More annual reports from Pilgrim's Pride:
2023 ReportPeers and competitors of Pilgrim's Pride:
M Winkworth PLCANNUAL REPO RT
2 0 17
Peet Limited
ACN 008 665 834
Level 7, 200 St Georges Terrace Perth WA 6000
Telephone +61 8 9420 1111 | Facsimile +61 8 9481 4712
www.peet.com.au
Perth | Melbourne | Brisbane | Canberra | Adelaide | Darwin
“Our focus is to create high-quality
masterplanned residential communities
for homebuyers across Australia, and
achieve the best possible results for
our shareholders, investors and partners.”
ANNUAL
REPORT 2017
CONTENTS
02 Business Overview
05 Peet Values
06 Performance at a Glance
08 Chairman’s Review
13 Managing Director and CEO’s Review
16 Operating and Financial Review
32 Peet in the Community
36 Promoting Healthy Active Lifestyles
38 Corporate Calendar
41 Directors’ Report
68 Auditor’s Independence Declaration
69 Corporate Governance Statement
70 Financial Report
107 Directors’ Declaration
1 08
Independent Auditor’s Report to the Members
114 Securityholder Information
118 Corporate Directory
A ANNUAL REPORT 2017 | PEET LIMITED
The Village at Wellard, WA
PEET LIMITED | ANNUAL REPORT 2017 1
Business
OVERVIEW
The Peet Group has a diversified land bank across
all mainland state and territories, with a pipeline
of approximately 52,000 lots worth $13.8 billion.
This represents 17 years’ lot supply based on
current sales rates.
The Group acquires, develops and markets
residential land, predominantly under a
capital-efficient funds management model.
Our focus is to create high-quality masterplanned
residential communities for homebuyers across
Australia, and achieve the best possible results
for our shareholders, investors and partners,
which include State and Federal Government
agencies and major Australian institutions.
These are in addition to our syndicate and
company investors.
We seek to add value to our communities with
the inclusion of medium-density housing and the
delivery and/or facilitation of key amenities such
as shopping centres, schools, medical centres,
pharmacies, childcare centres and other local
services in some estates.
Investment in other community infrastructure
such as parks and playgrounds as well as the
creation and installation of iconic works of public
art, support the creation of a sense of identity
and a unique place for residents within the
communities we develop.
We pride ourselves on the sound governance
framework, strong management, breadth of
business skills and modern project management
systems and procedures which underpin all
our development and marketing activities.
The Group employs approximately 240 people
in offices throughout mainland Australia and
has in-house expertise in a range of relevant
disciplines. We also draw on the specialist
expertise of highly qualified and experienced
consultants as required for each project.
We currently have 57 projects across the
country. The wide and varying nature of these
developments reflect the skills and experience
of the Group and demonstrate the commitment
to innovation and excellence that drives the entire
team, as well as a strong understanding of, and
connection to, our core markets.
In the 2017 financial year, the Group has
achieved another increase in profit on the back
of continuing strong conditions across the east
coast markets. Heading into the 2018 financial
year, our portfolio is well positioned for sustainable,
long-term growth and the Group will continue to
deliver an innovative and diverse mix of product
and infrastructure.
2 ANNUAL REPORT 2017 | PEET LIMITED
Flagstone City, QLD
PEET LIMITED | ANNUAL REPORT 2017 3
PEET VALUES
INTEGRITY
WE act with high integrity through open,
honest and professional conduct.
TEAMWORK
WE recognise the strength of working
together and encourage the development
of our people and the sharing of knowledge.
ACCOUNTABILITY
WE respect the responsibility invested in
us and have ownership and the freedom
to act to deliver constant improvements.
ADAPTABILITY
WE embrace change and foster creativity,
initiative, innovation and embrace
progressive thinking.
RESPECT
WE treat our team, customers and
the environment with respect, dignity
and equality.
CUSTOMER SERVICE
WE strive to deliver a high standard of
prompt, efficient and courteous service to
our customers, both internal and external.
4 ANNUAL REPORT 2017 | PEET LIMITED
Googong, NSW
PEET LIMITED | ANNUAL REPORT 2017 5
Performance
AT A GLANCE
HIGHLIGHTS
OPERATING AND
STATUTORY PROFIT1
AFTER TAX OF
$44.8 MILLION
REVENUE OF
$311.4
MILLION
EARNINGS PER SHARE OF 9.14 CENTS
TOTAL LOTS
SETTLED
3,077
TOTAL LOTS
SOLD
3,000
DIVIDENDS OF
4.75 CENTS
PER SHARE,
FULLY FRANKED
TWO NEW WHOLESALE
FUNDS ESTABLISHED
2
NET EBITDA
MARGIN OF 29%
2
EBITDA OF
$91.1 MILLION
4
GEARING
OF 21.4%
(AS AT 30 JUNE 2017)
2,186
3
CONTRACTS ON HAND
AS AT 30 JUNE 2017
OPERATING PROFIT
AFTER TAX ($M)
5%
FY15: 38.5
FY16: 42.6
FY17: 44.8
DIVIDENDS (CPS)
6%
FY15: 4.5
FY16: 4.5
FY17: 4.75
OPERATING EPS (CPS)
5%
FY15: 8.3
FY16: 8.7
FY17: 9.14
²
EBITDA ($M)
2%
FY15: 92.4
FY16: 89.8
FY17: 91.1
²
NET EBITDA MARGIN (%)
3%
FY15: 26%
FY16: 32%
FY17: 29%
1 Statutory profit after tax
means net profit measured
in accordance with Australian
Accounting Standards,
attributable to the owners
of Peet Limited.
2 EBITDA is a non-IFRS
measure that includes effects
of non-cash movements in
investments in associates
and joint ventures
totalling $15.3 million
(FY16: $16.7 million).
3
Includes equivalent lots.
Excludes englobo sales.
4 Calculated as (Total interest
bearing liabilities (including
land vendor liabilities) less
cash)/(Total assets adjusted
for market value of inventory
less cash, less intangible
assets), excluding Syndicates
consolidated under AASB10.
Operating profit is a non-IFRS measure that is determined to present the ongoing
activities of the Group in a way that reflects its operating performance. Operating profit
includes the effects of non-cash movements in investments in associates and joint
ventures. It excludes unrealised fair value gains/(losses) arising from the effect of
revaluing assets and liabilities and adjustments for realised transactions outside the
core ongoing business activities.
Statutory profit measures profit in accordance with Australian Accounting Standards.
Cornerstone Werribee, VIC
6 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 7
Chairman’s
REVIEW
On behalf of the Board of Peet Limited,
I am pleased to present to you our 2017
Annual Report.
The Australian residential property market
continued to show differences across
the country during the 2017 financial year
with Victoria sustaining its strong market
position, ACT/New South Wales and
South Australia remaining solid, and
Queensland continuing to improve.
Conditions in Western Australia and the
Northern Territory remained subdued.
The strategic benefits of Peet’s
geographically diversified portfolio,
buoyed by the stronger performing
eastern seaboard markets, saw an
increase in profit and a strong rise in
cash inflows and a reduction in gearing.
I draw your attention to the Managing
Director and CEO’s Review and the 2017
Financial Report for further consideration
of these matters.
Another significant achievement for the
company during the 2017 financial year
included the establishment of two new
wholesale funds. These funds involve
the co-ownership with Supalai Public
Company – a real estate developer listed
on the Thailand Stock Exchange – of
residential land projects at Newhaven
in Tarneit in the strong growth western
corridor of Melbourne; and Eden’s
Crossing in Redbank Plains, less than
30km west of Brisbane. These projects
are expected to be strong contributors
to Peet’s earnings over the next decade.
In line with our strategy of managing
the pipeline of projects with a focus on
maximising the return on capital, Peet
sold an undeveloped englobo parcel
in Rockbank, west of Melbourne,
for $30.5 million during the year.
The settlement is expected to occur
in the 2018 financial year.
Peet successfully launched several new
estates during the year; Newhaven and
Summerhill in Victoria; Flagstone City
and Eden’s Crossing in Queensland,
Burrabella in New South Wales and
Movida in Western Australia. The activity
generated at these new estates, together
with the continuing strong conditions in
Victoria, helped offset the effects of the
completion of a number of successful
projects in the 2016 financial year, such
as Quarters and Livingston in Victoria,
and Flagstone Rise and Warner Lakes
The Reserve in Queensland.
Following the end of the financial year,
in July 2017, Peet was named the
Western Australian Government’s
preferred proponent for final negotiations
as development partner for a major
housing project on a 220-hectare
landholding in Brabham, 22km north-east
of the Perth CBD which will be delivered
in partnership with the WA Housing
Authority. Peet will establish a new
wholesale fund to jointly develop the
project, with Peet appointed as the
development manager.
Newhaven Tarneit, VIC (Artist’s Impression)
It was pleasing to see a number of Peet
projects recognised with prestigious
industry awards during the year. These
awards provide important affirmation that
Peet is continuing to be at the forefront of
innovation in creating new communities.
They are also a measure of our senior
executive management and project
teams’ expertise and commitment to
excellence, against their industry peers
and market competitors.
Googong (a joint venture with Mirvac)
was named Best Southern NSW Regions
& ACT Development and received a
commendation in the Environmental
Technology and Sustainability category
at the Urban Development Institute of
Australia (UDIA) (NSW) Awards for
Excellence. The Village at Wellard (a joint
venture with the WA Housing Authority)
was named Best Sustainable Urban
Development of the Year at the UDIA (WA)
Awards for Excellence and also received
the Value-adding award at the National
Growth Areas Alliance Congress Awards.
8 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 9
Our innovative approach to medium
density housing was also rewarded with
Lightsview Apartments in South Australia,
and Invita Apartments in Western
Australia both winning the Medium
Density Development Award at their
respective state UDIA awards.
The year ahead
The Peet Group is well positioned for the
year ahead, with a diversified portfolio of
properties and a strong balance sheet.
The 2018 financial year will see the
commencement of a number of new
projects in key markets across Australia.
I refer you to the Managing Director and
CEO’s Review for further detail.
We will maintain a disciplined focus on
capital management and look forward to
maximising returns to our shareholders.
Subsequent to 30 June 2017, Peet issued
$50 million of Series 2, Tranche 1 Peet
Bonds. The Bonds further diversified
the Group’s debt profile, increased the
weighted average maturity of Peet’s
debt and, further strengthened the
Group’s balance sheet to support its
growth objectives.
Dividends
The Directors were pleased to declare a
final dividend for the 2017 financial year
of 3.00 cents per share, fully franked.
This brought the total dividend for the
year to 4.75 cents per share, fully franked,
an increase of 6% on the 2016 financial
year dividend payment of 4.50 cents per
share, fully franked.
Conclusion
The Australian property market is cyclical.
While Peet can be impacted by fluctuations
in the market or macro-economic
movements, the company has proved
its capacity over many decades to
manage through various cycles.
We will continue to identify growth
opportunities and to manage the Group’s
pipeline of projects with a focus on
maximising return on capital employed;
and continue the proactive and disciplined
approach to investment in the development
of a mix of product and infrastructure to
meet market demand, particularly in the
stronger performing east coast markets.
I take this opportunity to express my
appreciation to my fellow Directors and
to pay tribute to Managing Director and
CEO Brendan Gore, the senior executive
and leadership group, and the Peet team
around the country who demonstrate
their commitment to innovation and
excellence in the delivery of a range of
exciting communities across Australia.
I look forward to the next financial year
with the Group well placed to continue
to meet the challenges and deliver
positive results for our investors,
partners and residents.
Tony Lennon
Chairman
10 October 2017
10 ANNUAL REPORT 2017 | PEET LIMITED
Tonsley, SA (Artist’s Impression)
PEET LIMITED | ANNUAL REPORT 2017 11
Managing Director
AND CEO’S REVIEW
The 2017 financial year was a positive
one for the Peet Group, consolidating
our national expansion, launching a
number of new projects and continuing
to implement our business strategies.
Our diversified land bank meant we
were well positioned to take advantage
of the continuing strong conditions across
the east coast, with price growth being
recorded particularly across our Victorian
portfolio. The 2017 financial year also saw
signs of improvement in the Queensland
portfolio, with increased levels of sales
and enquiries.
The improved performance resulted in
an operating profit and statutory profit
after tax of $44.8 million, up 5% on FY16,
and earnings per share of 9.14 cents, also
up 5%.
The Group derived revenue of $311.4 million,
up 9%, with 3,077 lots settled, with
a gross value of $844.3 million. The
contribution from eastern states’ projects
rose to 86% of EBITDA, up from 82%
last year – the Group’s total EBITDA of
$91.1 million was up 2% on FY16.
There were 3,000 lots sold, with a gross
value of $860.3 million and we entered
FY18 with good momentum and 2,186
contracts on hand valued at $545.7 million.
Our strategic partnerships, with
Government and other development
partners, continue to be fundamental
to Peet’s ongoing strength and success
with solid performances at Lightsview
(Renewal SA), Googong (Mirvac) and
Flagstone (MTAA Super) in particular
contributing to this year’s results. We are
also proud to be continuing to work with
the WA Housing Authority at The Village
at Wellard and Golden Bay, and look
forward to progressing the new Brabham
project in FY18.
Peet maintains a disciplined focus on
capital management. The increase in
profits derived during the year was
accompanied by a strong increase in cash
inflows from operations, and a reduction
in gearing to 21.4% by the end of FY17
– at the lower end of the Group’s target
range of 20% to 30% and down from
28.8% at the end of FY16.
At 30 June 2017, the Group had
interest-bearing debt (including Peet
Bonds) of $249.8 million, compared
with $266.9 million at 30 June 2016.
Approximately 89% of the Group’s
interest-bearing debt was hedged as
at 30 June 2017, compared with 84%
at 30 June 2016.
12 ANNUAL REPORT 2017 | PEET LIMITED
Googong, NSW
PEET LIMITED | ANNUAL REPORT 2017 13
Peet will continue to
target the delivery
of shareholder
value and quality
residential
communities
around Australia.
We continue to strive for business
improvement, and to seek innovative
ways of delivering the best outcomes to
our investors, partners and the residents
in our communities.
An important part of that is investing
in new technology, and in FY17 we
implemented an ERP system to streamline
our financial systems and processes,
and launched a new digital platform
including social media channels. The
redevelopment of the Peet website has
delivered improved functionality with
data analytics providing greater customer
insight and enabling us to deliver
optimised and targeted marketing to
customers in addition to informing future
product mix.
To that end, we also continued to increase
the diversity of our product portfolio, to
ensure we offer housing options for all
stages of life, designed to suit different
lifestyles and budgets so people can live
the life they want to. This includes a
variety of land options – from family size
homesites to smaller compact lots –
through to a range of fully finished homes,
townhouses and apartments.
Group Strategy
Peet will continue to target the delivery of
shareholder value and quality residential
communities around Australia by
leveraging its land bank; working in
partnership with wholesale, institutional
and retail investors; and continuing to
meet market demand for a mix of product
in the growth corridors of major Australian
cities, with a focus on affordable product.
Lightsview, SA
Key elements of the Group’s strategy
for the year ahead and beyond include:
•
•
•
continuing to deliver high-quality,
masterplanned communities, adding
value and facilitating additional
investment in amenity and services
wherever possible;
managing the Group’s land bank
of approximately 52,000 lots, with
a focus on maximising return on
capital employed;
continuing to assess opportunities
to selectively acquire residential land
holdings in a disciplined manner under
our funds management platform and
as appropriate in market conditions;
•
maintaining a focus on cost and
debt reduction.
Approximately 70% of the Group’s
land bank is in development, and this is
expected to move to more than 80% over
the next two years. To achieve that, we
look forward to bringing some significant
new projects into development, including
the Tonsley project in SA, the University
of Canberra project and Atria Apartments
projects in the ACT, the Palmview project
in Queensland and moving towards
start-up of the Brabham project in WA.
These projects are expected to be
long-term drivers of earnings in the
years ahead.
being well positioned in good proximity to
the Adelaide CBD. To the west and north
of the country, conditions, while showing
signs of stabilising, are expected to
remain subdued throughout the 2018
financial year and into 2019.
Outlook
The Peet Group has moved into the 2018
financial year well-positioned to target
growth on 2017 financial year earnings,
subject to market conditions and the
timing of settlements, with earnings
expected to be weighted to the second
half of the financial year.
The outlook for Peet Group’s portfolio of
residential development landholdings is
positive, and we are well positioned for
sustainable long-term growth despite the
mixed market conditions which continue
across the country.
The east coast markets are expected to
remain strong – with strong population
and economic growth continuing to
support demand in Victoria, the ACT and
New South Wales. South Australia will
also remain supportive, with our projects
Our continued success is made possible
by Peet’s team of dedicated and hard-
working individuals who operate across
every mainland state and territory and
work diligently on behalf of our investors,
partners and residents.
I would also like to thank the Board and
shareholders of Peet Limited for their
continued valuable support during
the year.
Brendan Gore
Managing Director and
Chief Executive Officer
10 October 2017
14 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 15
Operating and
FINANCIAL REVIEW
The increase in profit was achieved on the back of continuing strong
conditions across the Group’s east coast markets, with price growth
continuing to be achieved, particularly across the Victorian portfolio.
HIGHLIGHTS
52,000 LOTS
TOTAL LAND BANK OF ALMOST
WITH AN ON-COMPLETION VALUE OF AROUND
$13.8 BILLION
3,000
TOTAL LOTS
SOLD
WITH A GROSS VALUE OF
$860.3 MILLION
3,077
TOTAL LOTS SETTLED
WITH A GROSS VALUE
OF $844.3
MILLION
2,186 5
CONTRACTS ON HAND
AS AT 30 JUNE 2017
GROSS VALUE OF
$545.7
MILLION
5
Includes equivalent lots. Excludes englobo sales
16 ANNUAL REPORT 2017 | PEET LIMITED
Aston Craigieburn, VIC
PEET LIMITED | ANNUAL REPORT 2017 17
The Peet Group achieved pleasing results
in FY17 with an operating profit and
statutory profit after tax of $44.8 million
for the year ended 30 June 2017, which
represents an increase of 5% on FY16.
The increase in profit was achieved on
the back of continuing strong conditions
across the Group’s east coast markets,
with price growth continuing to be
achieved, particularly across the Victorian
portfolio. FY17 also saw the level of
enquiries and sales improve across
the Group’s Queensland portfolio,
underpinning an improved performance
from this portfolio.
The Group derived EBITDA of $91.1 million
during FY17, compared to $89.8 million in
FY16, with a margin of 29% (FY16: 32%).
This still solid margin was impacted by
the product mix sold during the year and
the substantial completion in FY16 of
successful projects across the country.
Additionally, FY17 saw a ramping up
of production across the Queensland
portfolio, particularly at Flagstone City,
where the initial focus has been on
building market share and momentum.
The performance has resulted in earnings
per share of 9.1 cents for the year ended
30 June 2017, compared to 8.7 cents per
share in FY16, representing an increase
of 5%.
During the year, Peet announced the
establishment of two new wholesale funds.
These funds involve the co-ownership
of residential land development projects
with Supalai Public Company (a real
estate developer listed on the Thailand
Stock Exchange) – Newhaven in Tarneit
in the high-growth western corridor of
Melbourne, and Redbank Plains less
than 30 kilometres from Brisbane.
