
engagement with investors to understand
their views on its strategy, performance,
financial position, risks and governance,
together with their current and emerging
areas of focus. This provides an
opportunity to receive their feedback
and to address their questions.
We engage with investors through full
year and half year results presentations,
quarterly operational updates, Annual
General Meetings, investor briefings,
conference presentations, and executive
and director roadshows. Investor
communications and ASX announcements
ensure our investors receive timely
material information throughout the year.
We also participate in external benchmarks
and indices to compare our performance
with that of our peers.
Alongside regulatory requirements, this
investor engagement and benchmarking
shapes the nature and extent of
information we report.
32.4¢
FFO per security
25.0¢
Distribution per security
$5.98
NTA per security
3.9%
Total Return
28.5%
Gearing
A/A2
S&P (negative) / Moody’s (stable)
14 | THE GPT GROUP ANNUAL REPORT 2022
HOW WE
CREATE VALUE
Related risks and opportunities
» Portfolio operating and financial
performance
» Development, and
» Capital management.
Key activities in 2022
» Transition of management of the
$2.8 billion UniSuper direct real estate
mandate completed in September
» Commenced management of the
$2.7 billion Australian Core Retail Trust
(ACRT) in December
» Creation of Office DesignSuites by
GPT to attract new customers to deliver
resilient Office portfolio net income, and
» Grew Logistics assets under
management by 5 per cent, with GPT
development completions achieving
>30 per cent development margin and
an average yield on cost of 5.7 per cent.
Key priorities for 2023
» Further embed the UniSuper and ACRT
mandates into the Group, and
» Continue to strengthen and optimise
the portfolio so that it is well
positioned to generate growing and
predictable earnings.
Value created
Growing and
predictable earnings
Sustainable environment
Pacific Fair Shopping Centre, QLD
GROWING OUR FUNDS MANAGEMENT PLATFORM
WITH COMMENCEMENT OF MANAGEMENT OF THE
$2.8B UNISUPER DIRECT REAL ESTATE MANDATE
AND $2.7B AUSTRALIAN CORE RETAIL TRUST
Growing our funds management platform has been a key
objective for the Group. During the year, GPT was appointed by
UniSuper to manage its $2.8 billion direct real estate mandate
and this was transitioned to GPT in September 2022.
The UniSuper direct real estate mandate includes the following
retail centres now managed by GPT: Karrinyup Shopping Centre
in Western Australia, Marrickville Metro and Dapto Mall in New
South Wales, and Malvern Central in Victoria. Office assets
include 7 Macquarie Place and a 24.9 per cent interest in
Brookfield Place in New South Wales.
Subsequently, GPT was selected by UniSuper and Cbus Property
to manage the $2.7 billion Australian Core Retail Trust (ACRT)
and this was transitioned to GPT in December 2022. ACRT owns
Pacific Fair Shopping Centre on the Gold Coast and 50 per cent
of Macquarie Centre in Sydney. GPT has also commenced as the
property manager of Pacific Fair Shopping Centre.
The transition of these mandates to GPT management was
a large project for all involved. A mutli-pronged approach was
taken to onboard our new customers and team members to
ensure a smooth transition from day one. These high quality
assets and the teams that manage and support them are a
great addition to GPT.
GPT’s total funds under management are now $19.1 billion.
THE GPT GROUP ANNUAL REPORT 2022 | 15
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTSECURITYHOLDERINFORMATIONBUSINESSOVERVIEW HOW WE
CREATE VALUE
Thriving places
Our properties are community places where people come together for work,
connection and enjoyment.
2022 performance
Creating value
Engaging with stakeholders
97.5%
Portfolio occupancy
4.8 years
Portfolio Weighted
Average Lease Expiry
4.86%
Portfolio Weighted
Average Capitalisation Rate
71
Office portfolio
Net Promoter Score 1
137m
Retail portfolio customer visits
Our real estate assets – office buildings,
logistics facilities and retail shopping
centres – are the core of our business
and our ability to create value. Using our
industry expertise and experience, we
develop new assets and enhance existing
assets when the time is right to meet
tenant, customer and community needs
and grow returns for our investors.
Our active management of each asset
ensures they operate efficiently and
sustainably, providing enjoyable places for
our customers to be. Over the course of the
year, more than 137 million shoppers visited
a GPT retail centre, choosing to make our
centres a part of their daily lives. Our Office
team achieved a Net Promoter score (NPS)
of 71 for GPT managed assets in 2022.
Within our Logistics portfolio, customers’
gave our building management team a
satisfaction score averaging 80 per cent.
Thriving places are safe and inclusive. Our
asset teams are focused on identifying and
eliminating safety incidents and risks from
our properties and our developments as we
strive for our goal of zero injuries. Ensuring
our properties, facilities and local events are
culturally sensitive and safe for all people
boosts community engagement, economic
development and asset productivity. This
includes partnering with and recognising the
Traditional Custodians of the lands where
we operate and other important community
stakeholders local to our operations.
Our properties are workplaces for
businesses of all shapes and sizes that
contribute to the Australian economy. From
family-owned small businesses to major
government departments and development
construction sites, GPT provides places
where thousands of people work each day.
Places thrive when they are connected
to their communities. Our properties
are dynamic places where people come
together and we apply our planning, design
and management expertise to create
opportunities for them to connect. Our
places are desirable destinations where our
tenants can succeed and where customers
and communities want to visit to work,
shop, transit and socialise.
GPT engages with its tenants, customers
and communities to understand how its
properties can enable them to thrive. Our
‘voice of the customer’ programs provide
us with insights into what works well and
what could be improved at the places we
manage, as do our strong relationships
with current and prospective tenants and
local community groups.
GPT engages daily with its tenants and
customers at the asset and corporate level,
as well as through surveys and meetings,
sector outlook seminars, tenant intranets
and portals, relationship managers and
building management committee meetings.
Customer complaints and feedback are
closely monitored and actioned.
We collaborate with community
groups and local leaders to inform our
developments, placemaking activities
and operations to ensure that our assets
foster community connection, wellbeing
and inclusion. We also work with non-profit
partners and community groups to support
and collaborate with the communities in
which we operate, build resilience and
actively contribute to local and national
social matters of importance.
These insights guide how we develop,
operate and enhance our properties so
that they thrive – by offering relevant
events and experiences, providing flexible
spaces for start-ups and existing tenants,
changing how people move through the
local area, and sharing local First Nations
history and culture.
Related risks and opportunities
» Portfolio operating and financial
performance
» Development
» Health and safety, and
» Environmental and social sustainability.
For more information on our property
portfolio, visit: www.gpt.com.au
1. The 2022 Office Customer Survey covered tenants at assets managed by GPT.
16 | THE GPT GROUP ANNUAL REPORT 2022
HOW WE
CREATE VALUE
Key activities in 2022
Key priorities for 2023
Value created
Space & Co, 2 Southbank Boulevard, Melbourne
» Ongoing momentum across GPT’s
» Office portfolio:
Retail portfolio with Specialty sales now
exceeding $12,000/sqm and portfolio
leasing metrics continuing to strengthen
» Rollout of GPT’s Office turnkey
DesignSuite offering has been well
supported by smaller tenants
» Delivered seven new Logistics projects
to meet growing customer demand for
high quality well located facilities for
their supply chain requirements.
– Progress with the rollout of
our premium turnkey product,
‘DesignSuites by GPT’, and
– Continue to provide tenants with
the optionality of flexible space
with our ‘Space&Co. by GPT’ and
‘The Meeting Place by GPT’ products.
» Logistics portfolio:
– Three speculative developments:
Coulson Street, Wacol, Apex Business
Park, Bundamba and Gateway
Logistics Hub, Truganina expected
to reach completion in 2023, and
– Pursue opportunities to
maintain a pipeline of future
development opportunities for
GPT and its capital partners.
» Retail portfolio:
– The expansion of the Rouse Hill Town
Centre and development of residential
apartments is being progressed.
Growing and
predictable earnings
Thriving places
Sustainable environment
Prospering customers,
suppliers and communities
GPT OFFICE ANNOUNCES A NET PROMOTER SCORE OF 71 IN 2022
Exceeding customer expectations is a strategic priority for GPT
and our success is underpinned by our deep understanding of
the ever-changing needs of our customers. Ongoing engagement
and regular feedback provides us with the rich insights we need
to ensure we are delivering tailored solutions.
In 2022, the Office team conducted a customer experience survey
of GPT tenants across Sydney, Melbourne and Brisbane, using the
Net Promoter Score® (NPS®) method. Through this method we
were able to determine if we had provided our customers with
long-term value while developing their loyalty. The survey engaged
over 200 companies and focused on three areas:
» Satisfaction level
» Likelihood to recommend GPT, and
» Building features and functionality.
The result of this survey was a NPS of 71, which represents
very powerful feedback from GPT’s customers across the Office
portfolio. While this is a one point drop compared to last year’s
NPS score of 72, there was a 49 per cent increase in Respondents
and a 42 per cent increase in Promoters (score of 9 or 10 out of 10).
This reflects a more robust result, and demonstrates that our team
is delivering excellence in the industry. Our Customer Satisfaction
Rating also remained strong in 2022, achieving 9.0+ scores
across all categories including satisfaction with the GPT Building
Management Team and GPT Building health and safety
management procedures.
About NPS
The NPS® is an index ranging from -100 to +100 that
measures the willingness of customers to recommend a
company’s products or services to others. It is used as a
proxy for gauging the customer’s overall satisfaction with
a company’s product or services and the customer’s loyalty
to the brand. It uses one simple question measured from
0 (not at all likely) to 10 (extremely likely).
Note: Bain & Co, the source of the NPS® system advises that above 50 is excellent and above 80 is world class.
THE GPT GROUP ANNUAL REPORT 2022 | 17
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTSECURITYHOLDERINFORMATIONBUSINESSOVERVIEW HOW WE
CREATE VALUE
Empowered people
Our talented, engaged and motivated workforce deliver on our purpose to create value
for customers, investors and communities.
2022 performance
Creating value
Our people are central to GPT’s ability to deliver on our strategy and generate value for our
stakeholders. Their passion, expertise and capability drives our business activities and shapes
our corporate culture.
Our ability to attract, engage and retain a motivated and empowered workforce is central to
our success. We foster an inclusive and high performing work environment that provides our
people with flexibility and development opportunities. An Employee Engagement Survey was
completed in October 2022, which, with a participation rate of 83 per cent, provides us with
great insight into what matters most to our people and their perspectives on and experiences
of working at GPT. Our overall employee engagement scored 72 per cent, a six percentage point
increase from last year. The survey showed that 86 per cent of employees are proud to work
at GPT and believe we are a great place to work. Our commitment to community engagement
and social sustainability, inclusive work environment, employee wellbeing and strong and
effective cross team collaboration were also highly rated by our people with 84 per cent of our
employees telling us GPT enables them to make a positive difference, which is 12 percentage
points higher than the benchmark.
Our people are empowered when everyone feels represented and has a sense of belonging. We
seek to be a diverse and inclusive workplace that offers opportunities for learning, development
and growth to everyone. Our active LGBTQ+ (Lesbian, Gay, Bisexual, Transgender, Queer or
Questioning) awareness and diversity network, GLAD, promotes a culture of inclusion so that
our LGBTQ+ employees and their allies can feel safe and welcome at GPT. We participate in the
Australian Workplace Equality Index (AWEI) (run by Pride in Diversity) and in 2022 we received a
Gold ranking in the AWEI small employer category for the first time (up from Bronze in 2021).
We support all forms of flexibility, formal and informal. GPT’s offices and assets remain the
primary work location for most of our employees, playing an important cultural role as places
where our people come together to collaborate, learn, exchange ideas and solve problems. GPT
was certified as a Family Inclusive WorkplaceTM for the first time in 2022, receiving recognition
for the calibre of our policies, practices and support for working parents and carers.
GPT continues to explore employment opportunities for First Nations people including through
our ten year commitment to the CareerTrackers Indigenous Internship Program, which helps
create pathways for First Nations university students into the workforce through industry
experience. In 2022, GPT was pleased to support a scholarship for a First Nations student
studying at the University of Western Sydney; and through our second Stretch Reconciliation
Action Plan launching in 2023 we are pleased to further enhance employment outcomes and
cultural learning in our business and wider network.
GPT remains committed to supporting the holistic wellbeing of our people. Our Wellbeing@GPT
program incorporates initiatives addressing the four dimensions of mind, body, purpose and
place. A wellbeing platform was launched to all employees in July 2022 providing free access
to workouts, podcasts, toolkits, articles, videos and self-guided learning and therapy modules
covering topics across health, money, work, family and life matters. A Wellbeing Month was
held in October 2022 encouraging participation in a wide range of wellbeing activities, including
health checks, lunch and learn forums and physical exercise challenges. Two wellbeing leave
days (‘Wellbeing Days’) were offered during 2022 to coincide with public holidays to encourage
our people to take time to look after themselves by taking a meaningful break from work.
Maintaining our historically low levels, we had on average 3.85 days per year (total days: 2,046)
of employee absenteeism across our workforce in 2022.
MORE IN THE REMUNERATION REPORT ON PAGE 50
86%
Employees are proud to work for GPT
46.4%
Females in top quartile
Gold
Employer for LGBTQ+ inclusion,
small employer (AWEI)
22.2 hours
Average training per full-time employee 1
Certified as a
Family Inclusive
WorkplaceTM
Employer of Choice
for Gender Equality
citation achieved for a futher 2 years
1. Total training hours 11,792.
18 | THE GPT GROUP ANNUAL REPORT 2022
HOW WE
CREATE VALUE
Engaging with stakeholders
Key activities in 2022
Key priorities for 2023
GPT has a consultative work environment
where employee views are sought
out, respected, and acted upon where
appropriate. We engage regularly
with employees through monthly
Employee Town Hall meetings, internal
committees and working groups, internal
communication channels and business
leader presentations. We conduct an
employee engagement survey every year
and more frequently use focused ‘pulse’
surveys to seek feedback and views on
topical issues.
During 2022 we had a particular focus
on Safety, Sexual Harassment, Domestic
and Family Violence (DFV) and Inclusive
Leadership education. To ensure we remain
appropriately focused on a zero tolerance
stance on all forms of discrimination or
harassment and in response to the Sex
Discrimination Commissioner’s ‘Respect
at Work’ report, sexual harassment
education was delivered to all People
Leaders throughout the year. In addition,
the Inclusive Leadership education,
delivered across our People Leader cohort,
covered the value of both cognitive and
identity diversity, mitigating bias and the
core inclusive leadership behavioural traits
needed to drive a culture of inclusion at
GPT. Our comprehensive DFV education
gave all Leaders a clear understanding
of how to support and advocate for
employees experiencing DFV.
GPT’s participation in external benchmarks
such as the Workplace Gender Equality
Agency’s (WGEA) Employer of Choice for
Gender Equality citation, the Australian
Workplace Equality Index (AWEI) for
LGBTQ+ inclusion and the Family
Inclusive WorkplaceTM certification help
us to measure our progress and identify
further actions we can take to ensure
our work environment remains inclusive
and engaging.
Related risks and opportunities
» People and culture
» Health and safety, and
» Portfolio operating and financial
performance.
» Continuing to build on our strong,
inclusive culture to support our success
» Roll out of a new Human Resources
Information System (HRIS) to deliver
improved employee experience, data
management, reporting and analytics, and
» Development and communication of a
clear Employee Value Proposition (EVP)
to attract and retain talent.
Value created
Empowered people
» Employee Engagement Survey
completed in October 2022
» Welcomed the UniSuper and ACRT teams
through the successful onboarding and
transition of approximately 100 new
team members
» Inclusive Leadership training delivered
across our entire People Leader cohort
» Domestic and Family Violence and
Sexual Harassment awareness
sessions for People Leaders
» Launch of a holistic Wellbeing Platform
for our people
» Gender diversity initiatives resulting in
achievement of 38.3 per cent gender
diversity in the top decile and gender pay
gap decreasing from 20.73 per cent to
17.53 per cent exceeding target
» Recognised as a Gold employer for
LGBTIQ inclusion, moving up from Bronze
in the AWEI Small Employer category
» Recommenced hosting CareerTracker
interns and high school students, and
» Launch of our new Parental Leave policy.
GPT, Tour de PIF
THE GPT GROUP ANNUAL REPORT 2022 | 19
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW HOW WE
CREATE VALUE
Sustainable environment
Carbon Neutral Now, Nature Positive Next. We will deliver resilient assets, that optimise
environmental outcomes.
2022 performance
Creating value
-86%
Emissions intensity reduction since 2005
-53%
Energy intensity reduction since 2005
-62%
Water intensity reduction since 2005
35%
Closed loop waste recovery in 2022
2024
Carbon neutral target 1
5 Stars
Retained highest GRESB rating
1st
Ranked first among more than
800 listed real estate companies
in the 2022 S&P Global Corporate
Sustainability Assessment (CSA)
Corporate Sustainability Assessment
20 | THE GPT GROUP ANNUAL REPORT 2022
GPT is committed to demonstrating leadership in sustainability. Excellence in environment,
social and governance (ESG) matters underpins our activities and the future performance
of the business.
We are committed to being a positive contributor to the environment across our property
operations and development activities, informed by our restorative approach to addressing
the residual environmental impacts of our direct activities. This approach creates value by
restoring the environment while ensuring our buildings remain resilient as the environment
changes to deliver shared benefits for our investors, local communities and stakeholders.
GPT has led the property industry’s decarbonisation efforts, including delivering the
first Climate Active carbon neutral certified prime property portfolio in 2020 and upfront
embodied carbon neutral certified development in 2022. Considering the scientific
imperative to cut emissions now, we are acting to measure and reduce carbon emissions
as a priority, including both operational and embodied carbon emissions. Only residual
emissions that can’t be feasibly eliminated are offset, with a focus on Australian-based
reforestation solutions that have co-benefits for biodiversity. This delivers on our focus
of being carbon neutral now, nature positive next.
Comprehensive operations management systems and processes enable us to monitor
and measure performance and set targets to improve building efficiency and reduce
environmental impact. Our ISO14001 Certified Environmental Management System was
expanded in 2022 beyond operating assets to include development and capital works,
including upfront embodied carbon. Developments are designed so that they can be
constructed and operated with reduced environmental impact and operated efficiently upon
completion. In 2022, we delivered Australia’s first upfront embodied carbon neutral Logistics
development certified by the Green Building Council of Australia (GBCA) and Climate Active.
The Group has reduced its carbon emissions intensity (Scope 1 and 2 net offsets) by
86 per cent and energy intensity by 53 per cent against our 2005 baseline.
As part of GPT’s net zero plans, 20 of GPT’s operationally controlled assets in which we have
an ownership interest are Climate Active Carbon Neutral (for Buildings) certified. Four are
operating carbon neutrally with certification due in 2023.
GPT is also driving an orderly transition to a low carbon economy and improving its assets’
resilience to this transition. The Carbon Neutral Certified Chirnside Park Shopping Centre is
home to GPT’s first Smart Energy Hub in partnership with Shell Energy Australia and includes
the investment in a 650 kW solar PV array, a 2MWh battery and a loadflex program that
flexibly responds to grid supply constraint while lowering energy costs.
During the year, we continued developing our asset holistic water management plans in
support of our water neutral objective, addressing monitoring capability, reducing potable
water usage and decreasing the impacts of stormwater discharge. Our water intensity was
reduced by 62 per cent against our 2005 baseline.
Resource circularity remains important to GPT and we continue to lead transparency in
reporting closed loop waste recovery outcomes, not just diversion from landfill. Despite facing
post pandemic challenges for recycling as individually wrapped materials and consumer
behaviours have negatively impacted recycling processes, our target of 35 per cent closed
loop recovery outcomes was achieved in 2022. Increased engagement programs and the
focus on non-operational materials and waste are aimed at improving on this performance.
MORE ON PAGE 38-39
1. Target to achieve Climate Active Carbon Neutral (for Buildings) certifications for all assets that GPT operationally
control and in which GPT has an ownership interest, by the end of 2024. The majority of Logistics assets are
operationally controlled by tenants.
HOW WE
CREATE VALUE
The GPT Materials and Embodied Carbon
Working Group made significant progress
in 2022 in implementing its strategy to
achieve upfront embodied carbon neutrality.
Through improved measurement processes
and with more efficient design, changes in
materials and a shift to using renewable
energy in the construction and delivery
processes, upfront embodied carbon
emissions are reduced where feasible.
With an upfront embodied carbon neutral
target set for all assets that are developed
for GPT’s investment portfolio to be upfront
embodied carbon neutral from 2023
onwards, emissions that aren’t eliminated
will require offsetting. Over the past year,
an offset strategy has been developed and
implemented to mitigate risks around the
certainty of supply, cost, and quality of
offsets. High quality offsets are secured for
GPT’s forecast emissions until 2027 at a cost
of approximately $30 per tonne.
Since 2018, GPT has offset emissions in
partnership with leading environmental not-
for-profit, Greenfleet, Australia’s first carbon
offset provider to protect the climate through
the restoration of protected native forests.
In 2022, in a landmark agreement between
GPT and Greenfleet, the partnership is set
to support the restoration of 1,100 hectares
of native forest in the Noosa Hinterland,
an important region for endangered koalas
and other animal species. As part of GPT’s
‘Restoring Country for Climate’ project in
partnership with Greenfleet, and in strong
alignment with GPT’s Reconciliation Action
Plan, Greenfleet is also partnering with local
Traditional Owners, the Kabi Kabi People’s
Aboriginal Corporation, bringing resources
and jobs to their community.
Find out more
GPT’s Climate Disclosure Statement
is available on our website:
www.gpt.com.au
Riverside Centre, Brisbane
GPT’S ENVIRONMENTAL STRATEGIES TO DRIVE
ENVIRONMENTAL PERFORMANCE
1. RESILIENCE – Stay ahead of the curve of environmental change
» Improve the resilience of our portfolios to emerging sustainability risks
including climate change
» Transparent disclosure of sustainability risk management processes to
drive investor confidence
2. INNOVATION – Invest in innovations
» Differentiated sustainability offerings and pioneering environmental solutions
» New solutions for emerging risks and opportunities
3. SYSTEMATISATION – Systematically improve performance
» Establish processes to take our innovations into BAU operations
» Continued improvement and expansion of ISO 14001 certified
environmental management systems
4. ENGAGEMENT – Broaden stakeholder engagement
» Engage (with tenants, supply chain and investors) and partner to amplify
results and support stakeholders on their sustainability journey
» Call to action for internal and external stakeholders (to integrate
environmental management into decision making)
With objectives and actions focused around:
» Climate response: GPT is delivering certified carbon neutrality and building
resilience to the impacts of climate change.
» Restoring nature: GPT is focused on achieving a net positive impact
on biodiversity.
» Resource circularity: GPT is committed to circular outcomes by maximising
the lifecycle of materials, closed-loop recovery processes and avoiding
unnecessary consumption of materials.
» Water neutrality: GPT strives to be water neutral and resilient to drought and
flood (water scarcity and extreme rainfall).
THE GPT GROUP ANNUAL REPORT 2022 | 21
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW HOW WE
CREATE VALUE
Sustainable environment CONTINUED
Engaging with stakeholders
Key activities in 2022
Key priorities for 2023
GPT participates in external surveys and
benchmarks on ESG matters – primarily
the S&P Global Corporate Sustainability
Assessment and GRESB real estate
assessment. These benchmarks enable
our stakeholders to assess the progress
of the Group and our wholesale funds.
They also provide useful insights into
stakeholder expectations in relation to
ESG, how our performance aligns with
those expectations, and how it compares
to our global real estate peers.
Our understanding of sustainable
property operations, environmental
issues, and stakeholder expectations
influences how we create value
through our operations and informs
our assessment of the material risks
and opportunities arising from our
environmental impact.
Related risks and opportunities
» Portfolio operating and
financial performance
» Development, and
» Environmental and social
sustainability.
» Updating the ESG Strategy, approved
by the Board
» GPT ranked first internationally from
867 listed real estate companies
in the S&P Global Corporate
Sustainability Assessment
» Continued delivery of GPT’s net zero
plan including Climate Active Carbon
Neutral certification of buildings and
developments
» Climate adaption planning processes
accelerated across the portfolio
» GPT’s Restoring Country for Climate
» Development of asset level water
project sequesters carbon and restores
1100 hectares of native biodiverse
forest in partnership with Greenfleet
and Traditional Owners
» TCFD aligned Climate Disclosure
Statement with asset-level climate
adaptation plans under way
» ISO14001 certified environmental
management system scope expanded
to cover environmental impacts
from development and capital
works activities such as embodied
carbon, and
» Embodied carbon strategy endorsed
with a target to deliver upfront
embodied carbon neutral on top
of our operational carbon neutral
building commitments.
master plans to establish a pathway
to water neutrality
» Asset level biodiversity impact
reviews and development of
nature positive plans, and
» Increased focus on materials
and driving higher quality
recycling outcomes.
Value created
Growing and
predictable earnings
Thriving places
Sustainable environment
22 | THE GPT GROUP ANNUAL REPORT 2022
HOW WE
CREATE VALUE
143 Foundation Road, Truganina
AUSTRALIA’S FIRST CLIMATE ACTIVE UPFRONT
EMBODIED CARBON NEUTRAL LOGISTICS DEVELOPMENT
In implementing its environmental strategies, GPT has
achieved the delivery of Australia’s first Climate Active upfront
embodied carbon neutral certified logistics development at
143 Foundation Road, Truganina, Victoria. GPT’s net zero
emissions plan involves measuring emissions and then a
focus on reducing and eliminating emissions. Offsets are only
used for residual emissions that cannot be feasibly eliminated
and we independently validate our achievement through
Climate Active Carbon Neutral certification.
The emissions were measured by GPT’s quantity surveyors,
using the bill of quantities and applying emissions factors
from Environmental Product Declarations and the AusLCI
database. To reduce upfront embodied carbon emissions
from construction materials by 6.6 per cent, conventional
concrete was replaced by lower carbon concrete with
ground granulated blast furnace slag content in both internal
and external slabs. For every tonne of residual emissions,
GPT retired 1 tonne of Greenfleet forest restoration carbon
removal offsets and 1 tonne of certified renewable energy
emissions avoided offsets.
Additionally, the design of 51 Flinders Lane office development
in Melbourne, Victoria which is currently being developed by GPT
for the GPT Wholesale Office Fund, has been verified by Green
Star to achieve upfront embodied carbon neutrality and will be
certified by Climate Active after expected completion in 2025.
The cost of targeting upfront embodied carbon neutrality for all
developments from 2023 will vary from project to project but on
average is expected to increase development costs by less than
1 per cent. The current forecast cost increase directly attributable
to upfront embodied carbon neutrality for GPT’s development at
51 Flinders Lane, Melbourne is approximately 0.3 per cent.
A robust climate response is an important aspect of GPT’s ESG
leadership. As an early adopter with an ongoing commitment to
reducing carbon emissions, GPT has benefited from significant
savings over time in its operational assets. Our investment in
reducing upfront embodied carbon emissions is expected to
position the Group well to minimise risks associated with the
transition to a low carbon economy, and our leadership in this
area will provide valuable insights for the future.
THE GPT GROUP ANNUAL REPORT 2022 | 23
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTSECURITYHOLDERINFORMATIONBUSINESSOVERVIEW HOW WE
CREATE VALUE
Prospering customers, suppliers and communities
Strong relationships with customers, supply chain partners and communities enable us
to meet their current and emerging needs and ensure our mutual future success.
2022 performance
Creating value
$7m
Community investment
96.8%
Employees supported
The GPT Foundation
93%
Small businesses paid on time
UN Global
Compact
Participant of the United Nations
Global Compact since 2012,
contributing to the UN
Sustainable Development Goals
Signatory to the UN PRI in 2022
24 | THE GPT GROUP ANNUAL REPORT 2022
GPT’s success requires strong, productive relationships with our tenants, customers,
supply chain partners and local communities. We foster trusted relationships and work
collaboratively with these stakeholders to inform our business activities, such as strategy,
operations, development and placemaking, to build prosperous and sustainable futures.
GPT publicly commits to protecting and respecting the human rights of its employees,
customers, suppliers, and business partners. As outlined in our Human Rights Statement,
we uphold human rights in line with the United Nations Guiding Principles (UNGP) on
Business and Human Rights and continue to take action to enhance transparency in
this area. Our commitment is embedded in our policies, systems and processes and
we recognise the emphasis of the UNGP on tracking the effectiveness of measures to
address human rights harms.
GPT has been a member of the United Nations Global Compact (UN Global Compact)
since 2012, and annually reports a Communication on Progress. In 2022, we participated
in the Early Adopter program to support the pilot of the UN Global Compact’s new reporting
framework enhancing transparency in reporting against the Global Compact’s ten principles.
Additionally, GPT became a signatory to the United Nations Principles for Responsible
Investment (UN PRI), to further publicly demonstrate the Group’s commitment and actions
to incorporate environmental, social and governance (ESG) factors in our investment decision
making. Our first year of reporting will commence in 2023.
We maintain strong relationships with our tenants and customers, which are informed by
research and data insights to ensure that we understand their current and emerging needs
so that our properties support their prosperity today and into the future.
Our properties contribute to their local communities by providing employment and business
opportunities, events and experiences where people can come together, and spaces which
everyone can enjoy. We partner with national and local organisations to inform tailored
social plans across the portfolio and to collaborate on initiatives with our customers and
communities that support socio-economic outcomes.
We seek to build productive long-term partnerships with our suppliers that support the
delivery of our procurement and supply chain commitments, and work together to source
ethical and sustainable products and services to support a thriving supply chain. GPT is
committed to the timely payment of our suppliers to support their business viability, we paid
93 per cent of small businesses on time in 2022.
We work together with our suppliers to identify and address the risk of unfair labour practices
and modern slavery in our supply chain, including through our membership of the Cleaning
Accountability Framework, the UN Global Compact and the Supply Chain Sustainability
School; and our participation in the Property Council of Australia’s Modern Slavery Working
Group. During the year the Supplier Management System, Felix was implemented to improve
our ability to screen for and monitor supply chain risks including modern slavery, and provide
greater transparency across GPT’s new and existing suppliers.
The Group’s third Modern Slavery Statement was published in 2022 and builds on the
foundations of our prior efforts to assess and address modern slavery risks in our business,
setting out our current actions and critical next steps.
The GPT Foundation coordinates GPT’s philanthropic contributions which includes workplace
giving, fundraising, volunteering and supporting our partnerships with seven Australian
charities. Creating value in the communities where we live and operate is a key objective for
GPT and through the Foundation we are able to achieve this in two ways. Firstly, we provide
targeted support to organisations working with young people, and secondly, we empower our
people to play an active role in our communities.
HOW WE
CREATE VALUE
During 2022, 96.8 per cent of GPT
employees supported the Foundation and
its charity partners, including the Australian
Childhood Foundation, ReachOut, The
Clontarf Foundation, Mission Australia,
Property Industry Foundation, batyr
and Youth Off The Streets. Moreover,
43 per cent of employees volunteered their
time to support volunteering opportunities
for various charity partners. 2023 marks
the start of the GPT Foundation’s next three
year strategy, focusing on amplifying the
impact of Australian charities relevant to
the communities where we operate.
During 2022, GPT drafted its second
Stretch Reconciliation Action Plan. We
have continued to progress with action
in line with our previous Stretch RAP,
focusing on embedding cultural protocols
and relationships with First Nations
partners in our development practices,
customer engagement and procurement.
We look forward to launching our new
commitments in 2023.
Find out more
GPT’s Sustainability Report is available
on our website: www.gpt.com.au
Engaging with stakeholders
Key activities in 2022
Strong relationships with GPT Foundation
partners, First Nations partners, and
community organisations enable us to make
relevant and meaningful contributions. We
work together to understand how we can
best progress towards our shared goals.
We engage and collaborate with Traditional
Custodians and First Nations people, with
community groups, non-profit organisations
and local leaders to support reconciliation
actions and inform our developments,
placemaking activities and operations to
ensure that our assets foster community
connection, wellbeing and inclusion. We
seek regular feedback from these partners.
GPT also works with local stakeholder
groups, First Nations-owned businesses,
social enterprises, non-profit organisations
and government to support and collaborate
with the communities in which we operate.
These partnerships help us build resilience
and provide the opportunity to actively
contribute to local and national social
matters of importance.
We regularly engage with our supply chain
partners to understand their experience
of working with GPT and identify how we
can improve, while ensuring their ongoing
performance and alignment through regular
meetings, reporting, contractor reviews,
audits and risk assessments.
Related risks and opportunities
» Environmental and social sustainability
» Health and safety, and
» Portfolio operating and financial
performance.