These projects are expected to be
strong contributors to the Group’s
earnings over the next decade.
EBTIDA6 COMPOSITION
BY BUSINESS TYPE %
100
17%
33%
22%
29%
21%
80
60
40
20
0
%
33%
50%
36%
31%
30%
30%
36%
48%
41%
43%
FY13
FY14
FY15
FY16
FY17
DEVELOPMENT
FUNDS MANAGEMENT
JVs
EBTIDA6 COMPOSITION
BY GEOGRAPHY %
100
80
60
40
20
0
%
7%
6%
12%
10%
26%
39%
6%
5%
16%
7%
34%
32%
2%
8%
11%
59%
20%
8%
16%
2%
56%
6%
11%
6%
63%
18%
14%
FY13
FY14
FY15
FY16
FY17
WA
VIC
QLD
NSW/ACT
NT
SA
SALES COMPOSITION
BY GEOGRAPHY (LOTS)
3,525
3,229
3,253
3,000
2,308
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
6
Includes effects of non-cash movements
in investments in associates and joint
ventures.
LOTS
FY13
FY14
FY15
FY16
FY17
WA
VIC
QLD
NSW/ACT
NT
SA
In line with its strategy of managing
its pipeline of projects with a focus
on maximising return on capital, Peet
sold an undeveloped englobo parcel in
Rockbank, west of Melbourne, Victoria
for $30.5 million. The sale is subject
to planning-related conditions, with
settlement expected to occur in FY18.
The increase in profits derived during
the year was accompanied by a strong
increase in cash inflow from operations
and a reduction in gearing.
The Group achieved 3,000 lot sales,
with a gross value of $860.3 million,
and 3,077 settlements, with a gross
value of $844.3 million, for the full year,
representing a decrease of 8% and an
increase of 7%, respectively compared
with FY16.
The lower sales reflected, in part, the
substantial completion of successful
projects during 2016 and continuing
subdued conditions in the Western
Australian and Northern Territory
property markets.
During the year, the Group successfully
launched several new estates; Newhaven
and Summerhill in Victoria; Flagstone
City and Eden’s Crossing in Queensland,
Burrabella in New South Wales and
Movida in Western Australia. The activity
generated at these new estates, together
with the continuing strong conditions in
Victoria, helped offset the effects of the
completion of a number of successful
projects in the 2016 financial year, such
as Quarters and Livingston in Victoria,
and Flagstone Rise and Warner Lakes
The Reserve in Queensland.
Approximately 54% of the Group’s
settlements were achieved in the second
half of FY17 and, as at 30 June 2017,
there were 2,186 contracts on hand with
a gross value of $545.7 million, providing
strong momentum heading into the 2018
financial year.
Summerhill Botanic Ridge, VIC
This compares with 2,426 contracts on
hand with a gross value of $545.7 million
at 30 June 2016. While the number of
contracts on hand is down, their value is
the same as last year reflecting strong
price increases achieved across the east
coast portfolio.
Risk management
The Group’s operating and financial
performance is influenced by a number
of risks impacting the property sector.
These include general economic
conditions, government policy influencing
a range of matters including population
growth, household income and consumer
confidence, the employment market,
and land development conditions and
requirements, particularly in relation
to infrastructure and environmental
management.
Global and domestic factors which
may influence capital markets and the
movement of interest rates are also
risks faced by the Group.
The property market is cyclical and, while
the Group is impacted by fluctuations in
the market, it has also proved its capacity
to manage through various cycles over
a very significant period of time.
At an individual project level, residential
property developments also face a
number of risks related to the price and
availability of capital, the timeliness of
approvals, delays in construction, and
the level of competition in the market.
The Group has a long history of managing
these risks at an individual project and
portfolio level and invests appropriately
to ensure it has the systems, skills and
processes in place to manage them.
18 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 19
Project portfolio
The Peet Group’s diversified land bank
is strategically located in the growth
corridors of major cities in every mainland
state and territory. The diversity is
both geographic and across our Funds
Management, Joint Ventures and
Development businesses and enables
Peet to manage the variable market
conditions around the country.
Peet manages and markets high-quality
residential projects, often on behalf of
syndicate, joint venture or co-investment
partners. The Group’s emphasis is on
larger, masterplanned community
projects, underpinning future cash flows
and performance.
As was the case in FY16, in FY17 the
strength of the Group’s east coast
projects, and its Victorian projects in
particular, offset the performance of
its projects in the subdued Western
Australian and Northern Territory markets.
As at 30 June 2017, the Group’s total land
bank was almost 52,000 lot equivalents
with an estimated on-completion value of
approximately $13.8 billion, strategically
weighted to the eastern states and with
more than 80% of all lots within the
Funds Management and Joint Venture
business. The land bank represents
approximately 17 years’ lot supply based
on current sales rates and of note is the
Queensland land bank, representing
almost 17,700 lots, which provides
significant exposure to an improving
market cycle.
At the end of FY17, approximately
70% of the Group’s land bank was
in development and this is expected
to increase to more than 80% in
development by FY19.
The Group will continue to manage its
land bank strategically with a focus on
maximising return on capital employed
and assessing opportunities to selectively
acquire residential land holdings in a
disciplined manner under our funds
management platform and as appropriate
in market conditions. It will also maintain
a focus on cost and debt reduction.
During FY17, the Group launched a
number of new projects with a further
five projects to be launched in the next
two years. Approximately 95% of the
lots in these projects sit within the Funds
Management and Joint Venture business.
These projects have an average duration
of more than 7 years providing visibility
of future earnings and cash flows.
Two of these projects are the 3,300-lot
University of Canberra project in the
ACT which will see a mix of units and
townhouses constructed over the next
15 to 20 years, and the 850-dwelling high
density mixed use development in the
Tonsley Innovation District south west
of Adelaide which will be delivered as
a joint venture with Renewal SA.
The Group will continue to deliver
high-quality, masterplanned communities,
adding value and facilitating additional
investment in amenity and services
wherever possible and deliver a mix
of innovative products to meet market
demand in the growth corridors of
major Australian cities, with a focus
on affordable product.
Key projects in FY18 will include Flagstone
in Queensland, a 12,000-lot community
with a GDV 7 of more than $3.4 billion,
being developed in joint venture with
MTAA Super. This 1,245 hectare
greenfield masterplanned community
Peet entered FY18
with a strong
balance sheet that
will be applied
to bringing into
production significant
opportunities secured
over the last
12 to 18 months.
is situated in the key South East
Queensland growth corridor 38km
south west of Brisbane CBD.
The $1.8 billion, 6,000-dwelling Googong
community in NSW is being developed
in joint venture with the Mirvac Group
and will accommodate three schools,
community and childcare facilities, two
local neighbourhood centres, a major town
centre and 30 hectares of sporting facilities
linked by 200 hectares of open space.
Following the end of the financial year,
in July 2017, Peet was named the
Western Australian Government’s
preferred proponent for final negotiations
as development partner for a major
housing project on a 220-hectare
landholding in Brabham, 22 kilometres
north-east of the Perth CBD which will
be delivered in partnership with the WA
Housing Authority. Peet will establish
a new wholesale fund to jointly develop
the project, with Peet appointed as the
development manager.
Capital management
The Group continued to identify growth
opportunities and to manage its pipeline
of projects with a focus on maximising its
return on capital employed; and continued
its proactive and disciplined approach to
investment in the development of a mix of
product and infrastructure to meet market
demand, particularly in the stronger
performing east coast markets.
The Peet Group maintains a disciplined focus
on capital management, and at 30 June 2017,
the Group’s gearing 8 reduced to 21.4%, from
28.8% at 30 June 2016.
During FY17, the Group achieved a strong
increase in cash inflows from operations
and reduced gearing. At 30 June 2017, the
Group had interest-bearing debt (including
Peet Bonds) of $249.8 million, compared
with $266.9 million at 30 June 2016.
Approximately 89% of the Group’s interest-
bearing debt was hedged as at 30 June
2017, compared with 84% at 30 June 2016.
Dividend payments
Subsequent to year-end, the Directors
declared a final dividend for FY17 of
3.00 cents per share, fully franked.
This brings the total dividend for FY17 to
4.75 cents per share fully franked, which
is an increase of 6% on the FY16 dividend
(4.50 cents per share, fully franked).
The dividend is to be paid on 4 October 2017,
with a record date of 22 September 2017.
The Directors have resolved to keep the
Company’s Dividend Reinvestment
Plan deactivated.
LAND BANK COMPOSITION BY
BUSINESS TYPE (LOTS 9)
60,000
50,000
40,000
30,000
20,000
10,000
0
LOTS
51,726
29,292
12,713
9,721
FUNDS
JVs
DVLP
TOTAL
CONTRACTS ON HAND
BY GEOGRAPHY (LOTS 10)
3,000
2,500
2,000
1,500
1,000
500
0
LOTS
1,956
1,990
2,061
2,426
2,186
FY13
FY14
FY15
FY16
FY17
WA
VIC
QLD
NSW/ACT
NT
SA
CONTRACTS ON HAND
BY GEOGRAPHY (VALUE 10)
600
500
400
300
200
100
0
$
$546m
$546m
$462m
$468m
$441m
FY13
FY14
FY15
FY16
FY17
WA
VIC
QLD
NSW/ACT
NT
SA
7 Gross Development Value
8 Calculated as (Total
interest-bearing liabilities
(including land vendor
liabilities) less cash)/(Total
assets adjusted for market
value of inventory less cash,
less intangible assets),
excluding Syndicates
consolidated under AASB10.
9
Includes equivalent lots.
10 Includes equivalent lots and
excludes englobo sales.
20 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 21
FUNDS
MANAGEMENT
HIGHLIGHTS
1,756
TOTAL LOTS
SOLD
FOR A GROSS VALUE OF
$419.5 MILLION
1,912
TOTAL LOTS SETTLED
FOR A GROSS VALUE
OF $466.6
MILLION
11
EBITDA OF
$36.7 MILLION
P
U
24%
11
EBITDA
MARGIN OF
70%
1,328
12
CONTRACTS ON HAND
WITH A TOTAL VALUE OF
$294.9 MILLION
AS AT 30 JUNE 2017
11 Includes effects of non-cash movements in investments in associates.
12 Includes equivalent lots.
22 ANNUAL REPORT 2017 | PEET LIMITED
Shorehaven Alkimos, WA
PEET LIMITED | ANNUAL REPORT 2017 23
FM SALES COMPOSITION
BY GEOGRAPHY (LOTS)
FM EBITDA 13 COMPOSITION
BY GEOGRAPHY
4%
1%
20%
37%
38%
5%
19%
51%
6%
23%
51%
25%
20%
100
5%
15%
5%
19%
25%
30%
55%
46%
80
60
40
20
0
%
FY13
FY14
FY15
FY16
FY17
4%
16%
31%
49%
5%
2%
19%
31%
10%
25%
26%
43%
39%
2%
10%
58%
3%
15%
60%
30%
22%
FY13
FY14
FY15
FY16
FY17
100
80
60
40
20
0
%
The Group’s Funds Management
business performed solidly in FY17,
with a strong performance from
projects in Victoria and Queensland.”
WA
VIC
QLD
NSW/ACT
SA
WA
VIC
QLD
NSW/ACT
SA
The Peet Group manages a number
of projects on behalf of land syndicates
and under project management and
co-investment arrangements. The Funds
Management portfolio comprises almost
30,000 lots – or 58% of the Group’s total
portfolio – with an on-completion value of
about $7.9 billion.
The Funds Management business
performed solidly in FY17, with the strong
performance of projects in the Victorian
and Queensland markets more than
offsetting the weaker performance
of projects in the subdued Western
Australian market, and the substantial
completion of sales in several syndicate
projects in FY16, including Quarters and
Livingston in Victoria.
The period saw the first full-year of sales
from Cornerstone in Werribee, Victoria,
and Movida in Midvale, Western Australia.
There were 1,756 lots sold during the
year for a gross value of $419.5 million,
compared with 1,978 lots for a gross value
of $481.2 million in FY16, and 1,912 lots
settled for a gross value of $466.6 million,
compared to 1,508 settlements in FY16
with a gross value of $376.7 million.
During FY17, the Funds Management
business provided solid capital-light
earnings representing 36% the Group’s
EBITDA 13. Fee revenue for the year
increased by 16% over the previous year
to $48.3 million and the EBITDA 13 margin
of 70% was up 2% on that achieved in
FY16 (68%).
13 Includes effects of non-cash
movements in investments
in associates.
Riverbank Caboolture, QLD
Hilbert Park, WA
24 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 25
JOINT
VENTURES
HIGHLIGHTS
735
SOLD
TOTAL LOTS
FOR A GROSS VALUE OF
$191.2 MILLION
741
TOTAL LOTS SETTLED
FOR A GROSS VALUE
OF $189.9
MILLION
14
EBITDA OF
$21.2 MILLION
14
EBITDA
MARGIN OF
35%
15
420
CONTRACTS ON HAND
WITH A TOTAL VALUE OF
$112.8 MILLION
AS AT 30 JUNE 2017
14 Includes effects of non-cash movements
in investments in joint ventures.
15 Includes equivalent lots.
The Peet Group has a number of high-profile
joint venture projects across its portfolio,
including The Village at Wellard in WA (WA
Housing Authority), Googong in New South
Wales (Mirvac Group) and Lightsview in
South Australia (Renewal SA).
There were 735 lot sales across the Group’s
Joint Venture projects with a gross value of
$191.2 million, up from 712 lots sales with
a gross value of $172 million in FY16. A total
of 741 lots were settled with a gross value
of $189.9 million, compared to FY16 which
saw 941 lots settled with a gross value
of $218.3 million.
At 30 June 2017, there were 420 contracts
on hand with a gross value of $112.8 million.
The result was that FY17 saw a reduced
contribution from the Group’s Joint Venture’s
predominantly due to the timing of
settlements from Lightsview in SA, and
reduced contribution from The Village at
Wellard in WA in line with WA market
conditions. This has been partially offset by
the commencement of earnings from Eden’s
Crossing in QLD.
At year end, Group’s Joint Venture projects
comprised more than 12,500 lots, with an
estimated on-completion value of just over
$3.7 billion.
The Heights, Durack, NT
JV SALES BY
GEOGRAPHY (LOTS)
JV EBITDA 14 COMPOSITION
BY GEOGRAPHY
21%
32%
28%
14%
100
9%
20%
19%
25%
9%
5%
13%
73%
100
80
60
40
20
0
%
19%
1%
32%
34%
10%
37%
32%
5%
49%
9%
36%
23%
18%
4%
23%
1%
55%
39%
52%
19%
23%
53%
16%
42%
38%
23%
22%
17%
80
60
40
20
0
%
FY13
FY14
FY15
FY16
FY17
FY13
FY14
FY15
FY16
FY17
WA
VIC
QLD
NSW/ACT
NT
SA
WA
VIC
QLD
NSW/ACT
NT
SA
26 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 27
DEVELOPMENT
PROJECTS
HIGHLIGHTS
16
TOTAL LOTS
509
SOLD
FOR A GROSS VALUE OF
$249.6 MILLION
16
424
TOTAL LOTS SETTLED
FOR A GROSS VALUE
OF $187.8
MILLION
EBITDA OF
$43.7 MILLION
17
438CONTRACTS ON HAND
WITH A TOTAL VALUE OF
$138 MILLION
AS AT 30 JUNE 2017
EBITDA
MARGIN OF
23%
Greenlea Baldivis, WA
16 Includes super lots
17 Includes equivalent lots and
excludes Arena englobo sale
There was an increase in contribution
from the Group’s Development business
in FY17, underpinned by the strong
Victorian market and commencement of
settlements from new projects including
Little Green in Melbourne’s high growth
western corridor, and Greenlea Baldivis
south of Perth.
There were 509 lot sales achieved with
a gross value of $249.6 million, compared
with the 563 lot sales with a gross value of
$255.7 million in FY16. A total of 424 lots
were settled with a gross value of
$187.8 million, an increase on FY16, which
saw 417 lots settled with a gross value of
$162.1 million. This included settlement
of the sale of land to the Peet Werribee
Land Syndicate (Cornerstone) and the
settlement of two other super lot parcels.
As at 30 June 2017, there were
438 contracts on hand with a gross
value of $138 million, compared to
488 contracts on hand with a gross value
of $116.4 million as at 30 June 2016.
Revenue growth was supported by strong
price growth across the Victorian projects,
up 25% to $192.8 million. EBITDA was 8%
higher than the previous year, increasing
to $43.7 million in FY17 with an EBITDA
margin slightly down from 26% in FY16,
to 23%.
At year end, the Peet Group’s
Development projects comprised more
than 9,500 lots, with an estimated
on-completion value of almost $2.2 billion.
DEVELOPMENT SALES
COMPOSITION BY GEOGRAPHY (LOTS16)
DEVELOPMENT EBITDA
COMPOSITION BY GEOGRAPHY
100
80
60
40
20
0
%
1%
3%
60%
2%
5%
70%
10%
3%
49%
10%
8%
1%
74%
10%
4%
64%
35%
38%
23%
22%
15%
FY13
FY14
FY15
FY16
FY17
96%
1%
1%
91%
2%
17%
78%
2%
3%
43%
53%
27%
2%
51%
20%
3%
7%
4%
FY13
FY14
FY15
FY16
FY17
100
80
60
40
20
0
%
WA
VIC
QLD
NSW/ACT
SA
WA
VIC
QLD
NSW/ACT
SA
28 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 29
SUSTAINABILITY
Sustainability is at the heart of how
Peet creates communities and our
developments are helping to shape
some of the newest and fastest growing
corridors in Australia. Our holistic
approach to planning and design balances
social, economic and environmental
considerations to ensure these new
communities reflect the values of
Australia’s diverse society and appeal
to a broad spectrum of homebuyers.
As industry leaders, our planning and
investment is a catalyst driving the
essential services and quality facilities
that underpin long-term community
health and prosperity. Innovative,
accessible housing is sensitively
integrated within the natural environment
and closely orientated to existing work
centres and neighbouring communities.
During the 2017 financial year, our
commitment to sustainability was again
acknowledged with The Village at Wellard,
in Western Australia, receiving the Best
Sustainable Urban Development Award
at the UDIA (WA) Awards for Excellence
and the Value Adding award at the
2016 National Growth Areas Alliance
Congress Awards.
Parkindula Precinct at Bluestone, Mt Barker (Artist’s Impression)
Other highlights during the
2017 financial year included:
History unearthed at Googong
Extensive heritage surveys associated
with construction planning at Googong,
near Canberra, continue to unearth
important aspects of the district’s history
including the remnants of the region’s
first school. The schoolhouse was built in
the 1880s and operated for 20 or 30 years
but all records of its location had been
lost. An archaeological dig, in partnership
with the Australian National University,
excavated artefacts from the rare site
which will be vested with The Anglican
School Googong to teach children about
their local history.
Lakelands Town Centre
After years of planning and negotiation,
the $50 million Lakelands Shopping
Centre opened its doors in June 2017.
The 20,000sqm centre brings substantial
new amenity and jobs to the urban strip
between Rockingham and Mandurah, one
of the fastest growing regions in Western
Australia. Located inside Lakelands
Private Estate, the new retail centre has
attracted market leaders Coles, K-Mart
and ALDI, along with 40 specialty stores
and extensive community services,
including a childcare centre, library,
medical services, restaurants, fast food
outlets and a 24/7 gym.
First lots released at Newhaven
Peet responded to growing affordability
pressures in the Victorian housing market
with the release, this year, of a new
community in Melbourne’s western
suburbs. Newhaven in Tarneit will
significantly add to the supply of
affordable and accessible product
available to entry-level homebuyers and
expand Peet’s footprint in this developing
region. The Newhaven masterplan will
deliver 1,200 homes and includes
provision for a primary school.
Traffic planning at Riverbank
Peet and Moreton Bay Regional Council
have agreed to jointly fund a $16 million
bridge at Riverbank, north of Brisbane.
The thoroughfare will form part of a new
arterial road network helping to relieve
mounting traffic pressure around the
satellite township of Caboolture. The
two-lane bridge will cross Cundoot Creek,
a tributary of the Caboolture River,
creating a new eastern entrance from
Peet’s Riverbank community directly onto
the Bruce Highway (M1), and significantly
reduce travel time to Brisbane CBD.
Parkindula Village at Bluestone
Parkindula Village, the historic homestead
and stables at Bluestone, Mt Barker, in
the Adelaide Hills, is being given a fresh
lease on life. The renovation will preserve
and enhance the facility which is one of
the region’s key heritage assets.
New community meeting areas will
be incorporated, to be managed by
Mount Barker District Council, and
the building will also be used as a
Sales and Information Centre for the
Bluestone development.
First school opens at Shorehaven
The first school at Shorehaven at Alkimos
opened for the start of the 2017 school
year. Northshore Christian Grammar
School welcomed its first intake of
kindergarten to Year 6 students. The new
facility brings employment opportunities
and quality education and convenience
to families in this major residential
community on Perth’s north coast.
Flagstone pioneers move in
Flagstone, in Queensland, welcomed
its first residents this year. There has
been strong demand from “pioneer”
homebuyers keen to get an early footing
in the new satellite city which is the
centre of one of the biggest new
greenfields residential growth areas
in Australia. The first neighbourhood
comprises approximately 300 lots of
which almost 80% were sold by year
end. Over the next 25 years, the massive
Flagstone City masterplan is expected
to deliver 12,000 homes and a fully-
equipped 126 hectare CBD.
30 ANNUAL REPORT 2017 | PEET LIMITED
Lakelands Shopping Centre
PEET LIMITED | ANNUAL REPORT 2017 31
Peet
IN THE COMMUNITY
At Peet we believe that community living is much
more than finding an address for your new home
– it’s choosing the lifestyle you’d like to live.
We plan our communities around people – with
places to meet and play, pathways connecting
friends and families, retail precincts and
commercial areas with all life’s conveniences,
and shared community facilities that encourage
a diverse and healthy social life.
It’s also about choice. Being able to choose the
home you want, no matter what your age or
stage of life, and being surrounded by quality
homes in a well-maintained neighbourhood.
Just some of the highlights in the
2017 financial year include:
Community and corporate partnerships
Peet’s community partnerships program is
designed to provide grants that build capacity in
our own communities and in the regions in which
our residents and their families become involved.
Throughout the 2017 financial year we were
pleased to support more than 30 local groups and
organisations, and to continue working alongside
our five corporate partners; Military Art Program
Australia, Alongside, Legacy Australia’s Operation
Legacy Australia Kokoda Challenge 2017,
Anglicare WA’s Peet Big Lunch and the Santos
UCI Tour Down Under.
Local groups and organisations supported include
sporting teams like the Googong Hogs AFL Club,
Lightsview Cycling Team, the Swimming WA –
Open Water Swim series event at Shorehaven
at Alkimos and the Devon Meadows Cricket Club;
community groups such as the Mt Barker Apex
Club and Two Rocks Yanchep Assisted Cancer
Travels; environmental initiatives like the Tarneit
College community garden; Friends of the
Spectacles (FOTS) and Lakelands Go Green team.
Boogong at Googong
One of the largest Peet community events held
around the country during the year attracted more
than 15,000 people to Canberra’s biggest fancy
dress party as Halloween descended on Googong
for the third annual Boogong extravaganza.
Thousands of families came out to play, complete
with elaborate costumes and special effects
makeup, to share the unique community event.
@peetcommunities connected
The Peet Communities Facebook page was
launched in February 2017 as a space for all
stakeholders to come together, be inspired, learn
and share ideas. The page is used to share stories
and photos from our residents, provide tips to help
people through the home buying, building and
decorating process, and to find out more about
what makes living in a Peet community so great.
32 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 33
Boogong Event at Googong
Joining forces with the ‘experts in fun’
Our commitment to innovation keeps us
looking for new ways to deliver exciting
lifestyle opportunities for residents in our
communities across the country. During
the year, Peet joined forces with ‘experts
in fun,’ the Mamma Knows Melbourne
team, in an exclusive partnership to guide
the design and development of the parks
and playgrounds at Cornerstone and
Newhaven in the west, and Aston and
Aspect in the north.
Mamma Knows Melbourne partnership
Art for the frontline
Peet is very proud to support the
work of Military Art Program Australia
(MAPA) which uses art as its base
to help current and former serving
Defence Force veterans deal with
issues that come from active service.
MAPA provides a monthly series of
free art classes which cater for skills
from beginners to advanced allowing
maximum participation and learning
for all levels, puts on an annual art
exhibition, and during FY17 launched
the #ArtintheField project to extend
its program to those on operations.
Military Art Program Australia
34 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 35
Mamma Knows Melbourne partnership
Military Art Program Australia
Promoting
HEALTHY
ACTIVE LIFESTYLES
Peet recognises that Australian lifestyles are evolving
and we are creating communities that respond to the
changing needs of homebuyers at all stages of life.
More than ever, residents are making the most of
the shared spaces – parks and open spaces that are
designed as a kind of ‘communal backyard’ with
places to get active and also relax with parklands,
waterways, walking and cycling trails, BBQs,
shelters, and play equipment.
Every Peet community is different, and our parks
and open spaces reflect that individual style.
Some of the highlights during
the 2017 financial year
included:
Spring Mountain’s first park
A shortage of acreage building lots, less
than an hour’s drive from Brisbane, has
sparked strong demand for lots at the
Spring Mountain Estate, in Greenbank.
Despite their huge backyards, residents
celebrated the community’s first park and
the chance to meet their neighbours at
a community barbecue. The picturesque
recreation space, set in rolling green
lawns under the shade of massive
gumtrees, includes a half soccer field,
a half basketball court, picnic facilities
and a playground.
Gumnut Park adventure play
at Googong
Googong’s park designers were
determined to bring adventure back into
educational play with the opening of
their newest creation at Gumnut Park.
The fantasy space features giant gumnut-
shaped climbing pods and outdoor
ping pong tables. It is one of more than
23 parks and playgrounds in the Googong
masterplan that will account for almost
$90 million being invested in landscaping
over the life of the project.
Colour blocks at Golden Bay
A landmark new playground at Golden
Bay features large distinctive coloured
building blocks and a life-size block
tractor. Custom-designed by landscape
architects EPCAD it’s the only one of its
kind in Western Australia and also offers
shade structures, a large lawn kick-about
area with a dedicated yoga deck, and
seating area for adults as well as three
trampolines, a tunnel slide, climbing
structures, a rope bridge and sand play
areas – all covered by shade structures.
Gumnut Park, Googong
Destination Aspect
The $2 million flagship Destination Park
at Apsect in Greenvale covers almost
two-hectares and includes an adventure
playground, picnic shelters with barbeque
facilities, walking paths, amphitheatre-
style steps and a large grassed area
where people can enjoy the views
over the Greenvale Reservoir to the
Melbourne CBD.
Central Precinct at Lightsview
At five-hectares, the new $7 million
Central Precinct at Lightsview will
contribute about a third of the open space
in Adelaide’s newest suburb and provide
an exciting variety of areas for recreation
and relaxation – including the formal lake,
a youth precinct, playgrounds, 10 wetlands
and kick-about areas. It incorporates best
practice design features from the National
Heart Foundation’s ‘Healthy by Design’
policy which underpins the Lightsview
masterplan and ensures the suburb is
highly connected, safe for pedestrians
and cyclists, promotes health and
well-being and encourages a reduced
reliance on cars.
36 ANNUAL REPORT 2017 | PEET LIMITED
Golden Bay, WA
PEET LIMITED | ANNUAL REPORT 2017 37
Corporate
CALENDAR
22 September 2017
Record date for FY17 dividend
4 October 2017
Payment date for FY17 dividend
5 October 2017
Interest payment date for Peet Bond holders (Series 2, Tranche 1)
27 October 2017
Annual report and Notice of AGM dispatched to investors
29 November 2017
2017 Peet AGM – Parmelia Hilton Perth Hotel
18 December 2017
Interest payment date for Peet Bond holders (Series 1, Tranche 1)
5 January 2018
Interest payment date for Peet Bond holders (Series 2, Tranche 1)
February 2018
Release of results for the half year ended 31 December 2017
5 April 2018
Interest payment date for Peet Bond holders (Series 2, Tranche 1)
18 June 2018
Interest payment date for Peet Bond holders (Series 1, Tranche 1)
38 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 39
FINANCIALS
2017
CONTENTS
41 Directors’ Report
68 Auditor’s Independence Declaration
69 Corporate Governance Statement
70 Financial Report
107 Directors’ Declaration
108
Independent Auditor’s Report to the Members
114 Securityholder Information
118 Corporate Directory
Directors’ Report
Your Directors present their report on the Consolidated Entity consisting of Peet Limited (‘the Parent Entity’ or ‘the
Company’) and the entities it controlled at the end of, or during, the financial year ended 30 June 2017 (‘the Group’).
1. DIRECTORS
The following persons were Directors of the Company during part or the whole of the financial year and up to the date
of this report:
TONY LENNON
FAICD
NON-EXECUTIVE CHAIRMAN
Tony Lennon has extensive commercial experience particularly in the property industry.
Mr Lennon is a Fellow of the Australian Institute of Company Directors and an Associate of the Australian Property
Institute. A former President of the Real Estate Institute of Western Australia, he has also served as a Councillor of
the national body, the Real Estate Institute of Australia.
His industry service has included State Government appointed roles as Chairman of both the Perth Inner City Living
Taskforce and the Residential Densities Review Taskforce. He was also a Member of the Commercial Tribunal
(Commercial Tenancies).
Mr Lennon is a former President of Western Australia’s Shire of Peppermint Grove and Deputy Chairman of the National
Board of the Australia Day Council. He is also a former Chairman of the Curtin Aged Persons Foundation and a founding
Director of the Wearne and the Riversea Hostels for the Aged, both of which are locally initiated and managed
community facilities.
BRENDAN GORE
BCOMM, FCPA, FCIS, FGIA, FAICD
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
Brendan Gore has been Managing Director and Chief Executive Officer (“CEO”) of Peet Limited since 2007 – successfully
leading the company through the global financial crisis, expanding its land bank and developing key new partnerships with
Government and major institutions.
Mr Gore’s appointment to the position of Managing Director and CEO followed experience in two other key executive
roles within the Company. He began with Peet as Chief Financial Officer and played a key role in expanding the Company’s
scope of activities and growing its core residential development and land syndication businesses; and in January 2007
he was appointed inaugural Chief Operating Officer.
Mr Gore’s period in senior executive roles at Peet Limited was preceded by more than two decades’ experience in
a range of senior corporate, commercial and operational positions where he gained extensive experience in strategy
development and implementation, as well as expertise in debt and equity markets.
He developed a reputation as a strong leader, with operational responsibilities across local and State Government
relations, environmental and sustainability management and occupational health and safety.
Mr Gore is a qualified accountant and a Fellow of CPA Australia. He is also a Fellow of the Australian Institute of
Company Directors and a Fellow of the Governance Institute of Australia.
40 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 41
1. DIRECTORS (CONTINUED)
ANTHONY LENNON
BA, GRAD DIP BUS ADMIN, MAICD
NON-EXECUTIVE DIRECTOR
1. DIRECTORS (CONTINUED)
VICKI KRAUSE
BJURIS LLB W.AUST, GAICD
INDEPENDENT NON-EXECUTIVE DIRECTOR
Anthony Lennon joined Peet in 1991 and became a Director in 1996.
Vicki Krause was appointed to the Board of Peet Limited in April 2014.
He moved to Victoria to establish Peet’s operations in Australia’s eastern states and oversaw significant expansion.
An experienced commercial lawyer, Ms Krause had a 25-year career as a senior corporate executive with the
Before joining the Company, Mr Lennon worked in the United Kingdom, where he completed his post-graduate Diploma
Wesfarmers Group, including seven years as its Chief Legal Counsel.
in Business Administration while on a Graduate Management Training Scheme with major international construction and
She supported successful outcomes in numerous significant acquisitions (including listed companies, trade sales and
development company, John Laing PLC. His time with this global company saw him gain valuable experience in
a privatisation) and divestments.
property planning, marketing, feasibility analysis and project management.
As Chief Legal Counsel and a member of the Wesfarmers Executive Committee, Ms Krause led a large legal team and
Mr Lennon’s responsibilities during his career with Peet included project management, broadacre acquisitions,
was responsible for the provision of legal advice and strategic planning in relation to the management of legal risk in the
marketing and financing and a six-year term as Chairman of one of WA’s largest conveyancing businesses.
Wesfarmers Group with key outputs including the evaluation and completion of major business projects and major
Until his transition from Executive to Non-executive Director on 27 August 2012, Mr Lennon was Peet Limited’s
supply arrangements.
National Business Development Director.
TREVOR ALLEN
BCOMM (HONS), CA, FF, FAICD
INDEPENDENT NON-EXECUTIVE DIRECTOR
Trevor Allen joined Peet in April 2012.
Ms Krause has completed the PMD Management Course at Harvard Business School.
She is currently a director of Western Power and Chair of its People and Performance Committee.
ROBERT MCKINNON
FCPA, FCIS, FGIA, MAICD
INDEPENDENT NON-EXECUTIVE DIRECTOR
Mr Allen has almost 40 years’ experience in the corporate and commercial sectors, primarily as a corporate and financial
Appointed as Non-executive Director in May 2014, Bob McKinnon has 40 years’ experience in finance and general
adviser to Australian and international public and privately owned companies.
management positions in the light manufacturing and industrial sectors in Australia, New Zealand and Canada.
Mr Allen is an Independent Non-Executive Director of Freedom Foods Group Limited, where he chairs its Audit and Risk
He is the former Managing Director of Austal Ships and Fleetwood Corporation Limited, and spent 28 years with
Management Committee and is a member of its Remuneration Committee. He is also an Alternate Director, Company
Capral Aluminium (formerly Alcan Australia) in various financial and senior executive positions.
Secretary and Public Officer of Australian Fresh Milk Holdings Pty Ltd and Fresh Dairy One Pty Ltd. These are joint
venture companies, which have been formed to hold various dairy sector investments as part of the Freedom Group.
He is a Non-executive Director of Eclipx Limited, where he chairs its Audit Committee and is a member of its
Remuneration Committee. He is also a Non-executive Director of Yowie Group Limited, where he has recently been
acting as Interim Chair.
Mr Allen is also Chairman of Brighte Capital Pty Limited, a start-up company financing residential solar and batteries.
Prior to Mr Allen’s non-executive roles, he had senior executive positions including Executive Director – Corporate
Finance at SBC Warburg (now part of UBS), at Baring Brothers and as a Corporate Finance Partner at KPMG for
12 years. At the time of his retirement from KPMG in 2011 he was the lead partner in its National Mergers and
Acquisitions group.
From 1997 – 2000, he was Director – Business Development for Cellarmaster Wines, having responsibility for the
integration and performance of a number of acquisitions made outside Australia in that period.
Mr McKinnon was also a Non-executive Director of Bankwest until November 2012 and of Brierty Limited until
September 2011.
His other current directorships include Chairman of Tox Free Solutions Limited and Non-executive Director of
Programmed Maintenance Services Limited.
2. PRINCIPAL ACTIVITIES
The Group acquires, develops and markets residential land, predominantly under a capital-efficient funds
management model.
Peet was founded in Western Australia in 1895 and has expanded over the years to become Australia’s largest
pure-play residential developer. Peet has been listed on the ASX since 2004 and is focused on creating high-quality
master-planned residential communities for homebuyers across Australia, and achieving the best possible results
for its shareholders, investors and partners who include State and Federal Government agencies and major
Australian institutions.
The Group employs approximately 240 people in offices throughout Australia. As at 30 June 2017, the Group managed
and marketed a land bank of approximately 52,000 lots in the growth corridors of major mainland Australian cities.
There was no significant change in the nature of the activities during the year.
42 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 43
3. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS
3. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
OPERATING AND FINANCIAL REVIEW
KEY RESULTS 1
• Operating profit 2 and statutory profit 3 after tax of $44.8 million, up 5%
• Earnings per share of 9.1 cents, up 5%
• FY17 dividends of 4.75 cents per share, fully franked, up 6%
• Revenue 4 of $311.4 million with 3,077 lots settled
• EBITDA 5 of $91.1 million, up 2%
• EBITDA 5 margin of 29%
• 2,186 6 contracts on hand as at 30 June 2017
• Gearing 7 of 21.4%
FINANCIAL COMMENTARY
OPERATIONAL COMMENTARY
The Group achieved 3,000 sales (with a gross value of $860.3 million) and 3,077 settlements (with a gross value of
$844.3 million) for the full year, representing a decrease of 8% and an increase of 7%, respectively compared with FY16.
During the year, the Group successfully launched a number of new estates including Cornerstone and Newhaven in
Victoria, Flagstone City and Eden’s Crossing in Queensland, Mt Pleasant in NSW/ACT and Movida in Western Australia.
Together with the continuing strong conditions in Victoria, the activity from these new estates partially offset the
completion of successful projects such as Quarters and Livingston in Victoria and Flagstone Rise and Warner Lakes
The Reserve in Queensland.
Approximately 54% of the Group’s settlements were achieved in the second half of FY17 and, as at 30 June 2017,
there were 2,186 8 contracts on hand, with a gross value of $545.7 million, providing strong momentum into FY18.
This compares with 2,426 contracts on hand with a gross value of $545.7 million at 30 June in 2016. While the number
of contracts on hand are down, their value is the same as last year reflecting, in part, strong price increases achieved
across the east coast portfolio and the product mix sold during the year.
The Peet Group achieved an operating profit 2 and statutory profit 3 after tax of $44.8 million for the year ended 30 June
Funds management projects
2017, which represents an increase of 5% on FY16.
The increase in profit was achieved on the back of continuing strong conditions across the Group’s east coast markets,
with price growth continuing to be achieved, particularly across the Victoria portfolio. FY17 also saw the level of enquiries
and sales improve across the Group’s Queensland projects, underpinning an improved performance from this portfolio.
The Group derived EBITDA 5 of $91.1 million during FY17, compared to $89.8 million in FY16, with a margin of 29%
(FY16: 32%). The margin is always impacted by the product mix developed and sold in line with prevailing market
conditions during the year. The FY17 margin was also affected by the substantial completion in FY16 of several
successful projects across the country. Additionally, FY17 saw a ramping up of production across the Queensland
portfolio, particularly at Flagstone, where the initial focus has been on building market share and momentum.