» Participation in the Early Adopter program
to support the pilot of the UN Global
Compact’s new reporting framework
enhancing transparency in reporting
against the Global Compact’s ten principles
» Became a signatory to the United Nations
Principles for Responsible Investment
(UN PRI)
» Supplier Management System, Felix
was implemented to improve our
ability to screen for and monitor
supply chain risks, and
» Publishing of 2022 Modern Slavery
Statement.
Key priorities for 2023
» Undertake further human rights
reviews of our supply chain
» Launch GPT’s second Stretch
Reconciliation Action Plan
» Continue to progress on GPT’s
Modern Slavery road map including
a focus on our development supply
chain, and
» Commence the GPT Foundation’s
2023-26 Strategy.
Value created
Thriving places
Prospering customers,
suppliers and communities
Minus18 at Highpoint: CloseUp 2022
THE GPT GROUP ANNUAL REPORT 2022 | 25
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTSECURITYHOLDERINFORMATIONBUSINESSOVERVIEW GROUP PERFORMANCE
GPT delivered FFO of $620.6 million for the year ended 31 December
2022, up 11.9 per cent on the prior period (2021: $554.5 million),
reflecting increased FFO contributions from all segments, offset by
increased financing costs. FFO per security increased 12.4 per cent
to 32.40 cents, reflecting the reduction in securities due to the
on-market buyback in the prior period.
Each segment’s operational financial performance is detailed from
page 30.
Finance costs from borrowings increased to $140.8 million (2021:
$85.5 million). This was due to an increase in average borrowings
of approximately $0.9 billion over the prior period and a higher cost
of debt of 3.2 per cent (2021: 2.4 per cent).
GPT’s statutory net profit after tax was $469.3 million, as compared
to $1,422.8 million in the prior corresponding period, predominantly
due to negative investment property valuation movements of
$159.3 million (2021: $924.3 million positive revaluation).
The Group’s 12 month Total Return was 3.9 per cent
(2021: 14.1 per cent) predominantly as a result of the FFO yield
of 5.3 per cent (31 December 2021: 5.2 per cent) offset by the
negative investment property revaluations resulting in a decrease
in NTA per stapled security to $5.98.
Distribution
The Group targets to distribute 95 to 105 per cent of free cash flow,
defined as operating cash flow less maintenance and leasing capex
and inventory movements. The Group may make other adjustments
in its determination of free cash flow for one-off or abnormal items.
Over time, free cash flow approximates AFFO.
Distributions to stapled securityholders relating to the year ended
31 December 2022 are $478.9 million (2021: $444.4 million),
representing an annual distribution of 25.0 cents per ordinary stapled
security, an increase of 7.8 per cent on 2021 (2021: 23.2 cents). The
payout ratio for the year ended 31 December 2022 is 96.0 per cent of
free cash flow. The increase in distribution is due to higher free cash
flow as a result of improved cash collections from tenants driving
higher operating cash flows, partly offset by higher maintenance
capex and lease incentives.
Group FFO earnings composition 31 December 2022
Retail, 37%
Office, 40%
Logistics,
23%
Group Performance
Review of Operations and Operating Result
The Group delivered solid growth in Funds From Operations (FFO) and
distributions for the year despite the challenges of COVID restrictions
in the early part of the year, and an environment of high inflation and
a material increase in interest rates particularly in the second half
of the year. All three business segments reported increased Funds
From Operations on the prior period. This was partially offset by
higher financing costs.
The Retail portfolio performed strongly as the operating environment
normalised. Retail sales across the portfolio were generally well above
2019 pre-pandemic levels with the only exception being our CBD
located asset at Melbourne Central where customer visitation has
not fully recovered but continued to strengthen. High occupancy was
retained across the Retail portfolio and leasing spreads continued
to improve, with lease structures consisting of fixed base rents and
annual fixed increases. The sale of a non-core retail asset, Casuarina
Square, owned jointly by GPT and the GPT Wholesale Shopping Centre
Fund was completed in March. Mixed-use development schemes are
progressing at Rouse Hill Town Centre and Highpoint Shopping Centre.
Our prime grade Office portfolio occupancy reduced on the prior year
reflecting the challenging leasing environment with vacancy remaining
above long-term averages in each of our core markets. While larger
tenants continue to evaluate their space requirements in light of
hybrid work arrangements, delaying decisions, smaller tenants were
actively seeking to upgrade to high quality assets in prime locations.
In Office we continued the rollout of our premium turn-key product,
‘DesignSuites by GPT’, specifically designed to appeal to smaller
tenants. The product continues to be well supported, with 22,500 sqm
(on a 100 per cent NLA basis) of DesignSuites leased during the year.
The GPT Wholesale Office Fund’s development at 51 Flinders Lane
is underway and during the year a development site was secured for
the Fund in the North Sydney CBD.
Ongoing structural tailwinds in the sector continue to generate strong
tenant demand and maintain high occupancy across our Logistics
portfolio. During the year we increased our investment in the Logistics
sector, completing seven developments, with a further four projects
underway and due to complete by the end of 2023. Our Logistics
partnership with QuadReal is well progressed, with half of the $2 billion
target committed and half of that invested. Logistics currently
represents 28 per cent of the Group’s diversified property portfolio.
Funds Management growth remains a key focus for the Group and
in September, the transition of management to GPT of UniSuper’s
$2.8 billion portfolio of real estate investment was completed.
In December, GPT also commenced management of the Australian
Core Retail Trust (ACRT) and property management of Pacific Fair
Shopping Centre.
The Group’s gearing at 31 December 2022 of 28.5 per cent remains
below the mid-point of our stated range of 25 – 35 per cent.
Funds From Operations (FFO)
Funds From Operations (FFO) represents GPT’s underlying earnings
from its operations. This is determined by adjusting statutory net
profit after tax (under Australian Accounting Standards) for certain
items which are non-cash, unrealised or capital in nature. This is in
accordance with FFO and Adjusted Funds From Operations (AFFO) in
the Property Council of Australia ‘Voluntary Best Practice Guidelines’.
26 | THE GPT GROUP ANNUAL REPORT 2022
GROUP
PERFORMANCE
Funds From Operations ($M)
Financial Result
620.6
For the year ended
31 Dec 22
$M
31 Dec 21
$M
Change
%
554.7
554.5
2020
2021
2022
FFO per ordinary stapled security (cents)
28.48
28.82
32.40
2020
2021
2022
Distribution per ordinary stapled security (cents)
13.30
12.70
12.30
9.90
1H21
2H21
1H22
2H22
Retail
– Operations net income
– Funds management net
income
– Development net income
Office
– Operations net income
– Funds management net
income
– Development net income
Logistics
– Operations net income
– Funds management net
income
– Development net income
Corporate management
expenses
Net finance costs
Income tax expense
Funds from Operations (FFO)
Non-FFO items:
Valuation (decrease)/increase
Financial instruments mark to
market, net foreign exchange
movements and other items
Net profit for the year after tax
FFO per ordinary stapled
security (cents)
Funds from Operations (FFO)
Maintenance capex
Lease incentives
Adjusted Funds from
Operations (AFFO)
Distributions
Distribution per ordinary stapled
security (cents)
289.9
13.7
(0.1)
303.5
290.3
41.9
2.7
334.9
182.4
1.8
3.9
188.1
228.5
11.8
5.4
245.7
23.5%
268.0
36.5
1.2
305.7
151.2
—
3.5
9.6%
154.7
21.6%
(57.6)
(62.5)
(7.8%)
(139.9)
(8.4)
620.6
(85.2)
(3.9)
64.2%
115.4%
554.5
11.9%
(159.3)
924.3
8.0
(56.0)
469.3
32.40
620.6
(31.7)
(78.1)
510.8
478.9
25.00
1,422.8
(67.0%)
28.82
12.4%
554.5
(31.3)
(60.3)
462.9
444.4
23.20
11.9%
1.3%
29.5%
10.3%
7.8%
7.8%
THE GPT GROUP ANNUAL REPORT 2022 | 27
DIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW GROUP PERFORMANCE
Group Performance CONTINUED
Unlevered Total Return (%)
The unlevered Total Return at the investment portfolio level for the 12 months to 31 December 2022 was 3.8 per cent with each portfolio’s
performance detailed in the following chart.
Office
Logistics
Retail
Total Portfolio
(incl GWOF interest)
(incl GQLT interest)
(incl GWSCF interest)
(including equity interests)
4.8
4.5
1.3
5.8
5.1
1.9
7.0
4.8
3.8
-1.0
-5.2
-0.4
Income Return
Capital Return
Total Return
31 Dec 22
$M
31 Dec 21
$M
Change
%
Balance sheet
» The Group independently valued all completed investment properties
as at 31 December 2022. Valuations were conducted by valuers with
appropriate experience and expertise.
0.7%
(3.0%)
6.5%
0.9%
(4.4%)
» The independent valuations contain a number of assumptions,
estimates and judgements on the future performance of each
property including market rents and growth rates, occupancy,
capital expenditure and investment metrics. Total portfolio assets
increased by 0.9 per cent in the year ended 31 December 2022
due to investment in developments, offset by the divestment of
Casuarina Square and net property devaluations.
» Total borrowings decreased by $86.8 million as a result of asset
sales and favourable non-cash movements on the Group’s
foreign currency borrowings of $211.0 million, partially offset by
development capital expenditure.
Financial Position
Portfolio assets
Retail
Office
Logistics
5,789.2
5,982.6
4,834.5
5,750.2
6,170.0
4,539.9
Total portfolio assets
16,606.3
16,460.1
Financing and corporate
assets
687.9
719.6
Total assets
Borrowings
Other liabilities
Total liabilities
Net assets
Total number of ordinary
stapled securities (million)
17,294.2
17,179.7
0.7%
5,052.5
765.8
5,139.3
367.1
(1.7%)
108.6%
5,818.3
5,506.4
5.7%
11,475.9
11,673.3
(1.7%)
1,915.6
1,915.6
—
NTA ($ per security)1
5.98
6.09
(1.8%)
1. Includes all right-of-use assets of the GPT Group.
28 | THE GPT GROUP ANNUAL REPORT 2022
GROUP
PERFORMANCE
Capital management
GPT continues to maintain a strong focus on capital management.
Key matters for the period include:
» Net gearing of 28.5 per cent (31 December 2021: 28.2 per cent).
» Weighted average cost of debt for the year was 3.2 per cent,
up from 2.4 per cent for the year to 31 December 2021.
» Mark to market movements on derivatives and borrowings has
increased net tangible assets by $4.3 million.
As at
31 Dec 22
31 Dec 21
Change
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
$1,126.9 million (after allowing for refinancing of $502.3 million
of outstanding commercial paper) as at 31 December 2022;
» Weighted average debt expiry of 6.2 years, with sufficient liquidity
in place to cover the $202.7 million of debt (excluding commercial
paper outstanding) due between the date of this report and
31 December 2023;
Net gearing
28.5%
28.2%
Up 30bps
» Primary covenant gearing of 28.7 per cent, compared to
Weighted average
debt maturity
6.2 years
6.3 years
Down 0.1
years
Interest rate hedging
76%
69%
Up 7%
S&P/Moody’s
credit rating
A (negative
/ A2 (stable)
A (negative)
/ A2 (stable)
Unchanged
Sources of funds
Foreign bank debt
6%
Domestic
bank debt
18%
Commercial
paper
10%
CPI bonds
2%
Foreign MTNs
15%
USPP
31%
Domestic MTNs
19%
a covenant level of 50.0 per cent; and
» Interest cover ratio for the twelve months to 31 December 2022
of 5.5 times, compared to a covenant level of 2.0 times.
Cash flows
The cash balance as at December 2022 decreased to $60.2 million
(2021: $61.5 million). The following table shows the reconciliation
from FFO to the cash flow from operating activities and free
cash flow:
For the year ended
FFO
Less: non-cash items
included in FFO
Less: net movement
in inventory
Less: one-off
transaction costs
Movements in working
capital and reserves
Net cash inflows from
operating activities
Add: net movement
in inventory
Add: one-off transaction
costs in cashflows from
operating activities
Less: maintenance capex
and lease incentives
(excluding rent free)
31 Dec 22
$M
31 Dec 21
$M
Change
%
620.6
(30.2)
(4.8)
(5.1)
(18.4)
554.5
(36.6)
11.9%
(17.5)%
(7.1)
(32.4)%
—
9.6
N/A
Large
562.1
520.4
8.0%
4.8
5.1
7.1
(32.4%)
—
N/A
(73.0)
(60.0)
(21.7%)
Free cash flow
499.0
467.5
6.7%
The increase in free cash flow is a result of increased operating cash
flows from higher cash collections from tenants, partly offset by
higher maintenance capex and lease incentives. One-off transaction
costs to transition UniSuper and ACRT mandates from AMP to GPT
are excluded from free cash flow.
The Non-IFRS information included above has not been audited in
accordance with Australian Auditing Standards, but has been derived
from note 1 and note 16 of the accompanying financial statements.
THE GPT GROUP ANNUAL REPORT 2022 | 29
DIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW Retail
$5.6b
Retail portfolio value
(2021: $5.6 billion) 1
99.4%
Retail portfolio occupancy
(2021: 99.1%)
4.0 years
Retail portfolio Weighted Average
Lease Expiry (2021: 3.9 years)
5.03%
Retail portfolio Weighted
Average Capitalisation Rate
(2021: 5.03%)
7.0%
Retail portfolio 12 month
Total Return (2021:4.8%)
$0.4b
Estimated end value of
Retail development pipeline 2
GROUP PERFORMANCE
Performance
Operations
Full year operating net income was $289.9 million, an increase of 26.9 per cent on 2021.
This result reflects the normalisation of trade post COVID-19 with reduced rent relief provided to
tenants and strong collection of trade receivables leading to a reversal of debtor and abatement
provisions provided for in prior periods (+$1.4 million).
The portfolio occupancy as at 31 December 2022 was 99.4 per cent (2021: 99.1 per cent),
reflecting the strong demand from retailers seeking a presence in high quality assets.
The Group completed 581 leasing deals during the year, with both an improved average fixed
annual rental increase of 4.4 per cent (31 December 2021: 4.3 per cent) and average lease
term of 4.7 years (31 December 2021: 4.3 years). Total Specialty leasing spreads improved
to negative 2.8 per cent (31 December 2021: negative 7.0 per cent).
Total Centre sales were up 30.9 per cent and Total Specialty sales were up 36.1 per cent
compared to 2021. Sales growth in all retail categories was positive for the full year 2022 driven
by continued sales growth in both non discretionary and discretionary spending, particularly
in Dining, Fashion, Health and Beauty. Total Centre sales were also up 6.8 per cent on pre-
pandemic 2019.
Melbourne Central, our largest retail investment property, continued to strengthen post COVID
with both customer traffic and retail sales growing materially on 2021. The asset continues to be
in strong demand by retailers, with a number of new flagship stores and experience concepts,
including Lego, which opened in 2022 and Monopoly due to open in 2023.
The Retail portfolio achieved a net revaluation increase of $93.3 million (1.7 per cent) for the
12 months to December 2022 (2021: $30.7 million), including GPT’s equity interest in the GPT
Wholesale Shopping Centre Fund (GWSCF). The weighted average capitalisation rate remained
flat at 5.03 per cent (2021: 5.03 per cent).
Funds Management
Retail Funds Management income increased by 16.1 per cent to $13.7 million. GPT successfully
transitioned the UniSuper portfolio funds and property management on 1 September 2022 with
assets of $2.8 billion. This was then followed by the transition of the $2.7 billion Australian Core
Retail Trust (ACRT) in December 2022. ACRT is the owner of Pacific Fair Shopping Centre (QLD)
and Macquarie Centre (NSW), with GPT undertaking property management for Pacific Fair from
1 December 2022.
Development
GPT and its managed funds continue to have a material development pipeline of mixed-use
opportunities. During the period management continued to advance the retail and residential
mixed-use expansion of the Rouse Hill Town Centre. A development approval is expected
to be received during the 1H 2023 which will then provide GPT the ability to commence the
development at the appropriate time.
Development Applications have also been submitted for the first stages of a mixed-use scheme
expansion of Highpoint Shopping Centre which is one of Australia’s largest and most successful
shopping centres.
1. Includes GPT’s interest in GWSCF.
2. Includes GPT and GWSCF opportunities. Excludes mixed-use.
30 | THE GPT GROUP ANNUAL REPORT 2022
GROUP
PERFORMANCE
Office
Performance
Operations
Operations net income for the period ending 31 December 2022 increased 8.3 per cent, as a
result of the acquisition of 62 Northbourne Avenue, Canberra in November 2021 and the lease
up of the Queen & Collins and 32 Smith developments that reached practical completion in
2021. Comparable income growth for the portfolio was 3.4 per cent. Office occupancy as at
December 2022 is 87.9 per cent and the portfolio WALE is 4.9 years.
While the leasing market continues to be challenging, activity improved in the second half
of the year. Smaller tenants were the most active as they sought to upgrade to high quality
assets in prime locations. The Group’s premium turn-key product, ‘DesignSuites by GPT’, was
specifically designed to appeal to these tenants. Larger tenants continued to evaluate their
space requirements in light of hybrid work arrangements, but activity from these tenants
increased in the last quarter. The Group’s flexible space offering, ‘Space&Co’ provides these
tenants with the optionality they desire in the current environment. The Group continues to
focus on providing exceptional customer experience in high quality, sustainable buildings.
The Office portfolio recorded a negative revaluation of $316.0 million (-5.0 per cent) in 2022
(2021: net positive revaluation of $338.3 million), including GPT’s equity interest in the GPT
Wholesale Office Fund (GWOF). The largest negative revaluations were recorded at Melbourne
Central Tower (-$42.0 million), 60 Station Street (-$39.2 million), 2 Park Street (-$ 36.6 million)
and Darling Park 1 & 2 (-$31.0 million), which was partly offset by a revaluation uplift at
OneOneOne Eagle Street of $6.9 million.
Funds Management
Office Funds Management income increased 14.8 per cent to $41.9 million (2021: $36.5 million),
driven by investment property revaluations and acquisitions in GWOF in the first half of 2022.
Development
Master planning activity continued on the Group’s development pipeline, creating value in the
land to enable development of the next generation of workplaces when market conditions are
favourable. Commencement of developments is customer led with timing within our control.
GWOF’s development of 51 Flinders Lane in Melbourne is under construction, with completion
expected in late 2025.
$6.0b
Office portfolio value 1
(2021: $6.1b)
87.9%
Office portfolio occupancy
(2021: 92.9%)
4.9 years
Office portfolio Weighted
Average Lease Expiry
(2021: 5.0 years)
5.03%
Office portfolio Weighted Average
Capitalisation Rate
(2021: 4.77%)
(0.4)%
Office portfolio 12 month Total Return
(2021: 11.2%)
$5.9b
Estimated end value of Office
development pipeline 2
1. Includes GPT's interest in GWOF.
2. Includes GPT and GWOF share and 51 Flinders Lane Melbourne, currently underway.
Corner George & Bathurst, Sydney excluded due to the concept nature of the scheme.
THE GPT GROUP ANNUAL REPORT 2022 | 31
DIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW GROUP PERFORMANCE
Performance
Operations
Operations net income for the period ending 31 December 2022 increased 20.6 per cent as
a result of development completions and asset acquisitions. Comparable income growth for
the year was 3.0 per cent. Logistics occupancy as at December 2022 is 99.2 per cent and the
portfolio has a WALE of 6.2 years.
The Group has divested a number of assets during the period. Contracts have been exchanged
to divest Citiport Business Park, Port Melbourne and Rosehill Business Park, Camellia for
$256.2 million, with settlement expected to occur in 1H 2023. The sale price represents a
1.5 per cent discount to book value at 30 June 2022, and a 9 per cent premium to book value
at 31 December 2021. In addition, three small regional assets acquired as part of the Ascot
portfolio that were held as inventory were divested in December 2022.
The Logistics portfolio recorded positive revaluations of $63.4 million (1.4 per cent) in 2022
(2021: $555.3 million) including GPT’s equity interest in the GPT QuadReal Logistics Trust
(GQLT), with positive revaluations in the first half offset by second half declines. The weighted
average capitalisation rate has expanded to 4.40 per cent (31 December 2021: 4.11 per cent),
with some of the capitalisation rate movement offset by increased market rents.
Funds Management
Funds Management income increased to $1.8 million, as a result of the Group’s growing
partnership with QuadReal.
GQLT was formed to create a $2 billion prime Australian logistics portfolio, of which GPT’s share
is 50.1 per cent. Across land and future development projects, $1.0 billion has been committed,
with AUM of $0.5 billion at December 2022.
Development
The Group continued to increase its weighting to the Logistics sector through the development
of new assets.
Three fund-through projects reached completion during the period within GQLT. In 1H 2022 the
12,500 sqm facility at 18 Gorrick Court, Bundamba in Brisbane and the 70,100 sqm facility at
1 Hurst Drive, Tarneit in Melbourne reached completion. In 2H 2022 the first 38,100 sqm stage
of the Keylink fund-through acquisition in Keysborough in Melbourne’s South East reached
completion, with the second 22,800 sqm stage expected to complete in 1H 2023.
Four GPT developments reached completion, three of which occurred within the period, with
an additional facility delivered in January 2023.
In Brisbane, GQLT’s 17,100 sqm development at 100 Metroplex Place, Wacol reached practical
completion in the first half and is leased to Bulk Transport and Mainfreight. Practical completion
of GPT’s 21,900 sqm facility at 2 Wattlebird Court, Berrinba occurred in December 2022 with the
facility leased to JB Hi-Fi and InterCentral Logistics.
In Melbourne, a 10,700 sqm facility at 143 Foundation Road, Truganina reached completion in
July and is leased to Interior Secrets. This was followed in January 2023 by the completion of
24A & 24B Niton Drive, Truganina, a 27,200 sqm facility leased to Nature’s Best and Daikin.
The Group has activated a further three speculative developments that are expected to reach
completion in 2023.
A 17,500 sqm facility is due for completion at Coulson Street, Wacol in the first half of 2023,
followed by a 11,600 sqm facility at Apex Business Park, Bundamba in the second half of 2023.
Both assets are located in Brisbane and are held within GQLT.
In Melbourne’s West, the final 31,600 sqm stage of the Group’s Gateway Logistics Hub in Truganina
is expected to be completed in late 2023.
In July 2022 GQLT exchanged contracts to acquire 35.2 hectares of land in the north Melbourne
market of Epping, with settlement to occur in 1H 2023. The Group continues to pursue opportunities
to maintain a pipeline of future development opportunities for GPT and its capital partners.
Logistics
$4.5b
Logistics portfolio value 1
(2021: $4.4b)
99.2%
Logistics portfolio occupancy
(2021: 98.8%)
6.2 years
Logistics portfolio Weighted
Average Lease Expiry
(2021: 6.5 years)
4.40%
Logistics portfolio Weighted
Average Capitalisation Rate
(2021: 4.11%)
5.8%
Logistics portfolio
12 month Total Return
(2021: 25.1%)
$1.9b
Estimated end value of Logistics
development pipeline 2
Note: Logistics portfolio metrics exclude
Rosehill Business Park, Camellia and Citiport
Business Park, Port Melbourne, which are
contracted for sale.
1. Includes GPT's interest in the GQLT.
2. Includes GPT and GQLT opportunities.
32 | THE GPT GROUP ANNUAL REPORT 2022
GROUP
PERFORMANCE
Prospects
GPT is an owner and manager of high
quality, diversified real estate assets, with
assets under management of $32.4 billion
including a balance sheet portfolio valued
at $16.1 billion. Portfolio occupancy at
31 December 2022 was 97.5 per cent and
we are expecting that the quality of our
portfolio will continue to attract ongoing
tenant demand.
Global economies including Australia are
facing ongoing inflationary pressures and
central banks including the Reserve Bank
of Australia have raised interest rates
materially over the past 12 months. The
rise in interest rates has increased GPT’s
cost of debt impacting the FFO outlook for
the year ahead. GPT has 78 per cent of its
drawn debt hedged to reduce the exposure
to further rate rises in 2023. The effect of
rising bond yields is also observed in the
slowing of investment capital flows and
general economic uncertainty, increasing
the potential for further softening of
investment metrics adopted for valuations.
Further tightening of monetary conditions
is expected to moderate economic growth
over the next 12 months.
GPT currently has 12 per cent of its
Office portfolio area vacant, and in 2023,
9 per cent of the portfolio’s lease income
is due to expire. Our Office team is actively
engaging with new and existing customers
on their space needs and is pursuing
a focused leasing strategy targeting
occupancy of greater than 90 per cent by
31 December 2023. Tenants are continuing
to seek accommodation in better quality
office buildings and many businesses are
taking the opportunity to upgrade their
space, leading to growing enquiry in the
premium office market. This supports
GPT’s view that this segment of the market
will be more resilient over the long term.
Our Office portfolio has an average NABERS
energy rating of 5.1 Stars and we expect
an increasing number of office tenants will
seek to be located in assets with strong
environmental credentials.
GPT’s Retail portfolio is well positioned
with strong retail sales productivity, high
occupancy, fixed rental increases and
ongoing tenant demand. There has been
a strong recovery in sales performance
across GPT’s Retail portfolio in 2022,
supporting tenant financial strength,
buoyed by low unemployment and
elevated levels of household savings.
However, given the persistent rise in
interest rates over the past 12 months and
further increases expected, together with
inflationary pressures on households, it
is anticipated that retail sales growth will
moderate during the course of 2023.
The logistics sector is benefiting from
ongoing structural tailwinds. Vacancy rates
remain low in the core markets nationwide
and together with limited uncommitted
new supply, this is expected to drive
sustained market rent growth in GPT’s
Logistics portfolio.
The Group has an extensive development
pipeline providing the opportunity to further
up weight in the strong Logistics sector
and to create next generation Office assets
over the medium to long term in Melbourne,
Sydney, North Sydney, Parramatta and
Brisbane. The Group also continues to
advance the mixed-use development of
the Rouse Hill Town Centre with planning
approval expected in 1H 2023.
Strategically the Group is also focused
on growing its funds under management,
underpinned by the Funds’ existing
development pipeline and enhanced by the
addition of the UniSuper and ACRT mandates.
At 31 December 2022, the Group’s balance
sheet net gearing was 28.5 per cent, below
the midpoint of our stated gearing range
of 25 – 35 per cent and with liquidity of
$1.1 billion to meet funding requirements
through to February 2025. GPT has strong
credit ratings of A (negative) and A2 (stable)
by S&P and Moody’s respectively. Over
the next 3 years the Group is 61 per cent
hedged at an average rate of 2.9 per cent.
Our commitment to being a leader in ESG
enhances and protects GPT and its assets
for the long term. This is underpinned
by data driven decision making, coupled
with a robust environmental management
system and transparent disclosures. We are
also innovating with an investment in the
restoration of 1,100 hectares of Australian
biodiverse native forest in partnership with
Greenfleet and First Nations peoples for
permanent removal of our residual carbon
emissions. The large scale of this nature
positive initiative provides confidence in the
availability, quality and costs of our offsets
to support the delivery of our carbon neutral
targets. We seek to continually increase the
positive impact we can make on our people,
investors, customers and communities.
Outlook
While uncertainty remains in our trading
environment, including the impact of rising
interest rates and ongoing inflationary
pressures, the Group expects to deliver 2023
FFO of approximately 31.3 cents per security
and a distribution of 25.0 cents per security.
GPT has a high quality diversified portfolio,
combined with a strong balance sheet and
experienced management team, making it
well positioned to create long-term value
for securityholders.
THE GPT GROUP ANNUAL REPORT 2022 | 33
DIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW RISK MANAGEMENT
Risk Management
GPT proactively identifies and manages risk in order to enable informed decisions which protect
the value of our assets and realise strategic objectives.
GPT's takes an integrated, enterprise-wide approach to risk
management which incorporates culture, conduct, compliance,
processes and systems, consistent with AS/NZS ISO 31000:2018.
Risk Management Framework
n
o
i
t
a
t
l
u
s
n
o
C
d
n
a
n
o
i
t
a
c
i
n
u
m
m
o
C
Risk Policy
Risk Appetite
Risk Governance
Risk Culture
Risk Management Processes and Systems
Identification | Assessment | Treatment | Assurance and Reporting
M
o
n
i
t
o
r
i
n
g
a
n
d
R
e
v
e
w
i
The Group'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 Statement – 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.
34 | THE GPT GROUP ANNUAL REPORT 2022
Management of key risks in the 2022
operating environment
There has been considerable change in the Group’s broader operating
environment since the release of our 2021 Annual Report. In particular,
there has been a significant shift in macroeconomic conditions, the
global geopolitical climate, and Australia’s response to COVID-19.
The most material key risk currently facing the Group is the potential
impact on future financial performance of rising inflation and increases
in interest rates. This impact can happen directly through increased
financing costs and other costs, and indirectly through changes in
consumer sentiment, retail sales, supply chain disruption and in the
transactions market for commercial real estate, both through a slowing
in capital flows and a resetting of required investment returns. GPT’s
management and Board have implemented a number of measures to
mitigate this risk, which is expected to remain a key focus area for 2023.
An increasing number of cyber attacks on Australian companies
throughout 2022 has caused GPT to remain particularly vigilant
around cybersecurity and information protection. GPT holds limited
personal identifying information, with the key risk in this area being
interruption to business operations. A robust risk-based cyber security
strategy is in place, aligned to the National Institute of Standards and
Technology (NIST) Cyber Security Framework.
There continues to be a level of uncertainty in the office property
market regarding the long-term impact of changing ways of working
on demand for space. Levels of office leasing enquiry have been
subdued throughout the year, with most activity driven by smaller
customers. The rate of conversion of enquiries to leases has
slowed, however, as customers assess their needs in the changing
environment. Office leasing is expected to remain challenging in 2023.
GPT’s funds under management grew significantly during the year,
with the addition of the UniSuper and ACRT mandates. A key risk in
these transactions has been the onboarding and integration of new
staff members. This risk has been very closely managed and early
indications are that the transition has been very successful. Extensive
training of new staff (both in person and online) has been undertaken
to minimise conduct risk, in particular.
A full assessment of GPT’s key risks is set out in the table opposite.
In addition to key risks, GPT also monitors emerging threats, trends
and themes which have the potential to disrupt the business. In many
cases, these will also present opportunities. A review of emerging
threats, trends and themes and GPT’s response to them is undertaken
every six months by both the GPT Leadership Team and the
Sustainability and Risk Committee.
Some of the issues considered in 2022 include:
» Global uncertainty in macroeconomic conditions
including high inflation and rising interest rates
» The transition to clean energy
» Global trends in ESG regulation
» The shift to electric vehicles
» Responding to societal expectations, and
» Increasing geopolitical tensions.
RISK
MANAGEMENT
Key risks
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 during the period.
Risk
Our Response
Change in Residual Risk
for 2022
Value Creation
Input Affected
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.
» 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 sensitivities of impacts to gearing and returns,
as well as 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
» Experienced and capable management, supplemented
with external capabilities where appropriate
» A structured program of investor engagement
Development
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.
» A disciplined acquisition and development approval 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
Capital Management
Effective capital
management is
imperative to meet
the Group’s ongoing
funding requirements
and to withstand
market volatility.
» Stated gearing range of 25 to 35 per cent consistent with
stable investment grade credit ratings in the “A” range
» Long term capital planning, including sensitivity of asset
valuation movements on gearing
» 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 policy
» Limits on currency exposure
» Limits on exposure to counterparties
KEY
Risk increased
No change in risk
Risk decreased
Our investors
Real estate
Our people
Environment
Our customers,
suppliers and
communities
Our investors
Real estate
Our people
Environment
Our customers,
suppliers and
communities
Our investors
Rising inflation and
increases in interest
rates have the potential
to negatively impact
GPT’s financial
performance, primarily
through increased cost
of debt, the potential
or a decline in asset
valuations and a
resetting of required
investment returns.
GPT's development
pipeline remains strong,
particularly in the Office
and Logistics portfolios.
There has been some
supply chain disruption
and costs have
increased as a result
of inflation, however
these risks are being
effectively managed
and are not impacting
project delivery at the
current time.
Significant liquidity is
in place and gearing
sits below the mid-point
of the stated range,
however the cost of
debt has increased
materially, and net
asset devaluations
have increased gearing.
THE GPT GROUP ANNUAL REPORT 2022 | 35
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCEHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW
RISK MANAGEMENT
Key risks CONTINUED
Risk
Our Response
Change in Residual Risk
for 2022
Value Creation
Input Affected
Health and Safety
GPT is committed to
promoting and protecting
the health and safety of
its people, customers,
contractors and all users
of our assets.
» 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
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.
» 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
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
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.
» Extensive climate adaptation planning to ensure a portfolio
of climate resilient assets
» 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 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
KEY
Risk increased
No change in risk
Risk decreased
36 | THE GPT GROUP ANNUAL REPORT 2022
Real estate
Our people
Our customers,
suppliers and
communities
Our investors
Our people
Our investors
Real estate
Our people
Environment
Our customers,
suppliers and
communities
Although the COVID-19
virus continued to
circulate, the risk to
health and safety of our
employees, customers
and contractors
decreased over the
period due largely to
increased vaccination
coverage. There
have been no other
changes in the period
which have materially
impacted health and
safety risk.
Key drivers of People
and Culture risk
during the period
have been a tight
employment market
resulting in increased
competition for
skilled resources, and
growth in GPT’s funds
under management,
significantly increasing
employee numbers.
A decrease in
employee turnover
and an increase in the
employee engagement
score indicate effective
management of
this risk.
There has been no
material change to
GPT’s sustainability
risk profile during the
period. GPT remains
highly proactive in
its management of
ESG risks, particularly
around supply chain
risk, energy use, the
changing regulatory
environment and
climate change.
RISK
MANAGEMENT
Change in Residual Risk
for 2022
Value Creation
Input Affected
The number of cyber
attacks impacting
Australia has increased
significantly during
the period.
Real estate
Our people
Our customers,
suppliers and
communities
There has been no
material change in
GPT's compliance and
regulatory risk during
the period.
Our investors
Real estate
Our people
Environment
Our customers,
suppliers and
communities
Risk
Our Response
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.
Compliance and
Regulation
We ensure compliance
with all applicable
regulatory requirements
through our established
policies and frameworks.
» A comprehensive technology risk management framework
including third party risk management procedures around
cyber security
» 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
» External specialists and technology solutions in place to
monitor GPT platforms
» Regular updates to technology hardware and software
incorporating recommended security patches
» 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
» Regular review of security of information and compliance
with privacy regulations
» 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, 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
KEY
Risk increased
No change in risk
Risk decreased
THE GPT GROUP ANNUAL REPORT 2022 | 37
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCEHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW RISK MANAGEMENT
Climate-related risks and opportunities
GPT outlines the steps that it is taking to
identify and monitor, mitigate and adapt
to climate change and other sustainability-
related risks and opportunities in the Group’s
Climate Disclosure Statement, which is
summarised below. The Group’s fourth
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 threat of climate change is a global
challenge. It presents numerous complex
questions about the best approach to
transition to an economy that aligns with the
scientific imperative to limit global warming
to 1.5 degrees. In 2022, Australia increased
its decarbonisation ambitions and the COP27
United Nations Climate Change Conference
in Egypt served to reinforce progress on
Paris Agreement targets as well as widen the
conversation to the importance of nature-
related risks including biodiversity loss and
water.
As the owner and manager of a
$32.4 billion portfolio of office, logistics,
and retail properties across Australia,
we understand the importance of our
contribution to climate change mitigation
efforts. GPT is a leader in its decarbonisation
efforts, with our current emissions reduction
actions and future targets tracking well
ahead of Australia’s commitments to the
Paris Agreement and recent legislated
emissions reductions targets.
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.
38 | THE GPT GROUP ANNUAL REPORT 2022
Strategy
GPT’s overarching business strategy is
outlined in the Our Strategy section of
this report. The Group’s strategy aims to
deliver growing and predictable earnings
for investors through owning, developing
and managing a diversified portfolio of
high quality real estate, located in Australian
capital cities and established regional
centres. The proactive identification and
management of key risks and opportunities,
including those related to climate change,
biodiversity loss and water, supports the
achievement of this strategy.
We take a long-term approach to our
property investments and sustainability
initiatives, which benefits our tenants and our
broader stakeholder groups and improves
the resilience of our assets to the impacts
of physical and transitional climate risks.
Our detailed risk management process to
identify and address climate-related risks
and opportunities is described in the Risk
Management section of the 2022 Climate
Disclosure Statement on pages 18 to 21.
Through these risk processes, together
with natural catastrophe modelling and
valuations undertaken by our insurers,
no specific climate-related risks have
been identified that we believe could
have a material negative impact on our
current business model or strategy.
By including ESG leadership as a core
strategic pillar, GPT recognises the
increasingly important role it plays in driving
stakeholder value. In particular, GPT’s focus
on environmental sustainability will improve
the resilience of its assets by reducing their
vulnerability to climate change hazards. As a
result of our climate response strategy and
with GPT’s focus on resilience, we aim to
contribute to an orderly and just transition to
a low carbon economy. Within our transition
plans, we consider strategic opportunities as
well as any co-benefits, such as sustainable
financing options, climate-related income
generation and funds management
opportunities, that may be achieved in
the change management process.
GPT’s net zero plan always entails
measuring emissions, reducing and
eliminating wherever feasible and only
offsetting residual emissions. Our targets
are independently validated through
Climate Active certifications.
As part of our ESG leadership strategy,
GPT is focused not only on its carbon neutral
targets but also on having a net positive
impact on biodiversity. We have joined
the Taskforce on Nature-related Financial
Disclosure (TNFD) Forum and in the coming
years will be disclosing nature related risks
and opportunities. Our strategy is mature
in dealing with climate-related risks and
opportunities while nature-related impact
consideration is gaining momentum.
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 supported by consulting
subject matter experts, we have determined
the risks, opportunities and strategic 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
» Setting a target for all future developments
that GPT controls to be upfront embodied
carbon neutral from 2023 onward
» 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.
RISK
MANAGEMENT
Risk Management
Effective risk management is fundamental
to GPT’s ability to achieve its 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.
Our detailed risk management process
to identify and address climate-related
risks and opportunities is described in the
Risk Management section of the 2022
Climate Disclosure Statement on pages
18 to 21. Through these risk processes,
together with natural catastrophe modelling
and valuations undertaken by our insurers,
no specific climate-related risks have been
identified that we believe could have a
material negative impact on our current
business model or strategy.
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 three times 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.
The GPT Energy Master Plan has been in
place since 2018. A primary aim of the Plan
is to limit GPT’s exposure to the risks of
rising energy costs and reduced reliability
of supply as the grid transitions from ageing
coal-fired power to renewable energy. GPT
mitigates its exposure to rising energy costs
through efficiencies, on-site generation and
medium term contract hedging. A forward
purchasing program is also in place for our
residual offset needs. Measures such as
these enable GPT to progress its carbon
neutral goals whilst effectively managing
financial risk. GPT expects to see minimal
impact on the cost of operating its buildings
due to energy market volatility over the
next 18 months and it is closely watching
the 2024 to 2026 markets for longer term
risk. More detail can be found in the GPT
Climate Disclosure Statement.
Metrics and Targets
GPT is committed to reducing its
environmental impact. We aspire to be an
overall positive contributor to environmental
sustainability by taking a leadership role
in reducing carbon emissions across our
operations and shifting towards a nature
positive outcome.
We are progressing towards our net zero
target of Climate Active Carbon Neutral
(for Buildings) certifications for all assets
that GPT operationally controls and in
which we have an ownership interest
by the end of 2024. 1
During the year GPT also delivered
Australia’s first Climate Active certified
upfront embodied carbon neutral
development at 143 Foundation Road,
Truganina. A target has now been set to
deliver upfront embodied carbon neutral
developments from 2023 onwards
for all assets developed for GPT’s
investment portfolio.
GPT monitors its direct climate impacts
and reports on emissions, energy, water
and waste for each property annually.
Our Environment Dashboard 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, Scope 1,
Scope 2 emissions under GPT’s control,
carbon offsets, water consumption, waste
generated, and materials recycled by grade.
GPT sets environmental performance and
resilience targets, 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.
In areas outside of its control, GPT aims
to influence outcomes with a particular
focus on supporting its tenants to reduce
their emissions. As outlined in our Climate
Change and Energy Policy, GPT is committed
to actively engaging with its stakeholders
to reduce greenhouse gas emissions and
energy use, and to reduce waste, manage
water use and protect biodiversity.
GPT’s corporate activities and business
premises, including its travel and
consumables, have 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 its 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
1. The majority of logistics assets are operationally controlled by tenants.
THE GPT GROUP ANNUAL REPORT 2022 | 39
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSGOVERNANCEHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW GOVERNANCE
Governance
Good corporate governance is a fundamental part of GPT’s commitment to its securityholders. Corporate
governance plays an integral role in supporting GPT’s business and helping it deliver on its strategy.
Culture
The Board is committed to ensuring that there is a transparent
and inclusive culture at GPT and understands the importance of
the Board’s and management’s role in promoting and supporting
behaviours that underpin the desired culture, as shown in the Values
set out on page 2. The Board meets regularly with various levels of
the organisation to test and observe the culture. In addition, a culture
dashboard is reported to the Board regularly through its Committees
and the results of GPT’s employee engagement survey and planned
actions to address any issues raised are reported to the Board’s
Human Resources and Remuneration Committee.
Stakeholder engagement
Effective stakeholder engagement helps GPT to identify and manage
business risks and opportunities, while also informing its decisions as
GPT acts as a responsible business and creates long-term value.
The Chairman of the Board, Chairman of the Human Resources and
Remuneration Committee and members of the Leadership Team meet
with investors and their representatives, analysts and proxy advisors on
a regular basis to discuss GPT’s performance. Major communication
forums, such as Annual and Interim Results briefings and the Annual
General Meeting, are webcast.
In addition, timely and accurate information is made available to
investors by uploading ASX announcements to GPT’s website and
major media releases are distributed to key media contacts and also
made available on the website.
GPT encourages securityholder engagement and participation at its
Annual General Meetings which provides securityholders with the
opportunity to be briefed on GPT’s activities and to ask questions of
the Board and management. In 2022, the Group held a hybrid AGM
allowing securityholders the opportunity to engage with the Board in
person and also participate online.
It provides the arrangements and practices through which GPT’s
strategy and business objectives are set, performance is monitored,
and risks are managed. It includes a clear framework for decision
making and accountability across the business. Further information
on GPT’s corporate governance framework is available in the 2022
Corporate Governance Statement available on GPT’s website:
www.gpt.com.au.
The Board and Committees
The Board comprises six independent non-executive Directors
and the CEO and Managing Director. The Chairman of the Board
is an independent non-executive Director who is responsible for
providing leadership to the GPT Board. In 2022, Anne Brennan
was appointed to the Board following the retirement of
Angus McNaughton.
The Board has established the Audit Committee, Human Resources
and Remuneration Committee, Nomination Committee and
Sustainability and Risk Committee to assist it in carrying out
its responsibilities. The Board also establishes special purpose
committees as may be required from time to time to focus on
specific matters.
The Chairman of each Committee is an independent non-executive
Director with the appropriate qualifications and experience to carry
out that role. The Board receives minutes of Board Committee
meetings and updates from the Chairman of each Committee to
ensure that there is an appropriate flow of information between
the Committees and the Board.
Unless a conflict arises, all Directors have access to Board
Committee papers, may attend Committee meetings and receive
minutes even if not a member of the relevant committee.
Each Committee has a formal Charter setting out its responsibilities
which is reviewed at least every three years. The Charters were
reviewed during 2022 with amendments made to adjust to the
changing needs of GPT and evolving governance practices.
Copies of those Charters are available in the Corporate Governance
section of GPT’s website: www.gpt.com.au.
A summary of the responsibilities of each Committee,
the areas of focus in 2022 and membership is in the
2022 Corporate Governance Statement available on
our website: www.gpt.com.au
40 | THE GPT GROUP ANNUAL REPORT 2022
GOVERNANCE
Corporate Governance Framework
Details of GPT’s governance arrangements, including Board and Committee Charters and key policies, can be found in the ‘Governance’ section
of the website: www.gpt.com.au. These charters and key policies are reviewed regularly to ensure that they remain appropriate, meet regulatory
requirements and evolving stakeholder expectations, and maintain a high standard of corporate governance.
Independent Assurance
and Advice to the Board
and its Committees
» External audit
» Legal and other professional advice
» Internal audit
» Compliance audit
GPT Board
Sets GPT’s strategy, risk appetite and oversees management
The Board delegates responsibility to its Committees and management
pursuant to Charters, Limits of Authority, Risk Appetite Statement,
Policies and other delegations from time to time
Audit Committee
» Review financial reporting
processes
» Oversee internal and external
audit plans and processes
» Oversee GPT’s internal controls
Sustainability &
Risk Committee (SRC)
» Oversee GPT’s risk
management framework
» Oversee GPT’s sustainability
approach and plans
» Oversee GPT’s health and safety
systems and processes
Human Resources &
Remuneration Committee (HRRC)
» Oversee people and
remuneration related strategies,
policies, frameworks and
practices, including monitoring
culture indicators
Nomination Committee
» Manage Non-Executive Director
and Chief Executive Officer
appointments and succession
and related matters
» Manage Board/Committee
review processes
Each committee refers relevant matters to the other Board committees as required
Responsible for the day-to-day management of the Group within the Group’s Limits of Authority
Managing Director & CEO
Leadership Team
Provide executive governance of GPT’s organisational direction
Management Committees
Responsible for recommendations in specific areas, for example, valuations, investments, technology, community engagements, modern slavery,
diversity & inclusion, treasury activities and privacy
Responsible for working to deliver GPT’s Purpose, whilst adhering to the standards of behaviour set out in its Values and Code of Conduct
GPT’s People
THE GPT GROUP ANNUAL REPORT 2022 | 41
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSRISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW GOVERNANCE
Governance CONTINUED
Key areas of governance focus in 2022
The GPT Board was actively engaged in its governance responsibilities throughout the year, fulfilling their role in accordance with the Board and
Committee charters. Clear planning and agenda setting ensures the time of the Board and its Committees is used efficiently.
Time was allocated in 2022 to hear from experts in relevant fields, both internal and external to GPT, to further the Board’s knowledge in specific
areas. In addition, following the end of COVID-19 travel restrictions, the Board has been able to resume tours of GPT’s assets and engagement with
GPT’s people. Other focus areas for the Board during the year included:
Strategic
» Reviewing the Group’s strategic initiatives to create long term value
» The transition of the management of UniSuper’s portfolio of real estate investments and the Australian Core Retail Trust investments
from AMP Capital
» Overseeing plans to develop capabilities across the business to drive GPT’s strategic initiatives
» Reviewing sustainability leadership, including approving the ESG Strategy, the targeted delivery of all assets that are developed
for GPT’s investment portfolio to be upfront embodied carbon neutral, on top of its leading operational carbon neutral building
commitments and monitoring the pathway for assets GPT operationally controls and in which it has an ownership interest in to be
carbon neutral by the end of 2024
Governance and Risk Management
» Overseeing the Group’s risk management framework, including a review of GPT’s Risk Appetite Statement and metrics to ensure
it remains appropriate to enable the achievement of GPT’s strategic objectives
» Approving an updated Whistleblower Policy and monitoring whistleblower procedures
» Reviewing the Board’s succession planning and skills matrix. Anne Brennan was appointed to the Board in May 2022
following the retirement of Angus McNaughton and to complement the Board’s skills and experience in finance and accounting and
property funds management
» Overseeing GPT’s culture including monitoring risk culture and programs for leadership in areas of employee wellbeing and
psychological safety
» Monitoring the performance on health and safety and management’s policies and processes in this area
Financial oversight
» Approving the interim and full year results and associated asset valuations and accounting judgements
» Monitoring GPT’s financial and operating performance
» Reviewing the Group’s capital management strategies and responses to the rise in interest rates
People, Culture and Remuneration
» Reviewing CEO and management succession and talent plans
» Reviewing of the results of the employee engagement survey and the strategies to improve employee engagement
» Reviewing of GPT’s remuneration framework to assess its effectiveness and relevance to the market
» Reviewing and contributing to the continued development and implementation of GPT’s diversity and inclusion strategy
42 | THE GPT GROUP ANNUAL REPORT 2022
GOVERNANCE
Board skills and experience
The Board is committed to ensuring that collectively the Board has a mix of skills, experience, expertise and diversity to enable it to discharge its
responsibilities. The Board also seeks to have a mix of tenure for its Directors to balance those who have established knowledge of GPT’s business
and history, with those who bring a fresh perspective and different insights.
The Board has identified the skills and experience set out in the matrix on page 44 as those required for GPT’s Directors to provide effective governance
and direction for the Group.This is reviewed on a regular basis in line with GPT’s strategic direction and changes in Directors’ skills and experience.
For each of the skills and experience identified, the level of experience is assessed using a set of objective criteria which include: tertiary
qualifications; relevant industry experience or qualifications; and length of experience at a senior level.
Having assessed its composition and the results of the analysis set out above, the Board considers that it has the appropriate mix of skills and
experience to enable it to discharge its responsibilities.
The skills matrix continues to be reviewed and updated as appropriate and used by the Board as a key component of succession planning,
Committee membership and professional development.
Induction and training
On commencement of employment, all Directors undertake an induction program which includes information on GPT’s values, Code of Conduct,
health and safety, and employment practices and procedures. In addition, Directors meet with the members of the leadership team and visit GPT
assets as appropriate to discuss GPT’s strategy, the nature of its various businesses, its financial position and performance and risk management.
Ongoing training for Directors involves education programs which are incorporated into the Board programs, including in 2022 presentations
on industry developments, modern slavery obligations, investment trends, GPT’s upfront embodied carbon approach, ESG funds management,
logistics supply chain trends, trends in office accommodation and other changes impacting the business.
Attendance of Directors at meetings
The number of Board meetings, including meetings of Board Committees, held during the year and the number of those meetings attended by
each Director is set out below. There were also three special purpose Board Committees during the year with members appointed by the Board.
Two of these were attended by Vickki McFadden, Bob Johnston and Michelle Somerville. The other special purpose Board Committee was
attended by Vickki McFadden, Bob Johnston, Mark Menhinnitt and Rob Whitfield.
Board
Audit Committee
Human Resources
& Remuneration
Committee
Nomination
Committee
Sustainability &
Risk Committee
Director
Eligible Attended
Eligible Attended
Eligible Attended
Eligible Attended
Eligible Attended
Vickki McFadden
Anne Brennan
Bob Johnston
Tracey Horton AO
Angus McNaughton
Mark Menhinnitt
Michelle Somerville
Robert Whitfield AM
8
6
8
8
3
8
8
8
8
6
8
8
3
8
8
8
—
4
—
—
2
—
6
6
—
4
—
—
2
—
6
6
5
3
—
5
2
5
—
—
5
3
—
5
2
5
—
—
5
3
5
5
2
5
5
5
5
3
5
5
2
5
5
5
—
—
—
4
—
4
4
4
—
—
—
4
—
4
4
4
Director tenure (years)
Board gender diversity
6+ years
(2 Directors)
0–1 years
(1 Director)
1–3 years
(1 Director)
3–6 years
(3 Directors)
Female, 57%
Male, 43%
THE GPT GROUP ANNUAL REPORT 2022 | 43
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSRISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW GOVERNANCE
Governance CONTINUED
Board Skills and Experience
Experience with property investment, funds management and development
2
2
» Experience in property management and investment
» Experience in property development, asset generation, capital partnering,
construction and funds management
» Understanding of industry trends
Health, safety, environment, sustainability
1
3
» Experience in health, safety, environmental, social responsibility
and sustainability initiatives in large organisations
» Deep understanding of environmental and social issues
Finance and accounting
» Senior executive or equivalent experience in financial accounting and reporting,
corporate finance, capital management strategies, risk and internal controls
» Experience in financial accounting and reporting
» Experience in capital management and financing
Strategy
» Experience in developing, implementing and challenging strategic plans
to achieve the long-term goals of an organisation
» Experience in complex merger and acquisition activities
» Deep understanding of financial drivers and alternative business models
Risk management and compliance
» Experience of financial and non-financial risk management frameworks
and controls, and the identification, assessment and management of risk
in large organisations
Leadership and Governance
» ASX100 Directorship and Chairman of a Committee or CEO or
senior executive experience
» Knowledge, experience, and commitment to the highest standards
of governance
3
3
2
2
3
3
4
4
5
5
People, remuneration and culture
3
4
» Senior experience in people management and human resources policy
» Experience with remuneration structures and incentives in large ASX
listed companies
Transformation, innovation and technology
7
» Experience in identifying innovative ways of doing business and achieving
strategic goals
» Experience in transforming business models and processes
Experience in some aspects e.g. in a stage of career, or project roles
Significant experience at management or professional levels and/or tertiary qualification
Extensive career experience in senior executive, director or professional roles; tertiary qualifications
44 | THE GPT GROUP ANNUAL REPORT 2022
GOVERNANCE
Our tax contribution
The payment of applicable taxes is an important aspect of GPT’s
contribution to the Australian economy. The GPT Group’s real
estate investment assets are held in a trust (GPT) that is owned
by securityholders. Under Australian tax law, rental income arising
from real estate investments held by the Trust is taxed directly to
securityholders. All other profits that arise from trading activities
are earned by GMH and are subject to the Australian corporate
income tax rate of 30 per cent.
GPT is also subject to goods and services tax, stamp duty, council
rates, land tax, payroll tax, fringe benefits tax, and remits ‘pay as you
go’ withholding taxes on behalf of employees and investors.
Tax Transparency Code
The GPT Group reports in accordance with the voluntary Tax
Transparency Code (TTC) issued by the Board of Taxation.
The TTC recommends a set of principles and minimum standards
for the disclosure of tax information by businesses.
Tax disclosures
Information regarding taxation of the Group is disclosed in this
Annual Report.
MORE ON PAGE 93
Modern Slavery
GPT understands and takes seriously our responsibility to uphold
high ethical standards in our business practices and decision making.
A critical part of this is respecting the human rights of everyone we
deal with, directly and indirectly.
Modern slavery covers a range of unethical practices that result in
serious exploitation of other people for personal or commercial gain.
It can include forced labour, debt bondage and human trafficking.
GPT’s third Modern Slavery Statement was released in October 2022
and articulates the actions we have taken and propose to take
to identify and prevent modern slavery taking place within our
operations and across our supply chains.
The GPT Human Rights Statement and Modern Slavery
Statement are available on our website: www.gpt.com.au
Tax Transparency
Consistent with our commitment to good corporate governance,
GPT is committed to managing the Group’s tax obligations
responsibly and in compliance with all laws and regulations.
The GPT Group is a stapled entity, a common arrangement in the
Australian real estate sector. Each GPT security listed on the ASX is
comprised of a share in GPT Management Holdings Limited (GMH)
that is ‘stapled’ to a unit in General Property Trust (GPT). GPT is a unit
trust (Managed Investment Trust) that is treated separately to GMH
for Australian tax purposes. The GPT Group conducts its business
only in Australia.
Tax Risk Management Framework
The Group has a Tax Risk Management Framework that is reviewed
by the Audit Committee and reflects the Group’s conservative risk
appetite with respect to taxation. By applying this framework, GPT is
able to manage its tax obligations efficiently and ensure compliance
with tax laws and mitigate transaction-related tax risks.
The Tax Risk Management Framework provides a holistic
governance approach that ensures compliance with tax law through
the implementation of tax related policies, processes, procedures
and systems across the Group’s business. The Group applies this
framework across the broader business to fully integrate the taxation
implications of transactions, projects and business initiatives into
day-to-day activities.
Private tax rulings, external advice and counsel opinion are obtained
as necessary to ensure the correct application of the tax law to the
Group's business.
THE GPT GROUP ANNUAL REPORT 2022 | 45
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSRISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW GOVERNANCE
Director biographies
Vickki McFadden
CHAIRMAN
INDEPENDENT NON-EXECUTIVE DIRECTOR
Term
Vickki joined the Board in March 2018 and
was appointed Chairman in May 2018.
Skills, Experience and Qualifications
Vickki brings a broad range of skills and
experience to the Group gained during a
20 year career spanning investment banking,
corporate finance and corporate law, and
through her current and previous board
level positions.
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
(now CIMIC Group), and a Member of the
Executive Council and Advisory Board of
the UNSW Business School.
Listed Company Directorships
(held within the last 3 years)
» Newcrest Mining Limited (since 2016)
» Tabcorp Holdings Limited (2017–2020)
Other Current Appointments
» Non-Executive Director Allianz
Australia Limited
Board Committee Memberships
» Nomination Committee (Chair)
» Human Resources &
Remuneration Committee
GPT Security Holding (as at report date)
112,525 stapled securities
46 | THE GPT GROUP ANNUAL REPORT 2022
Bob Johnston
CHIEF EXECUTIVE OFFICER
& MANAGING DIRECTOR
EXECUTIVE DIRECTOR
Term
Bob joined the Board in September 2015.
Skills, Experience and Qualifications
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 also
held various senior positions at Lendlease.
Bob holds a Bachelor of Electrical and
Electronic Engineering (Hons).
Listed Company Directorships
(held within the last 3 years)
Nil
Other Current Appointments
» Director of the Property Council
of Australia
Board Committee Memberships
» Nomination Committee
GPT Security Holding (as at report date)
1,783,489 stapled securities
Anne Brennan
INDEPENDENT NON-EXECUTIVE DIRECTOR
Term
Anne joined the Board in May 2022.
Skills, Experience and Qualifications
Anne is an experienced public company
director with extensive experience across
a range of sectors. She is currently a Non-
Executive Director of The Lottery Corporation
and Endeavour Group. She is also on the
boards of NSW Treasury Corporation and
Rabobank New Zealand Limited.
Anne holds a Bachelor of Commerce
(Honours), and is a Fellow of the Chartered
Accountants Australia and New Zealand
and a Fellow of AICD.
Anne has held a variety of senior management
roles in both accounting firms and large
organisations including as Finance Director
of Coates Group and Chief Financial Officer
at CSR Limited. She was previously a partner
at KPMG, Andersen and Ernst & Young.
Listed Company Directorships
(held within the last 3 years)
» The Lottery Corporation (since 2022)
» Endeavour Group (since 2022)
» Argo Investments Limited (2011 – 2022)
» Spark Infrastructure Group (2020 – 2021)
» Tabcorp Holdings Limited (2020 – 2022)
» Charter Hall Group (2010 to 2021)
» Nufarm Limited (2011 to 2020)
» Metcash Limited (2018 to 2021)
Other Current Appointments
» Non-Executive Director NSW Treasury
Corporation
» Non-Executive Director Rabobank New
Zealand Limited
Board Committee Memberships
» Human Resources &
Remuneration Committee
» Audit Committee
» Nomination Committee
GPT Security Holding (as at report date)
12,000 stapled securities
GOVERNANCE
Tracey Horton AO
INDEPENDENT NON-EXECUTIVE DIRECTOR
Mark Menhinnitt
INDEPENDENT NON-EXECUTIVE DIRECTOR
Michelle Somerville
INDEPENDENT NON-EXECUTIVE DIRECTOR
Term
Tracey joined the Board in May 2019.
Term
Mark joined the Board in October 2019.
Term
Michelle joined the Board in December 2015.
Skills, Experience and Qualifications
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 Master's Degree in Applied
Finance and a Bachelor’s Degree in
Engineering and is a graduate member
of the Australian Institute of Company
Directors and a fellow of the Governance
Institute of Australia. Mark is a Director of
Downer EDI Limited (ASX:DOW), Chairman
of Fluent Property Pty Ltd and a Director of
Sunshine Coast Airport Pty Ltd.
Listed Company Directorships
(held within the last 3 years)
» Downer EDI Limited (since 2022)
Other Current Appointments
» Chairman and Non-Executive Director of
Fluent Property Pty Ltd
» Director of Sunshine Coast Airport Pty Ltd
Board Committee Memberships
» Human Resources &
Remuneration Committee
» Sustainability & Risk Committee
» Nomination Committee
GPT Security Holding (as at report date)
42,000 stapled securities
Skills, Experience and Qualifications
Michelle was previously an external audit
partner of KPMG for nearly 14 years.
She has deep business, finance, risk and
governance experience gained in Australia
and overseas, working with top tier financial
services and industrial clients.
Michelle is currently a non-executive Director
of Insignia Financial Limited (ASX:IFL),
Select Harvest Limited (ASX:SHV), Epworth
Foundation and the Summer Foundation.
She was also previously on the board of
Bank Australia, Challenger Retirement
and Investment Services, not for profit
organisations Down Syndrome Australia and
Save the Children (Australia), and was an
independent adviser to the Audit, Risk and
Compliance Committee of UniSuper.
Listed Company Directorships
(held within the last 3 years)
» Insignia Financial Limited (since 2019)
» Select Harvest Limited (since 2022)
Other Current Appointments
» Non-Executive Director of Epworth
Foundation
» Non-Executive Director of Summer
Foundation
Board Committee Memberships
» Audit Committee (Chair)
» Sustainability & Risk Committee
» Nomination Committee
GPT Security Holding (as at report date)
36,663 stapled securities
Skills, Experience and Qualifications
Tracey Horton has experience across a wide
range of listed, government and not-for-profit
boards. 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.
Tracey is currently a member of the
Australian Takeovers Panel, Chair of the
Australian Industry and Skills Committee and
a Non-Executive Director of IDP Education
(ASX:IEL) and Campus Living Villages Pty Ltd.
Previous appointments include Commissioner
of Tourism WA, a Non-Executive Director
of Nearmap Limited and 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
(held within the last 3 years)
» Nearmap Ltd (2019 – 2022)
» Navitas Limited (2012 – 2019)
» IDP Education (since 2022)
Other Current Appointments
» Member of the Australian Takeovers Panel
» Non-Executive Director Campus Living
Villages Pty Ltd
» Chair of the Australian Industry and
Skills Committee
Board Committee Memberships
» Human Resources &
Remuneration Committee (Chair)
» Sustainability & Risk Committee
» Nomination Committee
GPT Security Holding (as at report date)
33,245 stapled securities
THE GPT GROUP ANNUAL REPORT 2022 | 47
GROUPPERFORMANCEDIRECTORS’ REPORTFINANCIALSTATEMENTSRISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW GOVERNANCE
Director biographies CONTINUED
Company Secretary biographies
Marissa Bendyk
GENERAL COUNSEL AND
COMPANY SECRETARY
Emma Lawler
GROUP COMPANY SECRETARY
Marissa was appointed as General
Counsel and Company Secretary of GPT
in April 2022. Marissa has over 15 years'
experience in the legal profession, with
extensive experience in the areas of
mergers and acquisitions, corporate
and competition law, and corporate
governance.
Before joining GPT as General Counsel
and Company Secretary, Marissa
was the General Counsel, Corporate
& Governance and Group Company
Secretary of AMP Limited. Marissa has
also held senior positions with APA
Group and King & Wood Mallesons.
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 Group Company Secretary
of Link Group, Senior Governance
Consultant with Company Matters Pty
Limited, Head of Group Secretariat and
Company Secretary at Westpac Banking
Corporation and Company Secretary for
the former NSW State Rail Authority.
Robert Whitfield AM
INDEPENDENT NON-EXECUTIVE DIRECTOR
Term
Rob joined the Board in May 2020.
Skills, Experience and Qualifications
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
(held within the last 3 years)
» Commonwealth Bank Australia Limited
(since 2017)
» Transurban Group (since 2020)
Other Current Appointments
Nil
Board Committee Memberships
» Sustainability & Risk Committee (Chair)
» Audit Committee
» Nomination Committee
GPT Security Holding (as at report date)
27,500 stapled securities
48 | THE GPT GROUP ANNUAL REPORT 2022
DIRECTORS’
REPORT
Directors’ Report
The Directors of GPT RE Limited, the
Responsible Entity of General Property
Trust, present their report together with
the financial statements of the General
Property Trust (the Trust) and its controlled
entities (the trust consolidated entity)
for the year ended 31 December 2022.
The trust consolidated entity together with
GPT Management Holdings Limited and its
controlled entities form the stapled entity,
The GPT Group (GPT or The Group).
General Property Trust is a registered
scheme, GPT Management Holdings Limited
is a company limited by shares, and GPT RE
Limited is a company limited by shares, each
of which is incorporated and domiciled in
Australia. The registered office and principal
place of business is Level 51, 25 Martin
Place, Sydney NSW 2000.
The Directors’ Report for the year ended
31 December 2022 has been prepared in
accordance with the requirements of the
Corporations Act 2001 and includes the
following information:
» Operating and Financial Review, including
information on the Group’s operations and
financial position, business strategies and
prospects on pages 26 to 33
» Information on the Directors and
Company Secretary on pages 46 to 48
» Board and committee meetings
attendance on page 43
» Remuneration Report on pages 50 to 62,
and
» Auditor’s Independence Declaration on
page 64.
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 2022 within
the required timeframe.
Information about GPT's participation
in the NGER program is available on our
website: www.gpt.com.au.