The performance has resulted in earnings per share of 9.1 cents for the year ended 30 June 2017, compared to
8.7 cents per share in FY16, representing an increase of 5%.
The Group’s Funds Management business performed solidly in FY17, with the strong performance of projects in the
Victorian and Queensland markets more than offsetting the performance of projects in the weaker Western Australia
market and the substantial completion of sales in several syndicates in FY16 (Quarters (Vic) and Livingston (Vic)).
FY17 also saw the first full-year of sales from the Cornerstone (Vic) and Movida (WA) projects.
• 1,756 lots sold for a gross value of $419.5 million, compared with 1,978 lots ($481.2 million) in FY16.
• 1,912 lots settled for a gross value of $466.6 million, compared with 1,508 lots ($376.7 million) in FY16.
• 1,328 contracts on hand 9 as at 30 June 2017 with a total value of $294.9 million, compared with 1,510 contracts 9
($314.7 million) as at 30 June 2016.
• EBITDA 10 of $36.7 million compared with $29.6 million in FY16.
• EBITDA 10 margin of 70%, compared with 68% in FY16.
During the year, Peet announced the establishment of two new wholesale funds. These funds involve the co-ownership
Development projects
of residential land development projects with Supalai Public Company, a real estate developer listed on the Thailand
Stock Exchange, and projects in the strong western growth corridor of Melbourne (Newhaven, Tarneit) and Redbank
Plains (Eden’s Crossing) less than 30 kms from Brisbane. These projects are expected to be strong contributors to the
Group’s earnings over the next decade.
The increase in contribution from the Group’s Development business is underpinned by the strong Victorian market
and the commencement of settlements from new projects. The Aston (Vic) project made a significant contribution to
earnings during the year and settlement revenue commenced to be received from the Little Green (Vic) and Greenlea
(WA) projects. The settlement of the sale of land to the Peet Werribee Land Syndicate (Cornerstone, Vic) and the
In line with its strategy of managing its pipeline of projects with a focus on maximising return on capital, Peet sold an
settlement of super lot parcels also contributed positively to FY17 performance.
undeveloped englobo parcel in Rockbank, west of Melbourne, Victoria for $30.5 million. The sale is subject to planning-
related conditions, with settlement expected to occur in FY18.
The increase in profits derived during the year was accompanied by a strong increase in cash inflow from operations
and a reduction in gearing to 21.4% – at the lower end of the Group’s target range of 20% to 30%.
• 509 lots sold for a gross value of $249.6 million, compared with 563 lots ($255.7 million) in FY16.
• 424 lots settled for a gross value of $187.8 million, compared with 417 lots ($162.1 million) in FY16.
• 438 contracts on hand 8 as at 30 June 2017 with a total value of $138.0 million, compared with 488 contracts 8
($116.4 million) as at 30 June 2016.
• EBITDA 10 of $43.7 million compared with $40.3 million in FY16.
• EBITDA 10 margin of 23%, compared with 26% in FY16.
1 Comparative period is 30 June 2016, unless stated otherwise. The non-IFRS measures have not been audited.
2 Operating profit is a non-IFRS measure that is determined to present the ongoing activities of the Group in a way that reflects its operating performance. Operating profit includes the effects of non-cash
movements in investments in associates and joint ventures totalling $15.3 million (FY16: $16.7 million). Operating profit excludes unrealised fair value gains/(losses) arising from the effect of revaluing assets
and liabilities and adjustments for realised transactions outside the core ongoing business activities.
3 Statutory profit after tax means net profit measured in accordance with Australian Accounting Standards, attributable to the owners of Peet Limited.
4
Included is statutory revenue of $296.0 million (FY16: $268.1 million) and share of net profits from associates and joint ventures of $15.3 million (FY16: $16.7 million).
5 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures totalling $15.3 million (FY16: $16.7 million).
6
7 Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash)/(Total assets adjusted for market value of inventory less cash, less intangible assets), excluding Syndicates consolidated
Includes equivalent lots. Excludes englobo sales.
under AASB10.
Includes equivalent lots. Excludes englobo sales.
Includes equivalent lots.
8
9
10 EBITDA is a non-IFRS measure that includes effects of non-cash movements in associates and joint ventures totalling $15.3 million (FY16: $16.7 million).
44 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 45
3. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
3. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
Joint arrangements
DIVIDENDS
The reduced contribution from the Group’s Joint Arrangements business in FY17 is predominantly due to the timing of
Subsequent to the year end, the Directors declared a final dividend for FY17 of 3.0 cents per share, fully franked. This
settlements from Lightsview (SA) and reduced contributions from The Village at Wellard (WA) in line with WA market
brings the total dividend for FY17 to 4.75 cents per share, fully franked, which is an increase of 6% on the FY16 dividend
conditions. This has been partially offset by the commencement of earnings from Eden’s Crossing (Qld).
(4.5 cents per share, fully franked). The dividend is to be paid on Wednesday, 4 October 2017, with a record date of
• 735 lots sold for a gross value of $191.2 million, compared with 712 lots ($172.0 million) in FY16.
• 741 lots settled for a gross value of $189.9 million, compared with 940 lots ($218.3 million) in FY16.
Friday, 22 September 2017.
The Directors have resolved to keep the Company’s Dividend Reinvestment Plan deactivated.
• 420 contracts on hand 11 as at 30 June 2017 with a total value of $112.8 million, compared with 428 contracts 11
GROUP STRATEGY
($114.6 million) as at 30 June 2016.
• EBITDA 12 of $21.2 million compared with $28.3 million in FY16.
• EBITDA 12 margin of 35%, compared with 40% in FY16.
Land portfolio metrics
Lot sales
Lot settlements
Contracts on hand as at 30 June 13
– Number
– Value
CAPITAL MANAGEMENT
FY17
3,000
3,077
2,186
FY16
3,253
2,865
2,426
$545.7 million
$545.7 million
Change
(7.8%)
7.4%
(9.9%)
–
The Peet Group maintains a disciplined focus on capital management. During FY17, the Group achieved a strong
increase in cash inflows from operations and reduced gearing 14 to 21.4%, from 28.8% at 30 June 2016.
The Group will continue to target the delivery of shareholder value and quality residential communities around Australia
by leveraging its land bank; working in partnership with wholesale, institutional and retail investors; and continuing to
meet market demand for a mix of product in the growth corridors of major Australian cities, with a primary focus on
affordable product.
Key elements of the Group’s strategy for the year ahead and beyond include:
• continuing to deliver high-quality, masterplanned communities, adding value and facilitating additional investment
in amenity and services wherever possible;
• managing the Group’s land bank of approximately 52,000 with a focus on maximising return on capital employed;
• continuing to assess opportunities to selectively acquire residential land holdings in a disciplined manner under our
funds management platform and as appropriate in market conditions; and
• maintaining a focus on cost and the level of debt.
FY18 will see the commencement of development of a further three projects in key markets across Australia.
Subsequent to the year end, Peet announced that it had been named the Western Australian Government’s preferred
proponent for final negotiations as development partner for a housing project on a 220-hectare landholding in Brabham
At 30 June 2017, the Group had interest-bearing debt (including Peet Bonds) of $249.8 million, compared with
– 22 kilometres from the Perth CBD. As part of the Brabham joint venture, Peet will establish a new fund with a
$266.9 million at 30 June 2016. Approximately 89% of the Group’s interest-bearing debt was hedged as at 30 June
wholesale investor to jointly develop the project, with Peet appointed as the development manager.
2017, compared with 84% at 30 June 2016.
Peet enters FY18 with a strong balance sheet that will be applied towards the funding of significant opportunities
secured over the last 12 to 18 months, and the development of existing projects. These include the Tonsley urban
renewal project in SA, the University of Canberra project in ACT and the Brabham project in WA. These projects are
expected to be long-term drivers of earnings in the years ahead.
Subsequent to 30 June 2017, Peet issued $50 million of Series 2, Tranche 1 Peet Bonds, which further diversifies
the Group’s debt structure and increases the weighted average maturity of Peet’s debt to more than three years.
RISKS
The Group’s operating and financial performance is influenced by a number of risks impacting the property sector.
These include general economic conditions, government policy influencing a range of matters including population
growth, household income and consumer confidence, the employment market, and land development conditions
and requirements, particularly in relation to infrastructure and environmental management.
Global and domestic economic factors which may influence capital markets and the movement of interest rates are
also risks faced by the Group.
The property market is cyclical and, while the Group is impacted by fluctuations in the market, it has also proved its
capacity to manage through various cycles over a very significant period of time.
At an individual project level, residential property developments also face a number of risks related to the price and
availability of capital, the timeliness of approvals, delays in construction, and the level of competition in the market.
The Group has a long history of managing these risks at an individual project and portfolio level.
The Group’s financial risk management policies are set out in note 16 to the Financial Report.
Includes equivalent lots.
11
12 EBITDA is a non-IFRS measure that includes effects of non-cash movements in associates and joint ventures totalling $15.3 million (FY16: $16.7 million).
13
14 Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash)/(Total assets adjusted for market value of inventory less cash, less intangible assets), excluding Syndicates consolidated
Includes equivalent lots. Excludes englobo sales.
under AASB10.
46 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 47
3. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
7. DIVIDENDS
OUTLOOK
The Peet Group’s portfolio of residential development landholdings, supported by a strong balance sheet, is well
In August 2016, the Directors declared a final dividend of 2.75 cents per share, fully franked, in respect of the year
ended 30 June 2016. The dividend of $13.5 million was paid on Friday, 14 October 2016.
positioned for sustainable long-term growth and the outlook is generally supported by market fundamentals with
In February 2017, the Directors declared an interim dividend of 1.75 cents per share, fully franked, in respect to the year
sustained low interest rates and modest economic growth.
then ending 30 June 2017. The dividend of $8.6 million was paid on Friday, 21 April 2017.
The Australian residential property market conditions continued to differ across the states during FY17 and this is
Subsequent to 30 June 2017, the Directors have declared a final dividend of 3.00 cents per share, fully franked, in
expected to continue during FY18:
respect to the year ended 30 June 2017. The dividend is to be paid on Wednesday, 4 October 2017, with a record date
• conditions across Victoria, ACT/New South Wales and South Australia are expected to remain supportive;
• Western Australia, while stabilising, is expected to remain subdued throughout FY18 and into FY19; and
• the Queensland residential market is expected to continue to improve due to its relative affordability.
The Group has moved into FY18 well-positioned to target growth on FY17 earnings, subject to market conditions
of Friday, 22 September 2017.
The Directors have resolved to keep the Company’s Dividend Reinvestment Plan deactivated.
8. ENVIRONMENTAL REGULATION
and the timing of settlements, with earnings expected to be weighted to the second half.
The Group is subject to environmental regulation by way of the Environment Protection and Biodiversity Conservation
4. EARNINGS PER SHARE
Basic and diluted earnings per share
2017
Cents
9.14
2016
Cents
8.70
Basic earnings per share is calculated after income tax expense based on the weighted average number of shares on
issue for the year ended 30 June 2017. The weighted average number of shares on issue used to calculate earnings per
share is discussed at note 7 to the Financial Report.
5. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the year.
Act 1999 in respect of its land subdivision activities nationally, as well as other environmental regulations under both
Commonwealth and State legislation.
The Group is not aware of any breaches of environmental regulations in respect of its activities. However, from time
to time, statutory authorities make enquiries, issue notices requiring documents and/or material to be provided, and
undertake investigations or audits to confirm compliance with relevant regulations.
GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTS
The Group may be subject to the reporting requirements of the National Greenhouse and Energy Reporting Act 2007.
This requires the Group to report its annual greenhouse gas (GHG) emissions and energy use if it has operational control
of facilities (sites) that emit greenhouse gases, produce energy, or consume energy at or above the specified GHG
emission and energy thresholds per financial year.
The Group is not required to register and report to the Clean Energy Regulator as the Group does not have operational
control for each of its projects to the relevant contractor undertaking the works, and the remainder of the Group’s
activities fall below the reporting thresholds for the FY17 reporting period.
6. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
On 4 July 2017, it was announced that Peet Limited (“Peet”) had been named the Western Australian Government’s
9. INFORMATION ON DIRECTORS AND GROUP COMPANY SECRETARY
preferred proponent for final negotiations as development partner for a housing project on a 220-hectare landholding in
Please refer to the Board of Directors section of this report for information on Directors.
Brabham – 22 kilometres from the Perth CBD. The Brabham joint venture will potentially yield more than 3,000 dwellings,
schools and neighbourhood shops and recreational areas. As part of this joint venture, Peet will establish a new wholesale
fund with a wholesale investor to jointly develop the project, with Peet appointed as the development manager.
On 5 July 2017, Peet announced the close of the issue of 500,000 Series 2, Tranche 1 Peet Bonds, raising a total of
$50 million.
No other matters or circumstances have arisen since the end of the financial year, which have significantly affected or
may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group
in subsequent financial years.
GROUP COMPANY SECRETARY
Dom Scafetta is a Chartered Accountant who has worked with Peet Limited since 1998.
Mr Scafetta began his career with major accounting firm Coopers & Lybrand (now PricewaterhouseCoopers) after
completing a commerce degree in 1993. He held a senior role with the organisation in its Business Services division
and advised a range of clients on accounting, taxation and general business matters.
After four years at Coopers & Lybrand, Mr Scafetta joined Peet as Company Accountant and Company Secretary,
which also required him to act as Company Secretary for the Company’s various syndicates and subsidiaries. Prior to
Peet being listed on the Australian Securities Exchange, Mr Scafetta was appointed Chief Financial Officer and served
in that role until February 2005, when he was appointed as Company Secretary of Peet Limited.
48 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 49
10. DIRECTORS’ MEETINGS
12. REMUNERATION (CONTINUED)
The number of meetings of Directors (including meetings of committees of Directors) held during the year and the
While the statutory financial statements show total revenue of $296.0 million and earnings before interest, tax,
number of meetings attended by each Director were as follows:
depreciation and amortisation (EBITDA) of $91.1 million, Peet management remains responsible for a greater scale
Director
Board of
Directors
Audit & Risk Management
Committee
Remuneration
Committee
Nomination
Committee
Entitled
to Attend
Attended
Entitled
to Attend
Attended
Entitled
to Attend
Attended
Entitled
to Attend
Attended
A W Lennon*
B D Gore
A J Lennon*
T J Allen*
V Krause
R J McKinnon
13
13
13
13
13
13
12
13
11
10
13
13
–
–
5
5
–
5
–
–
5
5
–
5
–
–
–
3
3
3
–
–
–
3
3
3
1
1
1
1
1
1
1
1
1
1
1
1
* Directors were absent due to calling of non-scheduled meetings or the rescheduling of meetings which clashed with prior commitments.
11. RETIREMENT, ELECTION AND CONTINUATION IN OFFICE OF DIRECTORS
of business.
In addition to its own land development projects, Peet is also responsible for the management of a significant portfolio
of land development projects held within its Funds Management and Joint Arrangements businesses.
In addition to Group revenues of $296.0 million and EBITDA of $91.1 million, the properties that Peet is also responsible
for within its Fund Management and Joint Arrangement businesses generated revenues of $541.8 million and EBITDA
of $109.7 million.
Accordingly, the scale of business from which Peet derives its revenues and earnings, which drive its capacity to pay
dividends to shareholders, is extensive.
Key remuneration outcomes of the Committee’s deliberations are as follows:
• The MD’s base pay for the year ended 30 June 2017 was the same as for the previous year.
• There were no increases in the base pay of the KMP (including NEDs) during the year ended 30 June 2017.
• Short–term incentives will be paid to the KMP in respect of the year ended 30 June 2017. This follows a positive
Directors are elected at the Annual General Meeting (AGM) of the Company. Retirement will occur on a rotational
assessment of the individual member’s performance against a balanced scorecard, which includes consideration
basis so that one third of the Directors, but not less than two, shall retire at each AGM. The Directors may also appoint
of Group financial and strategic targets, together with individual targets.
a Director to fill a casual vacancy on the Board or in addition to the existing Directors, who will then hold office until the
next AGM. No Director who is not the Managing Director, may hold office without re-election beyond the third AGM
following the meeting at which the Director was last elected or re-elected.
At this year’s AGM, both Mr R J McKinnon and Ms V Krause will retire by rotation and offer themselves for re-election.
Your Board of Directors recommend the re-election of Mr R J McKinnon and Ms V Krause.
12. REMUNERATION
Dear Shareholder,
Peet is pleased to present its Remuneration Report for the year ended 30 June 2017. This report sets out remuneration
information for Non-executive Directors (“NEDs”), the Managing Director and Chief Executive Officer (“MD”), and
other key management personnel (“KMP”) and focuses on the remuneration decisions made by the Board and the
pay outcomes that resulted.
The 2017 financial year represented another year of growth as Peet achieved an operating net profit after tax of
$44.8 million, up 5% on the $42.6 million achieved in the 2016 financial year. During the year, Peet secured several
new projects, further diversified its debt capital strengthening its balance sheet and continued to deliver on its strategy
for growth.
To ensure Peet delivers on its growth strategy it must have the right people to lead the Group over the long-term and
a competitive remuneration framework that encourages our Leadership Team to continue to make decisions with a
view to creating long-term value for shareholders and all stakeholders.
In considering remuneration outcomes, the Board’s Remuneration Committee (Committee):
(a) balances Peet’s financial performance with the development and implementation of strategies for the long-term
benefit of the Group; and
(b) takes into account the underlying scale of Peet’s operations which are not fully identifiable from a pure focus on
the Group’s statutory accounts.
• During the year, long-term incentive performance conditions were tested as at 30 June 2016 resulting in the partial
vesting of performance rights. The vesting was met by way of ordinary shares acquired on market during the 2017
financial year.
Peet also takes the opportunity to confirm that the MD’s base pay for the year ending 30 June 2018 will be the same
as 2017, notwithstanding his contractual entitlement to an adjustment of at least CPI. Additionally, the 2018 base pays
of all other KMP (NEDs and executives) will remain the same as their 2017 base pays. The base pay of the MD and
NEDs was last amended with effect from 1 July 2014.
We encourage our shareholders to use the cash value of remuneration realised table on page 56 to assess the
remuneration outcomes for KMP in the year ended 30 June 2017 and the alignment of these outcomes with the
Group’s performance.
The key difference between the cash value of remuneration realised and the statutory remuneration is the value
included in the statutory remuneration table for potential future outcomes under the long-term incentive. A value is
required to be included in the statutory remuneration table to account for long-term incentives that may or may not
vest in the future, while the value for long-term incentives included in the cash value of remuneration realised table
represents the value of shares actually received by KMP following the vesting of performance rights.
The Board is satisfied that these remuneration outcomes for the year ended 30 June 2017 are appropriately
performance-based while at the same time recognising the strategic needs of the Group, and we commend this
report to you.
Robert McKinnon
Chairman, Remuneration Committee
50 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 51
13. REMUNERATION REPORT (AUDITED)
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
The Remuneration report is set out under the following main headings:
B. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
A. SERVICE AGREEMENTS
B. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
C. DETAILS OF REMUNERATION
D. SHARE-BASED COMPENSATION
E. ADDITIONAL INFORMATION
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
The key management personnel of the Group (“KMP”) include the Non-executive Directors (“NEDs”) of the Group, and
the following executives (the “Executives”) who have authority and responsibility for planning, directing and controlling
the activities of the Group.