Events subsequent to reporting date
As announced on 10 February 2023, it is
Bob Johnston’s current intention to retire
by the end of this year. The Board has
commenced a formal Chief Executive Officer
search process to select a suitably qualified
successor with the right leadership skills
and experience to continue the successes
of the Group.
The Directors are not aware of any other
matter or circumstances occurring since
31 December 2022 that has significantly or
may significantly affect the operations of
GPT, the results of those operations or the
state of affairs of GPT in the subsequent
financial years.
Indemnification and insurance
of directors officers and auditors
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 Chairman 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 Audit Committee’s own review
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 64 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 hundred thousand dollars
unless otherwise stated (where rounding
is applicable) under the option available to
GPT under ASIC Corporations (Rounding
in Financial/Directors’ Reports) Instrument
2016/191. GPT is an entity to which the
Instrument applies.
THE GPT GROUP ANNUAL REPORT 2022 | 49
GROUPPERFORMANCEFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW DIRECTORS’ REPORT
Remuneration Report
Introduction from the Chairman of the Human Resources and Remuneration Committee
On behalf of the Human Resources and Remuneration Committee (the Committee), I am pleased to present the Remuneration Report for
2022. This report describes the objectives, mechanisms and outcomes of our executive remuneration framework, which is a key element
of our business strategy to deliver strong results.
During 2022, we saw a welcome return to more consistently stable market conditions as COVID restrictions lifted. This positive development
followed an extended period during which the Group’s financial performance and the experience of investors and customers were negatively
impacted by responses to the pandemic and our people experienced subdued remuneration outcomes, reflecting a combination of missed
performance thresholds and Board decisions to withdraw some incentive schemes and moderate fixed remuneration increases. Within
this context, in 2022 the Committee focused its attention on ensuring that remuneration settings were carefully balanced to retain and
motivate our people to deliver superior performance while aligning reward outcomes to the securityholders’ experience. Other important
considerations for the Committee included the continuation of an extremely competitive talent market and the impact of rising interest
rate costs and inflation – which affected financial performance in 2022 and is expected to continue to be a headwind into 2023.
Group Performance and Remuneration
The Group delivered a solid financial and non-financial result in 2022. GPT’s FFO was $620.6 million for the year, up 11.9 per cent from last
year, a result enabled by increased FFO contributions from all three business units. In addition, we also secured a number of valuable funds
management mandates: management of UniSuper’s $2.8 billion direct real estate mandate; property management of Pacific Fair Shopping
Centre; and management of the Australian Core Retail Trust (ACRT).
The Board and management have also reviewed performance targets for the year ahead, with the objective of setting targets that
encourage high performance and optimum returns for securityholders. Noting the Group’s lower guidance for 2023 FFO, particular
judgement is required, balancing securityholder expectations and engaging the workforce with targets that are reasonable and do not
incentivise undue risk-taking.
2022 Remuneration Outcomes
The remuneration outcomes for 2022 reflect the intended operation of the remuneration framework which is designed to deliver competitive
remuneration to attract, engage and retain talent and be aligned to securityholders, using the following mechanisms:
» Short term and long term incentives based on the achievement of financial measures and strategic and operational objectives important
to the organisation’s success
» Consideration of values, behaviour and risk through the design of performance incentives and the remuneration framework including
clawback mechanisms and the exercise of Board discretion
» A minimum securityholding requirement, that aligns the interests of executives to those of securityholders, and
» Strong governance through the Committee ensuring remuneration outcomes are reasonable taking into account community and
stakeholder expectations.
The Group met its primary financial measure of FFO for the year, achieving its “target” performance level to determine the STIC pool.
The CEO received a short-term incentive compensation (STIC) payment of $1,314,000 (72 per cent of maximum opportunity), slightly ahead
of target, in recognition of strong performance against GPT’s strategic objectives and exceptional ESG results. The CFO received a STIC
payment of $575,000 (64 per cent of maximum opportunity) and the COO received a STIC payment of $535,000 (64 per cent of maximum
opportunity), aligned to target for performance outcomes achieved at the Group level.
Given the Board’s decision in 2020 to withdraw the 2020-22 Long Term Incentive (LTI) plan, no performance rights were eligible to vest this
year. This is the third consecutive year of nil LTI vesting, as the two prior awards did not meet the requisite performance-based thresholds.
It is noted COVID-19 has had a material impact on the business during these performance periods.
For 2022, the Committee approved a budget for fixed remuneration reviews, resulting in an average increase of 3.0 per cent for eligible
employees. Increases were restrained for executive KMP, with the CFO receiving a 2.85 per cent increase and the CEO and COO receiving
nil increases.
Following benchmarking, the Committee determined that no changes to Non-Executive Director (NED) fees occur in 2022. However, some
modest increases in some NED fees are planned for 2023, aligning fee levels with the median fee levels of GPT’s key peers.
2022 Leadership and Organisational Changes
In early 2022, we made changes to GPT’s organisation structure to provide greater sector alignment, enhance operational efficiencies
and to reflect the growth in our Logistics portfolio. These changes were coupled with key appointments to our Leadership Team (LT) with
Chris Davis appointed to Head of Logistics, Martin Ritchie to Head of Office, and Marissa Bendyk to Group General Counsel and Company
Secretary. The Funds businesses now sit under each sector head achieving greater alignment and efficiencies. These appointments have
added to a strong and capable LT. Our LT (including the CEO) is 44 per cent female and 56 per cent male.
50 | THE GPT GROUP ANNUAL REPORT 2022
DIRECTORS’
REPORT
Our People and Culture
We are proud of our people and culture at GPT, with our people being our most important asset. We continue to strive for a culture characterised
by purpose, opportunity and pride, through investment in our employee experience targeting initiatives in areas such as diversity and inclusion,
leadership capability, safety, flexible working arrangements and wellbeing. In 2022, we increased our engagement by 6 per cent with 86 per cent
of people believing GPT is a great place to work and 86 per cent being proud to work at GPT. We are inspired by our people, who continued to
demonstrate positive attitudes, commitment, resilience and drive throughout 2022.
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, 20 February 2023
Key Management Personnel
This Remuneration Report discloses information regarding our Key Management Personnel (KMP). In accordance with AASB 124 the
KMP identified are all Non-Executive Directors and those individuals responsible for planning, controlling and managing the GPT Group.
For 2022, the KMP were:
Name
Role
Term as KMP
Non-Executive Directors
Vickki McFadden
Anne Brennan
Tracey Horton AO
Angus McNaughton
Mark Menhinnitt
Michelle Somerville
Robert Whitfield AM
Executive KMP
Bob Johnston
Anastasia Clarke
Mark Fookes
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Full year
Part year – appointed 1 May 2022
Full year
Part year – retired 11 May 2022
Full year
Full year
Full year
Chief Executive Officer & Managing Director
Chief Financial Officer
Chief Operating Officer
Full year
Full year
Full year
THE GPT GROUP ANNUAL REPORT 2022 | 51
GROUPPERFORMANCEFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW
DIRECTORS’ REPORT
Remuneration Report CONTINUED
Remuneration Framework
GPT’s remuneration framework is designed to support the Group’s strategy and reward our people for its successful execution and performance.
The remuneration principles are the foundation of the framework, and the diagram below describes the typical delivery for remuneration and
reward. The framework also provides a basis for the Board to exercise discretion when determining remuneration outcomes.
Our Vision
Our Purpose
To be the most respected property company in Australia in the
eyes of our investors, people, customers and communities
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
How We Create Value
Growing and
predictable earnings
Thriving
places
Empowered
people
Sustainable
environment
Prospering customers,
suppliers and communities
Attract and retain high calibre
executives and employees
Align to investor outcomes
and behaviour consistent with GPT
values
Determine with reference to Group
and individual financial and non-
financial performance
Drive focus and encourage
our people to think and act
like an owner
GPT’s Remuneration Principles
Executive Remuneration Components1
The timeline below outlines how remuneration is delivered. Executives participate in the LTI and the Group’s STIC plan. Performance testing of both plans
occurs in quarter one of the year following the conclusion of each performance period. Deferred STIC awards are made 50% as cash and 50% as deferred
STIC (equity vesting 12 months after the end of the performance period).2 If LTI plan performance conditions are met, the requisite number of performance
rights will convert to GPT securities; alternatively, performance rights will lapse.3 All vested and unvested awards are subject to malus and clawback provisions.
Component
Year 1
Year 2
Year 3
Year 4
Fixed Remuneration
Salary & statutory superannuation
STIC
LTI
1 year performance period
3 year performance period
Q1, Y1
31 Dec, Y1
Q1, Y2
31 Dec, Y2
31 Dec, Y3
Q1, Y4
Performance rights granted using the prior December 30-day Volume Weighted
Average Price (VWAP)4
Performance tested, deferred equity granted and cash award paid
Securities vest
Performance tested, eligible performance rights convert to securities unless holding
lock nominated
Other Employee Ownership Schemes5
General Employee Security Ownership Plan (GESOP)
» For STIC eligible individuals who are ineligible for LTI
» Equal to 10% of STIC outcome (less tax)
» Delivered in GPT securities around the same time as the cash STIC
payment and must be held for at least one year
Broad-Based Employee Security Ownership Plan (BBESOP)
» For individuals ineligible for STIC or LTI
» GPT must achieve at least Target outcome on annual FFO growth per
security for the plan to operate
» Awarded as either:
–$1,000 cash (less tax) or
–a grant of $1,000 worth of GPT securities which must be held until the
earlier of 3 years from the allocation date or cessation of employment
1. Eligibility to participate in the STIC and LTI plans is role-based and typically limited to permanently employed individuals. Generally, participants must satisfy the minimum service
criteria applicable under each plan and have not resigned or been subject to any formal performance management process when an award is made.
2. Where deferred securities are awarded, the number allocated is determined by dividing 50% of the value of the total STIC by the 30-day VWAP immediately before the end of the
performance period. The value of the award on the conversion date may vary as a result of security price having increased or decreased since that point in time. Any award for non
LTI eligible employees is delivered as 100% cash.
3. Participants may elect at the commencement of the LTI plan to apply additional dealing restrictions of up to a maximum of 4 years post vesting. A taxing point will arise in the
financial year securities vest and become unrestricted.
4. The CEO’s performance rights are granted following the relevant resolution’s approval at the Annual General Meeting.
5. Eligibility to participate in the GESOP and BBESOP is subject to the same criteria set out in footnote 1.
52 | THE GPT GROUP ANNUAL REPORT 2022
DIRECTORS’
REPORT
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.
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 2022, and the Board did not enact the
Clawback Policy during the reporting period.
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.
As part of employees’ end-of-year performance assessments, GPT employees are assessed against the values. This signals that performance
is not just about “what” employees deliver, it is “how” employees deliver. There is alignment between remuneration outcomes and behaviour in
accordance with our values.
Our culture is underpinned by the following core values
Safety First –
Everyone, Always
Deliver Today,
Create Tomorrow
Value Differences,
Play as a Team
Raise the Bar
Speak Up
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Remuneration Report CONTINUED
Performance and Remuneration Outcomes
1. Five year Group financial performance
Total Securityholder Return (TSR) 1
Relative TSR 2
Total Return 3
NTA per security 4
FFO per security
FFO per security growth
Security price at end of calendar year
%
%
%
$
cents
%
$
2022
(16.2)
(1.4)
3.9
5.98
32.40
12.4
4.20
2021
27.8
8.2
14.1
6.09
28.82
1.2
5.42
2020
(17.7)
(13.1)
(2.4)
5.57
28.48
(12.9)
4.50
2019
9.6
(9.7)
8.7
5.80
32.68
2.6
5.60
2018
9.6
6.7
15.8
5.58
31.84
3.5
5.34
1. 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.
2. GPT’s TSR compared to the TSR of the S&P/ASX 200 A-REIT Index adjusted to exclude Goodman Group and The GPT Group for 2021 and 2022.
3. 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.
4. Includes all right-of-use assets of The GPT Group.
2. Short Term Incentive Compensation (STIC) overview and funding
GPT’s STIC plan 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. FFO is used by the Committee and the Board to determine the size of the
overall STIC pool. At target performance, the pool is 64 per cent of the aggregate of all participants’ maximum opportunity. The Committee then
reviews the performance of KMP against their objectives along with other relevant factors to determine their incentive award for the year.
54 | THE GPT GROUP ANNUAL REPORT 2022
DIRECTORS’
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3. Group Performance
The Board takes a robust approach to determining executive remuneration outcomes considering a range of quantitative and qualitative factors.
An assessment of performance against the primary objectives is summarised in the table below.
The percentage weightings for each category for the table below reflect the range used for the individual scorecards for each KMP.
Category
Performance measure
Achievement
Commentary
Financial
Weighting
50%
Strategy
Weighting
20%-30%
Achievement of a FFO Target
AT
TARGET
» Delivered FFO of $620.6m (FFO per security of 32.4 cents)
Position the business to deliver FFO
per security growth target in 2023
BELOW
TARGET
» Market guidance for 2023 is for FFO per security to be lower in 2023
while DPS is maintained
Secure new Funds/Mandates to grow
Funds Management Platform
» Secured $2.8b UniSuper direct Real Estate Platform
EXCEEDS
TARGET
» Secured management of $2.7b Australian Core Retail Trust
Effective hedging and capital
management plan in place to address
higher interest rate environment
» Increased levels of interest rate hedging for 2023-2025 period
AT
TARGET
with 78% of drawn debt hedged for 2023
» Balance sheet gearing of 28.5%
GPT Wholesale Funds (GWSCF and
GWOF) to be ranked 1st or 2nd in their
peers set for 12 month Total Return
BELOW
TARGET
Leadership in ESG
Operations
Weighting
10%-15%
Deliver logistics developments at
or exceeding the target commerce
Alignment of business into 3 sectors
and integration of Funds Platform
to drive efficiency and strategy
execution
Positive feedback from Customers
on our service offerings
People
and Safety
Weighting
10%-15%
To be equal to or greater than the
Australian National Average in the
annual employee engagement survey
Improvement of % of top decile of
females and gender pay gap
Continue to build our inclusive culture
Number of material incidents
decreasing
AT
TARGET
AT
TARGET
» GWSCF ranked 1st in the MSCI Index while GWOF was ranked 5th
in the relative MSCI Index
» Ranked number 1 real estate company globally in S&P Global
Corporate Real Estate Assessment
» Maintained highest rating of 5 stars for GRESB
» Delivered Australia’s first certified Upfront Embodied Carbon Neutral
EXCEEDS
TARGET
logistics development
» Successfully completed four logistics developments at >30% margin
EXCEEDS
TARGET
and an average yield on cost of 5.7%
» Business restructure implemented in Q1 2022 and
operating effectively
» Office portfolio – Net Promoter Score of 71%
» Retail portfolio – Net promoter score of 58% (up 18% on 2021)
» Logistics portfolio – Customers’ satisfaction with team averages 80%
» Employee engagement scored 72% – 6% higher than the prior survey
and higher than the Australian national average
» Achieved 38.3% gender diversity in the top decile of roles
» Gender pay gap decreased from 20.73% to 17.53% exceeding
the target 1
» Recognised as a Gold employer for LGBTQ+ inclusion, moving up
from Bronze in the AWEI Small Employer category
» WGEA 'Employer of Choice' citation for the 4th consecutive year
» Awarded Family Inclusive WorkplaceTM certification
» Maintained our workforce at 56% female
» Strong HSE performance with zero employee recordable injuries and
decrease of material incidents by 48% since 2021
EXCEEDS
TARGET
EXCEEDS
TARGET
EXCEEDS
TARGET
EXCEEDS
TARGET
1. Assessment based on annualised fixed remuneration. GPT has also assessed the
total compensation gender pay gap, which is 23.80 per cent.
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4. 2022 STIC outcomes by Executive KMP
Executive KMP’s STIC outcomes for 2022 ranged between 64 to 72 per cent of their maximum STIC opportunity and are set out in the table below.
Executive KMP
Position
Bob Johnston
Chief Executive Officer
& Managing Director
Anastasia Clarke Chief Financial Officer
Mark Fookes
Chief Operating Officer
Actual STIC
awarded
$1,314,000
$575,000
$535,000
Actual STIC
awarded as a %
of maximum STIC
% of
maximum STIC
award forfeited
Cash
component
Equity component
(# of GPT securities) 1
72.00%
28.00%
$657,000
151,274
63.89%
63.69%
36.11%
$287,500
36.31%
$267,500
66,197
61,592
1. The number of deferred GPT securities is calculated by dividing 50% of the Actual STIC awarded by GPT’s 30-day VWAP of $4.3431 immediately before the end of the performance
period. Vesting subject to service on 31 December 2023.
5. Deferred STIC outcomes – fair value and maximum value recognised in future years1
Executive KMP
Plan
Grant date
Fair value
per security 2
Securities
awarded
Vesting date
Portion vested
in year 3
Bob Johnston
Chief Executive Officer
& Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
2021
21 March 2022
$4.91
94,411
31 December 2022
100%
2021
21 March 2022
2021
21 March 2022
$4.91
$4.91
54,286
31 December 2022
47,205
31 December 2022
100%
100%
1. The GPT deferred STIC awards are allocated with reference to the 30-day VWAP of a GPT security up to 31 December 2021.
2. Reflects fair value per security as at the grant date.
3. The Deferred STIC was fully vested and fully expensed as at reporting date. As such, the maximum value to be recognised in future years is nil.
6. LTI performance hurdles
LTI performance
measurement
period
LTI
Performance
measure 1,2
Performance
measure hurdle
Vesting % by
performance
measure 3
Overall Plan
Vesting
Outcome
% 3
Weighting Result 3
2020
2020-22
2021
2021-23
2020 LTI withdrawn
Relative TSR versus
ASX200 AREIT
Accumulation Index
10% of PR vest at Index performance,
up to 100% at Index plus 10%
(pro-rata vesting in between)
50%
N/A
N/A
Total Return
10% of PR vest at 4% Total Return,
up to 100% at 6% Total Return
(pro-rata vesting in between)
50%
N/A
N/A
2022
2022-24
Relative TSR versus
ASX200 AREIT
Accumulation Index
10% of PR vest at Index performance,
up to 100% at Index plus 10%
(pro-rata vesting in between)
50%
N/A
N/A
Total Return
10% of PR vest at 6.0% Total Return,
up to 100% at 8.5% Total Return
(pro-rata vesting in between)
50%
N/A
N/A
N/A
N/A
1. The Relative TSR comparator group, being the ASX200 AREIT Accumulation Index, is adjusted to exclude GPT and Goodman for LTI plans. TSR is calculated as the percentage
growth in GPT’s security price over the performance period, together with the value of distributions received during the performance period, assuming that all of those distributions
are reinvested into new securities.
2. 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.
3. Entries of “N/A” are for awards that are part-way through their performance periods and where the testing date is in the future.
56 | THE GPT GROUP ANNUAL REPORT 2022
DIRECTORS’
REPORT
7. 2020-2022 LTI outcomes by Executive KMP
As noted in the above table, the 2020-22 LTI awards were withdrawn by the Board. On that basis, the realised values from the 2020-2022 LTI
awards are nil for each of the Executive KMP.
8. LTI outcomes – fair value and maximum value recognised in future years1
Executive KMP
Plan
Grant date
Bob Johnston
Chief Executive Officer
& Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
2022
20 May 2022
2021
21 May 2021
2022
2021
2022
2021
28 March 2022
26 April 2021
28 March 2022
26 April 2021
Fair value per
performance right 2
Performance
rights granted as at
31 December 2022 3
Vesting date
Maximum value
to be recognised
in future years
$3.205
$3.038
$3.211
$3.077
$3.211
$3.077
413,520
31 December 2024
470,199
31 December 2023
169,939
187,865
158,610
180,350
31 December 2024
31 December 2023
31 December 2024
31 December 2023
$597,803
$476,590
$215,898
$192,920
$223,894
$185,126
1. The GPT LTI plan is calculated on face value grants of performance rights based on the VWAP of GPT securities for specified periods.
2. Reflects fair value per performance right as at the grant date.
3. Approval of the issue of performance rights to Mr Johnston was obtained in accordance with ASX Listing Rule 10.14.
9. Remuneration – Executive KMP – Actual Amounts Received (Non-IFRS information)
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
Base Pay 2
Superannuation
Non-monetary
Benefits 3
STIC
receivable 4
LTI
Total
$1,435,570
$1,437,869
$875,570
$852,869
$815,570
$817,869
$3,126,710
$3,108,607
$24,430
$22,631
$24,430
$22,631
$24,430
$22,631
$73,290
$67,893
$8,222
$7,192
$8,129
$3,893
$7,862
$5,868
$1,314,000
$1,000,000
$575,000
$575,000
$535,000
$500,000
$24,213
$16,953
$2,424,000
$2,075,000
—
—
—
—
—
—
—
—
$2,782,222
$2,467,692
$1,483,129
$1,454,393
$1,382,862
$1,346,368
$5,648,213
$5,268,453
Year
2022
2021
2022
2021
2022
2021
2022
2021
1. 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 $4.3431.
2. Base Pay includes taxable cash salary and the value of items salary packaged on a pre-tax basis e.g. car parking.
3. Non-Monetary Benefits may include death and total/permanent disability insurance premiums, service awards, GPT superannuation plan administration fees, professional memberships,
subscriptions and/or other benefits.
4. STIC receivable amounts are provided in two components: a 50 per cent cash component; and a 50 per cent deferred STIC component. The deferred STIC components are subject
to time-based vesting conditions.
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10. 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
Year
Base Pay 2
STIC
(cash)
Non-monetary
Benefits 3
Super-
annuation
Long-Service
Leave
Movements4
STIC
(Deferred) 5
LTI
Total
Short-term benefits
Long-term benefits
Share-based payments 1
Bob Johnston
Chief Executive Officer
& Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
Total
2022 $1,490,658
$1,454,372
2021
$657,000
$500,000
$8,222
$7,192
$24,430
$22,631
$26,787
$23,777
$525,739
$255,503
$772,523
$578,569
$3,505,359
$2,842,044
2022
2021
2022
2021
$898,000
$869,098
$780,935
$819,140
$287,500
$287,500
$267,500
$250,000
2022 $3,169,593
$3,142,610
2021
$1,212,000
$1,037,500
$8,129
$3,893
$7,862
$5,868
$24,213
$16,953
$24,430
$22,631
$24,430
$22,631
$73,290
$67,893
($24,662)
($5,809)
$23,635
$12,872
$258,651
$146,913
$233,374
$127,750
$300,386
$258,350
$1,752,434
$1,582,576
$296,678
$249,102
$1,634,414
$1,487,363
$25,760
$30,840
$1,017,764
$530,166
$1,369,587
$1,086,021
$6,892,207
$5,911,983
1. These columns record the fair values of the awards under the STIC (deferred) and LTI plans, expensed in the relevant financial years. Values do not represent actual awards made to
executives or the face value grant method.
2. Base Pay includes the value of items salary packaged on a pre-tax basis (e.g. car parking) as well as the value of year-on-year changes to annual leave provisions.
3. Non-Monetary Benefits may include death and total/permanent disability insurance premiums, service awards, GPT superannuation plan administration fees, professional
memberships, subscriptions and/or other benefits.
4. Long-Service Leave Movements reflect the long-service leave balances as at the relevant year end, less the relevant balances from the prior comparable period. A negative value can
result where leave taken during the year exceeds the value of any accrued leave during the year.
5. The 2021 comparatives have been restated to reflect the number of deferred GPT securities granted under the 2021 STIC (Deferred) plan. This results in a decrease of the 2021
STIC share-based expense of $92,618 for Bob Johnston, $19,995 for Anastasia Clarke, and $32,481 for Mark Fookes.
11. GPT security ownership – Executive KMP as at 31 December 2022
Employee Security Scheme (ESS)
Executive KMP
Bob Johnston
Chief Executive Officer
& Managing Director
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
GPT Holdings
(start of period) 1
2021
Deferred STIC
2019-21
LTI
Purchase /
(Sales)
during period 2
GPT Holdings
(end of period) 3
Value of
GPT
Holdings 4
MSHR
Guideline 5
1,689,078
94,411
235,428
54,286
1,222,362
47,205
—
—
—
—
1,783,489
$7,745,871
$2,190,000
54,849
344,563
$1,496,472
$900,000
—
1,269,567
$5,513,856
$840,000
1. GPT Holdings (start of period) include GPT securities obtained via sign-on grants (Mr Johnston only), awards previously received under Employee Share Schemes up to and including
the 2021 performance period, private holdings less any prior sales.
2. 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 2022 calendar year.
3. GPT Holdings (end of period) is the sum of GPT Holdings (start of the period) plus any securities granted during 2022 in respect of the 2021 Deferred STIC and 2019-21 LTI plan
(noting this plan was cancelled) adjusted for any purchases or sales during the period.
4. The GPT Holdings (end of period) multiplied by GPT’s December 2022 30-day VWAP of $4.3431 to derive a dollar value.
5. GPT’s Minimum Security Holding Requirement (MSHR) guideline requires the CEO to acquire and maintain a holding equal to 150 per cent of their Total Package Value i.e. their base
pay plus superannuation. For other KMP and Leadership Team members the holding requirement is equal to 100 per cent of their Total Package Value. Individuals have four years from
commencement of employment to achieve the MSHR before it is assessed.
58 | THE GPT GROUP ANNUAL REPORT 2022
DIRECTORS’
REPORT
12. GPT performance rights – Executive KMP
Executive KMP
Opening
balance
Performance
rights awarded
during 2022
Performance
rights exercised
during 2022 1
Performance
rights that
lapsed in 2022 1
Performance
rights still on foot
at 31 Dec 22 2
Bob Johnston
Chief Executive Officer & Managing Director
470,199
413,520
Anastasia Clarke
Chief Financial Officer
Mark Fookes
Chief Operating Officer
187,865
169,939
180,350
158,610
—
—
—
—
—
—
883,719
357,804
338,960
No performance rights were allocated under the 2020-22 LTI as the LTI offer was withdrawn.
1
2. The total of unvested performance rights currently on foot excluding any GPT securities or performance rights that may have lapsed up to 31 December 2022. 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 and
2022-24 LTI plans. 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
1. Employment terms
Employment Terms
CEO & Managing Director
Other Executive KMP
Conditions
Remuneration Package
Fixed Remuneration 1
Range of STIC Opportunity as a
percentage of Fixed Remuneration 2
Range of LTI Opportunity as a
percentage of Fixed Remuneration 3
Contract duration
Notice period 4
Termination by Company
without cause
Bob Johnston
$1,460,000
0% to 125%
0% to 150%
Ongoing
6 months
Anastasia Clarke
Mark Fookes
$900,000
$840,000
0% to 100%
0% to 100%
Ongoing
3 months
12 months’ notice. Treatment of unvested STIC
and LTI will remain on foot and be treated in
the same manner as if the CEO remained in
employment. The GPT Board retains discretion to
forfeit a prorated amount of any unvested LTI
3 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
Termination by Company for cause
No notice requirement or termination benefits (other than accrued entitlements)
Post Employment Restraints
6 months non-compete (CEO only), and 12 months non-solicitation of GPT employees
1. Fixed remuneration is inclusive of superannuation.
2. Performance assessed against 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.
3. Face value of performance rights at time of grant. Vesting outcomes dependent on performance and continued service, delivered in GPT securities.
4. 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 & 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%
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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)
» Anne Brennan
» Vickki McFadden
» Mark Menhinnitt
The Committee operates in accordance with the HRRC Charter and undertakes the following activities on behalf of the Board:
GPT’s Remuneration Framework and Application
» Consider and recommend any changes to GPT’s Remuneration Framework to the Board for approval
» Oversee the implementation of key plans in support of GPT’s Remuneration Framework
» Review and approve an annual salary review budget for all employees
» Review and make recommendations to the Board regarding incentive plans within GPT, including the total pools and
performance hurdles
» Exercise key functions and discretion for the administration of GPT incentive plans in accordance with plan rules
Remuneration for the Board, Chief Executive Officer and other members of the Leadership Team
» Periodically review and recommend to the Board for approval any changes to the remuneration for Non-Executive
Directors, including recommending any increase to the pool approved by securityholders for Non-Executive Director
remuneration
» Review annually and make recommendations to the Board for approval in relation to the remuneration package for the
CEO and any other Executive Director, including contract terms, remuneration, benefits and incentives
» In consultation with the CEO, review and approve the remuneration packages for any new members and existing
members of the Leadership Team (excluding the CEO), including contract terms, remuneration, benefits and incentives
Evaluation of the Chief Executive Officer and Leadership Team performance
» Recommend to the Board for approval the Key Performance Indicators (KPIs) for the CEO
» The Chairman of the Board and the CEO will assess the CEO’s performance against these KPIs and that assessment will
be provided to the Committee for consideration. The Committee will recommend the incentive plan outcomes for the
CEO to the Board for approval
» Review the CEO’s assessment of the Leadership Team’s (excluding the CEO) performance against KPIs and proposed
incentive plan outcomes. The Committee will approve incentive plan outcomes for the Leadership Team (excluding the CEO)
Oversee the management of GPT’s culture including:
» Ensure clear accountabilities for culture
» Systems in place to monitor culture, including any material breaches of the Code of Conduct or other workplace
behaviour policies
» Recommend any changes to the Code of Conduct to the Board for approval, in conjunction with the Sustainability and
Risk Committee
» Ensure the remuneration framework balances risk and return and promotes appropriate risk taking behaviours
Succession planning
» Review and monitor the implementation of succession plans for the Leadership Team (excluding the CEO which is a
responsibility of the Nomination Committee 1)
Diversity and inclusion
» Review and approve GPT’s diversity & inclusion strategy
» Oversee the implementation of key initiatives in support of this strategy and review GPT’s achievement of the strategy
and measurable objectives
Talent
» Monitor and oversee employee talent and oversee the processes to support the implementation of those initiatives
Compliance with legal and regulatory requirements
» Review the annual Remuneration Report and make recommendations to the Board for its inclusion in the Annual Report.
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.
60 | THE GPT GROUP ANNUAL REPORT 2022
DIRECTORS’
REPORT
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 53 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 fees 1,2
Chairman
Members
2022
2021
2022
2021
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. 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.
2. Fees for Non-executive Directors are inclusive of superannuation.
THE GPT GROUP ANNUAL REPORT 2022 | 61
GROUPPERFORMANCEFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW DIRECTORS’ REPORT
Remuneration Report CONTINUED
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.
Fixed Pay
Base Fees
Superannuation
Other 1
Total
Non-Executive Directors
Vickki McFadden
Chairman
Anne Brennan 2
Tracey Horton AO
Mark Menhinnitt
Michelle Somerville
Robert Whitfield AM 3
Former Non-Executive Directors
Angus McNaughton 4
Total
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
$443,677
$449,942
$123,857
—
$200,455
$201,368
$185,035
$185,878
$205,897
$206,835
$203,176
$225,372
$68,517
$188,611
$1,430,614
$1,458,006
$6,323
—
$13,005
—
$20,545
$19,632
$18,965
$18,122
$21,103
$20,165
$20,824
$20,464
$6,852
$18,389
$107,617
$96,772
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$450,000
$449,942
$136,862
—
$221,000
$221,000
$204,000
$204,000
$227,000
$227,000
$224,000
$245,836
$75,369
$207,000
$1,538,231
$1,554,778
1. ‘Other’ may include death and total/permanent disability insurance premiums and/or GPT superannuation plan administration fees.
2. Anne Brennan was appointed to the GPT Board on 1 May 2022.
3. Mr Whitfield’s total fees for 2021 were $224,000. However, an adjustment for unpaid fees in 2020 was made during the period.
4. Angus McNaughton retired from the GPT Board on 11 May 2022.
3. Non-executive Director – GPT security holdings
Non-executive Director
Vickki McFadden
Anne Brennan
Tracey Horton AO
Mark Menhinnitt
Michelle Somerville
Robert Whitfield AM
Balance
31 Dec 21
112,525
—
27,525
30,000
36,663
15,000
Holdings (# of securities)
Minimum securityholding requirement (MSHR)
Purchase /
(Sale)
Balance
31 Dec 22
MSHR
assessment 1
MSHR
guideline 2
MSHR
assessment date
—
112,525
$527,976
12,000
5,720
12,000
—
12,500
12,000
33,245
42,000
36,663
27,500
$52,117
$170,736
$223,395
$179,936
$119,435
$450,000
$170,000
$170,000
$170,000
March 2022
May 2026
May 2023
October 2023
$170,000
December 2019
$170,000
May 2024
1. 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 2022 30-day
VWAP of $4.3431).
2. 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.
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.
62 | THE GPT GROUP ANNUAL REPORT 2022
DIRECTORS’
REPORT
The Directors’ Report is signed in accordance with a resolution of the Directors of the GPT Group.
Vickki McFadden
CHAIRMAN
Sydney
20 February 2023
Bob Johnston
CHIEF EXECUTIVE OFFICER AND
MANAGING DIRECTOR
THE GPT GROUP ANNUAL REPORT 2022 | 63
GROUPPERFORMANCEFINANCIALSTATEMENTSGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW Auditor’s Independence Declaration
FINANCIAL STATEMENTS
Auditor’s Independence Declaration
As lead auditor for the audit of General Property Trust for the year ended 31 December 2022, I
declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of General Property Trust and the entities it controlled during the period.
Susan Horlin
Partner
PricewaterhouseCoopers
Sydney
20 February 2023
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.
64 | THE GPT GROUP ANNUAL REPORT 2022
FINANCIAL STATEMENTS
FINANCIAL
STATEMENTS
Contents
Financial Statements
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
RESULTS FOR THE YEAR
1. Segment Information
Investment Properties
OPERATING ASSETS AND LIABILITIES
2.
3. Equity Accounted Investments
4. Trade and Other Receivables
5.
6.
7. Payables
8. Provisions
9. Taxation
Intangible Assets
Inventories
CAPITAL STRUCTURES
10. Equity
11. Earnings per Stapled Security
12. Distributions Paid and Payable
13. Borrowings
14. Financial Risk Management
15. Other Fair Value disclosures
OTHER DISCLOSURE ITEMS
16. Cash Flow Information
17. Lease Revenue
18. Commitments
19. Contingent Liabilities
20. Security Based Payments
21. Related Party Transactions
22. Auditor’s Remuneration
23. Parent Entity Financial Information
24. Accounting Policies
25. Events Subsequent to Reporting Date
Directors’ Declaration
Independent Auditor’s Report
66
67
68
69
70
75
86
89
90
91
92
92
93
95
97
98
98
100
105
106
107
108
108
109
111
112
113
114
119
120
121
Melbourne Central Tower,
Melbourne
THE GPT GROUP ANNUAL REPORT 2022 | 65
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS Consolidated Statement of Comprehensive Income
Revenue
Rent from investment properties
Property management fees
Funds management fees
Development revenue
Development management fees
Profit on sale of investment
Fair value adjustments and other income
Fair value gain on investment properties
Share of after tax profit of equity accounted investments
Interest revenue
Impairment reversal/(loss) on trade and other receivables
Gain on financial liability at amortised cost
Net gain from hedge ineffectiveness on qualifying hedges
Gain on financial asset at amortised cost
Net gain/(loss) on fair value movements of derivatives
Total revenue, fair value adjustments and other income
Expenses
Property expenses and outgoings
Management and other administration costs
Development costs
Depreciation, amortisation and (impairment reversal)/impairment expense
Finance costs
Net foreign exchange loss
Total expenses
Profit before income tax expense
Income tax expense/(benefit)
Net profit for the year
Other comprehensive income
Items that may be reclassified to profit or loss, net of tax
Movement in hedging reserve
Movement in fair value of cash flow hedges
Total other comprehensive (loss)/income
Total comprehensive income for the year
Note
17
14(b)
9(a)
10(c)
10(c)
Net profit/(loss) attributable to:
» Securityholders of the Trust
» Securityholders of the Company
Total comprehensive income/(loss) attributable to:
» Securityholders of the Trust
» Securityholders of the Company
Basic earnings per unit attributable to ordinary securityholders of the Trust
Earnings per unit (cents per unit)
Basic earnings per stapled security attributable to ordinary stapled securityholders of the GPT Group
Earnings per stapled security (cents per stapled security)
11(a)
11(b)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
66 | THE GPT GROUP ANNUAL REPORT 2022
31 Dec 22
$M
31 Dec 21
$M
707.3
17.0
66.9
11.0
11.0
2.3
815.5
34.0
62.8
0.9
5.9
2.4
0.6
—
3.8
110.4
925.9
212.8
91.3
10.6
(4.4)
142.0
0.4
452.7
473.2
3.9
469.3
(0.3)
(1.8)
(2.1)
673.7
17.0
61.9
34.8
7.8
—
795.2
762.5
384.6
0.3
(50.0)
2.4
17.6
8.7
(11.9)
1,114.2
1,909.4
197.5
111.0
27.2
64.7
87.0
0.2
487.6
1,421.8
(1.0)
1,422.8
20.9
6.0
26.9
467.2
1,449.7
446.7
22.6
444.6
22.6
23.3
24.5
1,433.7
(10.9)
1,460.6
(10.9)
74.5
73.9
Year ended 31 December 2022FINANCIAL STATEMENTS Consolidated Statement of Financial Position
As at 31 December 2022
Assets
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Intangible assets
Inventories
Derivative assets
Prepayments
Other assets
Current tax assets
Assets classified as held for sale – investment properties
Total current assets
Non-current assets
Investment properties
Equity accounted investments
Intangible assets
Inventories
Property, plant and equipment
Derivative assets
Right-of-use assets
Deferred tax assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Payables
Borrowings
Derivative liabilities
Lease liabilities – other property leases
Provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Borrowings
Derivative liabilities
Lease liabilities – investment properties
Lease liabilities – other property leases
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Securityholders of the Trust (parent entity)
Contributed equity
Reserves
Retained earnings
Total equity of the Trust's securityholders
Securityholders of the Company
Contributed equity
Reserves
Accumulated losses
Total equity of the Company's securityholders
Total equity
Note
31 Dec 22
$M
31 Dec 21
$M
4(a)
4(b)
5
6
14(a)
9(c)
2(a)(v)
2(a)
3
5
6
14(a)
9(d)
7
13
14(a)
8
9(c)
13
14(a)
2(a)
8
10(a)
10(c)
10(d)
10(a)
10(c)
10(d)
60.2
56.2
175.4
0.3
13.4
33.5
11.7
23.8
6.2
380.7
256.6
637.3
11,956.6
4,098.3
24.5
141.3
10.6
354.5
23.9
21.9
25.3
16,656.9
17,294.2
485.9
704.9
0.2
8.6
44.0
—
61.5
46.1
169.3
—
14.5
1.4
13.3
20.5
—
326.6
198.6
525.2
11,954.7
4,067.9
13.0
71.0
9.2
464.6
30.7
26.0
17.4
16,654.5
17,179.7
207.0
802.4
6.3
8.1
30.5
6.1
1,243.6
1,060.4
4,347.6
188.8
14.2
22.6
1.5
4,574.7
5,818.3
4,336.9
62.0
14.8
31.2
1.1
4,446.0
5,506.4
11,475.9
11,673.3
8,526.6
(22.8)
3,402.5
8,526.6
(20.7)
3,624.6
11,906.3
12,130.5
331.8
26.9
(789.1)
(430.4)
331.8
22.7
(811.7)
(457.2)
11,475.9
11,673.3
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
THE GPT GROUP ANNUAL REPORT 2022 | 67
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS Consolidated Statement of Changes in Equity
Year ended 31 December 2022
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68 | THE GPT GROUP ANNUAL REPORT 2022
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T
FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
Year ended 31 December 2022
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 sale of inventories
Payments for inventories
Distributions received from equity accounted investments
Interest received
Income taxes paid
Finance costs paid
Note
31 Dec 22
$M
31 Dec 21
$M
876.8
(331.6)
11.0
(15.4)
172.5
0.9
(12.3)
(139.8)
562.1
(22.4)
(70.6)
(212.9)
221.2
—
(4.0)
(3.1)
2.3
(154.0)
808.7
(328.6)
14.9
(14.4)
142.9
0.3
(6.3)
(97.1)
520.4
(897.3)
(55.2)
(151.3)
5.5
10.5
(1.6)
(4.4)
—
(132.3)
Net cash inflows from operating activities
16(a)
Cash flows from investing activities
Payments for acquisition of investment properties
Payments for maintenance and leasing capital expenditure on investment properties
Payments for development capital expenditure on investment properties
Proceeds from disposal of investment properties (net of transaction costs)
Deposit received for investment properties held for sale
Payments for property, plant and equipment
Payments for intangibles
Capital return from unlisted investment
Investment in equity accounted investments
Net cash outflows from investing activities
(243.5)
(1,226.1)
Cash flows from financing activities
Payments for on-market buy-back of securities
Proceeds from borrowings
Repayment of borrowings
Repayment of principal elements of lease payments
Purchase of securities for security based payments plans
Distributions paid to securityholders
Net cash (outflows)/inflows from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
—
3,477.0
(3,354.0)
(8.3)
(1.7)
(432.9)
(319.9)
(1.3)
61.5
60.2
(146.8)
1,430.8
(369.9)
(7.5)
—
(511.9)
394.7
(311.0)
372.5
61.5
THE GPT GROUP ANNUAL REPORT 2022 | 69
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS These are the consolidated financial statements of the consolidated entity, The GPT Group (GPT or the Group), which consists of General Property
Trust (the Trust) and its controlled entities and GPT Management Holdings Limited (the Company) and its controlled entities.
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 GPT’s performance.
The notes to the financial statements are organised into the following sections:
Note 1 – RESULT FOR THE YEAR: focuses on results and performance of GPT.
Notes 2 to 9 – OPERATING ASSETS AND LIABILITIES: provides information on the assets and liabilities used to generate GPT’s trading performance.
Notes 10 to 15 – CAPITAL STRUCTURE: outlines how GPT manages its capital structure and various financial risks.
Notes 16 to 24 – 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 GPT’s accounting policies, management has made a number of judgements, estimates and assumptions regarding future events.
The impact of inflation and interest rate rises has caused heightened levels of economic uncertainty. As such there is a higher level of estimation
uncertainty than usual in management's judgements and estimates for the year.
Management have reviewed the investment property valuations for both accuracy and the reasonableness of assumptions used to determine fair
value. See note 2(c) for information on GPT’s valuation process, and note 2(d) for a sensitivity analysis showing indicative movements in investment
property valuations should certain key metrics differ from those assumed in the valuations.
The following judgements, estimates and assumptions have the potential to have a material impact on the financial statements:
Area of judgements and estimates
Assumptions underlying
Lease liabilities
Investment properties
Trade receivables
Inventories
Security based payments
Equity accounted investments
Right-of-use assets
Lease term, incremental borrowing rate
Fair value
Measurement of expected credit loss
Lower of cost and net realisable value
Fair value
Assessment of control versus significant influence
Recoverable amount
Note
2, 24
2
4
6
20
24(c)
24(d)(vii)
RESULT FOR THE YEAR
1. Segment Information
GPT’s operating segments are described in the following table. The chief operating decision makers monitor the performance of the business
on the basis of Funds from Operations (FFO) for each segment. FFO represents GPT’s underlying and recurring earnings from its operations, and
is determined by adjusting the statutory net profit after tax for certain items which are non-cash, unrealised or capital in nature. FFO has been
determined in accordance with guidelines issued by the Property Council of Australia.
Segment
Types of products and services which generate the segment result
Retail
Office
Logistics
Corporate
Ownership, development (including mixed-use) and management of predominantly regional, sub-regional and CBD shopping
centres and also includes the management of the GPT Wholesale Shopping Centre Fund (GWSCF) and external mandates
as well as the results of GPT’s equity investment in GWSCF.
Ownership, development and management of prime office properties and also includes the management of the GPT
Wholesale Office Fund (GWOF) as well as the results of GPT’s equity investment in GWOF.
Ownership, development and management of logistics assets and also includes the management of the GPT QuadReal
Logistics Trust (GQLT) as well as the results of GPT's equity investment in GQLT.
Cash, other assets, borrowings and associated hedges as well as net finance costs, corporate management and administration
expenses and income tax expense.
70 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 1. Segment Information continued
a) Segment financial information
31 December 2022
The segment financial information provided to the chief operating decision makers for the year ended 31 December 2022 is set out below:
Financial performance by segment
Rent from investment properties
Property expenses and outgoings
Income from Funds
Management net income
Operations Net Income
Funds Management Net Income
Development profit
Development management net income
Development Net Income
Interest revenue
Finance costs
Net Finance Costs
Segment Result Before Tax
Income tax expense
Funds from Operations (FFO)
Note
b(ii)
b(iii)
b(iv)
b(v)
b(vi)
b(vii)
b(viii)
b(ix)
b(x)
b(i)
Retail
$M
350.5
(112.2)
45.2
6.4
289.9
13.7
(0.3)
0.2
(0.1)
—
—
—
303.5
—
303.5
Office
$M
295.8
(76.6)
72.3
(1.2)
290.3
41.9
—
2.7
2.7
—
—
—
334.9
—
334.9
Logistics
$M
Corporate
$M
222.6
(42.3)
4.1
(2.0)
182.4
1.8
0.6
3.3
3.9
—
—
—
188.1
—
188.1
—
—
—
(57.6)
(57.6)
—
—
—
—
0.9
(140.8)
(139.9)
(197.5)
(8.4)
(205.9)
Reconciliation of segment assets and liabilities to the Consolidated Statement of Financial Position
Total
$M
868.9
(231.1)
121.6
(54.4)
705.0
57.4
0.3
6.2
6.5
0.9
(140.8)
(139.9)
629.0
(8.4)
620.6
Total
$M
637.3
637.3
11,956.6
4,098.3
141.3
460.7
16,656.9
17,294.2
5,818.3
5,818.3
Retail
$M
48.2
48.2
4,783.5
873.6
73.7
10.2
5,741.0
5,789.2
25.1
25.1
Office
$M
Logistics
$M
Corporate
$M
—
—
2,987.8
2,973.7
—
21.1
5,982.6
5,982.6
17.2
17.2
338.9
338.9
4,185.3
241.0
67.6
1.7
4,495.6
4,834.5
7.7
7.7
250.2
250.2
—
10.0
—
427.7
437.7
687.9
5,768.3
5,768.3
5,764.1
5,965.4
4,826.8
(5,080.4)
11,475.9
THE GPT GROUP ANNUAL REPORT 2022 | 71
Current Assets
Current assets
Total Current Assets
Non-Current Assets
Investment properties
Equity accounted investments
Inventories
Other non-current assets
Total Non-Current Assets
Total Assets
Current and non-current liabilities
Total Liabilities
Net Assets/(Liabilities)
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 1. Segment Information continued
31 December 2021
The segment financial information provided to the chief operating decision makers for the year ended 31 December 2021 is set out below:
Financial performance by segment 1
Rent from investment properties
Property expenses and outgoings
Income from Funds
Management net income
Operations Net Income
Funds Management Net Income
Development profit
Development management net income
Development Net Income
Interest revenue
Finance costs
Net Finance Costs
Segment Result Before Tax
Income tax expense
Funds from Operations (FFO)
Note
b(ii)
b(iii)
b(iv)
b(v)
b(vi)
b(vii)
b(viii)
b(ix)
b(x)
b(i)
Retail
$M
306.0
(112.2)
34.1
0.6
228.5
11.8
5.2
0.2
5.4
—
—
—
245.7
—
245.7
Office
$M
264.3
(68.4)
74.0
(1.9)
268.0
36.5
—
1.2
1.2
—
—
—
305.7
—
305.7
Logistics
$M
Corporate
$M
185.7
(33.7)
0.6
(1.4)
151.2
—
3.3
0.2
3.5
—
—
—
154.7
—
154.7
—
—
—
(62.5)
(62.5)
—
—
—
—
0.3
(85.5)
(85.2)
(147.7)
(3.9)
(151.6)
Reconciliation of segment assets and liabilities to the Consolidated Statement of Financial Position
Current Assets
Current assets
Total Current Assets
Non-Current Assets
Investment properties
Equity accounted investments
Inventories
Other non-current assets
Total Non-Current Assets
Total Assets
Current and non-current liabilities
Total Liabilities
Net Assets/(Liabilities)
Retail
$M
218.5
218.5
4,630.1
830.5
71.0
0.1
5,531.7
5,750.2
6.9
6.9
Office
$M
Logistics
$M
Corporate
$M
—
—
3,019.3
3,126.9
—
23.8
6,170.0
6,170.0
20.7
20.7
126.2
126.2
4,305.3
100.5
—
7.9
4,413.7
4,539.9
7.9
7.9
180.5
180.5
—
10.0
—
529.1
539.1
719.6
5,470.9
5,470.9
5,743.3
6,149.3
4,532.0
(4,751.3)
11,673.3
Total
$M
756.0
(214.3)
108.7
(65.2)
585.2
48.3
8.5
1.6
10.1
0.3
(85.5)
(85.2)
558.4
(3.9)
554.5
Total
$M
525.2
525.2
11,954.7
4,067.9
71.0
560.9
16,654.5
17,179.7
5,506.4
5,506.4
1. Comparatives in this table have been restated to the current year presentation format. There have been no changes to total amounts.
72 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 1. Segment Information continued
b) Reconciliation of segment result to the Consolidated Statement of Comprehensive Income
FFO to Net profit for the year
i)
Segment result
FFO
Adjustments
Fair value gain on investment properties
Fair value (loss)/gain and other adjustments to equity accounted investments
Amortisation of lease incentives and costs
Straightlining of rental income
Valuation (decrease)/increase
Net gain/(loss) on fair value movement of derivatives
Net gain from hedge ineffectiveness on qualifying hedges
Net foreign exchange loss
Gain on financial liability at amortised cost
Financial instruments mark to market and net foreign exchange movements
Impairment reversal/(expense)
Transaction costs 1
Other items
Total other items
Consolidated Statement of Comprehensive Income
Net profit for the year
ii) Rent from investment properties
Segment result
Rent from investment properties
Adjustments
Less: share of rent from investment properties in equity accounted investments
Eliminations of intra-group lease payments
Amortisation of lease incentives and costs
Straightlining of rental income
Impairment (reversal)/loss on trade and other receivables
Consolidated Statement of Comprehensive Income
Rent from investment properties
iii) Property expenses and outgoings
Segment result
Property expenses and outgoings
Adjustment
Less: share of property expenses and outgoings in equity accounted investments
Consolidated Statement of Comprehensive Income
Property expenses and outgoings
iv) Share of after tax profit of equity accounted investments
Segment result
Income from funds
Adjustments
Share of rent from investment properties in equity accounted investments
Share of property expenses and outgoings in equity accounted investments
Development revenue – equity accounted investments
Fair value (loss)/gain and other adjustments to equity accounted investments
Consolidated Statement of Comprehensive Income
Share of after tax profit of equity accounted investments
31 Dec 22
$M
31 Dec 21
$M
620.6
554.5
34.0
(130.0)
(62.1)
(1.2)
(159.3)
3.8
0.6
(0.4)
2.4
6.4
8.5
(13.8)
6.9
1.6
762.5
206.6
(49.4)
4.6
924.3
(11.9)
17.6
(0.2)
2.4
7.9
(56.2)
(20.7)
13.0
(63.9)
469.3
1,422.8
868.9
756.0
(89.6)
(2.8)
(62.1)
(1.2)
(5.9)
(85.2)
(2.3)
(49.4)
4.6
50.0
707.3
673.7
(231.1)
(214.3)
18.3
16.8
(212.8)
(197.5)
121.6
108.7
89.6
(18.3)
(0.1)
(130.0)
85.2
(16.8)
0.9
206.6
62.8
384.6
1. Year ended 31 December 2022: Transaction costs predominantly relate to costs incurred in the transition of the management of the property portfolios of UniSuper and the Australian
Core Retail Trust (ACRT). Year ended 31 December 2021: Transaction costs include $10.7 million of penalties and interest in relation to the Darling Park stamp duty assessment
(refer to note 3(b)(ii) for further details) and a $10.0 million termination fee paid upon the acquisition of the Ascot portfolio.
THE GPT GROUP ANNUAL REPORT 2022 | 73
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 1. Segment Information continued
v) Management net income
Segment result
Operations management net income
Adjustments
Expenses in development management net income
Expenses in funds management net income
Eliminations of intra-group lease payments
Transfer to finance costs – leases
Depreciation, amortisation and impairment expense
Transaction costs
Other
Management net income
Consolidated Statement of Comprehensive Income
Property management fees
Management and other administration costs
Management net income
vi) Funds management net income
Segment result
Funds management net income
Adjustments
Add: expenses in funds management net income
Transaction costs
Consolidated Statement of Comprehensive Income
Funds management fees
vii) Development profit
Segment result
Development profit
Adjustment
Less: share of after tax loss/(profit) of equity accounted investments
Development profit
Consolidated Statement of Comprehensive Income
Development revenue
Development costs
Development profit
viii) Development management net income
Segment result
Development management net income
Adjustment
Add: expenses in development management net income
Consolidated Statement of Comprehensive Income
Development management fees
ix) Finance costs
Segment result
Finance costs – borrowings
Adjustment
Finance costs – leases
Consolidated Statement of Comprehensive Income
Finance costs
Income tax expense
x)
Segment result
Income tax expense
Adjustment
Tax impact of reconciling items from segment result to net profit for the year
Consolidated Statement of Comprehensive Income
Income tax (expense)/benefit
74 | THE GPT GROUP ANNUAL REPORT 2022
31 Dec 22
$M
31 Dec 21
$M
(54.4)
(4.8)
(11.0)
2.8
1.2
4.1
(12.3)
0.1
(74.3)
17.0
(91.3)
(74.3)
57.4
11.0
(1.5)
66.9
0.3
0.1
0.4
11.0
(10.6)
0.4
6.2
4.8
11.0
(65.2)
(6.2)
(13.6)
2.3
1.5
8.5
(20.7)
(0.6)
(94.0)
17.0
(111.0)
(94.0)
48.3
13.6
—
61.9
8.5
(0.9)
7.6
34.8
(27.2)
7.6
1.6
6.2
7.8
(140.8)
(85.5)
(1.2)
(1.5)
(142.0)
(87.0)
(8.4)
4.5
(3.9)
(3.9)
4.9
1.0
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 1. Segment Information continued
c) Net profit on disposal and derecognition of assets
Details of disposals during the year:
Consideration received/receivable
Carrying amount of net assets sold
Profit on sale and derecognition before income tax
The carrying amounts of assets and liabilities as at the date of disposal were:
Investment properties
Equity accounted investments
Net assets
31 Dec 22
$M
31 Dec 21
$M
198.6
108.5
(198.6)
(108.5)
—
—
198.6
—
198.6
108.5
—
108.5
Investment Properties
OPERATING ASSETS AND LIABILITIES
2.
Basis of valuation
In line with the Valuation Policy, GPT independently values each completed investment property (including investment property assets disclosed
within equity accounted investments) at least annually. Independent valuers consider transaction evidence and prevailing market conditions, which
guides them in their key valuation assumptions, including capitalisation and discount rates, market rental levels, tenant incentives, lease up periods,
income growth rates and capital expenditure.
GPT provides factual information to the independent valuers, including passing rent information, outstanding incentives and capital expenditure
forecasts which the independent valuers then use to form their own assessment.
In early February 2023 the Group consulted with the independent valuers to understand whether any changes subsequent to the balance date
changed their view regarding the 31 December 2022 valuations. In particular the Group noted the rapidly changing economic environment,
including high inflation, rising interest rates and a slowing in capital flows. All valuers confirmed that their valuations were appropriate as at
31 December 2022, noting that the valuations are based on recent market transactions and information available as at that date. On 9 February
2023, the Valuation Committee undertook a further review of the valuations, assessing the impact of the elevated level of economic uncertainty.
Management has reviewed the investment property valuations for both accuracy and reasonableness of the assumptions used to determine fair
value. The fair values are shown in the following tables.
a)
Investment properties
Retail
Office
Logistics
Properties under development
Total investment properties
Investment
properties
Less lease
liabilities
Fair value
Investment
properties
Less lease
liabilities
Fair value
31 Dec 22
31 Dec 21
Note
(i)
(ii)
(iii)
(iv)
(vi)
$M
4,783.5
2,987.8
3,841.3
344.0
$M
(6.5)
—
(7.7)
—
$M
4,777.0
2,987.8
3,833.6
344.0
$M
4,630.1
3,019.3
4,025.8
279.5
$M
(6.9)
—
(7.9)
—
$M
4,623.2
3,019.3
4,017.9
279.5
11,956.6
(14.2)
11,942.4
11,954.7
(14.8)
11,939.9
THE GPT GROUP ANNUAL REPORT 2022 | 75
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS l
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76 | THE GPT GROUP ANNUAL REPORT 2022
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THE GPT GROUP ANNUAL REPORT 2022 | 79
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS
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80 | THE GPT GROUP ANNUAL REPORT 2022
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Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS
2.
Investment Properties continued
vi) Reconciliation
Opening balance at the beginning of the year
Additions – maintenance capital expenditure
Additions – development capital expenditure
Additions – interest capitalised 1
Asset acquisitions
Transfers to assets held for sale
Transfers (to)/from properties under development/
other assets
Transfer to inventory
Movement in ground leases of investment properties
Fair value adjustments
Lease incentives (includes rent free)
Leasing costs
Amortisation of lease incentives and costs
Straightlining of leases
Retail
$M
4,630.1
16.0
65.5
—
—
—
—
(9.6)
(0.4)
72.9
21.7
4.2
(16.1)
(0.8)
Office
$M
3,019.3
8.3
66.3
0.1
—
—
—
—
—
(107.1)
33.4
2.6
(35.6)
0.5
Logistics
$M
4,025.8
5.1
6.4
—
—
(256.6)
78.8
(55.0)
(0.2)
37.9
5.8
1.9
(9.7)
1.1
Properties
under
development
$M
31 Dec 22
$M
31 Dec 21
$M
279.5
—
77.9
9.0
28.1
—
(78.8)
—
—
28.3
—
—
—
—
11,954.7
29.4
216.1
9.1
28.1
(256.6)
—
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(0.6)
32.0
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8.7
(61.4)
0.8
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29.5
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5.9
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(198.6)
0.8
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7.0
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43.2
7.7
(49.4)
4.6
Closing balance at the end of the year
4,783.5
2,987.8
3,841.3
344.0
11,956.6
11,954.7
1. A capitalisation interest rate of 3.2% (31 December 2021: 2.4%) has been applied when capitalising interest on qualifying assets.
Land and buildings which are held to earn rental income or for capital appreciation or for both, and which are not wholly occupied by GPT, are classified
as investment properties.
Investment properties are initially recognised at cost and subsequently stated at fair value at each balance date. Fair value is based on the
latest independent valuation adjusting for capital expenditure and capitalisation and amortisation of lease incentives since the date of the
independent valuation report. Any change in fair value is recognised in the Consolidated Statement of Comprehensive Income in the period.
Properties under development are stated at fair value at each balance date. Fair value is assessed with reference to reliable estimates of future
cash flows, status of the development and the associated risk profile. Finance costs incurred on properties undergoing development are included
in the cost of the development.
Lease incentives provided by GPT to lessees are included in the measurement of fair value of investment property and are amortised over the lease
term using a straight-line basis.
THE GPT GROUP ANNUAL REPORT 2022 | 81
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS Investment Properties continued
2.
b) Fair value measurement, valuation techniques and inputs
Critical judgements are made by GPT in respect of the fair values of investment properties. Fair values are reviewed regularly by management with
reference to independent property valuations, recent transactions and market conditions, using generally accepted market practices. A description
of the valuation techniques and key inputs are included in the following table:
Class
of assets
Fair value
hierarchy 1
Valuation
technique
Inputs used to measure fair value
Unobservable inputs
31 Dec 22
Unobservable inputs
31 Dec 21
Retail
Level 3
Office
Level 3
Discounted
cash flow
(DCF) and
income
capitalisation
method
DCF and
income
capitalisation
method
Gross market rent (per sqm p.a.)
10 year average specialty market rental growth (DCF)
Adopted capitalisation rate
Adopted terminal yield (DCF)
Adopted discount rate (DCF)
Lease incentives (gross)
Stabilisation allowance (% of asset annual income)
– 3.3%
$1,502 – $2,444
2.7%
4.50% – 5.63%
4.75% – 5.88%
6.25% – 6.50%
– 10.0%
7.5%
– 0.0%
0.0%
– 3.2%
$1,427 – $2,288
2.4%
4.50% – 5.50%
4.75% – 5.75%
6.00% – 6.50%
– 14.0%
7.5%
– 20.6%
0.6%
Net market rent (per sqm p.a.)
10 year average market rental growth (DCF)
Adopted capitalisation rate
Adopted terminal yield (DCF)
Adopted discount rate (DCF)
Lease incentives (gross)
Stabilisation allowance (% of asset annual income)
– $1,630
– 3.9%
$435
3.0%
4.75% – 6.00%
5.00% – 6.25%
5.88% – 6.50%
15.0% – 42.5%
0.2%
– 0.8%
– $1,400
– 3.9%
$430
3.1%
4.50% – 5.63%
4.75% – 5.75%
5.75% – 6.25%
15.0% – 40.0%
0.0%
– 4.9%
Logistics
Level 3
DCF and
income
capitalisation
method
Net market rent (per sqm p.a.)
10 year average market rental growth (DCF)
Adopted capitalisation rate
Adopted terminal yield (DCF)
Adopted discount rate (DCF)
Lease incentives (net)
Level 3
Properties
under
development
Development
feasibility
analysis or
land rate
Net market rent (per sqm p.a.)
Adopted capitalisation rate
Adopted terminal yield (DCF)
Adopted discount rate (DCF)
Land rate (per sqm)
Profit and risk factor
1. Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
– $480
– 3.9%
$80
3.0%
4.13% – 6.25%
4.25% – 6.50%
5.38% – 7.00%
– 30.0%
8.3%
$95
– $115
4.13% – 4.75%
4.38% – 5.00%
5.50% – 5.75%
– $679
$363
– 20.0%
0.0%
– $529
– 3.5%
$70
2.5%
3.50% – 5.75%
3.63% – 6.00%
5.25% – 7.00%
10.0% – 32.0%
$80
– $134
3.63% – 5.00%
3.88% – 5.13%
5.25% – 6.00%
– $679
$348
– 10.0%
0.0%
82 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS Investment Properties continued
2.
b) Fair value measurement, valuation techniques and inputs continued
DCF
Under the DCF method, the fair value is estimated using explicit assumptions regarding the benefits and liabilities
of ownership over the asset's or liability's life including an exit or terminal value. The DCF method involves the
projection of a series of cash flows from the asset or liability. To this projected cash flow series, an appropriate,
market-derived discount rate is applied to establish the present value of the cash flows from the asset or liability.
Income capitalisation
method
This method involves assessing the total net market income receivable from the property and capitalising this in
perpetuity to derive a capital value, with allowances for capital expenditure and reversions.
Gross market rent
A gross market rent is the estimated amount of rent for which a property or space within a property should lease
between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper
marketing and wherein the parties have each acted knowledgeably, prudently and without compulsion.
Net market rent
Net market rent is defined as gross market rent less the building outgoings or cleaning costs paid by the tenant.
10 year average specialty
market rental growth
The expected annual rate of change in market rent over a 10 year forecast period in specialty tenancy rents.
Specialty tenants are those retail tenancies with a gross lettable area of less than 400 square metres (excludes
ATMs and kiosks).
10 year average market
rental growth
The expected annual rate of change in market rent over a 10 year forecast period.
Adopted capitalisation rate The rate at which net market income is capitalised to determine the value of a property. The rate is determined with
regards to market evidence.
Adopted terminal yield
The capitalisation rate used to convert income into an indication of the anticipated value of the property at the end
of the holding period when carrying out a discounted cash flow calculation. The rate is determined with regards to
market evidence.
Adopted discount rate
The rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
Theoretically it should reflect the opportunity cost of capital, that is, the rate of return the capital can earn if put to
other uses having similar risk. The rate is determined with regards to market evidence.
Land rate (per sqm)
The land rate is the market land value per sqm.
Profit and risk factor
The profit and risk factor is applied to the remaining costs of a development to reflect a target margin required to
complete the project. The factor will vary depending on the remaining leasing or construction required.
Lease incentives
A lease incentive is often provided to a lessee upon the commencement of a lease. Incentives can be a
combination of, or, one of the following: a rent-free period, a fit-out contribution, a cash contribution or rental
abatement.
Stabilisation allowance
The stabilisation allowance reflects the anticipated prospective rent relief granted to tenants.
THE GPT GROUP ANNUAL REPORT 2022 | 83
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 2.
Investment Properties continued
c) Valuation process – investment properties
GPT manages the semi-annual valuation process to ensure that investment properties are held at fair value in GPT’s accounts and that GPT is
compliant with applicable regulations (for example the Corporations Act 2001 and ASIC regulations), the GPT RE Constitution and Compliance Plan.
GPT has a Valuation Committee (committee) which is comprised of the Chief Operating Officer, Chief Financial Officer, Head of Transactions,
Deputy Chief Financial Officer and General Counsel.