Name
B D Gore
P J Dumas
D Scafetta
B C Fullarton
Position
Managing Director and Chief Executive Officer
Chief Investment Officer
Group Company Secretary
Chief Financial Officer
A. SERVICE AGREEMENTS
Remuneration and other terms of employment for the Executives are formalised in service agreements. Each of these
agreements provide for the provision of performance related cash bonuses and participation, when eligible, in the Peet
Limited Employee Share Option Plan and/or the Peet Limited Performance Rights Plan. The major provisions of the
agreements are set out below.
All contracts with Executives may be terminated early by either party with 3 to 6 months notice, subject to termination
payments as detailed below.
Name
B D Gore
Terms of Agreement
On-going renewed 5 August 2011
P J Dumas
On-going commenced 4 February 2008
D Scafetta
On-going commenced 10 June 1998
Base pay including
Superannuation 1
$937,300
$485,000
$350,000
Termination Benefit 2,3
Refer below 4
3 months base pay inclusive of superannuation
3 months base pay inclusive of superannuation
B C Fullarton
On-going commenced 21 October 2013
$440,000
3 months base pay inclusive of superannuation
1. Base pays, inclusive of superannuation, for the year ended 30 June 2017. Base pays are reviewed annually by the Remuneration Committee.
2. Termination benefits are payable on early termination by Peet Limited giving notice in writing. Payment may be made in lieu of notice, other than for gross misconduct.
3. Termination benefits referred to in the above table are in addition to any statutory entitlements payable (e.g. accrued annual leave and long service leave).
4. On 5 August 2011 B D Gore renewed his contractual arrangements with the Company. Under the agreement the components of his remuneration comprise fixed annual remuneration, short-term incentives and
long-term incentives. There is no fixed termination date and the agreement is terminable on six months notice by either party. The Company may, at its option, make a payment in lieu of part or all of the notice
period and certain conditions exist in relation to payment of long-term and short-term incentives upon termination. A summary of the key contractual terms and remuneration-related arrangements was disclosed
to the market on 5 August 2011 with certain parts approved by shareholders at the 2011 AGM.
The objective of the Company’s executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives
for the long-term benefit of the Company and shareholders. The Board ensures that executive reward satisfies the
following key criteria for good reward governance practices:
• competitiveness and reasonableness;
• acceptability to shareholders;
• performance linkage/alignment to executive compensation; and
• capital management.
In consultation with external remuneration consultants in prior financial years, the Company has structured, and continues
to evolve, an executive remuneration framework that is market competitive and complementary to our reward strategy
through the following features.
ALIGNMENT TO SHAREHOLDERS’ INTERESTS
• has a relevant measurement of financial performance as a core component of plan design;
• rewards implementation of strategy;
• focuses the Executive on other key financial and non-financial drivers of long-term value; and
• attracts and retains high-calibre executives.
In prior years, the Remuneration Committee of the Board had given consideration to the most appropriate financial
measure to align the creation of shareholder value with incentive arrangements for senior management. Consideration
was given to relative performance against comparable listed companies, measuring growth in Earnings before Interest,
Tax, Depreciation and Amortisation (EBITDA), relative performance in measures such as Return on Equity (ROE) and
Return on Capital Employed (ROCE) and absolute performance in measures such as ROE, ROCE and earnings per share.
Over the last several years, the Remuneration Committee has recommended to the Board, and it has agreed, to assess
financial performance for the purposes of long-term incentive awards against ROCE, together with funds under
management growth.
The Remuneration Committee and the Board will continue to assess the applicability of all short-term and long-term
related key performance indicators as they are applied in assessing performance for remuneration purposes.
ALIGNMENT TO PROGRAM PARTICIPANTS’ INTERESTS
• rewards capability and experience;
• provides a clear structure for earning rewards; and
• provides recognition for contribution.
The framework provides a mix of fixed and variable pay, and a blend of short and long-term incentives. As employees
are promoted to executive and senior management roles within the Company, the balance of this mix shifts to a higher
proportion of ‘at risk’ rewards.
52 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 53
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
NON-EXECUTIVE DIRECTORS’ FEES (INCLUDING THE CHAIRMAN’S FEES)
Short-term performance incentives (“STI”)
Fees and payments to NEDs reflect the demands which are made on, and the responsibilities of, the Directors.
Executives have a target STI opportunity depending on the accountabilities of their specific role and impact on the
NEDs’ fees and payments are reviewed periodically by the Remuneration Committee and the Board. The Remuneration
Group’s performance. The maximum target bonus opportunity for the Executives for the years ended 30 June 2017
Committee considers, as appropriate, the advice of independent remuneration consultants to ensure NEDs’ fees and
and 2016 ranged between 50% and 100% of the relevant Executive’s base pay. However, the Board of Directors has
payments are appropriate and in line with the market. NEDs do not receive share options or performance rights.
the discretion to pay over and above these amounts.
The NEDs’ remuneration is inclusive of committee fees and fees for their membership on any subsidiary Boards.
Each year, the Remuneration Committee considers the appropriate targets and key performance indicators (“KPIs”)
The fees payable to NEDs and the Chairman of the Remuneration Committee and the Chairman of the Audit and Risk
to link to the STI plan and the level of payout if targets are met for the Managing Director and Chief Executive Officer
Management Committee were last amended with effect from 1 July 2014. NEDs may also be entitled to fees where
(“MD”). This may include setting any maximum payout under the STI plan and minimum levels of performance to
they represent Peet on the Board of Syndicates.
trigger payment of STI. The MD will then set the STI KPIs to apply to his direct reports (being the non-director KMP).
NEDs’ fees are determined within an aggregate Directors’ fee pool limit, which is periodically recommended for
KPIs for each Executive are set by reference to the following criteria based on their specific role:
approval by shareholders. Shareholders approved a resolution at the 2012 AGM to increase the aggregate NEDs’
fees pool to $900,000.
The NEDs do not receive any form of retirement allowance.
EXECUTIVE PAY
The Company’s pay and reward framework for an Executive Director and other (non-director) KMP has the following
• financial;
• strategy;
• stakeholder engagement;
• people and processes improvements; and
• health, safety and environment.
components:
• base pay and benefits;
• short-term performance incentives; and
• long-term performance incentives.
The combination of these comprises the total remuneration for the individual concerned.
Base pay and benefits
The base pay for Executives is structured as a total employment cost package, which may be delivered as a mix of
cash and prescribed non-financial benefits and includes superannuation.
For the year ended 30 June 2017, the MD and other Executives were assessed as follows against the KPIs:
Category
Financial
Strategic
Stakeholder
People and processes improvements
Health, safety and environment
Weighting
Executives
50.0% to 62.5%
5.0% to 50.0%
0.0% to 7.5%
0.0% to 32.5%
0.0% to 10.0%
% Achieved
Executives
50.0% to 60.0%
5.0% to 42.0%
0.0% to 7.5%
12.6% to 15.0%
0.00% to 10.0%
MD
50.0%
20.0%
5.0%
15.0%
5.0%
MD
50.0%
25.0%
5.0%
15.0%
5.0%
MD
–
5.0%
–
–
–
% Forfeited
Executives
0.0% to 5.1%
0.0% to 8.0%
–
0.0% to 19.9%
–
100.0%
100.0%
95.0% 75.0% to 100.0%
5.0%
0.0% to 25.0%
Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. As and when
For the year ended 30 June 2016, the KPIs linked to STI plan were based on similar criteria.
considered appropriate, external remuneration consultants provide analysis and advice to ensure base pay is set to
reflect the market for a comparable role. Base pay is reviewed annually to ensure it remains competitive with the market.
Long-term incentives (“LTI”)
Traditionally, the Company has provided its Executives with LTI through participation in the Peet Limited Employee
Share Option Plan (“PESOP”) and/or the Peet Limited Performance Rights Plan (“PPRP”).
Executives have a target LTI opportunity depending on the accountabilities of their specific role and impact on the
Group’s performance. The maximum target opportunity for the Executives for the years ended 30 June 2016 and 2015
ranged between 50% and 100% of the relevant Executive’s base pay.
Each year, the Remuneration Committee considers the appropriate targets and KPIs to link to the LTI plan and the level
of payout if targets are met for the Executives. This may include setting any maximum payout under the LTI plan and
minimum levels of performance to trigger payment of LTI. Further details of the Company’s LTI structures are included
in the section titled ‘Share-based compensation’.
54 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 55
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
C. DETAILS OF REMUNERATION
Details of the statutory and cash value of remuneration of each member of the KMP of the Group are set out in the
tables following.
The statutory disclosures required by the Corporations Act 2001 (Cth), as amended and its regulations are set out in
the table on page 57. The company believes that the additional information provided in table below is useful to investors.
The table below sets out the total cash value of remuneration realised for the KMP and provides shareholders with
details of the “take-home” pay received/ receivable during the year. These earnings include cash salary and fees,
superannuation, non-cash benefits received/ receivable during the year and the value of shares issued to, or acquired on
behalf of, KMP following the vesting of Performance Rights (“PRs”) during the financial year. The table does not include
the accounting value of share-based payments consisting of PRs granted in the current and prior years required for
statutory purposes. This is because those share-based payments are dependent on the achievement of performance
hurdles and so may or may not be realised.
Cash
salary and
fees 1
Bonus 2
Value of
PRs vested 3
Other 4
Superannuation
Total
Directors
A W Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore
Total
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Other key management personnel
P J Dumas
D Scafetta
B C Fullarton
Total
2017
2016
2017
2016
2017
2016
2017
2016
216,712
216,712
136,283
136,283
59,574
66,055
108,886
108,886
146,055
146,055
917,685
917,992
1,585,195
1,591,983
454,998
455,000
330,383
330,692
404,998
405,000
1,190,379
1,190,692
–
–
–
–
–
–
–
–
–
–
890,435
822,959
890,435
822,959
267,720
292,188
175,000
173,075
165,000
155,452
607,720
620,715
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,007,244
1,964,815
1,007,244
1,964,815
10,000
10,000
10,000
10,000
305,494
595,922
166,029
302,279
235,208
–
706,731
898,201
–
–
–
–
–
–
–
–
1. Cash salary and fee, as well as fees paid to Directors for their directorship on Syndicate Boards.
2. All cash bonuses are earned in the financial year to which they relate and are paid during the following financial year.
3. Calculated as the closing price of Peet shares as at 6 September 2016 ($1.00), being the date the Board confirmed the partial vesting of FY14 PRs.
4. Other includes termination benefits, long service payments, motor vehicle costs, car-parking and other benefits.
20,588
20,588
12,947
12,947
34,656
28,175
10,344
10,344
8,175
8,175
237,300
237,300
149,230
149,230
94,230
94,230
119,230
119,230
154,230
154,230
19,615
2,844,979
19,308
3,735,074
106,325
3,599,199
99,537
4,489,294
30,000
30,000
19,615
19,308
35,000
35,000
84,615
84,308
1,058,212
1,373,110
691,027
825,354
840,206
595,452
2,589,445
2,793,916
The table below is calculated in accordance with statutory obligations and Australian Accounting Standards. The
amounts in the “Share-based payments” column relate to the component of the fair value of awards from the current
year and prior years made under the various incentive plans attributable to the year measured in accordance with
AASB 2 Share-based Payments.
Short-term
benefits
Post-employment
benefits
Share-based
payments
Bonus 2
Other 3
Superannuation
Shares/Options/
Performance
Rights 4,5
Termination
benefits
Cash salary
and fees 1
$
216,712
216,712
136,283
136,283
59,574
66,055
108,886
108,886
146,055
146,055
$
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
Directors
A W Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore
Total
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
917,685
890,435
10,000
917,992
822,959
10,000
1,585,195
890,435
10,000
1,591,983
822,959
10,000
Other key management personnel
P J Dumas
D Scafetta
B C Fullarton
Total
2017
2016
2017
2016
2017
2016
2017
2016
454,998
267,720
455,000
292,188
330,383
175,000
330,692
173,075
404,998
165,000
405,000
155,452
1,190,379
607,720
1,190,692
620,715
–
–
–
–
–
–
–
–
$
20,588
20,588
12,947
12,947
34,656
28,175
10,344
10,344
8,175
8,175
19,615
19,308
106,325
99,537
30,000
30,000
19,615
19,308
35,000
35,000
84,615
84,308
$
–
–
–
–
–
–
–
–
–
–
881,976
1,033,487
881,976
1,033,487
264,691
303,279
156,805
172,375
201,498
232,510
622,994
708,164
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
237,300
237,300
149,230
149,230
94,230
94,230
119,230
119,230
154,230
154,230
2,719,711
2,803,746
3,473,931
3,557,966
1,017,409
1,080,467
681,803
695,450
806,496
827,962
2,505,708
2,603,879
1. Cash salary and fees include fees paid to Directors for their directorship on Syndicate Boards.
2. All cash bonuses are earned in the financial year to which they relate and are paid during the following financial year.
3. Other includes motor vehicle costs, car-parking and other benefits.
4. The value placed on options and performance rights in the table above is based on the valuation at the date of grant using a Black-Scholes model (options) or Binomial Model, pro-rated over the period from grant
date to vesting date. These do not represent the value of equity benefits that vested in favour of KMP during the year.
5. Remuneration in the form of options and/or PRs may include negative amounts as a result of changes made to vesting probability assumptions and as a result of options and/or PRs forfeited during the year.
56 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 57
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
The relative proportions of remuneration that are linked to performance and those that are fixed based on the table are
CONSIDERATION
Unless the Board determines otherwise, no payment will be required for a grant of options and/or PRs under the PESOP
and/or PPRP.
EXERCISE CONDITIONS
Generally, as a pre-condition to exercise, any exercise conditions in respect of an option and/or PR must be satisfied.
However, the Board has the discretion to enable an option and/or PR holder to exercise options and/or PRs where the
exercise conditions have not been met, including, for example, where a court orders a meeting to be held in relation to
a proposed compromise or arrangement in respect of the Company, or a resolution is passed, or an order is made, for
winding up the Company.
Options granted under the PESOP and PRs granted under the PPRP carry no dividend or voting rights.
LAPSE OF OPTIONS AND/OR PRS
Unexercised options and/or PRs will lapse upon the earlier to occur of a variety of events specified in the rules of the
PESOP and PPRP including, on the date or in circumstances specified by the Board in the invitation, failure to meet the
options’ or PRs’ exercise conditions in the prescribed period or on a specified anniversary date of grant of the options
or PRs, as determined by the Board.
as follows:
Directors
A W Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore
Fixed remuneration
2017
100%
100%
100%
100%
100%
35%
2016
100%
100%
100%
100%
100%
34%
45%
50%
53%
2017
–
–
–
–
–
33%
26%
26%
20%
At risk STI
2016
–
–
–
–
–
29%
27%
25%
19%
2017 1
–
–
–
–
–
32%
26%
23%
25%
At risk LTI
2016 1
–
–
–
–
–
37%
28%
25%
28%
Other key management personnel
P J Dumas
D Scafetta
B C Fullarton
48%
51%
55%
1. Since LTI are provided exclusively by way of options and/or PRs, the percentages disclosed also reflect the value of remuneration consisting of options and/or PRs based on the value of options and/or PRs expensed
during the year.
D. SHARE-BASED COMPENSATION
Options over shares in Peet Limited are granted under the PESOP, which was approved by the Board and shareholders
during the 2004 financial year. PRs over shares in Peet Limited are granted under the PPRP, which was approved by
shareholders at the 2008 AGM. Changes have been made since to allow for changes in taxation of PRs. Employees
of any Group Company (including an Executive Director) will be eligible to participate in the PESOP and/or PPRP at
the discretion of the Board.
The PESOP and PPRP are designed to provide long-term incentives for Executives to deliver long-term shareholder
returns. Under the plans, participants are granted options and/or PRs, which only vest if the employees are still
employed by the Group at the end of the vesting period, subject to the Board’s discretion, and any set performance
hurdles have been met.
INVITATIONS TO APPLY FOR OPTIONS AND/OR PERFORMANCE RIGHTS
Eligible employees, at the discretion of the Board, may be invited to apply for options and/or PRs on terms and
conditions to be determined by the Board including as to:
• the method of calculation of the exercise price of each option;
• the number of options and/or PRs being offered and the maximum number of shares over which each option and/or
PR is granted;
• the period or periods during which any of the options and/or PRs may be exercised;
• the dates and times when the options and/or PRs lapse;
• the date and time by which the application for options and/or PRs must be received by Peet; and
• any applicable conditions which must be satisfied or circumstances which must exist before the options and/or
PRs may be exercised.
Eligible employees may apply for part of the options and/or PRs offered to them, but only in specified multiples.
58 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 59
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
s
e
t
o
N
t
r
o
p
e
r
f
o
e
t
a
d
l
t
a
e
b
a
s
c
r
e
x
E
i
e
t
a
d
t
a
e
c
n
a
a
B
l
t
r
o
p
e
r
f
o
/
d
e
s
p
a
L
d
e
t
i
e
f
r
o
f
d
e
t
s
e
v
i
/
d
e
s
c
r
e
x
E
s
a
e
c
n
a
a
B
l
g
n
i
t
s
e
V
r
e
p
e
u
a
V
l
t
a
R
P
/
n
o
i
t
p
o
d
e
t
n
a
r
G
6
1
y
l
u
J
1
t
a
s
n
o
i
t
i
d
n
o
c
e
t
a
D
t
n
a
r
G
e
s
i
c
r
e
x
E
y
r
i
p
x
E
/
e
c
n
a
m
r
o
f
r
e
P
d
o
i
r
e
P
e
c
i
v
r
e
S
t
n
a
r
G
f
o
e
t
a
D
s
e
v
i
t
u
c
e
x
E
:
s
e
v
i
t
u
c
e
x
E
o
t
d
e
t
n
a
r
g
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
d
n
a
s
n
o
i
t
p
o
s
’
y
n
a
p
m
o
C
e
h
t
f
o
s
u
t
a
t
s
e
h
t
s
e
s
i
r
a
m
m
u
s
w
o
e
b
e
b
a
t
e
h
T
l
l
2
3 4
3 4
3 5
3 5
3 4
3 4
3 4
3 5
3 5
NOTE 1
0
0
0
,
0
0
2
1
,
0
0
0
,
0
0
2
1
,
–
–
–
–
–
–
–
–
–
–
–
–
–
)
8
7
3
,
6
1
(
)
,
4
4
2
7
0
0
1
,
(
7
9
8
,
3
3
8
0
2
0
,
8
2
9
,
4
1
1
5
6
0
1
,
–
–
8
2
3
,
3
9
5
8
0
2
,
9
7
6
6
4
5
,
9
7
7
–
–
–
–
–
–
)
7
6
6
7
,
(
)
3
2
5
1
7
4
,
(
)
5
2
8
,
3
(
)
8
0
2
,
5
3
2
(
–
–
–
–
–
–
,
3
1
1
9
7
8
,
4
)
0
7
8
7
2
,
(
)
5
7
9
,
3
1
7
1
,
(
–
–
–
–
–
–
–
–
E
C
O
R
4
1
1
,
5
6
0
,
1
–
h
t
w
o
r
G
M
U
F
1
0
8
.
0
$
0
0
.
0
$
1
3
0
2
v
o
N
3
2
E
F
A
O
R
E
C
O
R
E
F
A
O
R
7
9
8
,
3
3
8
h
t
w
o
r
G
M
U
F
1
7
0
.