The purpose of the committee is to:
» approve the panel of independent valuers;
» review valuation inputs and assumptions;
» provide an escalation process where there are differences of opinion from various team members responsible for the valuation;
» oversee the finalisation of the valuations; and
» review the independent valuation sign-off and any comments that have been noted.
All independent valuations and internal tolerance checks are reviewed by the committee prior to these being presented to the Board for approval.
Independent valuations
GPT’s independent valuations are performed by independent professionally qualified valuers who hold recognised relevant professional qualifications
and have specialised expertise in the investment properties being valued. Selected independent valuation firms form part of a panel approved by
the committee. Each valuation firm is limited to undertaking consecutive valuations of a property for a maximum period of two years. Where an
exceptional circumstance arises, the extension of the valuer’s term must be approved by the relevant Board.
The Valuation Policy requires an independent valuation at least annually for all completed investment properties. Properties under development
with a value of $100 million or greater are independently valued at least every six months. Unimproved land is independently valued at least every
three years. Additional valuations will be completed in the event an internal tolerance check identifies the requirement for an independent valuation.
Internal tolerance checks
Every six months, with the exception of properties independently valued, an internal tolerance check is prepared. The internal tolerance check involves
the preparation of a DCF and income capitalisation valuation for each investment property. These are produced using a capitalisation rate, terminal
yield and discount rate based on comparable market evidence and recent independent valuation parameters. The tolerance measurement will
typically be a mid-point of these two approaches.
These internal tolerance checks are used to determine whether the book value is in line with the fair value or whether an independent valuation
is required.
Properties under development
The valuation of the properties under development is determined by a development feasibility analysis for each parcel of land within each asset.
The development feasibility analysis is prepared on an “as if complete” basis and is a combination of the income capitalisation method and where
appropriate, the discounted cash flow method. The cost to complete of the development includes development costs, finance costs and an
appropriate profit and risk margin. These costs are deducted from the “as if complete” valuation to determine the “as is” basis or “current fair value.”
The fair value of vacant land parcels is based on the market land value per square metre.
Highest and best use
The fair value of investment properties is calculated based on the highest and best use whether or not the current use reflects the highest and best use.
84 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS
Investment Properties continued
2.
d) Sensitivity information – investment properties
Critical judgements are made by GPT in respect of the fair values of investment properties (including investment properties within equity accounted
investments). Fair values are reviewed regularly by management with reference to independent property valuations, recent transactions and market
conditions, and using generally accepted market practices. The valuation process, critical assumptions underlying the valuations and information
on sensitivity are disclosed below and in note 2(b).
An independent valuer will typically conduct both an income capitalisation valuation and a discounted cash flow (DCF) valuation for each asset,
which informs a range of valuation outcomes. The valuer will then apply their expertise in determining an adopted value, which may include
adopting one of these specific approaches or a mid-point of these two approaches.
In conducting the sensitivity analysis, management have selected a sample of assets for each portfolio, for which key metrics are typical of the
portfolio to which they relate. For those assets, the independent valuer conducted the sensitivity analysis in the following tables. Results for
individual assets may differ based on each asset’s particular attributes and market conditions.
The following table shows the sensitivity of the valuation to movements in the key variables of cap rates and market rent per sqm when using
the income capitalisation valuation approach and the discount rate and terminal rate and market rental growth rates when using the DCF
valuation approach.
Retail – impact to valuation
Office – impact to valuation
Logistics – impact to valuation
Retail – impact to valuation
Office – impact to valuation
Logistics – impact to valuation
1. For Retail, this is the 10 year specialty growth rate.
Capitalisation Method
Cap Rate
Market Rent per sqm
0.25%
0.50%
0.75%
1.00%
(5.4%)
(5.0%)
(5.8%)
(10.3%)
(9.6%)
(11.0%)
(14.7%)
(13.9%)
(15.7%)
(18.7%)
(17.8%)
(20.0%)
(5.0%)
(6.3%)
(5.4%)
(3.5%)
5.0%
6.3%
5.3%
3.6%
DCF Method
Discount Rate and Terminal Rate
10-Year Growth Rate 1
0.25%
0.50%
0.75%
1.00%
(0.50%)
0.50%
(5.4%)
(5.3%)
(5.7%)
(10.3%)
(10.2%)
(10.9%)
(14.7%)
(14.6%)
(15.5%)
(18.7%)
(18.8%)
(19.7%)
(3.3%)
(3.9%)
(3.4%)
3.4%
4.0%
3.6%
e) 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 five years
Total lease payments to be received
31 Dec 22
$M
31 Dec 21
$M
593.1
534.0
463.2
384.7
296.1
936.5
3,207.6
582.5
507.2
446.5
382.0
312.1
1,055.1
3,285.4
Lease amounts to be received include future amounts to be received on non-cancellable operating leases, not recognised in the financial statements
at balance date. A proportion of this balance includes amounts receivable for recovery of operating costs on gross and semi-gross leases which
will be accounted for as revenue from contracts with customers as this income is earned. The remainder will be accounted for as lease income
as it is earned. Amounts receivable under non-cancellable operating leases where GPT’s right to consideration for a service directly corresponds
with the value of the service provided to the customer have not been included (for example, variable amounts payable by tenants for their share
of the operating costs of the asset). Leases have only been included where there is an active lease in place and renewal has not been assumed
unless there is reasonable certainty that the tenant intends to renew.
THE GPT GROUP ANNUAL REPORT 2022 | 85
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 3. Equity Accounted Investments
Investments in joint ventures
Investments in associates
Total equity accounted investments
a) Details of equity accounted investments
Name
i)
Joint ventures
2 Park Street Trust 1
Horton Trust
GPT QuadReal Logistics Trust
Lendlease GPT (Rouse Hill) Pty Limited 1,2
Total investment in joint venture entities
ii) Associates
GPT Wholesale Office Fund 1,3
GPT Wholesale Shopping Centre Fund 1
GPT Funds Management Limited
Darling Park Trust 1
DPT Operator Pty Limited 1
DPT Operator No.2 Pty Limited 1
Total investments in associates
1. The entity has a 30 June balance date.
Note
(a)(i)
(a)(ii)
31 Dec 22
$M
31 Dec 21
$M
1,105.3
2,993.0
4,098.3
991.0
3,076.9
4,067.9
Principal Activity
31 Dec 22
%
31 Dec 21
%
31 Dec 22
$M
31 Dec 21
$M
Ownership Interest
Investment property
Investment property
Investment property
Property development
Investment property
Investment property
Funds management
Investment property
Management
Management
50.00
50.00
50.10
50.00
21.74
28.48
100.00
41.67
91.67
91.67
50.00
50.00
50.10
50.00
21.81
28.48
100.00
41.67
91.67
91.67
819.5
30.2
241.0
14.6
1,105.3
1,601.5
828.8
10.0
552.7
—
—
2,993.0
847.1
28.8
100.5
14.6
991.0
1,702.9
787.1
10.0
576.9
—
—
3,076.9
2. GPT has a 50% interest in Lendlease GPT (Rouse Hill) Pty Limited, a joint venture developing residential and commercial land at Rouse Hill, in partnership with Urban Growth and
the NSW Department of Planning.
3. Ownership has decreased as a result of GPT not participating in the Distribution Reinvestment Plan (DRP) which occurred during the year.
For those joint ventures and associates with investment property as the principal activity refer to note 2 for details on key judgements and estimates
relating to the valuation of these investment properties.
For those joint ventures where the principal activity is property development refer to note 6 for details on key judgements and estimates.
86 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 3. Equity Accounted Investments continued
b) Summarised financial information for associates and joint ventures
The information disclosed reflects the amounts presented in the 31 December 2022 financial results of the relevant associates and joint ventures
and not GPT’s share of those amounts. They have been amended to reflect adjustments made by GPT when using the equity method, including fair
value adjustments and modifications for differences in accounting policies.
i)
Joint ventures
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Investment properties and loans
Total non-current assets
Current liabilities
Trade and other payables
Total current liabilities
Other non-current liabilities
Total non-current liabilities
Net assets
Reconciliation to carrying amounts:
Opening net assets 1 January
Profit for the year
Issue of equity
Distributions paid/payable
Closing net assets
GPT’s share
Summarised statement of comprehensive income
Revenue
Profit for the year
Total comprehensive income
2 Park Street Trust
GPT QuadReal
Logistics Trust
Others
31 Dec 22
$M
31 Dec 21
$M
31 Dec 22
$M
31 Dec 21
$M
31 Dec 22
$M
31 Dec 21
$M
10.5
0.7
11.2
47.8
1.2
49.0
1,660.0
1,700.0
1,660.0
1,700.0
32.2
32.2
—
—
54.9
54.9
—
—
13.5
13.2
26.7
469.1
469.1
14.8
14.8
—
—
25.6
9.3
34.9
181.2
181.2
15.5
15.5
—
—
13.6
14.5
28.1
65.8
65.8
3.2
3.2
1.1
1.1
16.7
14.5
31.2
61.4
61.4
4.7
4.7
1.1
1.1
1,639.0
1,694.1
481.0
200.6
89.6
86.8
1,694.1
8.0
23.4
(86.5)
1,609.1
151.1
—
(66.1)
1,639.0
1,694.1
819.5
847.1
68.9
8.0
8.0
73.4
151.1
151.1
200.6
22.8
265.4
(7.8)
481.0
241.0
11.2
22.8
22.8
—
14.5
187.4
(1.3)
200.6
100.5
1.6
14.5
14.5
86.8
5.1
0.3
(2.6)
89.6
44.8
3.9
5.1
5.1
88.0
4.7
0.6
(6.5)
86.8
43.4
2.9
4.7
4.7
THE GPT GROUP ANNUAL REPORT 2022 | 87
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 3. Equity Accounted Investments continued
b) Summarised financial information for associates and joint ventures continued
ii) Associates
GPT Wholesale
Office Fund
GPT
Wholesale Shopping
Centre Fund
Darling Park
Trust
GPT Funds
Management Limited
and others
31 Dec 22
$M
31 Dec 21
$M
31 Dec 22
$M
31 Dec 21
$M
31 Dec 22
$M
31 Dec 21
$M
31 Dec 22
$M
31 Dec 21
$M
Total current assets
Total non-current assets
Total current liabilities
Total non-current liabilities
81.2
9,643.3
(277.4)
(2,080.5)
73.3
9,764.5
(455.0)
(1,574.9)
35.8
3,524.8
(100.8)
(549.7)
257.1
3,284.3
(100.7)
(677.0)
56.0
1,320.5
(50.0)
—
42.1
1,381.7
(39.3)
—
Net assets
7,366.6
7,807.9
2,910.1
2,763.7
1,326.5
1,384.5
Reconciliation to carrying amounts:
Opening net assets 1 January
(Loss)/profit for the year
Issue of equity
Movement in reserves
Distributions paid/payable
7,807.9
(146.8)
25.6
(2.1)
(318.0)
7,222.4
865.9
18.8
13.3
(312.5)
2,763.7
291.6
—
—
(145.2)
2,665.9
166.4
—
—
(68.6)
1,384.5
(4.9)
22.1
—
(75.2)
1,263.2
164.8
21.9
—
(65.4)
Closing net assets
7,366.6
7,807.9
2,910.1
2,763.7
1,326.5
1,384.5
GPT’s share
Investment1
Impairment
1,601.5
1,702.9
828.8
787.1
552.7
576.9
—
—
—
—
—
—
—
—
—
—
29.2
(29.2)
10.0
—
—
—
10.0
10.0
—
—
—
—
10.0
10.0
—
—
10.0
—
—
—
10.0
10.0
—
—
—
—
10.0
10.0
—
—
Closing GPT share
1,601.5
1,702.9
828.8
787.1
552.7
576.9
10.0
10.0
Summarised statement
of comprehensive income
Revenue
(Loss)/profit for the year
Total comprehensive (loss)/income
Distributions received/receivable
from their associates
441.3
(146.8)
(148.9)
63.0
540.0
865.9
879.2
56.5
254.5
291.6
291.6
—
248.0
166.4
166.4
—
79.8
(4.9)
(4.9)
—
69.1
164.8
164.8
—
—
—
—
—
—
—
—
—
1. During the year ended 31 December 2021, GPT received a notice of assessment from Revenue NSW that levied stamp duty on the 2019 acquisition of a 41.67% interest in the Darling
Park Trust. That notice levied stamp duty of $29.2m (which was recognised against the equity accounted investment) as well as penalties and interest of $10.7m. The penalty together
with interest has been recognised as an expense in the Consolidated Statement of Comprehensive Income. GPT has objected to the notice of assessment but has determined that it is
appropriate to reflect these amounts in the financial statements pending the outcome of the objection.
88 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 4. Trade and Other Receivables
a) Trade receivables
Current assets
Trade receivables 1
Accrued income
Related party receivables 2
Less: impairment of trade receivables
Total current trade receivables
31 Dec 22
$M
31 Dec 21
$M
29.6
12.9
30.6
(16.9)
56.2
42.4
9.7
24.9
(30.9)
46.1
1. This includes trade receivables relating to revenue from contracts with customers. Refer to note 17 for the methodology of apportionment between trade receivables relating to
AASB 15 Revenue from Contracts with Customers and other trade receivables balances.
2. The related party receivables are on commercial terms and conditions.
The following table shows the ageing analysis of GPT’s trade receivables.
Retail
Office
Logistics
Corporate
Less: impairment of trade receivables
31 Dec 22
31 Dec 21
Not yet
due
$M
0–30
days
$M
31–60
days
$M
61-90
days
$M
90+
days
$M
9.2
2.4
2.1
3.5
(3.6)
7.3
3.4
1.9
30.0
(4.5)
1.7
1.1
0.1
0.5
(1.4)
0.5
0.1
—
0.3
(0.5)
6.7
1.1
0.5
0.7
(6.9)
Total
$M
25.4
8.1
4.6
35.0
(16.9)
Not yet
due
$M
0–30
days
$M
31–60
days
$M
61-90
days
$M
11.0
2.3
3.7
0.3
(5.9)
8.1
1.9
1.0
25.0
(6.6)
3.9
0.3
0.1
0.8
(3.1)
1.8
0.1
0.1
0.2
(1.6)
90+
days
$M
15.3
0.8
0.1
0.2
(13.7)
Total
$M
40.1
5.4
5.0
26.5
(30.9)
Total current trade receivables
13.6
38.1
2.0
0.4
2.1
56.2
11.4
29.4
2.0
0.6
2.7
46.1
b) Other receivables
Current assets
Distribution receivable from associates
Distribution receivable from joint ventures
Settlement compensation receivable 1
Other receivables
Total current other receivables
31 Dec 22
$M
31 Dec 21
$M
37.7
11.8
117.1
8.8
175.4
29.5
2.4
131.6
5.8
169.3
1. Comprising $78.6 million in relation to Sydney Olympic Park and $38.5 million in relation to Rouse Hill land.
c) Accounting policies and COVID-19 impacts
Regulated commercial rent relief schemes were in place during 2022 and 2021, in accordance with the national mandatory Code of Conduct, to
assist small and medium enterprise (SME) tenants who suffered financial hardship during the pandemic. The Code of Conduct sets out principles
to guide discussions between commercial landlords and SME tenants and is legislated and regulated by the states and territories.
The application of the Code of Conduct requires GPT to engage with each of its SME tenants and provide cash flow support in a fair and
proportionate manner during the COVID-19 period. Importantly, the Code of Conduct allows GPT to negotiate commercial outcomes on a case
by case basis for those SMEs most impacted. GPT has also engaged with non-SME tenants who have sought assistance but are not eligible under
the Code of Conduct. Assistance provided to tenants under the Code of Conduct has taken the form of rent waivers, rent payment deferral or a
combination of the two. While the majority of leasing deals under the Code of Conduct have now been finalised, there are still a small number of
deals that remain unresolved.
Receivables are initially recognised at fair value and subsequently at amortised cost using the effective interest method less any allowance under
the ‘expected credit loss’ (ECL) model. GPT 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.
Rent waivers and other write-offs
Debts which management has determined will be subject to a rent waiver, or are otherwise uncollectible have been written off as at 31 December
2022, in accordance with the requirements of AASB 9 Financial Instruments (AASB 9). Bad debt write offs of $26.5 million (31 December 2021:
$41.6 million) relating to COVID-19 abatements and other non recoverable amounts have been recognised during the financial year. Waivers which
have been reflected on invoices issued to tenants and do not relate to previous outstanding debtors, have been shown as a reduction to rent from
investment properties on the Consolidated Statement of Comprehensive Income.
THE GPT GROUP ANNUAL REPORT 2022 | 89
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 4. Trade and Other Receivables continued
c) Accounting policies and COVID-19 impacts continued
Recoverability of receivables
For remaining trade and other receivables balances which have not been written off, management has assessed whether these balances are
“credit impaired”, and recognised a loss allowance equal to the lifetime ECL. 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.
Lifetime ECLs result from all possible default events over the expected life of the receivables 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 GPT in accordance
with the contract and the cash flows that GPT expects to receive). A default on receivables is when the counterparty fails to make contractual
payments when they fall due and management determines that the debt is uncollectible, or where management forgives all or part of the debt.
GPT 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;
» financial difficulties of a counterparty or probability that a counterparty will enter bankruptcy; and
» conditions specific to the asset to which the receivable relates.
Debts that are known to be uncollectible are written off when identified.
At 31 December 2022, GPT has assessed the likelihood of future defaults and debt forgiveness taking into account several factors. These include
the risk profile of the tenant, the age of the debt, the asset location, and tenant cash payment trends after the completion of rent relief agreements
and other economic conditions impacting the tenants' ability to pay.
This has resulted in an ECL allowance of $16.9 million being recognised as at 31 December 2022 (31 December 2021: $30.9 million). The remaining
net balance of trade receivables (excluding accrued income and related party receivables) is $12.7 million (31 December 2021: $11.5 million).
5.
Intangible Assets
Costs
Balance at 31 December 2020
Additions
Write off
Balance at 31 December 2021
Additions
Write off
Balance at 31 December 2022
Accumulated amortisation and impairment
Balance at 31 December 2020
Amortisation
Impairment
Write off
Balance at 31 December 2021
Amortisation
Reversal of impairment
Write off
Balance at 31 December 2022
Carrying amounts
Balance at 31 December 2021
Balance at 31 December 2022
90 | THE GPT GROUP ANNUAL REPORT 2022
Management
rights
$M
IT development
and software
$M
Carbon
offsets
$M
52.0
—
—
52.0
—
—
52.0
(41.8)
—
(10.2)
—
(52.0)
—
10.2
—
(41.8)
—
10.2
54.3
4.3
(12.3)
46.3
0.9
—
47.2
(39.8)
(2.1)
(3.7)
12.3
(33.3)
(1.5)
—
—
(34.8)
13.0
12.4
—
—
—
—
2.2
—
2.2
—
—
—
—
—
—
—
—
—
—
2.2
Total
$M
106.3
4.3
(12.3)
98.3
3.1
—
101.4
(81.6)
(2.1)
(13.9)
12.3
(85.3)
(1.5)
10.2
—
(76.6)
13.0
24.8
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS Intangible Assets continued
5.
Management rights
Management rights include property management and development management rights. Rights are initially measured at cost and 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, GPT tests for impairment or reversal at balance date. Assets are impaired if the carrying value exceeds
their recoverable amount. The recoverable amount is determined using a discounted cash flow. A 13.25% pre-tax discount rate and 2.90% growth
rate have been applied to these asset specific cash flow projections.
The asset was impaired in full during the year end 31 December 2021, with the full amount reversed at 31 December 2022 due to economies of
scale benefits as a result of the commencement of management of the UniSuper and ACRT mandates.
IT development and software
Costs incurred in developing systems and acquiring software and licences that will contribute future financial benefits and which the Group 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 over which the benefits are expected to be received, generally ranging
from 5 to 10 years.
IT development and software are assessed for impairment at each reporting date by evaluating if any impairment triggers exist. Where impairment
triggers exist, management calculate the recoverable amount. The asset is impaired if the carrying value exceeds the recoverable amount. Critical
judgements are made by GPT in setting appropriate impairment triggers and assumptions used to determine the recoverable amount.
Management believe the carrying value reflects the recoverable amount.
Costs incurred in relation to Software as a Service are recognised as an expense as incurred.
Carbon offsets
The Group has purchased carbon credits (or offsets) known as Verified Carbon Units (VCUs). The VCUs are used by the Group to offset its
operational emissions or to offset embodied carbon within a development project. The carbon credits are measured at cost and management
considers that the carbon credits have an indefinite useful life. Therefore, GPT tests for impairment at balance date. The costs of the carbon credits
include any direct purchase costs.
Assets are impaired if the carrying value exceeds their recoverable amount. The recoverable amount is determined with reference to the current
market price for equivalent VCUs.
When carbon credits are utilised, they are derecognised and the cost is recognised as an expense where the carbon credits are utilised to offset
operational emissions, or capitalised to development costs of investment properties where utilised to offset embodied carbon.
6.
Inventories
Properties held for sale
Development properties
Current inventories
Development properties
Non-current inventories
Total inventories
31 Dec 22
$M
31 Dec 21
$M
—
13.4
13.4
141.3
141.3
154.7
8.4
6.1
14.5
71.0
71.0
85.5
Development properties held as inventory to be sold are stated at the lower of cost and net realisable value.
Cost includes the cost of acquisition and any subsequent capital addition. 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. A total of $2.2 million in finance costs have been capitalised
to inventory for the year ended 31 December 2022 (31 December 2021: $1.9 million). 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.
THE GPT GROUP ANNUAL REPORT 2022 | 91
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS Inventories continued
6.
Net realisable value (NRV)
The NRV is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs to sell.
At each reporting date, management reviews these estimates by considering:
» the most reliable evidence; and
» any events which confirm conditions existing at the year end that could cause any fluctuations of selling price and costs to sell.
Management have completed NRV assessments for each asset held as inventory taking into account the impacts of COVID-19 on these estimates
including its impacts on delivery timeframes and revenue assumptions, and has compared the results to the cost of each asset.
The amount of any write down is recognised as an impairment expense in the Consolidated Statement of Comprehensive Income. An impairment
expense of $1.1 million has been recognised for the year ended 31 December 2022 (31 December 2021: $0.2 million).
7. Payables
Distribution payable to stapled securityholders
Trade payables and accruals
GST payables
Interest payable
Levies payable
Other payables
Total payables
31 Dec 22
$M
31 Dec 21
$M
235.6
198.4
6.2
19.8
23.8
2.1
485.9
—
157.7
5.5
11.7
20.4
11.7
207.0
Trade payables and accruals represent liabilities for goods and services provided to GPT 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.
8. Provisions
Current provisions
Employee benefits
Other
Total current provisions
Non-current provisions
Employee benefits
Total non-current provisions
Total provisions
Provisions are recognised when:
31 Dec 22
$M
31 Dec 21
$M
17.3
26.7
44.0
1.5
1.5
45.5
15.6
14.9
30.5
1.1
1.1
31.6
» GPT 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 and long service 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.
Employee benefit expenses in the Consolidated Statement of Comprehensive Income
Employee benefit expenses
92 | THE GPT GROUP ANNUAL REPORT 2022
31 Dec 22
$M
31 Dec 21
$M
126.5
122.2
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 9. Taxation
Income tax expense
a)
Current income tax (benefit)/expense
Deferred income tax expense/(benefit)
Income tax expense/(benefit) in the
Consolidated Statement of Comprehensive Income
Income tax expense/(benefit) attributable to profit from continuing operations
Aggregate income tax expense/(benefit)
b) Reconciliation of accounting profit to income tax expense/(benefit)
Net profit for the year excluding income tax expense
Less: Trust profit not subject to tax
Profit which is subject to taxation at 30% tax rate
Tax effect of amounts not deductible/assessable in calculating income
tax expense:
Non-assessable revaluation items in the Company
Proceeds from wind up of BGP Holdings plc
Equity accounted losses/(profits) from joint ventures in the Company
Profit/(loss) used to calculate effective tax rate
Other tax adjustments
Income tax expense/(benefit)
Effective tax rate
31 Dec 22
Gross
$M
31 Dec 22
Tax Impact
$M
31 Dec 21
Gross
$M
31 Dec 21
Tax Impact
$M
(0.2)
4.1
3.9
3.9
3.9
473.2
(447.3)
25.9
142.0
(134.2)
7.8
1,421.8
(1,401.3)
20.5
(9.9)
(2.3)
0.1
13.8
(0.8)
13.0
(22.9)
—
(0.9)
(3.3)
0.2
(3.1)
(3.0)
(0.7)
—
4.1
(0.2)
3.9
28%
10.2
(11.2)
(1.0)
(1.0)
(1.0)
426.5
(420.4)
6.1
(6.9)
—
(0.3)
(1.1)
0.1
(1.0)
30%
c) Current tax assets/(liabilities)
Opening balance at the beginning of the year
Income tax (expense)/benefit
Tax payments made to tax authorities
Other deferred tax asset charged to income
Movements in employee benefits
Movements in reserves
Closing balance at the end of the year
d) Net deferred tax assets
Employee benefits
Provisions and accruals
Right-of-use assets
Lease liabilities
Other
Net deferred tax assets
Movement in temporary differences during the year
Opening balance at the beginning of the year
Income tax (expense)/benefit
Movement in reserves
Closing balance at the end of the year
31 Dec 22
$M
31 Dec 21
$M
(6.1)
(3.9)
12.3
5.4
(1.3)
(0.2)
6.2
12.0
2.0
(9.7)
14.4
3.2
21.9
26.0
(4.1)
—
21.9
(2.0)
1.0
6.3
(5.8)
(5.6)
—
(6.1)
10.6
1.9
(13.2)
17.9
8.8
26.0
14.6
11.2
0.2
26.0
THE GPT GROUP ANNUAL REPORT 2022 | 93
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 9. Taxation continued
Trust
Property investments are held by the Trust for the purposes of earning rental income. Under current tax legislation, the Trust is not liable for
income tax provided the taxable income of the Trust including realised capital gains is attributed in full to its securityholders each financial year.
Securityholders are subject to income tax at their own marginal tax rates on amounts attributable to them.
Company
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 liabilities and assets – 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 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; and
– 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.
Effective tax rate
The Australian Accounting Standards Board have issued a Draft Appendix to the Tax Transparency Code outlining the method to calculate the
effective tax rate as shown in note 9(b), using:
» accounting profit before tax adjusted to exclude transactions which are not reflected in the calculation of income tax expense, including;
– Trust taxable income which is attributed in full to its securityholders; and
– Non-tax related material items in the Company; and
» tax expense adjusted to exclude carry forward tax losses that have been recognised and prior year tax under/overstatements.
Attribution managed investment trust regime
The Trust made an election to be an attribution managed investment trust (AMIT). Under Australia’s taxation laws, unitholders of the Trust pay
income tax to the Federal Government on taxable income that is attributed to them as part of the Trust distribution process.
In the case where a GPT unitholder is an Australian resident, the unitholder pays tax on the taxable income attributed to them at their own applicable
tax rate. Where the unitholder is a non-resident, Managed Investment Trust (MIT) withholding tax applies at the rate of 15 per cent where the place of
payment is in a country that has an exchange of information agreement with Australia. If such an agreement does not exist, a withholding tax rate of
30 per cent or 45 per cent applies, depending on the circumstances.
94 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS CAPITAL STRUCTURE
Capital is defined as the combination of securityholders’ equity, reserves and net debt (borrowings less cash and cash equivalents). The Board is
responsible for monitoring and approving the capital management framework within which management operates. The purpose of the framework
is to safeguard GPT’s ability to continue as a going concern while optimising its debt and equity structure. GPT aims to maintain a capital structure
which includes net gearing levels within a range of 25 to 35 per cent that is consistent with a stable investment grade credit rating in the “A category”.
At 31 December 2022, GPT is credit rated A (negative) / A2 (stable) by Standard and Poor’s (S&P) and Moody’s Investor Services (Moody’s)
respectively. The ratings are important as they reflect the investment grade credit rating of GPT which allows access to global capital markets to
fund the business. The stronger ratings improve both the availability of capital, in terms of amount and tenor, and reduce the cost at which it can
be obtained.
GPT is able to vary the capital mix by:
» issuing stapled securities;
» buying back stapled securities;
» activating the distribution reinvestment plan;
» adjusting the amount of distributions paid to stapled securityholders;
» selling assets to reduce borrowings; or
» increasing borrowings.
10. Equity
a) Contributed equity
Number
Trust
$M
Company
$M
Total
$M
Ordinary stapled securities
Opening securities on issue and contributed equity at 1 January 2021
On-market securities buy-back 1
1,947,929,316
(32,351,886)
Closing securities on issue and contributed equity at 31 December 2021
1,915,577,430
Opening securities on issue and contributed equity at 1 January 2022
1,915,577,430
Closing securities on issue and contributed equity at 31 December 2022
1,915,577,430
8,673.2
(146.6)
8,526.6
8,526.6
8,526.6
332.0
(0.2)
331.8
331.8
331.8
9,005.2
(146.8)
8,858.4
8,858.4
8,858.4
1. On 15 February 2021, the Group announced an on-market buy-back of GPT securities, with transactions occurring between 3 March 2021 and 1 June 2021 for an average price of
$4.54 per security.
Ordinary stapled securities are classified as equity and recognised at the fair value of the consideration received by GPT. 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 or added
to the consideration paid for securities bought back.
b) Treasury securities
Treasury securities are securities in GPT that the Group has purchased, that are held by GPT Group Stapled Security Plan Trust for the purpose of
issuing securities under various employee security schemes. Refer to note 20 for further information. Securities issued to employees are recognised
on a first-in-first-out basis.
Opening balance at 1 January 2021
Acquisition of securities by the GPT Group Stapled Securities Trust
Employee securities issued
Balance at 31 December 2021
Opening balance at 1 January 2022
Acquisition of securities by the GPT Group Stapled Securities Trust
Employee securities issued
Balance at 31 December 2022
Number of
securities
—
81,549
(81,549)
—
—
285,376
(281,910)
3,466
$M
—
0.4
(0.4)
—
—
1.4
(1.4)
—
THE GPT GROUP ANNUAL REPORT 2022 | 95
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 10. Equity continued
c) Reserves
Foreign currency
translation reserve
Cash flow
hedge reserve
Cost of
hedging reserve
Employee incentive
scheme reserve
Total reserves
Trust
$M
Company
$M
Trust
$M
Company
$M
Trust
$M
Company
$M
Trust
$M
Company
$M
Trust
$M
Company
$M
Balance at 1 January 2021
Movement in hedging reserve
Movement in fair value of cash
flow hedges
Security-based payment
transactions, net of tax
(26.4)
—
—
18.3
—
—
(6.4)
—
6.0
—
—
—
Balance at 31 December 2021
(26.4)
18.3
(0.4)
Balance at 1 January 2022
Movement in hedging reserve
Movement in fair value of cash
flow hedges
Security-based payment
transactions, net of tax
(26.4)
—
—
18.3
—
—
(0.4)
—
(1.8)
—
—
—
Balance at 31 December 2022
(26.4)
18.3
(2.2)
Nature and purpose of reserves
—
—
—
—
—
—
—
—
—
—
(14.8)
20.9
—
—
6.1
6.1
(0.3)
—
—
5.8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1.3
—
—
3.1
(47.6)
20.9
6.0
—
19.6
—
—
3.1
4.4
(20.7)
22.7
4.4
—
—
4.2
(20.7)
(0.3)
(1.8)
22.7
—
—
—
4.2
8.6
(22.8)
26.9
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 net profit when the investment in the foreign controlled entity is disposed.
Cash flow hedge reserve
The reserve records the portion of the unrealised gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective
hedge relationship inclusive of the share of cash flow hedge reserve of equity accounted investments.
Cost of hedging reserve
The reserve records the changes in the fair value of the currency basis that is part of cross currency interest rate swaps used to hedge foreign
currency borrowings, but is excluded from the hedge designations. This reserve is inclusive of the share of cost of hedging reserve of equity
accounted investments. Refer to note 14 for further details.