1
$
0
0
.
0
$
9
1
0
2
c
e
D
2
2
0
2
0
,
8
2
9
h
t
w
o
r
G
M
U
F
1
7
9
.
0
$
0
0
.
0
$
0
3
0
2
v
o
N
5
2
0
6
6
,
4
4
8
,
1
8
9
2
,
6
7
7
,
4
E
C
O
R
6
4
5
,
9
7
7
–
h
t
w
o
r
G
M
U
F
5
8
.
0
$
0
0
.
0
$
1
3
0
2
c
e
D
1
2
E
F
A
O
R
E
C
O
R
E
F
A
O
R
E
F
A
O
R
3
3
0
,
9
3
2
h
t
w
o
r
G
M
U
F
7
2
.
1
$
0
0
.
0
$
9
1
0
2
p
e
S
8
8
2
3
,
3
9
5
h
t
w
o
r
G
M
U
F
4
9
.
0
$
0
0
.
0
$
9
1
0
2
c
e
D
2
2
8
0
2
,
9
7
6
h
t
w
o
r
G
M
U
F
6
9
.
0
$
0
0
.
0
$
0
3
0
2
c
e
D
1
2
6
1
0
2
e
n
u
J
0
3
d
e
d
n
e
s
r
y
3
7
1
0
2
n
u
J
0
3
d
e
d
n
e
s
r
y
3
8
1
0
2
n
u
J
0
3
d
e
d
n
e
s
r
y
3
9
1
0
2
n
u
J
0
3
4
1
0
2
v
o
N
6
2
5
1
0
2
v
o
N
5
2
6
1
0
2
v
o
N
3
2
6
1
0
2
e
n
u
J
0
3
d
e
d
n
e
s
r
y
3
6
1
0
2
n
u
J
0
3
d
e
d
n
e
s
r
y
3
7
1
0
2
n
u
J
0
3
d
e
d
n
e
s
r
y
3
8
1
0
2
n
u
J
0
3
d
e
d
n
e
s
r
y
3
9
1
0
2
n
u
J
0
3
4
1
0
2
p
e
S
8
4
1
0
2
c
e
D
2
2
5
1
0
2
c
e
D
1
2
6
1
0
2
c
e
D
1
2
0
9
1
,
9
7
4
h
t
w
o
r
G
M
U
F
7
2
.
1
$
0
0
.
0
$
8
1
0
2
c
e
D
0
2
d
e
d
n
e
s
r
y
3
3
1
0
2
c
e
D
0
2
s
e
v
i
t
u
c
e
x
e
r
e
h
t
O
0
0
0
,
0
0
2
,
1
d
e
s
a
b
e
m
i
T
2
1
.
1
$
0
1
.
4
$
A
/
N
1
1
0
2
v
o
N
0
3
o
t
p
U
7
0
0
2
v
o
N
0
3
i
s
t
h
g
R
e
c
n
a
m
r
o
f
r
e
P
s
n
o
i
t
p
O
e
r
o
G
D
B
2
2
6
,
3
2
0
,
1
h
t
w
o
r
G
M
U
F
1
7
2
.
1
$
0
0
.
0
$
8
1
0
2
c
e
D
0
2
d
e
d
n
e
s
r
y
3
3
1
0
2
v
o
N
6
2
e
r
o
G
D
B
0
0
0
,
0
0
2
,
1
,
3
1
1
9
7
0
,
6
)
0
7
8
7
2
(
,
)
5
7
9
,
3
1
7
1
(
,
0
6
6
,
4
4
8
,
1
8
9
2
,
6
7
9
,
5
l
a
t
o
T
The issue of a share-based payment award to a Director requires shareholder approval and the value at grant date is
taken as the date at which that approval is granted. Accordingly, the value of these PRs is based on 26 November 2013,
26 November 2014, 25 November 2015 and 23 November 2016, being the dates of Peet Limited’s, 2013, 2014, 2015
and 2016 AGMs, respectively.
NOTE 2
These options are convertible to ordinary shares on a 1:1 basis at the exercise price after the fourth anniversary of the
grant date.
The exercise condition in respect of these options is that Mr Gore remains employed as Managing Director for a period
of four years. Although the service period requirement has been met, the options have not been exercised.
NOTE 3
These PRs are convertible to ordinary shares on a 1:1 basis, with 40% subject to the Funds Under Management (FUM)
growth vesting condition.
FUM growth is measured as the total of the following during the performance period:
• the purchase price (ex GST) of land acquired by a Peet syndicate or Joint Venture; or
• the market value (ex GST) of land for which Peet has been appointed development manager at the time of its
appointment; or
• the selling price (ex GST) of land sold by Peet, a Syndicate, a Joint Venture or Peet-managed project to a third party
and Peet is appointed the development manager (and where applicable, to manage the leasing) of a commercial,
industrial, retail or residential built-form project on that property; or
• in all other property funds management-related transactions, as determined by the Board of Directors.
The aggregate of the FUM growth during the performance period is then compared to the FUM growth target set by
the Board.
Of the PRs subject to FUM growth, the proportion to vest will be as follows:
Performance level
Less than the target
Target
Aggregate FUM growth target
during performance period
Proportion of performance rights
that may be eligible to vest
Less than $60 million
$60 million
0%
50%
Target – medium
$60 million to $100 million
Medium – maximum
$100 million to $150 million
Pro-rata between 50% and 70%
Pro-rata between 70% and 100%
Maximum
Greater than $150 million
100%
The Group achieved FUM growth of $143.0 million for the three-year performance period ended 30 June 2016.
Accordingly, the performance condition was partially met and on 23 August 2016 the Directors resolved that 96% of
the FY14 PRs thereto vested.
The FY15, FY16 and FY17 PRs remain unvested.
NOTE 4
These PRs are convertible to ordinary shares on a 1:1 basis, with 60% subject to the ROAFE vesting condition,
measured over a three-year period from 1 July 2013 to 30 June 2016 (“FY14 Performance Period”) and 1 July 2014
to 30 June 2017 (“FY15 Performance Period”) respectively. ROAFE is measured as the average of the earnings before
interest, tax and write-downs of inventories and/or development costs or increases in the carrying value of inventories
(EBIT) divided by the average of the sum of net debt, convertible notes, contributed equity, non-controlling interests
and retained earnings.
60 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 61
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
The ROAFE is compared to the Board’s internal target ROAFE for the FY14 and FY15 Performance Periods, respectively.
OPTION AND PERFORMANCE RIGHTS HOLDINGS
Of the PRs subject to ROAFE, the proportion to vest will be as follows:
The number of options and PRs over unissued ordinary shares in the Company held during the financial year by the
KMP of the Group, including their personally-related entities, is set out below. When exercisable, each option and PR
Performance level
Proportion of performance rights that may be eligible to vest
is convertible into one ordinary share of Peet Limited.
Less than 75% of the target
75% of the target
0%
30%
75% to 85% of the target
Pro-rata between 30% and 50%
85% to 100% of the target
Pro-rata between 50% and 70%
100% to 110% of the target
Pro-rata between 70% and 100%
Greater than 110% of the target
100%
The Group achieved underlying ROAFE of 11.58% against the target of 10.5% for the three-year performance period
ended 30 June 2016. Accordingly, the ROAFE performance condition attached to the FY14 PRs was met and on
23 August 2016 the Directors resolved that 100% of the FY14 PRs relating thereto vested.
The FY15 PRs remain unvested.
NOTE 5
These PRs are convertible to ordinary shares on a 1:1 basis, with 60% subject to the ROCE vesting condition, measured
over a three-year period from 1 July 2015 to 30 June 2018 (“FY16 Performance Period”) and 1 July 2016 to 30 June 2019
Balance
at the start
of the year
Granted
during
the year
Exercised
during
the year
Lapsed/forfeited
during the year 1
Balance
at end of
the year
Vested and
exercisable
at the end of
the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,985,539
1,065,114
(1,007,244)
(16,378)
4,027,031
1,200,000
Directors
A W Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore
Other key management personnel
P J Dumas
D Scafetta
B C Fullarton
851,605
486,569
652,585
330,682
198,864
250,000
(305,494)
(166,029)
(235,208)
(4,967)
(2,700)
(3,825)
871,826
516,704
663,552
–
–
–
(“FY17 Performance Period”), respectively.
1.
Includes performance rights for which performance conditions were not met for the performance period.
ROCE is measured the same way as the ROAFE vesting condition that was used in respect of prior years’ grants.
During the year ended 30 June 2017, 1,713,975 PRs (2016: 2,602,742) had vested and were exercised by Executives
Of the PRs subject to ROCE, the proportion to vest will be as follows:
at $ Nil exercise price. In order to settle the PRs exercised during year ended 30 June 2017, the Company purchased
ordinary shares in the Company on-market on behalf of KMP.
Performance level
Proportion of performance rights that may be eligible to vest
Since 30 June 2017, no PRs were vested. No other options and PRs have been issued. Refer note 24 of the Financial
Less than 75% of the target
75% of the target
0%
30%
75% to 85% of the target
Pro-rata between 30% and 50%
85% to 100% of the target
Pro-rata between 50% and 70%
100% to 110% of the target
Pro-rata between 70% and 100%
Greater than 110% of the target
100%
The FY16 and FY17 PRs remain unvested.
Report for the total options and PRs outstanding.
62 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 63
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
E. ADDITIONAL INFORMATION
PERFORMANCE OF PEET LIMITED
The overall level of executive compensation takes into account the performance of the Group. STI is generally based
on an assessment of performance over a 12-month period, while LTI is generally assessed over a three-year period.
The high-level performance of the Group over the last five years is compared below:
Net profit after tax (NPAT)
NPAT growth
$’000
Growth%
Net operating profit after tax (NOPAT)
$’000
NOPAT growth
Basic EPS
Basic EPS growth
Operating EPS
Operating EPS growth
Dividends paid/payable
Dividend paid growth
Share price 30 June
Share price growth
Growth%
cents per share
Growth%
cents per share
Growth%
cents per share
Growth%
$
Growth%
2013
880
(83.8%)
18,346
(9.7%)
0.26
2014
30,291
3342.2%
31,555
72.0%
7.0
(84.7%)
2592.3%
5.4
(14.3%)
–
–
1.12
67.2%
7.3
35.2%
3.5
100%
1.35
20.5%
2015
38,460
27.0%
38,460
21.9%
8.26
18.0%
8.26
13.2%
4.5
29%
1.15
2016
42,592
10.7%
42,592
10.7%
8.70
5.3%
8.70
5.3%
4.5
–
0.94
2017
44,792
5.2%
44,792
5.2%
9.14
5.1%
9.14
5.1%
4.75
6%
1.20
(14.8%)
(18.3%)
27.7%
DETAILS OF REMUNERATION: CASH BONUSES, OPTIONS AND PRS
For each cash bonus, grant of options and/or PRs included in the tables within the remuneration report, the percentage
of the available bonus or grant that was paid, or that vested and the percentage that was forfeited because the person
did not meet the service and performance criteria, is set out below. Generally, no part of the bonuses forfeited is
payable in future years. Subject to the rules of the PESOP and PPRP no options or PRs will vest if the conditions are
not satisfied, subject to the discretion of the Board, hence the minimum value of the option and PRs yet to vest is nil.
The maximum value of the options and PRs yet to vest has been determined as the amount of the grant date fair value
of the options and PRs that is yet to be expensed.
Cash Bonus
Options & Performance Rights
Paid/
payable
%
Forfeited/
deferred
%
Financial year
Granted
Vested 1
%
Forfeited 1,2
%
Financial years
in which
options/PRs
may vest
Maximum total
value of grant
yet to vest
$
Directors
A W Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore
–
–
–
–
–
–
–
–
–
–
95%
5%
–
–
–
–
–
2017
2016
2015
2014
2013
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
98.4%
85.6%
1.6%
14.4%
–
–
–
–
–
2019
2018
2018
2017
2016
–
–
–
–
–
568,511
300,472
–
–
–
Cash Bonus
Options & Performance Rights
Paid/
payable
%
Forfeited/
deferred
%
Financial year
Granted
Vested 1
%
Forfeited 1,2
%
Financial years
in which
options/PRs
may vest
Maximum total
value of grant
yet to vest
$
Other key management personnel
P J Dumas
92%
8%
D Scafetta
100%
–
B C Fullarton
75%
25%
2017
2016
2015
2014
2013
2017
2016
2015
2014
2013
2017
2016
2015
2014
–
–
–
98.4%
85.6%
–
–
–
98.4%
85.6%
–
–
–
–
–
–
1.6%
14.4%
–
–
–
1.6%
14.4%
–
–
–
98.4%
1.6%
2019
2018
2018
2017
2016
2019
2018
2018
2017
2016
2019
2018
2018
2017
187,080
91,658
–
–
–
112,506
26,656
–
–
–
141,435
26,656
–
–
1.
2.
Includes performance rights for which performance conditions were met for the performance period ended 30 June 2016 and confirmed by the Directors after balance date.
Includes performance rights for which performance conditions were not met for the performance period.
Further details relating to options and/or PRs, either granted, exercised or lapsed during the year, are set out below.
The amounts below are calculated in accordance with Australian Accounting Standards. The KMPs exercised 1,713,975
PRs over shares in the Company and received shares in the Company during the 2017 financial year. Please refer to
previous pages of the Remuneration Report for commentary on vesting conditions met during the performance period
ended 30 June 2017.
Directors
B D Gore
Other key management personnel
P J Dumas
D Scafetta
B C Fullarton
Remuneration consisting
of options &
performance rights 1
Value of options &
performance rights
granted 2
Value of options &
performance rights
exercised 3
32%
26%
23%
25%
853,156
1,279,200
280,749
168,836
212,250
387,976
210,857
298,715
1. The percentage of the value of remuneration consisting of options and PRs, based on the value of options and PRs expensed during the current year.
2. The value at grant date calculated in accordance with AASB 2 Share-based payments of options and/or PRs granted during the year as part of remuneration.
3. The value at exercise date of options and/or PRs that were granted as part of remuneration and were exercised during the year, being the intrinsic value of the options and/or PRs at that date.
LOANS TO DIRECTORS AND OTHER KEY MANAGEMENT PERSONNEL
There were no loans made to KMP, or their personally-related entities, during the financial year.
64 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 65
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
15. NON-AUDIT SERVICES
VOTING AND COMMENTS MADE AT THE COMPANY’S 2016 ANNUAL GENERAL MEETING
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the
The instructions given to validly appointed proxies in respect of the resolution pertaining to the Company’s 2016
Remuneration Report were as follows:
For
240,099,117
95.7%
Against
10,437,603
4.2%
Proxy’s discretion
278,686
0.1%
Abstain
347,787
The motion was carried as an ordinary resolution on show of hands.
auditor’s expertise and experience with the Company and/or the Group are considered important.
The Board of Directors has considered the position and, in accordance with the advice received from the Audit and
Risk Management Committee, is satisfied that the provision of the non-audit services is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the
provision of non-audit services by the auditor did not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the Audit and Risk Management Committee to ensure they do not
impact the impartiality and objectivity of the auditor; and
INTERESTS IN THE SHARES, CONVERTIBLE NOTES AND BONDS OF THE COMPANY
• none of the services undermine the general principles relating to auditor independence as set out in APES 110
Shares
Received
during the
year on
exercise of
PRs
Other
changes
during the
year
Balance at
the end of
the year
Balance at
the start of
the year
Bonds
Other
changes
during the
year
Balance at
the end of
the year
Directors
A W Lennon
T J Allen
V Krause
R J McKinnon
B D Gore
A J Lennon
Balance at
the start of
the year
96,812,574
92,054
–
50,000
–
–
–
–
502,111
97,314,685
–
–
–
–
–
92,054
–
50,000
4,533,238
1,331,344
3,525,994
1,007,244
1,331,344
–
Other key management personnel
P J Dumas
D Scafetta
B C Fullarton
658,835
830,109
–
305,494
166,029
235,208
(90,000)
–
–
874,329
996,138
235,208
Since 30 June 2017, no PRs were vested. No other options and PRs have been issued.
END OF REMUNERATION REPORT (AUDITED)
14. INDEMNITY OF OFFICERS AND AUDITORS
3,000
5,114
1,000
500
–
500
–
–
–
–
–
–
–
–
–
–
–
–
3,000
5,114
1,000
500
–
500
–
–
–
During the financial year, the Company paid a premium in respect of a Directors’ and Officers’ insurance policy that
insures Directors and Officers of the Company. The liabilities insured are costs and expenses that may be incurred in
defending civil or criminal proceedings that may be brought against the Directors and Officers in their capacity as such.
The Directors have not included more specific details of the nature of the liabilities covered or the amount of the
premium paid in respect of Directors’ and Officers’ liability, as such disclosure is prohibited under the terms of the
contract.
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of
the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount). The indemnity does not apply to any loss in respect of any matters which are finally determined to have
resulted from the auditors’ negligent, wrongful or willful acts or omissions. No payment has been made to indemnify
the auditors during or since the financial year.
Code of Ethics for Professional Accountants.
The fees that were paid or payable for services provided by the auditors of the Group, its related practices and non-
related audit firms is set out in note 21 of the Financial Report.
16. AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration, as required under section 307C of the Corporation Act 2001, is set out
on page 68.
17. ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to the “rounding off” of amounts in the Director’s Report. Amounts in the Director’s
Report have been rounded off in accordance with that legislative instrument to the nearest thousand dollars, or in
certain cases, the nearest dollar.
Signed for and on behalf of the Board in accordance with a resolution of the Board of Directors.
Brendan Gore
Managing Director and Chief Executive Officer
Perth, Western Australia
24 August 2017
66 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 67
Corporate Governance Statement
A copy of the Group’s corporate governance policies and practices in place during the financial year ended 30 June 2017
is available at the following link:
www.peet.com.au/corporate-governance-statement-2017
Unless otherwise stated, these are consistent with the 3rd edition of the ASX Corporate Governance Council’s
Principles and Recommendations (released March 2014).
68 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 69
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
Notes
5
6
6
10
8
Revenue
Expenses
Finance costs (net of capitalised borrowing costs)
Share of net profit of associates and joint ventures
Profit before income tax
Income tax expense
Profit for the year
Attributable to:
Owners of Peet Limited
Non-controlling interests
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
Realised losses on cash flow hedges transferred to profit or loss
Unrealised gains/(losses) on cash flow hedges
Share of other comprehensive income of associates
Income tax relating to components of other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Attributable to:
Owners of Peet Limited
Non-controlling interests
Earnings per share for profit attributable to the ordinary equity holders of the Company
Basic and diluted earnings per share
Notes
7
2017
$’000
296,043
(240,609)
(8,337)
15,326
62,423
(18,163)
44,260
2016
$’000
268,127
(221,659)
(4,606)
16,685
58,547
(16,759)
41,788
44,792
(532)
44,260
42,592
(804)
41,788
2,307
1,857
–
(1,249)
2,915
47,175
47,707
(532)
47,175
Cents
9.14
2,184
(6,940)
162
1,428
(3,166)
38,622
39,426
(804)
38,622
Cents
8.70
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
Financial
Report
Contents
Consolidated Statement of Profit or Loss and Other Comprehensive Income ................................................................ 71
Consolidated Balance Sheet ............................................................................................................................................. 72
Consolidated Statement of Changes in Equity ................................................................................................................. 73
Consolidated Statement of Cash Flows ............................................................................................................................ 74
Notes to the Consolidated Financial Statements .............................................................................................................. 75
This financial report covers the consolidated
financial statements for the Group consisting of
Peet Limited and its subsidiaries. The financial
report is presented in Australian currency. Peet
Limited is a for profit company limited by
shares, incorporated and domiciled in Australia.
Its registered office and principal place of
business is; Level 7, 200 St Georges Terrace,
Perth WA 6000. The financial report was
authorised for
issue by the Directors on
24 August 2017. The Directors have the power
to amend and reissue the financial report.
Through the use of the internet, we have
ensured that our corporate reporting is timely
and complete. All press releases, financial
reports and other information are accessible via
our website; www.peet.com.au
70 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 71
Consolidated Balance Sheet
Consolidated Statement
of Changes in Equity
Current assets
Cash and cash equivalents
Receivables
Inventories
Total current assets
Non-current assets
Receivables
Inventories
Investments accounted for using the equity method
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Payables
Land vendor liabilities
Borrowings
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Land vendor liabilities
Borrowings
Derivative financial instruments
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
Capital and reserves attributable to owners of Peet Limited
Non-controlling interest
Total equity
Notes
2017
$’000
2016
$’000
11
9
11
9
10
12
13
16
14
13
16
16
8
14
17
17
88,367
53,336
133,237
274,940
78,002
352,919
213,448
8,298
6,251
658,918
933,858
69,509
15,975
5,791
4,698
6,245
73,373
66,514
147,549
287,436
48,024
451,395
198,115
8,577
5,147
711,258
998,694
81,559
16,100
5,321
9,650
8,136
102,218
120,766
17,853
244,017
4,551
39,698
199
306,318
408,536
525,322
385,955
1,417
126,258
513,630
11,692
525,322
73,169
261,644
8,150
33,286
164
376,413
497,179
501,515
385,955
7,809
103,515
497,279
4,236
501,515
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Balance at 1 July 2015
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Contributions of equity, net
of transaction costs and tax
Transfer between reserves
Share-based payments
Dividends paid
Balance at 30 June 2016
Balance at 1 July 2016
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Non-reciprocal contribution
to a controlled entity
Capital return to non-
controlling interests
Vesting of performance rights
Share-based payments
Dividends paid
Balance at 30 June 2017
Notes
Contributed
equity
$’000
Reserves
$’000
385,962
10,628
–
–
–
(7)
–
–
–
17
–
(3,166)
(3,166)
–
(1,933)
2,280
Retained
profits
$’000
82,264
42,592
–
Total
$’000
478,854
42,592
(3,166)
Non-controlling
interest
$’000
Total
equity
$’000
5,040
483,894
(804)
–
41,788
(3,166)
42,592
39,426
(804)
38,622
–
1,933
(7)
–
–
2,280
–
(23,274)
(23,274)
–
–
–
–
(7)
–
2,280
(23,274)
385,955
7,809
103,515
497,279
4,236
501,515
385,955
7,809
103,515
497,279
–
–
–
–
–
–
–
–
–
2,915
2,915
(7,988)
(1,217)
(2,201)
2,099
44,792
–
44,792
44,792
2,915
47,707
–
–
–
–
(7,988)
(1,217)
(2,201)
2,099
–
(22,049)
(22,049)
4,236
501,515
(532)
44,260
–
(532)
2,915
47,175
7,988
–
–
–
–
–
(1,217)
(2,201)
2,099
(22,049)
385,955
1,417
126,258
513,630
11,692
525,322
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
72 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 73
Consolidated Statement of Cash Flows
Notes to the
Consolidated Financial Statements
Notes
2017
$’000
2016
$’000
CONTENTS
BASIS OF REPORTING
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Payments for purchase of land
Interest and other finance costs paid
Distributions and dividends received from associates and joint ventures
Interest received
Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for investment in associates
Proceeds from capital returns from associates
Loans to related parties
Repayment of loans by related parties
Net cash outflow from investing activities
Cash flows from financing activities
Dividends paid to Group’s shareholders
Repayment of borrowings
Proceeds from borrowings
Proceeds from issue of equity securities (net of equity raising costs)
Proceeds from issue of Peet bonds (gross proceeds net of costs)
Repayment of convertible notes (including reinvestment proceeds)
Transactions with non-controlling interests (net of costs)
Net cash inflow/(outflow) from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
19
334,369
(203,504)
(42,376)
(18,160)
3,949
901
(17,952)
57,227
(4,426)
(3,537)
744
(16,220)
21,951
(1,488)
(22,049)
(67,296)
49,817
–
–
–
(1,217)
(40,745)
14,994
73,373
88,367
294,954
(210,373)
(50,422)
(21,072)
5,756
570
(2,178)
17,235
(3,031)
(8,253)
3,608
(8,801)
6,880
(9,597)
(23,274)
(72,419)
55,826
(10)
97,889
(50,000)
–
8,012
15,650
57,723
73,373
1. Reporting entity .......................................................................................................................................................... 76
2. Basis of preparation .................................................................................................................................................... 76
3. How to read the annual report .................................................................................................................................... 78
PERFORMANCE FOR THE YEAR
4. Segment information .................................................................................................................................................. 79
5. Revenue ...................................................................................................................................................................... 81
6. Expenses .................................................................................................................................................................... 82
7. Earnings per share ...................................................................................................................................................... 82
8. Taxes ........................................................................................................................................................................... 83
OPERATING ASSETS AND LIABILITIES
9.
Inventories .................................................................................................................................................................. 85
10. Investments accounted for using the equity method ................................................................................................ 85
11. Receivables ................................................................................................................................................................. 88
12. Payables ...................................................................................................................................................................... 89
13. Land vendor liabilities ................................................................................................................................................. 89
14. Provisions ................................................................................................................................................................... 89
15. Interests in joint operations ........................................................................................................................................ 90
CAPITAL MANAGEMENT
16. Borrowings and derivative financial instruments ....................................................................................................... 91
17. Contributed equity and reserves ................................................................................................................................ 95
18. Dividends .................................................................................................................................................................... 96
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
19. Reconciliation of profit after income tax to net cash inflow from operating activities ............................................... 97
20. Fair value measurement ............................................................................................................................................. 97
OTHER NOTES
21. Remuneration of auditors ........................................................................................................................................... 98
22. Contingencies and commitments .............................................................................................................................. 98
23. Parent entity financial information and subsidiaries ................................................................................................... 99
24. Share-based payments ............................................................................................................................................. 102
25. Matters subsequent to the end of the financial year ............................................................................................... 104
26. Other accounting policies ......................................................................................................................................... 104
74 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 75
Basis of Reporting
This section of the financial report sets out the basis of
a. Principles of consolidation
preparation of the consolidated financial statements.
Where an accounting policy is specific to one note, the
policy is described in the note to which it relates.
1. Reporting entity
This financial report covers the consolidated financial
statements for the Consolidated Entity consisting of Peet
Limited and its subsidiaries (Group). The Financial Report is
presented in the Australian currency. Peet Limited is a
company limited by shares, incorporated and domiciled in
Australia. Its registered office and principal place of
The consolidated financial statements comprise the
financial statements of the Group and the entities it
controlled at the end of, or during the year ended 30 June
2017. The Group controls an investee if and only if the
Group has:
• power over the investee (i.e. existing rights that give it
the current ability to direct the relevant activities of the
investee);
• exposure, or rights, to variable returns from
its
involvement with the investee; and
business is; Level 7, 200 St Georges Terrace, Perth WA
• the ability to use its power over the investee to affect
6000. The nature of the operations and principal activities
its returns.
of the Group are described in the Directors’ Report. Peet
Limited is a for-profit entity.
2. Basis of preparation
The Financial Report is a general purpose financial report
which:
The Group re-assesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the
Group loses control of the subsidiary. Assets, liabilities,
• has been prepared in accordance with Australian
income and expenses of a subsidiary acquired or disposed
Accounting Standards and Interpretations issued by
of during the year are included in the statement of
the Australian Accounting Standards Board and the
comprehensive income from the date the Group gains
Corporations Act 2001;
control until the date the Group ceases to control the
• complies with
International Financial Reporting
subsidiary.
Standards
(IFRS) as
issued by
the
International
Accounting Standards Board (IASB);
Profit or loss and each component of other comprehensive
income (OCI) are attributed to the equity holders of the
• has been prepared under the historical cost convention,
parent of the Group and to the non-controlling interests,
except for derivative instruments which have been
even if this results in the non-controlling interests having
measured at fair value;
a deficit balance. All intra-group assets and liabilities,
• provides comparative information in respect of the
previous period; and
• is rounded off to the nearest thousand dollars or in
certain cases to the nearest dollar in accordance with
ASIC Corporations Instrument 2016/191.
equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated
in full on consolidation.
2. Basis of preparation (continued)
b. Associates
To the extent the joint arrangement provides the Group
with rights to the individual assets and obligations arising
from the joint arrangement, the arrangement is classified
Associates are all entities over which the Group has
as a joint operation and as such, the Group recognises its:
significant
influence
but
not
control,
generally
accompanying a shareholding of between 20% and 50%
of the voting rights. In the case of syndicates, significant
influence can exist with a lower shareholding by virtue of
• assets, including its share of any assets held jointly;
• liabilities, including its share of any liabilities incurred
jointly;
the Group’s position as project manager. Investments in
• share of revenue from the sale of the output by the joint
associates are accounted for using the equity method of
operation; and
accounting, after initially being recognised at cost.
• expenses, including its share of any expenses incurred
The Group’s share of its associates’ post-acquisition profits
or losses are recognised in the consolidated statement of
profit or loss, and its share of post-acquisition other
comprehensive income is recognised in other comprehensive
income. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment.
Dividends receivable from associates are recognised as
jointly.
To the extent the joint arrangement provides the Group
with rights to the net assets of the arrangement, the
investment is classified as a joint venture and accounted
for using the equity method. Under the equity method,
the cost of the investment is adjusted by the post-
acquisition changes in the Group’s share of the net assets
a reduction in the carrying amount of the investment.
of the venture.
When the Group’s share of losses in an associate equals or
exceeds its interest in the associate, including any other
unsecured long-term receivables, the Group does not
recognise further losses, unless it has incurred obligations
or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and
its associates are eliminated to the extent of the Group’s
interest in the associates. Unrealised losses are also
eliminated unless the transaction provides evidence of an
impairment of the asset transferred.
c. Investments in joint arrangements
d. Changes in ownership interests
The Group
treats
transactions with non-controlling
interests that do not result in a gain or loss of control as
transactions with equity owners of the Group. A change in
ownership interest results in an adjustment between the
carrying amounts of the controlling and non-controlling
interests to reflect their relative interests in the subsidiary.
Any difference between the amount of the adjustment to
non-controlling interests and any consideration paid or
received is recognised in a separate reserve within equity
attributable to owners of Peet Limited.
Joint arrangements are arrangements of which two or
e. Changes in accounting policies
more parties have joint control. Joint control is the
contractual agreed sharing of control of the arrangement
which exists only when decisions about the relevant
activities require unanimous consent of the parties sharing
control. Joint arrangements are classified as either a joint
operation or joint venture, based on the rights and
obligations arising
from
the contractual obligations
between the parties to the arrangement.
The Group has adopted all new and amended Australian
Accounting Standards and Interpretations effective from
1 July 2016. New and amended Standards and
Interpretations did not result in any significant changes to
the Group’s accounting policies. The Group has not elected
to early adopt any other new or amended Standards or
Interpretations that are issued but not yet effective (refer
note 26 viii).
76 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 77
3. How to read the annual report
The notes to the financial statements are set out in four
specific sections:
• Performance for the year;
• Operating assets and liabilities;
• Capital management; and
• Other notes.
Where an accounting policy is specific to one note, the
policy is described in the note to which it relates.
Key estimates are described in the following notes:
• Note 5 – sales fall over rates on project management
and selling fees;
• Note 8 – deferred tax assets; and
• Note 9 – net realisable value.
Financial instrument risk management is carried out by
management under policies approved by the Board of
Directors and the Audit and Risk Management Committee.
Management identifies, evaluates and mitigates financial
risks in close co-operation with the Group’s operating units.
The Board and Audit and Risk Management Committee
provide written principles for overall risk management, as
well as written policies covering specific areas, such as
mitigating interest rate and credit risks, use of derivative
financial instruments and investing excess liquidity.
Financial risks and its management are detailed in the
respective notes it pertains to. The Group’s activities
expose it to financial risks including:
• credit risk (note 11 and 16);
• liquidity risk (note 16); and
• interest rate risk (note 16).
Related party transactions are disclosed within the notes
they relate to. Transactions which occur between the
Group and significant controlled entities are classified as
related party transactions. Significant controlled entities
are interests held in associates and joint ventures, which
are set out in note 10. Details relating to the key
management personnel, including remuneration paid, are
set out in note 6.
Performance for the year
This section focuses on the results and performance of
Company-owned projects
the Group.
4. Segment information
The Group acquires parcels of land in Australia, primarily
for
residential development purposes. Certain
land
holdings will also produce non-residential blocks of land.
Operating segments are reported in a manner that is
consistent with the internal reporting provided to the chief
Joint arrangements
operating decision maker. The chief operating decision
maker, who is responsible for allocating resources and
assessing performance of the operating segments, has
been identified as the executive management group.
Joint arrangements are entered into with government,
statutory authorities and private landowners. The form of
these arrangements can vary from project to project but
generally involves Peet undertaking the development of
The executive management group assesses
the
land on behalf of the landowner or in conjunction with the
performance of the operating segments based on multiple
co-owner. The Group is typically entitled to ongoing fees
measures including earnings before interest (including
for management of the development project and also a
interest and finance charges amortised through cost of
share of the profits.
sales), tax, depreciation and amortisation (“EBITDA”),
earnings before interest (including interest and finance
Inter-segment transfers and other unallocated
charges amortised through cost of sales) and tax (“EBIT”)
and profit after tax.
Segment revenue, expenses and results include transfers
between segments. Such transfers are based on an arm’s
The share of profits from associates and joint ventures is
length basis and are eliminated on consolidation.
included as segment revenue as it is treated as revenue for
internal reporting purposes.
The adoption of AASB 10 Consolidated Financial
Statements from 1 July 2013, resulted in certain property
The Group operates only in Australia.
syndicates being consolidated. These entities however,
The executive management group considers the business
to have the following reportable business segments:
Funds management
continue to be managed and reported to the executive
management group as part of the funds management
business segment. Adjustments are
included
in
“Inter-segment transfers and other unallocated” to
reconcile reportable business segment information to the
Peet enters into asset and funds management agreements
Group’s consolidated statement of profit or loss.
with external capital providers. Peet and/or the external
capital provider commit equity
funds
towards
the
acquisition of land and this is generally supplemented with
debt funds either at the time of acquisition or during the
development phase of a project.
The Group derives fees from underwriting, capital raising
and asset identification services. Ongoing project related
fees (mainly project management and selling fees as well
as performance fees) are then derived by the Group for the
duration of a particular project.
78 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 79
4. Segment information (continued)
d
e
t
a
d
i
l
o
s
n
o
C
t
n
e
m
g
e
s
-
r
e
t
n
I
d
n
a
s
r
e
f
s
n
a
r
t
d
e
t
a
c
o
l
l
a
n
u
r
e
h
t
o
i
t
n
o
J
s
t
n
e
m
e
g
n
a
r
r
a
d
e
n
w
o
-
y
n
a
p
m
o
C
s
t
c
e
o
r
p
j
s
d
n
u
F
t
n
e
m
e
g
a
n
a
m
8
1
0
,
4
5
8
6
,
6
1
2
1
8
,
4
8
2
)
2
6
5
,
0
1
(
0
7
7
,
9
8
)
1
3
5
,
3
(
9
3
2
,
6
8
)
2
9
6
7
2
,
(
2
8
2
,
4
6
2
3
,
5
1
9
6
3
,
1
1
3
)
5
2
6
,
0
1
(
1
3
1
1
9
,
)
9
3
5
,
3
(
2
9
5
7
8
,
)
9
6
1
5
2
,
(
7
4
5
,
8
5
3
2
4
,
2
6
)
9
5
7
6
1
,
(
)
3
6
1
8
1
,
(
4
0
8
8
8
7
1
4
,
2
9
5
,
2
4
0
6
2
,
4
4
2
3
5
2
9
7
,
4
4
6
1
0
2
0
0
0
’
$
7
1
0
2
0
0
0
’
$
6
1
0
2
0
0
0
’
$
,
9
0
1
4
6
2
1
6
7
1
9
2
,
5
5
1
6
1
,
1
1
4
)
8
5
3
(
8
0
2
,
6
1
)
2
6
5
,
0
1
(
)
0
8
3
,
8
(
)
8
0
2
1
,
(
)
8
8
5
,
9
(
)
1
4
0
,
2
1
(
7
1
0
2
0
0
0
’
$
9
0
2
5
1
1
1
5
3
,
4
5
7
6
,
4
)
5
2
6
,
0
1
(
)
4
0
5
,
0
1
(
)
7
3
5
1
,
(
6
1
0
2
0
0
0
’
$
1
8
1
1
,
1
2
9
,
3
5
9
9
3
,
5
1
1
0
5
,
0
7
6
7
2
,
8
2
)
4
0
3
(
2
7
9
7
2
,
7
1
0
2
0
0
0
’
$
1
6
8
,
8
4
1
5
5
,
1
9
2
6
,
0
1
1
4
0
,
1
6
)
5
2
1
(
7
6
1
,
1
2
2
4
0
,
1
2
6
1
0
2
0
0
0
’
$
7
1
0
2
0
0
0
’
$
6
1
0
2
0
0
0
’
$
6
9
7
,
3
5
1
8
4
6
,
1
9
1
7
3
2
,
0
4
–
1
9
8
–
5
6
1
,
1
5
3
5
,
1
4
4
6
,
1
7
8
6
,
4
5
1
3
1
8
,
2
9
1
6
1
4
,
3
4
7
1
0
2
0
0
0
’
$
1
0
9
,
6
4
7
5
3
,
1
2
8
5
,
4
0
4
8
,
2
5
)
4
6
9
,
1
(
6
6
2
,
0
4
2
0
3
,
8
3
4
3
7
,
3
4
)
7
2
8
,
1
(
7
0
9
,
1
4
)
5
5
(
)
0
5
(
8
0
6
,
9
2
4
3
7
,
6
3
3
5
5
,
9
2
4
8
6
,
6
3
s
V
J
d
n
a
s
e
t
a
i
c
o
s
s
a
f
o
t
fi
o
r
p
t
e
n
f
o
e
r
a
h
S
s
e
i
t
r
a
p
l
a
n
r
e
t
x
e
o
t
s
e
l
a
S
t
n
e
m
g
e
s
y
b
e
u
n
e
v
e
R
e
u
n
e
v
e
r
r
e
h
t
O
n
o
i
t
a
s
i
t
r
o
m
a
d
n
a
n
o
i
t
a
i
c
e
r
p
e
D
2
T
I
B
E
s
d
a
e
h
r
e
v
o
e
t
a
r
o
p
r
o
C
1
A
D
T
I
B
E
l
a
t
o
T
s
t
s
o
c
e
c
n
a
n
fi
d
n
a
t
s
e
r
e
t
n
i
s
e
d
u
l
c
n
i
(
s
t
s
o
c
g
n
i
c
n
a
n
i
F
d
e
t
i
m
i
L
t
e
e
P
f
o
s
r
e
n
w
o
o
t
e
b
a
t
u
b
i
r
t
t
a
t
fi
o
r
P
l
s
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
n
o
t
e
l
b
a
t
u
b
i
r
t
t
a
s
s
o
L
)
s
e
l
a
s
f
o
t
s
o
c
h
g
u
o
r
h
t
d
e
s
n
e
p
x
e
x
a
t
e
m
o
c
n
i
e
r
o
f
e
b
t
fi
o
r
P
e
s
n
e
p
x
e
x
a
t
e
m
o
c
n
I
r
a
e
y
e
h
t
r
o
f
t
fi
o
r
P
.
n
o
i
t
a
s
i
t
r
o
m
A
d
n
a
n
o
i
t
a
i
c
e
r
p
e
D
,
x
a
T
,
)
s
e
l
a
s
f
o
t
s
o
c
h
g
u
o
r
h
t
d
e
s
i
t
r
o
m
a
s
e
g
r
a
h
c
e
c
n
a
n
fi
d
n
a
t
s
e
r
e
t
n
i
g
n
i
d
u
l
c
n
i
(
t
s
e
r
e
t
n
I
e
r
o
f
e
B
s
g
n
i
n
r
a
E
:
A
D
T
I
B
E
.
x
a
T
d
n
a
)
s
e
l
a
s
f
o
t
s
o
c
h
g
u
o
r
h
t
d
e
s
i
t
r
o
m
a
s
e
g
r
a
h
c
e
c
n
a
n
fi
d
n
a
t
s
e
r
e
t
n
i
g
n
i
d
u
l
c
n
i
(
t
s
e
r
e
t
n
I
e
r
o
f
e
B
s
g
n
i
n
r
a
E
:
T
I
B
E
.