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 the security based payments.
d) Retained earnings / accumulated losses
Balance at 1 January 2021
Net profit/(loss) for the financial year
Less: distributions paid/payable to ordinary stapled securityholders
Reclassification of employee incentive security scheme reserve to retained earnings/
accumulated losses
Note
12
Trust
$M
Company
$M
2,700.9
1,433.7
(511.9)
1.9
(800.6)
(10.9)
—
(0.2)
Total
$M
1,900.3
1,422.8
(511.9)
1.7
Balance at 31 December 2021
3,624.6
(811.7)
2,812.9
Balance at 1 January 2022
Net profit for the financial year
Less: distributions paid/payable to ordinary stapled securityholders
Reclassification of employee incentive security scheme reserve to retained earnings/
accumulated losses
12
3,624.6
446.7
(668.5)
(0.3)
(811.7)
22.6
—
—
2,812.9
469.3
(668.5)
(0.3)
Balance at 31 December 2022
3,402.5
(789.1)
2,613.4
96 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 11. Earnings per Stapled Security
a) Attributable to ordinary securityholders of the Trust
Total basic and diluted earnings per security attributable to
ordinary securityholders of the Trust
b) Attributable to ordinary stapled securityholders of the GPT Group
Total basic and diluted earnings per security attributable to
stapled securityholders of the GPT Group
31 Dec 22
Cents
31 Dec 22
Cents
31 Dec 21
Cents
31 Dec 21
Cents
Basic
23.3
Diluted
23.3
Basic
74.5
Diluted
74.5
24.5
24.5
73.9
73.9
The earnings and weighted average number of ordinary securities (WANOS) used in the calculations of basic and diluted earnings per ordinary
stapled security are as follows:
c) Reconciliation of earnings used in calculating earnings
per ordinary stapled security
Basic and diluted earnings of the Trust
Basic and diluted earnings of the Company
Basic and diluted earnings of the GPT Group
d) Weighted average number of ordinary securities
WANOS used as the denominator in calculating basic earnings
per ordinary stapled security
Performance security rights at weighted average basis 1
WANOS used as the denominator in calculating diluted earnings
per ordinary stapled security
31 Dec 22
$M
31 Dec 22
$M
31 Dec 21
$M
31 Dec 21
$M
446.7
22.6
469.3
446.7
22.6
469.3
1,433.7
(10.9)
1,422.8
1,433.7
(10.9)
1,422.8
31 Dec 22
Millions
31 Dec 22
Millions
31 Dec 21
Millions
31 Dec 21
Millions
1,915.6
1,915.6
1,924.3
1,924.3
0.7
1,916.3
0.7
1,925.0
1. Performance security rights granted under the employee incentive schemes are only included in dilutive earnings per ordinary stapled security where the performance hurdles are
expected to be met as at the year end.
Calculation of earnings per stapled security
Basic earnings per stapled security is calculated as net profit/(loss) attributable to ordinary stapled securityholders of GPT, divided by the
weighted average number of ordinary stapled securities outstanding during the financial year which is adjusted for bonus elements in ordinary
stapled securities issued during the financial year. Diluted earnings per stapled security is calculated as net profit/(loss) attributable to ordinary
stapled securityholders of GPT divided by the weighted average number of ordinary stapled securities and dilutive potential ordinary stapled
securities. Where there is no difference between basic earnings per stapled security and diluted earnings per stapled security, the term basic
and diluted earnings per stapled ordinary security is used.
THE GPT GROUP ANNUAL REPORT 2022 | 97
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 12. Distributions Paid and Payable
Distributions are paid to GPT stapled securityholders half yearly.
Distributions paid/payable
2021
31 December 2020 distribution (paid on 26 February 2021)
30 June 2021 distribution (paid on 31 August 2021)
Total distributions paid for the year
2022
31 December 2021 distribution (paid on 28 February 2022)
30 June 2022 distribution (paid on 31 August 2022)
31 December 2022 distribution declared (payable on 28 February 2023)
Total distributions paid/payable for the year
13. Borrowings
Current borrowings – unsecured 1
Current borrowings – secured
Current borrowings
Non-current borrowings – unsecured 2
Non-current borrowings – secured
Non-current borrowings
Total borrowings – carrying amount 3
Total borrowings – fair value 4
Cents
per stapled
security
Total
amount
$M
13.20
13.30
26.50
9.90
12.70
12.30
34.90
257.1
254.8
511.9
189.6
243.3
235.6
668.5
31 Dec 22
$M
31 Dec 21
$M
702.2
2.7
704.9
4,259.4
88.2
4,347.6
5,052.5
4,909.0
800.0
2.4
802.4
4,248.5
88.4
4,336.9
5,139.3
5,217.4
1. Includes $502.3 million of outstanding commercial paper (31 December 2021: $750.0 million) which is an uncommitted line with a maturity period of generally three months or less
and is classified as current borrowings. These drawings are in addition to GPT’s committed facilities but may be refinanced by non-current undrawn bank loan facilities.
2. Cumulative fair value hedge adjustments and impact of exchange rate changes are shown in the table below.
3. Including unamortised establishment costs, fair value hedge adjustments, impact of exchange rate changes and other adjustments.
4. Of the total estimated fair value, $2,443.0 million (31 December 2021: $2,716.3 million) was classified as level 2 in the fair value hierarchy, and $2,466.0 million (31 December 2021:
$2,501.1 million) was classified as level 3. The estimated fair value is calculating using the inputs which are described in Note 15, and excludes unamortised establishment costs.
All borrowings with maturities greater than 12 months after the reporting date are classified as non-current liabilities.
Borrowings are initially measured at fair value, net of transaction costs, and subsequently measured at amortised cost using the effective interest method.
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 a gain / loss on modification of financial liabilities. GPT management has
assessed the modification of terms requirements within AASB 9 and have concluded that these will not have a material impact for the Group.
98 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 13. Borrowings continued
The following table outlines the cumulative amount of fair value hedge adjustments and impact of exchange rate changes that are included in the
carrying amount of borrowings, which are designated in hedging relationships, in the Consolidated Statement of Financial Position.
Nominal amount
Unamortised borrowing costs
Amortised cost
Cumulative fair value hedge adjustments and impact of exchange rate changes
Carrying amount
31 Dec 22
$M
31 Dec 21
$M
2,192.8
(5.5)
2,187.3
174.2
2,361.5
1,907.4
(5.4)
1,902.0
385.2
2,287.2
The carrying value of cross currency interest rate swaps hedging the above foreign currency borrowings is reflected in the Consolidated Statement
of Financial Position within derivative assets totalling $237.6 million (31 December 2021: $398.0 million) and within derivative liabilities totalling
$63.6 million (31 December 2021: $12.0 million).
The maturity profile of borrowings as at 31 December 2022 is as follows:
Due within one year
Due between one and five years
Due after five years
Cash and cash equivalents
Total financing resources at the end of the year
Less: commercial paper 2
Less: cash and cash equivalents held for the AFSLs
Total financing resources available at the end of the year
Total facility 1,2
$M
705.0
3,289.9
2,453.2
6,448.1
Used
facility 1
$M
705.0
1,709.9
2,453.2
4,868.1
Unused
facility 2
$M
—
1,580.0
—
1,580.0
60.2
1,640.2
(502.3)
(11.0)
1,126.9
1. Excluding unamortised establishment costs, fair value hedge adjustments, impact of exchange rate changes and other adjustments and $10.0 million bank guarantee facilities and
its $7.1 million utilisation. This reflects the contractual cash flows payable on maturity of the borrowings taking into account historical exchange rates under cross currency interest
rate swaps entered into to hedge the foreign currency borrowings.
2. GPT’s commercial paper program is an uncommitted line with a maturity period of generally three months or less and is classified as current borrowings. These drawings are in addition
to GPT’s committed facilities but may be refinanced by non-current undrawn bank loan facilities and are therefore excluded from available liquidity.
Cash and cash equivalents include cash on hand, cash at bank and short term money market deposits.
Debt covenants
GPT’s borrowings are subject to a range of covenants, according to the specific purpose and nature of the loans. Most bank facilities include one
or more of the following covenants:
» Gearing: adjusted borrowings must not exceed 50 per cent of adjusted total tangible assets; and
» Interest coverage: the ratio of operating earnings before interest and taxes to finance costs on borrowings is not to be less than 2 times.
A breach of these covenants may trigger consequences ranging from rectifying and/or repricing to repayment of outstanding amounts. GPT performed
a review of debt covenants as at 31 December 2022 and no breaches were identified noting:
» Covenant gearing ratio as at 31 December 2022 is 28.7 per cent; and
» Interest cover ratio for the 12 months to 31 December 2022 is 5.5 times.
THE GPT GROUP ANNUAL REPORT 2022 | 99
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS
14. Financial Risk Management
The GPT Board approve GPT’s treasury policy which:
» establishes a framework for the management of risks inherent to the capital structure;
» defines the role of GPT’s treasury; and
» sets out the policies, limits, monitoring and reporting requirements for cash, borrowings, liquidity, credit risk, foreign exchange, interest rate
and other derivative instruments.
a) Derivatives
As part of normal business operations, GPT is exposed to financial market risks which are principally interest rate risk on borrowings and foreign
exchange rate risk on foreign currency borrowings. GPT manages these risks through the use of derivative instruments including interest rate
swaps (fixed to floating, floating to fixed and floating to floating swaps), cross currency interest rate swaps and option based derivatives. Regular
coupons under these instruments are reported in finance costs in the Consolidated Statement of Comprehensive Income along with the interest
cost on borrowings to which it relates.
Derivatives are carried in the Consolidated Statement of Financial Position at fair value and classified according to their contractual maturities.
If they do not qualify for hedge accounting, changes in fair value (including amortisation of upfront payment including premiums) are recognised
in net gain / loss on fair value movements of derivatives in the Consolidated Statement of Comprehensive Income. Where derivatives qualify for
hedge accounting and are designated in hedge relationships, the recognition of any gain or loss depends on the nature of the item being hedged.
Refer to note 14(b) on hedge accounting. All of GPT’s derivatives are valued using market observable inputs (level 2). For additional fair value
disclosures refer to note 15.
Derivative Assets
Interest Rate Swaps – AUD
Cross Currency Interest Rate Swaps – fair value hedges
Cross Currency Interest Rate Swaps – fair value and cash flow hedges
Total Derivative Assets
Derivative Liabilities
Interest Rate Swaps – AUD
Cross Currency Interest Rate Swaps – fair value hedges
Total Derivative Liabilities
Net Derivative Assets
31 Dec 22
$M
31 Dec 21
$M
150.4
—
237.6
388.0
125.4
63.6
189.0
199.0
68.0
41.8
356.2
466.0
56.3
12.0
68.3
397.7
GPT enters into ISDA (International Swap Derivatives Association) Master Agreements with its derivative counterparties. Under the terms of these
agreements, where certain credit events occur, there is a right to set-off the position owing/receivable to a single counterparty to a net position
as long as all outstanding derivatives with that counterparty are terminated. As GPT does not presently have a legally enforceable right to set-off,
these amounts have not been offset in the Consolidated Statement of Financial Position. In the event a credit event occurred, the ISDA Master
Agreement would have the effect of netting, allowing a reduction to derivative assets and derivative liabilities of the same amount of $151.6 million
(31 December 2021: $66.3 million).
b) Hedge Accounting
GPT’s objective is to manage the risk of volatility in FFO and NTA and whilst economic hedges exist to manage its financial market risks, GPT has
elected to apply hedge accounting only in relation to foreign currency borrowings. Foreign exchange and interest rate risks arising from foreign
currency borrowings are managed with cross currency interest rate swaps which convert foreign currency fixed interest rate cash flows into
Australian dollar floating interest rate cash flows.
At inception of the hedge relationship, GPT designates and documents the relationship between the hedging instrument and hedged item and
the proposed effectiveness of the risk management objective the hedge relationship addresses. GPT fully hedges 100% of its foreign currency
exposure in respect of foreign currency borrowings with cross currency interest rate swaps and therefore applies a hedge ratio of 1:1. This means
that whilst there are fair value movements from period to period, there is 100% matching of cash flows, resulting in nil fair value movements over
the duration of the borrowings nor FFO impact in any period. On an ongoing basis, GPT determines and documents its assessment of prospective
hedge effectiveness of all hedge relationships.
Cross currency interest rate swaps hedging foreign currency borrowings are designated as either dual fair value and cash flow hedges or fair value
hedges only.
100 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 14. Financial Risk Management continued
b) Hedge Accounting continued
Fair value hedges
A fair value hedge is a hedge of the exposure to changes in fair value of the underlying item (foreign currency borrowings) that is attributable to a
particular risk (movements in foreign benchmark interest rates and if applicable, foreign exchange rates). All changes in the fair value of the foreign
currency borrowings relating to the risk being hedged are recognised in the Consolidated Statement of Comprehensive Income together with the
changes in the fair value of cross currency interest rate swaps with the net difference reflecting the hedge ineffectiveness.
Cash flow hedges
A cash flow hedge is a hedge of the exposure to variability in cash flows attributable to a particular risk (movements in foreign exchange rates)
associated with a liability (foreign currency borrowings). The portion of the fair value gain or loss on the hedging instrument that is effective (that
which offsets the movement on the hedged item attributable to foreign exchange movements) is recognised in Other Comprehensive Income and
accumulated in the cash flow hedge reserve in equity and any ineffective portion is recognised as net ineffectiveness on qualifying hedges directly
in the Consolidated Statement of Comprehensive Income.
Currency basis
A component of the cross currency interest rate swap is the currency basis. This is a liquidity premium that is charged for exchanging different
currencies, and changes over time. Where currency basis has been included in fair value hedge designations, movement in currency basis is
recognised in the Consolidated Statement of Comprehensive Income. In all other cases, currency basis have been excluded from GPT’s fair value
hedge designation with movements recognised in Other Comprehensive Income and accumulated in the cost of hedging reserve in equity.
Hedging Instruments
The following table shows the nominal amount of derivatives designated in cash flow and/or fair value hedge relationships in time bands based on
the maturity of each derivative.
31 Dec 22
31 Dec 21
Less than
1 year
$M
1 to 5
years
$M
Over
5 years
$M
Total
$M
Less than
1 year
$M
1 to 5
years
$M
Over
5 years
$M
Total
$M
Cross currency interest rate swaps
USD exposure
AUD nominal amount
Average receive fixed interest rate
Average contracted FX rate (AUD/USD)
HKD exposure
AUD nominal amount
Average receive fixed interest rate
Average contracted FX rate (AUD/HKD)
_
_
_
_
_
_
210.3
3.5%
0.9511
69.1
3.0%
5.7890
1,247.5
3.9%
0.8056
665.9
3.5%
5.9420
1,457.8
735.0
_
_
_
_
_
_
145.8
3.6%
1.0283
69.1
3.0%
5.7890
1,311.9
3.8%
0.8042
380.6
2.9%
6.3747
1,457.7
449.7
The following table shows the impact on the Consolidated Statement of Comprehensive Income relating to hedge ineffectiveness of fair value
hedges and the impact on Other Comprehensive Income (OCI) relating to movements in cash flow hedges and the cost of hedging reserve.
Fair Value Hedge Movements in Net profit
Fair value hedge adjustments and impact of exchange rates changes on foreign borrowings
(Loss)/gain on derivatives designated in hedging relationships
Net gain from hedge ineffectiveness on qualifying hedges
Movement in Hedge Reserves in OCI
Movement in cash flow hedge reserve
Movement in cost of hedging reserve
Share of movement in hedge reserves in equity accounted investments
Net (decrease)/increase in hedge reserves in OCI
In these hedge relationships, the main sources of ineffectiveness are:
31 Dec 22
$M
31 Dec 21
$M
211.0
(210.4)
0.6
(1.7)
—
(0.4)
(2.1)
7.3
10.3
17.6
5.4
18.8
2.7
26.9
» the effect of the counterparty and GPT’s own credit risk on the fair value of the swaps, which is not reflected in the fair value of the hedged item;
» changes in Australian and foreign swap interest rates which will impact the fair value of the Australian dollar margin and implied foreign currency
margin respectively; and
» changes in currency basis included within fair value hedge designations impacting the fair value of the swaps, which is not reflected in the fair
value of the hedged item.
THE GPT GROUP ANNUAL REPORT 2022 | 101
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS Interest rate risk
14. Financial Risk Management continued
c)
GPT’s primary interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. This mainly arises from borrowings. Interest rate risk inherent on borrowings issued at floating rates is managed by entering into
interest rate swaps that are used to convert a portion of floating interest rate borrowings to fixed interest rates, which reduces GPT’s exposure
to interest rate volatility.
The following table provides a summary of GPT’s gross interest rate risk exposure as at 31 December 2022 on interest bearing borrowings as well as
the net effect of interest rate risk management transactions. This excludes unamortised establishment costs and fair value and other adjustments.
Fixed Rate Exposure
Fixed rate borrowings
Borrowings hedged via interest rate swaps 1
Effective fixed rate borrowings
Floating Rate Exposure
Floating rate borrowings
Borrowings hedged via interest rate swaps 1
Effective floating rate borrowings
31 Dec 22
$M
31 Dec 21
$M
3,239.3
192.0
3,431.3
1,628.8
(192.0)
1,436.8
3,004.0
247.6
3,251.6
1,738.2
(247.6)
1,490.6
1. Net interest rate swaps converting floating rate borrowings into fixed rate borrowings.
Interest rate risk – sensitivity analysis
The impact on interest expense of a 0.50 per cent (2021: 0.25 per cent) increase or decrease in market interest rates is shown below. Finance costs
are sensitive to movements in market interest rates on floating rate borrowings (net of any derivatives).
Impact on Consolidated Statement of Comprehensive Income
Increase in interest rates of 0.50% (2021: 0.25%)
Decrease in interest rates of 0.50% (2021: 0.25%)
d) Liquidity risk
Liquidity risk is the risk that GPT, 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.
GPT manages liquidity risk by:
» maintaining sufficient cash;
» maintaining an adequate amount of committed credit facilities;
31 Dec 22
$M
31 Dec 21
$M
(7.2)
7.2
(4.0)
2.9
» maintaining a minimum liquidity buffer in cash and surplus committed facilities for the forward rolling twelve month period;
» minimising debt maturity concentration risk by diversifying sources and spreading maturity dates of committed credit facilities and maintaining
a minimum weighted average debt maturity of 4 years; and
» maintaining the ability to close out market positions.
102 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 14. Financial Risk Management continued
d) Liquidity risk continued
The following table provides an analysis of the undiscounted contractual maturities of liabilities which forms part of GPT’s assessment of liquidity risk:
31 Dec 22
31 Dec 21
1 year
or less
$M
Over 1
year to
2 years
$M
Over 2
years to
5 years
$M
Over 5
years
$M
Total
$M
1 year
or less
$M
Over 1
year to
2 years
$M
Over 2
years to
5 years
$M
Over 5
years
$M
Total
$M
485.9
705.0
9.2
222.4
—
455.0
10.0
211.4
—
1,254.9
13.6
478.7
—
2,453.2
12.6
410.6
485.9
4,868.1
45.4
1,323.1
207.0
802.4
8.1
99.9
—
288.5
9.6
98.0
—
1,459.0
20.9
296.0
—
2,192.3
15.5
358.3
207.0
4,742.2
54.1
852.2
16.7
18.2
39.2
38.5
112.6
23.3
14.4
12.1
16.8
66.6
Liabilities
Non-derivatives
Payables
Borrowings
Lease liabilities
Projected finance cost
from borrowings 1
Derivatives
Projected finance cost from
derivative liabilities 1,2
Total liabilities
1,439.2
694.6
1,786.4
2,914.9
6,835.1
1,140.7
410.5
1,788.0
2,582.9
5,922.1
Less cash and cash equivalents
(net of cash held for AFSLs)
49.2
—
—
—
49.2
51.3
—
—
—
51.3
Total liquidity exposure
1,390.0
694.6
1,786.4
2,914.9
6,785.9
1,089.4
410.5
1,788.0
2,582.9
5,870.8
Projected reduction to finance
costs from derivative assets 2
49.7
27.8
30.6
1.2
109.3
18.0
20.4
25.7
19.1
83.2
Net liquidity exposure
1,340.3
666.8
1,755.8
2,913.7
6,676.6
1,071.4
390.1
1,762.3
2,563.8
5,787.6
1. Projection is based on the likely outcome of contracts given the interest rates, margins, interest rate forward curves as at 31 December 2022 and 31 December 2021 up until the
contractual maturity of the contract. The projection is based on future non-discounted cash flows and does not ascribe any value to optionality on any instrument which may be
included in the current market values. Projected interest on foreign currency borrowings is shown after the impact of associated hedging.
2. In accordance with AASB 7, the future value of contractual cash flows of non-derivative and derivative liabilities only is to be included in liquidity risk disclosures. As derivatives
are exchanges of cash flows, the positive cash flows from derivative assets have been disclosed separately to provide a more meaningful analysis of GPT’s net liquidity exposure.
The methodology used in calculating projected interest income on derivative assets is consistent with the above liquidity risk disclosures.
e) Refinancing risk
Refinancing risk is the risk that credit is unavailable or available at unfavourable interest rates and credit market conditions resulting in an
unacceptable increase in GPT’s interest cost. Refinancing risk arises when GPT is required to obtain debt to fund existing and new debt positions.
GPT 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 2022, GPT’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 13.
f) 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. GPT’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.
The foreign exchange risk arising from borrowings denominated in foreign currency is managed with cross currency interest rate swaps which
convert foreign currency exposures into Australian dollar exposures. Sensitivity to foreign exchange is deemed insignificant.
THE GPT GROUP ANNUAL REPORT 2022 | 103
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 14. Financial Risk Management continued
f) Foreign exchange risk continued
Foreign currency assets and liabilities
The following table shows the Australian dollar equivalents of amounts within the Consolidated Statement of Financial Position which are denominated
in foreign currencies.
Assets
Derivative financial instruments
Liabilities
Derivative financial instruments
Borrowings 1
1. Excluding unamortised establishment costs.
United States Dollars
Hong Kong Dollars
31 Dec 22
$M
31 Dec 21
$M
31 Dec 22
$M
31 Dec 21
$M
192.0
192.0
21.9
1,630.5
1,652.4
331.1
331.1
—
1,791.3
1,791.3
45.5
45.5
41.8
736.5
778.3
66.9
66.9
12.0
501.3
513.3
g) 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 GPT.
GPT has exposure to credit risk on all financial assets included on the Consolidated Statement of Financial Position.
GPT manages this risk by:
» establishing credit limits for financial institutions and monitoring credit exposures for customers to ensure that GPT only trades and invests with
approved counterparties;
» investing and transacting derivatives with multiple counterparties that have a minimum long term credit rating of A- from S&P, or equivalent if an
S&P rating is not available, minimising exposure to any one counterparty;
» providing loans into joint ventures, associates and third parties, only where GPT 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. A provision for doubtful debts is recognised at an amount equal to lifetime ECL. Refer
to note 4 for the calculation of lifetime ECL. GPT’s policy is to hold collateral as security over tenants via bank guarantees (or less frequently,
collateral such as bond deposits or cash).
The maximum exposure to credit risk as at 31 December 2022 is the carrying amounts of financial assets recognised on GPT’s Consolidated
Statement of Financial Position. For more information refer to note 4.
104 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 15. Other 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, critical assumptions underlying the valuations and information on sensitivity are disclosed in the following table:
Fair value measurement, valuation techniques and inputs
Class of
assets / liabilities
Fair value
hierarchy 1
Level 2
Derivative financial
instruments –
measured at fair
value through
profit or loss
Borrowings –
measured at
amortised cost
Valuation technique
DCF
(adjusted for
counterparty credit
worthiness)
Inputs used to
measure fair value
Unobservable inputs
31 Dec 22
Unobservable inputs
31 Dec 21
» Interest rates
» Basis
» CPI
» Volatility
» Foreign exchange rates
Not applicable – all inputs are market observable
inputs
Level 2 and
Level 3
DCF
» Interest rates
» Foreign exchange rates
» GPT's own credit spread
Borrowings classified as Level 2 relate to Australian
dollar denominated bonds, bank debt and commercial
paper. All inputs are market observable.
Borrowings classified as Level 3 relate to foreign
currency denominated borrowings as GPT's own
credit spreads are not market observable. These
spreads are sourced from banks.
Refer to note 13 for breakdown.
1. 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 data (unobservable inputs).
Counterparty credit worthiness
Credit value adjustments are applied to derivative assets based on that counterparty’s credit risk using the
observable credit default swaps curve as a benchmark for credit risk.
Debit value adjustments are applied to derivatives liabilities based on GPT’s credit risk using GPT’s credit
default swaps curve as a benchmark for credit risk.
THE GPT GROUP ANNUAL REPORT 2022 | 105
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS OTHER DISCLOSURE ITEMS
16. Cash Flow Information
a) Cash flows from operating activities
Reconciliation of net profit after tax to net cash inflows from operating activities:
Net profit for the year
Fair value gain on investment properties
Net (gain)/loss on fair value movement of derivatives
Net gain from hedge ineffectiveness on qualifying hedges
Gain on financial liability at amortised cost
Gain on financial asset at amortised cost
Impairment (reversal)/expense
Share of after tax loss/(profit) of equity accounted investments (net of distributions)
Depreciation and amortisation
Non-cash revenue/expense adjustments
Profit on sale of inventories
Proceeds from sale of inventories
Payment for inventories
Movements in working capital and reserves (net of impairment)
Net foreign exchange loss
Other
Net cash inflows from operating activities
b) Net debt reconciliation
Reconciliation of net debt movements during the financial year:
1 January 2021
Cash (outflow)/inflow
Fair value hedge adjustments and impact of exchange rate changes
New leases and modification of lease
Other non-cash movements
31 December 2021
1 January 2022
Cash (outflow)/inflow
Fair value hedge adjustments and impact of exchange rate changes
New leases and modification of lease
Other non-cash movements
31 December 2022
31 Dec 22
$M
31 Dec 21
$M
469.3
(34.0)
(3.8)
(0.6)
(2.4)
—
(8.5)
122.7
4.1
36.6
(0.4)
11.0
(15.4)
(18.2)
0.4
1.3
562.1
1,422.8
(762.5)
11.9
(17.6)
(2.4)
(8.7)
56.3
(238.3)
8.4
32.5
(7.6)
14.9
(14.4)
21.6
0.2
3.3
520.4
Cash
$M
372.5
(311.0)
—
—
—
61.5
61.5
(1.3)
—
—
—
60.2
Lease
liabilities
$M
Borrowings
$M
Total
net debt
$M
55.1
(9.0)
—
6.6
1.4
54.1
54.1
(9.5)
—
(0.6)
1.4
45.4
4,087.4
1,060.9
(7.4)
—
(1.6)
5,139.3
5,139.3
123.0
(211.0)
—
1.2
5,131.9
5,052.5
5,037.7
106 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 17. Lease Revenue
Segment Result
Lease revenue
Recovery of operating costs
Share of rent from investment properties in equity
accounted investments
Less:
Share of rent from investment properties in equity
accounted investments
Amortisation of lease incentives and costs
Straightlining of leases
Eliminations of intra-group lease payments
Impairment (reversal)/loss on trade and other receivables
Consolidated Statement of Comprehensive Income
Rent from investment properties
31 Dec 22
31 Dec 21
Retail
$M
Office
$M
Logistics
$M
Total
$M
Retail
$M
Office
$M
Logistics
$M
Total
$M
269.8
78.9
1.8
176.2
31.8
87.8
208.4
14.2
—
654.4
124.9
89.6
226.7
77.6
1.7
152.5
28.3
83.5
173.8
11.9
—
553.0
117.8
85.2
350.5
295.8
222.6
868.9
306.0
264.3
185.7
756.0
(89.6)
(62.1)
(1.2)
(2.8)
(5.9)
707.3
(85.2)
(49.4)
4.6
(2.3)
50.0
673.7
Rent from investment properties
Rent from investment properties in the Consolidated Statement of Comprehensive Income is recognised and measured in accordance with
AASB 16 Leases. Revenue for leases with fixed increases is recognised on a straight-line basis for the minimum contracted rent over the lease term
with an asset recognised as a component of investment properties relating to the fixed increases in operating lease rentals in future periods.
When GPT provides lease incentives to tenants, these costs are amortised against lease income on a straight-line basis. Contingent rental income is
recognised as revenue in the period in which it is earned.
In addition to revenue generated directly from the lease, rent from investment properties includes non-lease revenue earned from tenants, predominately
in relation to recovery of asset operating costs, which is recognised and measured under AASB 15 Revenue from Contracts with Customers.
Management has assessed if a rent waiver constitutes a lease modification under AASB 16 and concluded that where rent waivers relate to periods
after the execution of an agreement with the tenant, this constitutes a lease modification and the rent waiver is reflected on a straight-line basis
over the life of the lease. Rent waivers relating to periods prior to the execution of an agreement are treated as write-offs under AASB 9 where the
rent waiver offsets a receivable from the tenant (see note 4). Waivers reflected on invoices issued to tenants and which do not relate to previous
outstanding debtors, are shown as a reduction to rent from investment properties on the Consolidated Statement of Comprehensive Income.
THE GPT GROUP ANNUAL REPORT 2022 | 107
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 18. Commitments
a) Capital expenditure commitments
Commitments arising from contracts principally relating to the purchase and development of investment properties and committed tenant incentives
contracted for at balance date but not recognised on the Consolidated Statement of Financial Position are shown below.
Retail
Office
Logistics
Properties under development
Corporate
Total capital expenditure commitments
b) Commitments relating to equity accounted investments
GPT’s share of equity accounted investments’ commitments at balance date:
Capital expenditure
Total joint ventures and associates' commitments
31 Dec 22
$M
31 Dec 21
$M
31.4
104.0
22.7
28.3
—
186.4
52.8
106.5
23.4
7.9
2.0
192.6
31 Dec 22
$M
31 Dec 21
$M
179.3
179.3
211.9
211.9
In addition to the table above, GPT QuadReal Logistics Trust has contracted to purchase the following logistics sites:
» a development site in Crestmead, Brisbane and has paid a deposit of $1.1 million (GPT's 50.1% share), with $10.1 million (GPT's 50.1% ownership)
to be paid at settlement, which is expected to occur in March 2023; and
» a development site in Epping, Melbourne and has paid a deposit of $3.5 million (GPT's 50.1% share), with $31.5 million (GPT's 50.1% ownership)
to be paid at settlement, which is expected to occur in May 2023.
19. Contingent Liabilities
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.
As at 31 December 2022, GPT has no material contingent liabilities.
108 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 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 GESOP is in place 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). The amount
after the deduction of income tax is invested in GPT securities to be held for a minimum of one year. The cost of this benefit is recognised as an
expense in the Consolidated Statement of Comprehensive Income.
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 in the Consolidated Statement of Comprehensive Income.
c) DSTI
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 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.
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 over the vesting period (2022: $5.9 million, 2021: $5.4 million)
with a corresponding increase in the employee incentive scheme reserve in equity. For LTI, the fair value is measured at grant date. For DSTI,
the fair value is measured at each reporting date until the issuance of securities. Total security based payment expense based on the fair value is
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 vest. At each reporting date, GPT revises
its estimate of the number of performance rights that are expected to vest 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 equity.
As a result of the COVID-19 pandemic, no plans were 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 period end (weighted average)
Security price at grant date
Security price at period end date
Grant date 1
Vesting date
Outperformance vs Index – plan to date
Distribution Yield
Risk free interest rate
Volatility 2
Correlation
2022 LTI
2022 DSTI
$3.21
$5.03
N/A
28 Mar 2022
31 Dec 2024
1.1%
5.0%
2.5%
27.5%
80.9%
$4.20
N/A
$4.20
N/A
31 Dec 2023
N/A
6.0%
N/A
N/A
N/A
1, Grant date for 2022 LTI is 20 May 2022 for CEO and 28 March 2022 for other participants. Grant date for 2022 DSTI is based on award date which is expected to be in the first
half of 2023.
2. The volatility is based on the historic volatility of the security.
THE GPT GROUP ANNUAL REPORT 2022 | 109
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS
20. Security Based Payments continued
e) Summary table of all employee security schemes
Rights outstanding at 1 January 2021
Rights granted during 2021
Rights forfeited during 2021
Rights converted to GPT stapled securities during 20211
Rights outstanding at 31 December 2021
Rights outstanding at 1 January 2022
Rights granted during 2022
Rights forfeited during 2022
Rights converted to GPT stapled securities during 2022
Rights outstanding at 31 December 2022
Number of rights
DSTI
—
—
—
—
—
LTI and
Sign On
2,366,024
2,690,585
(2,287,972)
(81,549)
Total
2,366,024
2,690,585
(2,287,972)
(81,549)
2,687,088
2,687,088
—
281,910
—
(281,910)
2,687,088
2,117,982
(455,141)
(52,874)
2,687,088
2,399,892
(455,141)
(334,784)
—
4,297,055
4,297,055
Number of stapled securities
DSTI
GESOP
BBESOP
92,349
(32,773)
59,576
59,576
43,645
(32,356)
Total
142,342
(82,766)
59,576
59,576
381,884
(319,762)
70,865
121,698
Securities outstanding at 1 January 2021
Securities vested during 2021
Securities outstanding at 31 December 2021
Securities outstanding at 1 January 2022
Securities granted during 2022
Securities vested during 2022
Securities outstanding at 31 December 2022
—
—
—
—
281,910
(281,910)
—
49,993
(49,993)
—
—
56,329
(5,496)
50,833
1. Rights under the sign on agreements were converted to GPT stapled securities on 31 December 2021.
110 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 21. Related Party Transactions
General Property Trust is the ultimate parent entity.
Equity interests in joint ventures and associates are set out in note 3. Receivables from joint ventures and associates are on commercial terms and
conditions with detail being set out in note 4.
Key management personnel
Key management personnel compensation was as follows:
Short term employee benefits 1
Post employment benefits
Long term employee benefits
Total key management personnel compensation
31 Dec 22
$'000
31 Dec 21
$'000
6,854.2
180.9
1,395.3
8,430.4
6,185.2
164.7
1,116.9
7,466.8
1. The 2021 comparatives have been restated to reflect the number of deferred GPT securities granted under the 2021 DSTI. This results in a decrease to the 2021 short term employee
benefits of $145,093.
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.
Transactions with related parties
Transactions with related parties other than associates and joint ventures
Expenses
Contributions to superannuation funds on behalf of employees
Transactions with associates and joint ventures
Revenue and expenses
Responsible Entity fees from joint ventures and associates
Property management fees
Development management fees from joint ventures and associates
Rent expense
Management fees from associates
Distributions received/receivable from joint ventures
Distributions received/receivable from associates
Payroll costs recharged to associates
Other transactions
Increase in units in joint ventures
Increase in units in associates
31 Dec 22
$'000
31 Dec 21
$'000
(8,603.4)
(7,267.3)
65,702.7
14,250.7
12,633.1
(4,355.2)
6,277.4
48,398.2
141,666.7
(8,763.8)
61,440.6
14,318.6
8,527.5
(3,974.1)
7,199.5
37,058.4
114,684.6
(8,902.5)
144,825.0
9,223.5
94,121.4
38,225.4
THE GPT GROUP ANNUAL REPORT 2022 | 111
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 22. Auditor’s 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
31 Dec 22
$'000
31 Dec 21
$'000
1,632.3
1,632.3
1,584.4
1,584.4
321.3
129.5
450.8
301.8
111.5
413.3
2,083.1
1,997.7
45.5
45.5
—
—
2,128.6
1,997.7
112 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 23. Parent Entity Financial Information
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Equity attributable to security holders of the parent entity
Contributed equity
Reserves
Retained earnings
Total equity
Profit attributable to members of the parent entity
Total comprehensive income for the year, net of tax, attributable to members of the parent entity
Capital expenditure commitments
Retail
Office
Logistics
Total capital expenditure commitments
Parent entity
31 Dec 22
$M
31 Dec 21
$M
1,032.7
16,747.0
462.6
16,765.7
17,779.7
17,228.3
940.7
5,223.4
6,164.1
544.6
5,196.0
5,740.6
11,615.6
11,487.7
8,549.9
4.3
3,061.4
8,549.9
5.9
2,931.9
11,615.6
11,487.7
770.1
770.1
16.1
27.1
22.9
66.1
719.0
719.0
32.4
31.3
13.0
76.7
Intercompany loan receivables are considered to be low risk, and therefore the impairment provision is determined as 12 months expected credit
losses. Applying the expected credit risk model did not result in any significant loss allowance being recognised in 2022.
THE GPT GROUP ANNUAL REPORT 2022 | 113
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 24. Accounting Policies
a) Basis of preparation
The financial statements are a general purpose financial report which has been prepared:
» in accordance with the requirements of the Trust’s Constitution, Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board and International Financial Reporting Standards;
» in accordance with the recognition and measurement requirements of the International Financial Reporting Standards (IFRSs) adopted by the
International Accounting Standards Board (IASB);
» on a going concern basis. GPT 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 and future cash flow assessments have been made
(refer to note 24(b)). GPT is confident in the belief that 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. The net deficiency of current assets over current
liabilities of $606.3 million arises as a result of the inclusion of borrowings due within 12 months (inclusive of $502.3 million of outstanding
commercial paper). As set out in note 13, GPT has access to $1,580.0 million in undrawn financing facilities (prior to refinancing of the
commercial paper). Refer to note 24(b) for further information on going concern;
» under the historical cost convention, as modified by the revaluation for financial assets and liabilities and investment properties at fair value
through the Consolidated Statement of Comprehensive Income;
» using consistent accounting policies with 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 in the nearest hundred thousand dollars in accordance with ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191, unless otherwise stated.
In accordance with Australian Accounting Standards, the stapled entity reflects the consolidated entity. Equity attributable to other stapled entities
is a form of non-controlling interest and represents the contributed equity of the Company.
Comparatives in the financial statements have been restated to the current year presentation.
As a result of the stapling, investors in GPT may receive payments from each component of the stapled security comprising distributions from
the Trust and dividends from the Company.
The financial report was approved by the Board of Directors on 20 February 2023.
b) Going Concern
GPT is of the opinion that it is able to meet its liabilities and commitments as and when they fall due for at least a period of 12 months from the
date of this report. In reaching this position, GPT has taken into account the following factors:
» Available liquidity, through cash and undrawn facilities, of $1,126.9 million (after allowing for refinancing of $502.3 million of outstanding
commercial paper) as at 31 December 2022;
» Weighted average debt expiry of 6.2 years, with sufficient liquidity in place to cover the $202.7 million of debt (excluding commercial paper
outstanding) due between the date of this report and 31 December 2023;
» Primary covenant gearing of 28.7 per cent, compared to a covenant level of 50.0 per cent, and
» Interest cover ratio for the twelve months to 31 December 2022 of 5.5 times, compared to a covenant level of 2.0 times.
114 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 24. Accounting Policies continued
c) Basis of consolidation
Controlled entities
The consolidated financial statements of GPT include the assets, liabilities and results of all controlled entities for the financial year.
Controlled entities are all entities over which GPT has control. GPT controls an entity when it 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 and expenses and profits
and losses resulting from intra-group transactions have been eliminated.
Associates
Associates are entities over which GPT 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 GPT 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, GPT’s investment in associates is carried in the
Consolidated Statement of Financial Position at cost plus post acquisition changes in GPT’s share of net assets. GPT’s share of the associates’
result is reflected in the Consolidated Statement of Comprehensive Income. Where GPT’s share of losses in associates equals or exceeds its
interest in the associate, including any other unsecured long term receivables, GPT does not recognise any further losses, unless it has incurred
obligations or made payments on behalf of the associate.
Joint arrangements
Investment 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. GPT has assessed the nature of its joint arrangements and determined it has
both joint operations and joint ventures.
Joint operations
GPT has significant co-ownership interests in a number of properties through unincorporated joint ventures. These interests are held directly and
jointly as tenants in common. GPT recognises its direct share of jointly held assets, liabilities, revenues and expenses in the consolidated financial
statements under the appropriate headings. The investment properties that are directly owned as tenants in common are disclosed in note 2.
Joint ventures
Investment 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.
THE GPT GROUP ANNUAL REPORT 2022 | 115
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 24. Accounting Policies continued
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.
i)
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.
ii) 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.
iii) 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.
When the above criteria are not met, revenue is recognised at a point in time. Management have assessed that there were no significant changes
to the recognition of revenue as a result of the COVID-19 pandemic.
Other revenue
Rental revenue from investment properties is recognised on a straight-line basis for the minimum contracted rent over the lease term with an asset
recognised as a component of investment properties relating to the fixed increases in operating lease rentals in future periods. When GPT provides
lease incentives to tenants, these costs are amortised against lease income on a straight-line basis.
Contingent rental income is recognised as revenue in the period in which it is earned.
Revenue from dividends and distributions is recognised when they are declared.
Interest income is recognised using the effective interest method.
116 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 24. Accounting Policies continued
d) Other accounting policies continued
The following table summarises the revenue recognition policies.
Type of revenue
Description
Recoveries revenue
Recharge revenue
Fund management fees
Fee income – property
management fees
The Group recovers the costs associated with general building and tenancy operation from
lessees in accordance with specific clauses within lease agreements. These are invoiced monthly
based on an annual estimate. The consideration for the current month is due on the first day of
the month. Revenue is recognised as the estimated costs are consumed by the tenant. Should
any adjustment be required based on actual costs incurred, this is recognised in the Consolidated
Statement of Comprehensive Income within the same reporting period and billed annually.
The Group recovers costs for any additional specific services requested by the lessee under the
lease agreement. These costs are recovered in accordance with specific clauses within the lease
agreements. Revenue from recharges is recognised as the services are provided. The lessee is
invoiced on a monthly basis, where applicable. The consideration for the current month is due on
the first day of the month.
The Company provides fund management services to GPT Wholesale Office Fund (GWOF), GPT
Wholesale Shopping Centre Fund (GWSCF), GPT QuadReal Logistics Trust (GQLT) as well as
external mandates managed by GPT in accordance with their contractual arrangements. The
services are utilised on an ongoing basis and revenue is calculated and recognised in accordance
with the relevant constitution. The fees are invoiced on a quarterly basis and consideration is
payable within 21 days of the quarter end.
The Company 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.
Fee income – property
management leasing
fees – over time
Under some property management agreements, the Company 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.
Fee income – property
management leasing
fees – point in time
Under some property management agreements, the Company provides a lease management
service 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.
Development
management fees
Sale of inventory
The Company 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 Company 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
Over time
Over time
Point in time
Over time /
point in time
Point in time
The Group recognised $15.5 million of contract assets during the period, which amortise over a contract period of two years beginning 16 December
2022. Amortisation of this asset offsets revenue from funds management fees, or is recognised in expenses in the Consolidated Statement of
Comprehensive Income, depending on the nature of the contract payments made.
THE GPT GROUP ANNUAL REPORT 2022 | 117
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS 24. Accounting Policies continued
d) Other accounting policies continued
iv) Government grants
Government grants are accounted for 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 expenses.
The Group has recognised $6.6 million in land tax relief relating to the period to 31 December 2022 (2021: $5.7 million). GPT elected to present these
amounts as a reduction in expenses. The Group result does not include any incentives under the National Rental Affordability Scheme during the
period (31 December 2021: $0.9 million). GPT elected to present these amounts as income.
v) Expenses
Property expenses and outgoings which include rates, taxes and other property outgoings, are recognised on an accrual basis.
vi) Finance costs
Finance costs include interest on borrowings and regular coupons paid or received under derivative instruments hedging GPT’s interest rate risk on
a portfolio basis, 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 for the period of time that is required
to complete 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.
vii) Leases
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, GPT’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 liability;
» 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 liability and any variable lease payments not included in the measurement of the lease liability 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 $1.2 million for the year (31 December 2021: $1.5 million).
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 includes:
» the amount of the initial measurement of lease liability;
» any lease payments made at or before the commencement date less any lease incentives received;
» any initial direct costs; and
» restoration cost.
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, unless they meet the definition of an investment property. Right-of-use assets which meet
the definition of an investment property form part of the investment property balance and are measured at fair value in accordance with AASB 140
Investment Property (refer note 2 and the following section on ground leases).
GPT’s right-of-use assets are all property leases.
GPT 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.
GPT 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.
GPT has assessed the right-of-use assets for impairment indicators and has calculated the recoverable amount where indicators exist. This has
resulted in a reversal of impairment of $1.4 million for the year (31 December 2021: $1.2 million expense).
118 | THE GPT GROUP ANNUAL REPORT 2022
Notes to the Consolidated Financial StatementsYear ended 31 December 2022FINANCIAL STATEMENTS 24. Accounting Policies continued
d) Other accounting policies continued
Ground Leases
A lease liability reflecting the leasehold arrangements of investment properties is separately disclosed in the Consolidated Statement of Financial
Position and the carrying value of the investment properties is adjusted (i.e. grossed up) so that the net of these two amounts equals the fair value
of the investment properties. The lease liabilities are calculated as the net present value of the future lease payments discounted at the incremental
borrowing rate.
e) New and amended accounting standards and interpretations adopted from 1 January 2022
GPT has applied the following standard and amendment for the first time for the annual reporting period commencing 1 January 2022:
» AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and Others Amendments [AASB 1, AASB 3,
AASB 9, AASB 116, AASB 137 & AASB 141].
Other than the above, there are no significant changes to GPT’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 2022.
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 2022 reporting periods and have not been early adopted by the Group. 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.
25. Events Subsequent to Reporting Date
As announced on 10 February 2023, it is Bob Johnston’s current intention to retire by the end of this year. The Board has commenced a formal
Chief Executive Officer search process to select a suitably qualified successor with the right leadership skills and experience to continue the
successes of the Group.
The Directors are not aware of any other matter or circumstance occurring since 31 December 2022 that has significantly or may significantly
affect the operations of GPT, the results of those operations or the state of affairs of GPT in the subsequent financial years.
THE GPT GROUP ANNUAL REPORT 2022 | 119
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS Directors’ Declaration
In the Directors of the Responsible Entity’s opinion:
a) The consolidated financial statements and notes set out on pages 65 to 119 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 GPT’s financial position as at 31 December 2022 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 24 to the
financial statements.
c) There are reasonable grounds to believe that GPT 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 a resolution of the Directors.
Vickki McFadden
CHAIRMAN
GPT RE Limited
Sydney
20 February 2023
Bob Johnston
CHIEF EXECUTIVE OFFICER AND
MANAGING DIRECTOR
120 | THE GPT GROUP ANNUAL REPORT 2022
FINANCIAL STATEMENTS Independent Auditor’s Report
Independent auditor’s report
To the stapled security holders of the GPT Group
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of General Property Trust (the Trust) and its controlled entities and
GPT Management Holdings Limited (the Company) and its controlled entities (together, GPT, the GPT
Group or the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 31 December 2022 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 Group financial report comprises:
●
●
●
●
●
●
the Consolidated Statement of Financial Position as at 31 December 2022
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 Consolidated 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 Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
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.
THE GPT GROUP ANNUAL REPORT 2022 | 121
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS Independent Auditor’s Report CONTINUED
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 Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Key audit matters
Amongst other relevant topics, we
communicated the following key
audit matters to the Audit
Committee:
• Valuation of investment
properties, including
investment properties in
equity accounted
investments
• 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 Group materiality of
$31.0 million, which represents
approximately 5% of the Group’s
Funds from Operations (FFO).
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 FFO because, in our
view, it is the key performance
indicator used by security holders
to measure the performance of the
Group. An explanation of what is
included in FFO is located in Note
1, Segment information.
We selected a 5% threshold
based on our professional
judgment, noting it is within the
range of commonly accepted profit
related thresholds.
The structure of the Group is
commonly referred to as a stapled
group. In a stapled group, the
securities of two or more entities
are 'stapled' together and cannot
be traded separately. In the case
of the Group, the units in the Trust
have been stapled to the shares in
the Company. For the purposes of
consolidation accounting, the
Trust is the 'deemed' parent and
the financial report reflects the
consolidation of the Trust and its
controlled entities and the
Company and its controlled
entities.
Our audit focused on where the
Group made subjective
judgments; for example,
significant accounting estimates
involving assumptions and
inherently uncertain future events.
The Group holds equity accounted
investments in two wholesale real
estate investment funds. The
auditor of these funds (the
122 | THE GPT GROUP ANNUAL REPORT 2022
FINANCIAL STATEMENTS
component auditor) assisted in
performing procedures on behalf
of the Group engagement team.
We determined the level of
involvement we needed to have in
the audit work performed by the
component auditor to be able to
conclude whether sufficient
appropriate audit evidence had
been obtained. This included
written instructions and active
dialogue throughout the year.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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
Valuation of investment properties, including
investment properties in equity accounted
investments
Refer to Note 2 and 3
We tested key controls related to the data inputs
provided by the Group to external valuers, as well as
key controls over review and approval of the
valuations by management.
The Group’s investment property portfolio is
comprised of office, retail and logistics properties
including properties under development in those
categories. These include:
● Directly held properties included in the
Consolidated Statement of Financial Position
as investment properties valued at $11,956.6
million as at 31 December 2022 (2021:
$11,954.7 million).
Investment properties held through
associates and joint ventures included in the
Consolidated Statement of Financial Position
as equity accounted investments.
●
Investment properties are valued at fair value at
reporting date using the Group’s policy as described
in Note 2. The value of investment properties is
dependent on the valuation methodology adopted and
the inputs and assumptions in the valuation models.
We obtained a selection of independent property
market reports and also worked together with PwC
Real Estate experts to develop an understanding of
the prevailing market conditions and their expected
impact on the Group’s investment properties.
We agreed the fair value in investment property
valuation reports to the Group’s accounting records
and assessed the competency, capability and
objectivity of the external valuers.
We met with management to discuss the specifics of
the property portfolio including significant leasing
activity, capital expenditure and vacancies impacting
the portfolio.
For a sample of key data inputs to the valuations, we
agreed details to supporting documentation. For
example, we agreed a sample of rental income inputs
in valuations to lease agreements.
THE GPT GROUP ANNUAL REPORT 2022 | 123
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS
Independent Auditor’s Report CONTINUED
Key audit matter
How our audit addressed the key audit matter
The following are significant assumptions in
establishing fair value:
● Capitalisation rate
● Discount rate
In line with the Group’s valuation policy, GPT
independently values each completed investment
property (including investment property assets
disclosed within equity accounted investments) at
least annually.
We considered this a key audit matter because of:
●
●
●
the relative size of the investment property
balance in the consolidated statement of
financial position (including investment
properties within equity accounted
investments).
the inherently subjective nature of the key
assumptions that underpin the valuations,
including capitalisation and discount rates.
the extent of judgment involved in
considering the impact of the uncertain
economic environment on investment
property valuations.
Carrying value of inventory
$154.7 million
Refer to note 6
For a sample of properties which were assessed as
being at greater risk of material misstatement, we
performed the following procedures, amongst others,
to assess the appropriateness of certain assumptions
used in the Group’s assessment of fair value. We:
● obtained the valuation and held discussions
with management to develop an
understanding of the basis for assumptions
used.
● assessed the appropriateness of the
methodology adopted and the mathematical
accuracy of valuations.
● assessed the appropriateness of the
capitalisation rate and discount rate used in
the valuations by comparing them against
market data for comparable properties.
● assessed the appropriateness of other key
assumptions in the valuation by considering
observable external market data.
● met with a selection of external valuation firms
to develop an understanding of their
processes, judgment and observations.
We assessed the reasonableness of the Group’s
disclosures against the requirements of Australian
Accounting Standards.
For each material project we obtained the Group’s
latest Net Realisable Value (NRV) models.
The Group develops a portfolio of sites for future sale
which are classified as inventory. The Group’s
inventories are held at the lower of the cost and net
realisable value for each inventory project.
We developed an understanding of how the Group
identified the relevant assumptions and sources of
data that are appropriate for calculating the NRV and
compared the carrying value to the NRV to identify
projects with potential impairments.
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 judgment required
by the Group to appropriately determine assumptions,
for example, in estimating future selling prices. These
judgments may have a material impact on the
We performed the following procedures, amongst
others, to gain an understanding of material projects:
●
discussed project specifics with
management, for example the life cycle of
the project, key project risks, the impact of
macroeconomic trends and how they have
been reflected in the NRV models.
● where applicable, met with the external
quantity surveyors (QS) and design
124 | THE GPT GROUP ANNUAL REPORT 2022
FINANCIAL STATEMENTS
Key audit matter
How our audit addressed the key audit matter
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.
specialists engaged by the Group, in order to
develop an understanding of their
methodology and considerations in
estimating the forecast spend for the project.
For selected projects we performed the following
procedures over NRV models:
●
● where applicable, agreed the forecast spend
per the NRV of the inventory projects to
external QS estimates.
compared the estimated selling prices to
market sales data in similar locations or to
recent sales in the project.
compared escalation rates to relevant
market data such as GDP growth and
inflation.
●
● where applicable, performed sensitivity
analyses to supplement our procedures over
the reasonableness of key assumptions in
the NRV model, including sensitising
forecast revenue, forecasts costs to
complete and escalation rates.
In addition, we have performed the following
procedures:
●
●
●
●
traced each inventory disposal to the
supporting settlement statement, sales
contract and cash support.
traced inventory acquisitions to relevant
supporting documents, for example, a
purchase contract.
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 key control over review and
approval of the inventory carrying value by
management.
We also assessed the reasonableness of the
disclosures relating to inventories in the Group’s
financial report against the requirements of Australian
Accounting Standards.
THE GPT GROUP ANNUAL REPORT 2022 | 125
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS
Independent Auditor’s Report CONTINUED
Other information
The directors of GPT RE Limited, the Responsible Entity of General Property Trust, (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 2022, 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 are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
126 | THE GPT GROUP ANNUAL REPORT 2022
FINANCIAL STATEMENTS
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 50 to 62 of the directors report for the year
ended 31 December 2022.
In our opinion, the remuneration report of GPT Group for the year ended 31 December 2022 complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors are responsible for the preparation and presentation of the remuneration report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion
on the remuneration report, based on our audit conducted in accordance with Australian Auditing
Standards.
PricewaterhouseCoopers
Susan Horlin
Partner
Sydney
20 February 2023
THE GPT GROUP ANNUAL REPORT 2022 | 127
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEWFINANCIALSTATEMENTS
SECURITYHOLDER
INFORMATION
Securityholder Information
GPT is listed on the Australian Securities Exchange (ASX) under the ASX Listing Code: GPT.
Unless otherwise noted, the information in this section is current as at 31 January 2023.
Voting Rights
Securityholders in The GPT Group are entitled to one vote for each dollar of the value of the total securities they hold in The Group.
Securityholders
Substantial Securityholders as notified to the ASX
UniSuper Limited
BlackRock Group
The Vanguard Group, Inc.
State Street Corporation
Distribution of Securities
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total Number of Securityholders
Number of Securities
312,149,253
196,425,723
183,628,450
176,822,177
Number of
Securityholders
Percentage of
total issued Securities
14,345
12,441
3,667
2,727
109
33,289
0.34
1.62
1.38
2.97
93.69
100.00
There were 1,256 securityholders holding less than a marketable parcel of 110 securities, based on a close price of $4.55 as at 31January 2023,
and they hold 42,269 securities.
There are no other classes of quoted equity securities on issue.
Unquoted Equity Securities
The GPT Group has 4,263,232 unquoted Performance Rights on issue to 35 Securityholders under employee incentive schemes.
Twenty Largest Securityholders
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
PACIFIC CUSTODIANS PTY LIMITED GPT GROUP PLANS CTRL
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
WARBONT NOMINEES PTY LTD
MUTUAL TRUST PTY LTD
CHARTER HALL WHOLESALE MANAGEMENT LIMITED
NETWEALTH INVESTMENTS LIMITED
ARGO INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
ONE MANAGED INVESTMENT FUNDS LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS(NZ) LTD
NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
Total
Total Securities on Issue
128 | THE GPT GROUP ANNUAL REPORT 2022
Number of Securities
Percentage of
total issued Securities
668,597,478
381,442,218
317,658,002
187,551,125
57,572,442
56,965,423
30,914,641
19,960,795
5,289,764
4,346,080
4,187,596
3,906,000
3,899,813
3,765,798
3,480,667
3,321,980
3,000,000
2,753,458
2,711,761
2,268,424
1,763,593,465
1,915,577,430
34.90
19.91
16.58
9.79
3.01
2.97
1.61
1.04
0.28
0.23
0.22
0.20
0.20
0.20
0.18
0.17
0.16
0.14
0.14
0.12
92.07
100.00
FINANCIAL
STATEMENTS
SECURITYHOLDER
INFORMATION
Issue of Securities
No GPT securities were issued during the period 1 January 2022 to 31 December 2022.
Securities Purchased On-market
During 2022, 438,224 securities were purchased on-market for the purposes of The GPT Group's employee incentive schemes and the average
price per security was $4.91.
On-market Buy-back
There is no current on-market buy-back.
Investor Information
Securityholder services – Link Market Services
You can access your investment online at www.linkmarketservices.com.au, signing in using your SRN/HIN, Surname and Postcode. Functions
available include updating your address details, downloading a PDF of your Annual Tax Statement and collecting FATCA/CRS self certification.
Also online at www.linkmarketservices.com.au are regularly requested forms relating to payment instructions, name corrections and changes and
deceased estate packs.
For assistance with altering any of your investment details, please phone the GPT Registry on 1800 025 095 (free call within Australia)
or +61 1800 025 095 (outside Australia).
Electronic communications
GPT encourages our securityholders to receive investor communications electronically, including the Group Annual Report, as part of our
commitment to sustainability. These reports are available on our website at www.gpt.com.au.
To register for electronic investor communications, please go to www.linkmarketservices.com.au and register for online services.
Annual General Meeting 2023
GPT’s Annual General Meeting (AGM) will be held on 10 May 2023. Details will be provided in the Notice of Meeting. The Chairman’s and CEO’s
addresses will be announced to the ASX on the day.
Investor calendar
Date
10 May 2023
14 August 2023
Event
Annual General Meeting
2023 Interim Result Announcement
An investor calendar is also available on our website at www.gpt.com.au/investor-centre.
Distribution policy and payments
GPT has a distribution policy that effectively aligns the Group’s capital management framework with our business strategy, which reflects a
sustainable distribution level to ensure a prudent approach to managing the Group’s gearing through market and economic cycles.
GPT makes distribution payments in Australian dollars to securityholders two times a year, for the six months ended 30 June and the six months
ended 31 December.
Feedback, suggestions and complaints
GPT is committed to delivering a high level of service to Securityholders, including responding to complaints in a fair, timely and efficient
manner. Should there be some way you think that we can improve our service, we would like to know. Whether you are making a suggestion or a
complaint, your feedback is always appreciated and can be provided by telephone on + 61 1800 025 095, by fax to +61 2 9287 0303 or by email to
complaints@linkmarketservices.com.au. GPT’s Investor Complaints Handling Policy can be found at www.gpt.com.au/complaints.
GPT RE Limited is a member (member no.11784) of the Australian Financial Complaints Authority (AFCA), an external dispute resolution scheme
to handle complaints from consumers in the financial system. If you are not satisfied with the resolution of your complaint by GPT RE Limited, you
may refer your complaint to AFCA, GPO Box 3, Melbourne Victoria 3001, by telephone on 1800 931 678, by email to info@afca.org.au or online at
www.afca.org.au.
THE GPT GROUP ANNUAL REPORT 2022 | 129
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUEBUSINESSOVERVIEW Glossary
Term
A-Grade
ACRT
AFFO
AREIT
ASX
AUM
bps
Capex
CBD
CO2
CPI
cps
DPS
EBIT
EPS
FFO
SECURITYHOLDER
INFORMATION
Meaning
As per the Property Council of Australia’s ‘A Guide to Office Building Quality’
Australian Core Retail Trust
Adjusted Funds From Operations, defined as FFO less maintenance capex, leasing incentives and one-off items
calculated in accordance with the Property Council of Australia ‘Voluntary Best Practice Guidelines for Disclosing
FFO and AFFO’
Australian Real Estate Investment Trust
Australian Securities Exchange
Assets under management
Basis points
Capital expenditure
Central Business District
Carbon Dioxide
Consumer Price Index
Cents per security
Distribution per security
Earnings Before Interest and Tax
Earnings Per Security. Earnings per security is defined as Funds From Operations per security
Funds From Operations. Funds From Operations is defined as the underlying earnings calculated in accordance
with the Property Council of Australia ‘Voluntary Best Practice Guidelines for Disclosing FFO and AFFO’
Free Cash Flow
Operating cash flow less maintenance and leasing capex and inventory movements. The Group may make other
adjustments in its determination of free cash flow for one-off or abnormal items
FUM
GAV
GFA
GLA
GQLT
Funds under management
Gross Asset Value
Gross Floor Area
Gross Lettable Area
GPT QuadReal Logistics Trust
Group Total Return
Total Return, calculated at the Group level as the change in Net Tangible Assets (NTA) per security plus
distributions per security declared over the year, divided by the NTA per security at the beginning of the year
GWOF
GWSCF
HoA
IFRS
IRR
GPT Wholesale Office Fund
GPT Wholesale Shopping Centre Fund
Heads of Agreement
International Finance Reporting Standards
Internal Rate of Return
Major Tenants
Retail tenancies including Supermarkets, Discount Department Stores, Department Stores and Cinemas
130 | THE GPT GROUP ANNUAL REPORT 2022
FINANCIAL
STATEMENTS
SECURITYHOLDER
INFORMATION
Term
MAT
Meaning
Moving Annual Turnover
Mini-Major Tenants
Retail tenancies with a GLA above 400 sqm not classified as a Major Tenant
MTN
N/A
NABERS
NAV
Net Gearing
NLA
NPAT
NTA
Medium Term Notes
Not Applicable
National Australian Built Environment Rating System
Net Asset Value
Defined as debt less cash less cross currency derivative assets add cross currency derivative liabilities divided
by total tangible assets less cash less cross currency derivative assets less right-of-use assets less lease
liabilities – investment properties
Net Lettable Area
Net Profit After Tax
Net Tangible Assets
Ordinary Securities
Those that are most commonly traded on the ASX. The ASX defines ordinary securities as those securities that
carry no special or preferred rights. Holders of ordinary securities will usually have the right to vote at a general
meeting of the company, and to participate in any dividends or any distribution of assets on winding up of the
company on the same basis as other ordinary securityholders
PCA
Property Council of Australia
Premium Grade
As per the Property Council of Australia’s ‘A Guide to Office Building Quality’
Prime Grade
Includes assets of Premium and A-Grade quality
psm
Per square metre
Retail Sales
Based on a weighted GPT interest in the assets and GWSCF portfolio. GPT reports retail sales in accordance
with the Shopping Centre Council of Australia (SCCA) Guidelines
Specialty Tenants
Retail tenancies with a GLA below 400 sqm
sqm
Square metre
Total Specialties
Retail tenancies including specialty tenants and mini-major tenants
Total tangible assets
Total tangible assets is defined as per the Constitution of the Trust and equals Total Assets less Intangible
Assets reported in the Statement of Financial Position
TSR
Total Securityholder Return, defined as distribution per security plus change in security price, assuming
distributions are reinvested
Unlevered Total Return
Unlevered Total Return is calculated as the sum of the net income and revaluation movement of the portfolio
divided by the average book value of the portfolio, compounded monthly for a rolling 12 month period
USPP
VWAP
WACD
WACR
WALE
United States Private Placement
Volume weighted average price
Weighted average cost of debt
Weighted average capitalisation rate
Weighted average lease expiry
THE GPT GROUP ANNUAL REPORT 2022 | 131
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUEBUSINESSOVERVIEW SECURITYHOLDER
INFORMATION
Auditors
PricewaterhouseCoopers
One International Towers Sydney,
Watermans Quay, Barangaroo
Sydney NSW 2000
Principal Registry
Link Market Services
GPT Security Registrar
Locked Bag A14
Sydney South NSW 1235
Within Australia: 1800 025 095 (free call)
Outside Australia: +61 1800 025 095
Fax: +61 2 9287 0303
Email: registrars@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
Corporate Directory
The GPT Group
Comprising:
GPT Management Holdings Limited
ACN 113 510 188 and
GPT RE Limited
ACN 107 426 504
AFSL 286511
As Responsible Entity for
General Property Trust ARSN 090 110 357
Registered and Principal
Administrative Office
Level 51
25 Martin Place
Sydney NSW 2000
Telephone: +61 2 8239 3555
Board of Directors
Vickki McFadden (Chair)
Bob Johnston
Anne Brennan
Tracey Horton AO
Mark Menhinnitt
Michelle Somerville
Robert Whitfield AM
Company Secretaries
Marissa Bendyk
Emma Lawler
Audit Committee
Michelle Somerville (Chair)
Anne Brennan
Robert Whitfield AM
Human Resources and
Remuneration Committee
Tracey Horton AO (Chairman)
Vickki McFadden
Anne Brennan
Mark Menhinnitt
Nomination Committee
Vickki McFadden (Chair)
Bob Johnston
Anne Brennan
Tracey Horton AO
Mark Menhinnitt
Michelle Somerville
Robert Whitfield AM
Sustainability and Risk Committee
Robert Whitfield AM (Chair)
Tracey Horton AO
Mark Menhinnitt
Michelle Somerville
132 | THE GPT GROUP ANNUAL REPORT 2022
FINANCIAL
STATEMENTS
SECURITYHOLDER
INFORMATION
Highpoint Shopping Centre, VIC
THE GPT GROUP ANNUAL REPORT 2022 | 133
GROUPPERFORMANCEDIRECTORS’ REPORTGOVERNANCERISKMANAGEMENTHOW WECREATE VALUESECURITYHOLDERINFORMATIONBUSINESSOVERVIEW Level 51
25 Martin Place
Sydney NSW 2000
www.gpt.com.au