1
.
2
5. Revenue
Revenue from sales of land
Project management, selling and
performance fees
Other revenue
2017
$’000
2016
$’000
235,187
213,281
56,574
50,828
4,282
4,018
296,043
268,127
KEY ESTIMATES
SALES FALL OVER RATES ON PROJECT
MANAGEMENT AND SELLING FEES
An analysis of sales fallen over is performed on
a monthly basis for all business segments by
location. This analysis is used to determine an
appropriate allowance for sales fall overs to be
recognised against project management and
Recognition and measurement
selling fees.
Revenue is recognised at the fair value of consideration
received or receivable. The main streams of revenue are
Revenue from related parties included above:
recognised if it meets the criteria outlined below.
SALE OF LAND
Revenue from the sale of blocks from completed stages of
land subdivision are recognised on settlement of the sale.
This represents the point when risks and rewards have
passed to the buyer.
PROJECT MANAGEMENT AND SELLING FEES
Revenue from related parties 1
Associates
Project management, selling and
performance fees
Syndicate administration fees
Interest
Other
Project management and selling fees are recognised where
Joint arrangements
there is a signed sales contract with a buyer as this is the
point at which revenue has been earned by the project
Project management, selling and
performance fees
manager, adjusted for estimates of sales fall over rates.
PERFORMANCE FEES
1. Refer to note 3 for information on related party transactions.
2017
$’000
2016
$’000
42,658
44,147
1,368
825
667
1,587
1,535
–
5,682
3,937
51,200
51,206
Performance fee revenue is based on a profitability
measurement in accordance with the relevant development
management agreement.
OTHER REVENUE
Other revenue includes:
• interest – this is recognised when earned, which is
determined using the effective interest rate method.
• dividends – this is recognised when the Group’s right to
receive payment is established.
• other trading activities – this is recognised as the service
required under the contract is performed.
80 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 81
6. Expenses
Land and development costs
2017
$’000
2016
$’000
Land and development costs represent the portion of the
land and development costs associated with the lots sold
Profit before income tax includes the
following specific expenses:
during the year.
Land and development cost
148,665
125,789
Borrowing costs
Amortised interest and finance expense
16,832
23,086
Total land and development cost
165,497
148,875
Depreciation
Amortisation
Total depreciation and amortisation 1
Employee benefits expense 2
Project management, selling and other
operating costs
Other expenses
Total other expenses
Total expenses
Finance costs
2,722
817
3,539
33,736
19,602
18,235
71,573
3,195
336
3,531
33,614
17,612
18,027
69,253
240,609
221,659
Interest and finance charges paid/payable
12,703
14,868
6,296
–
–
7,863
(12,229)
(16,558)
8,337
4,606
Interest on convertible notes
Interest on corporate bonds
Amount capitalised
1. Refer to note 26 (ii) and (iii) for accounting policies.
2. Refer to note 26 (iv) and (v) for accounting policies.
Related party expenses
KMP remuneration 1
Short-term employee benefits
Post-employment benefits
Share-based payments
1. Refer to note 3 for information about related party transactions.
Borrowing costs incurred for the construction of any
qualifying asset are capitalised during the period of time that
is required to complete and prepare the asset for its intended
use or sale. Other borrowing costs are expensed in the
period they are incurred. The capitalisation rate used to
determine the amount of finance costs to be capitalised is
the weighted average interest rate applicable to the Group’s
outstanding borrowings during the year (refer note 16).
7. Earnings per share
Profit attributable to the ordinary
equity holders of the Company
($’000)
Weighted average number of
ordinary shares used as the
denominator in calculating
basic earnings per share
Basic and diluted earnings
per share (cents)
2017
44,792
2016
42,592
489,980,559
489,588,246
9.14
8.70
There are 1,200,000 options excluded from the calculation
of diluted earnings per share as they are anti-dilutive. They
could potentially dilute basic earnings per share in the future.
2017
$’000
2016
$’000
Refer note 24 for the number of Performance Rights (PRs)
outstanding at 30 June 2017. These PRs are contingently
issuable shares and accordingly not included in diluted
earnings per share.
4,284
191
1,505
5,980
4,236
184
1,742
6,162
8. Taxes
a. Income tax expense
Major components of tax expense
Current income tax expense
Current tax
Adjustments for prior periods
Inclusion of subsidiary in tax
consolidated group
Deferred income tax expense
Deferred tax
Adjustments for prior periods
DEFERRED TAXES
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to apply,
2017
$’000
2016
$’000
when the assets are recovered or liabilities are settled,
based on those tax rates which are enacted or substantively
enacted for each jurisdiction by the end of the reporting
period. The relevant tax rates are applied to the amounts of
deductible and taxable temporary differences to measure
the deferred tax asset or liability. An exception is made for
certain temporary differences arising from the initial
recognition of an asset or a liability. No deferred tax asset
or liability is recognised in relation to these temporary
differences if they arise in a transaction other than a
business combination that at the time of the transaction did
not affect either accounting profit or taxable profit or loss.
12,297
703
–
11,637
(693)
(2,463)
13,000
8,481
5,866
(703)
5,163
7,585
693
8,278
18,163
16,759
Deferred tax assets are recognised for deductible
Deferred income tax expense included
in income tax expense comprises:
Decrease in deferred tax assets
Decrease in deferred tax liabilities
4,241
922
5,163
6,891
1,387
8,278
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority.
Tax reconciliation
Profit before income tax
Tax at Australian tax rate of 30%
Tax effect of amounts which are not
assessable or deductible:
Share of net profit of associates
Employee benefits
Franking credits
Sundry items
62,423
18,727
58,547
17,564
Current and deferred tax is recognised in profit or loss,
except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
KEY ESTIMATES
(218)
630
(1,184)
208
(1,733)
684
(287)
531
18,163
16,759
DEFERRED TAX ASSETS
Recognition and measurement
CURRENT TAXES
The Group has recognised deferred tax assets
relating to carried forward tax losses to the extent
there are sufficient taxable temporary differences
(deferred tax liabilities) relating to the same taxation
The income tax expense for the period is the tax payable
authority against which the unused tax losses can
on the current period’s taxable income based on the
be utilised. However, utilisation of the tax losses
applicable income tax rate, adjusted by changes in deferred
also depends on the ability of the entity, to satisfy
tax assets and
liabilities attributable
to
temporary
certain tests at the time the losses are recouped.
differences between the tax bases of assets and liabilities
and their carrying amounts in the financial statements.
Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends
either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.
82 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 83
8. Taxes (continued)
b. Deferred tax assets
Movements
At 1 July 2015
Credited/(charged):
– to profit or loss
– to other comprehensive income
Total deferred tax assets
Set off against deferred tax liabilities pursuant
to set off provisions
At 30 June 2016
At 1 July 2016
Credited/(charged):
– to profit or loss
– to other comprehensive income
Total deferred tax assets
Set off against deferred tax liabilities pursuant
to set off provisions
At 30 June 2017
c. Deferred tax liabilities
Movements
At 1 July 2015
Charged/(credited):
– to profit or loss
Total deferred tax liabilities
Set off against deferred tax liabilities pursuant
to set off provisions
At 30 June 2016
At 1 July 2016
Charged/(credited):
– to profit or loss
Total deferred tax liabilities
Set off against deferred tax liabilities pursuant
to set off provisions
At 30 June 2017
Inventory
$’000
Cash flow
hedges
$’000
Capital
raising costs
$’000
Tax losses
$’000
4,112
1,004
976
10,601
(840)
–
3,272
–
1,428
2,432
(286)
–
690
(4,949)
–
5,652
Other
$’000
5,018
(816)
–
4,202
Total
$’000
21,711
(6,891)
1,428
16,248
(16,248)
–
3,272
2,432
690
5,652
4,202
16,248
80
–
3,352
–
(1,249)
1,183
(484)
–
206
(2,960)
–
2,692
(877)
–
3,325
(4,241)
(1,249)
10,758
(10,758)
–
Interest and
finance
charges
$’000
Accrued
income
$’000
Inventory
$’000
Share of joint
arrangements
deferred tax
liabilities
$’000
31,308
8,440
6,728
581
Other
$’000
1,090
Total
$’000
48,147
(1,718)
29,590
(368)
8,072
2,301
9,029
2,107
2,688
(935)
155
1,387
49,534
(16,248)
33,286
29,590
8,072
9,029
2,688
155
49,534
(1,043)
28,547
(1,554)
6,518
2,983
12,012
536
3,224
–
155
922
50,456
(10,758)
39,698
Operating assets and liabilities
This section shows the assets used to generate the Group’s
trading performance and the liabilities incurred as a result.
Liabilities relating to the Group’s financing activities are
KEY ESTIMATES
addressed in the capital management section.
NET REALISABLE VALUE
9. Inventories
Current
Cost of acquisition
Capitalised development costs
Capitalised finance costs
Non-current
Cost of acquisition
Capitalised development costs
Capitalised finance costs
Total inventory at cost
The Group is required to carry inventory at lower
of cost and net realisable value. Net realisable
value is the estimated selling price in the ordinary
course of business, less estimated costs of
completion and the estimated costs necessary
to make the sale. Estimates of net realisable value
are based on the most reliable evidence available
at the time the estimates are made, of the amount
2017
$’000
2016
$’000
36,400
70,140
26,697
48,162
75,663
23,724
133,237
147,549
the inventories are expected to realise and the
estimate of costs to complete. The key
213,318
302,502
assumptions require the use of management
81,031
58,570
352,919
486,156
83,671
65,222
451,395
598,944
Recognition and measurement
Land held for development and resale is stated at the lower
of cost and net realisable value. Cost includes the cost of
acquisition, development and borrowing costs during
development. When development is completed, borrowing
costs and other holding charges are expensed as incurred.
Land is initially classified as non-current. It is subsequently
reclassified to current if the development/subdivided lots
are expected to be sold within the next 12 months.
judgement and are reviewed annually.
10. Investments accounted for using
the equity method
Investments in associates and joint ventures are accounted
for using the equity method of accounting.
a. Movements in carrying amounts of
investments in associates and joint
ventures
2017
$’000
2016
$’000
Carrying amount at 1 July
198,115
181,826
Acquisitions/additional investments
Dividends
Capital returns
4,700
(3,949)
(744)
8,806
(5,756)
(3,608)
Share of profit after income tax
15,326
16,685
Share of other comprehensive income
–
162
Carrying amount at 30 June
213,448
198,115
84 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 85
10. Investments accounted for using the equity method (continued)
10. Investment accounted for using the equity method (continued)
The Group assesses, at each balance date, the carrying value of investments in associates and joint ventures to ensure
the assets are not impaired.
b. Investments in associates and joint ventures (JVs) including summarised financial information
s
t
e
s
s
a
t
n
e
r
r
u
c
-
n
o
N
s
e
i
t
i
l
i
b
a
i
l
t
n
e
r
r
u
C
s
e
i
t
i
l
i
b
a
i
l
t
n
e
r
r
u
c
-
n
o
N
s
t
e
s
s
a
t
e
N
s
t
e
s
s
a
t
n
e
r
r
u
C
i
p
h
s
r
e
n
w
O
n
i
t
s
e
r
e
t
n
i
l
f
o
e
u
a
v
g
n
i
y
r
r
a
C
e
r
u
t
n
e
v
t
n
o
i
j
i
r
o
e
t
a
c
o
s
s
a
)
s
s
o
l
(
/
t
fi
o
r
p
t
e
N
e
u
n
e
v
e
R
)
s
s
o
l
(
/
t
fi
o
r
p
f
o
e
r
a
h
S
As at 30 June 2017
% $’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Peet Caboolture Syndicate Limited, QLD 20
10,996
49,595
46,231
5,076
9,284
7,952
379,668
125,351
28,585
233,684
61,155
31,404
1,472
48,243
25,754
56
23,905
4,102
1,857
77
19,182
(1,345)
(1,090)
(1,582)
(352)
(187)
(316)
Associates
Peet Alkimos Pty Limited, WA
Peet Werribee Land Syndicate, VIC
26
17
Joint Ventures*
Peet Flagstone City Pty Limited, QLD
Googong Township Unit Trust, NSW
Peet Golden Bay Pty Limited, WA
Peet Mt Barker Pty Limited, SA
Peet No.1895 Pty Limited, VIC #
Other associates
Other JVs
Total
As at 30 June 2016
Associates
Peet Alkimos Pty Limited, WA
Peet Werribee Land Syndicate, VIC
50
50
50
50
50
26
17
17,785
134,617
40,203
936
111,263
55,632
21,594
2,355
1,178
52,761
117,297
53,061
32,333
5,500
–
–
116,997
58,499
90,263
21,166
10,583
31,621
15,811
13,757
2,434
1,217
28,714
10,539
282
22,912
11,456
12,548
23
12
4,788
5,019
61,327
6,118
3,059
13,989
81,565
49,715
40,219
5,620
2,810
1,874
252
213,448
22
110
15,326
376
–
(131)
Peet Caboolture Syndicate Limited, QLD 20
13,389
40,145
21,520
21,149
10,865
37,760
334,974
19,050
119,460
234,224
61,296
26,854
1,438
17,500
–
–
–
17,500
3,003
2,173
–
–
12,137
(655)
c. Additional summarised information in relation to amounts included in assets, liabilities
and profit/(loss) of joint ventures
As at 30 June 2017
Peet Flagstone City Pty Limited
Googong Township Unit Trust
Peet Golden Bay Pty Limited
Peet Mt Barker Pty Limited
Peet No. 1895 Pty Limited
As at 30 June 2016
Peet Flagstone City Pty Limited
Googong Township Unit Trust
Peet Golden Bay Pty Limited
Peet Mt Barker Pty Limited
Crace Developments Pty Limited
1. Excluding trade and other payables and provisions
Cash and cash
equivalents
$’000
13,042
3,151
5,822
5,434
14,022
1,013
31,455
2,413
4,234
1,294
Current
financial
liabilities 1
$’000
–
39,463
–
5,000
–
–
–
–
–
–
Non-current
financial
liabilities 1
$’000
36,021
–
–
–
38,923
–
69,131
–
–
–
Interest
expense
$’000
Income tax
expense/
(benefit)
$’000
–
103
–
–
101
–
7
–
–
–
1,014
(14)
1,043
14
1,409
(920)
(23)
1,080
495
–
Joint Ventures*
Peet Flagstone City Pty Limited, QLD
Googong Township Unit Trust, NSW
Peet Golden Bay Pty Limited, WA
Peet Mt Barker Pty Limited, SA
Crace Developments Pty Limited, ACT
50
50
50
50
80
Other associates
Other JVs
Total
4,419
116,207
16,223
– 104,403
52,202
–
(2,147)
(1,073)
65,831
130,710
13,900
23,728
9,096
4,984
12,237
21,853
11,129
91,526
95,919
47,961
50,447
22,554
11,276
–
–
32,644
16,322
15,363
22,961
11,481
12,566
2,519
1,155
1,260
578
2,919
79
155
2,154
689
551
5,582
12,851
3,598
3,126
–
198,115
801
–
16,685
* Refer to note 10(c) for further breakdown of financial information of joint ventures
# New joint venture in FY17
The associates and joint ventures finance their operations through unitholder/shareholder contributions and also through
external banking facilities. The Group also provides a loan facility to some of these entities which is disclosed in note 11.
The Group has no further contractual obligations to provide ongoing financial support.
86 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 87
11. Receivables
Current
Trade receivables 1
Accrued income 2
Loans to associates and joint ventures 3
Other receivables
Non-current
Loans to associates and joint ventures 3
Other receivables 4
Recognition and measurement
LOANS AND RECEIVABLES
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in
an active market. They are included in current assets, except
for those with maturities greater than 12 months after the
balance date which are classified as non-current assets.
Trade receivables generally mentioned in (1) are recognised
initially at fair value and subsequently at amortised cost
using the effective interest rate method, less allowance for
impairment. Other receivables are recognised on an accrual
basis as the services to which they relate are performed.
2017
$’000
2016
$’000
20,147
25,005
6,609
1,575
53,336
66,787
11,215
78,002
12,391
21,416
27,811
4,896
66,514
35,950
12,074
48,024
Total receivables
131,338
114,538
Refer note 20 for fair value disclosures.
1. Trade receivables are non-interest bearing and generally have 30-60 day terms. There were no
impaired trade receivables at the end of the year for the Group (2016: $Nil).
2. These amounts represent project management and performance fees from associates and other
Credit risk
managed entities.
3. The Group has entered into financing arrangements (including loans and equity contributions in cash)
with certain associates and JVs of the Group on commercial terms. The loans provided to associates
and JVs are unsecured with interest rates based on Bank Bill Swap Bid Rate (BBSY) plus a margin up
to 5%.
Includes deferred facilities fee – Those that purchase homes in the Lattitude Lakelands retirement
village enter into an agreement to pay deferred facilities fees on departure, which is based on 3%
of the market value of the unit for each year of occupation (up to 24%). The deferred facilities fee
is based on independent valuations.
4.
Related party balances with associates and joint ventures
included above:
Current
Trade and accrued income
Loans to associates and joint ventures
Non-current
Loans to associates and joint ventures
Other receivables
Total
2017
$’000
2016
$’000
31,214
6,609
66,787
6,861
111,471
23,391
27,811
35,950
7,433
94,585
Movements in loans to associates and joint ventures:
Carrying amount at 1 July
Loans advanced to associates
Loan repayments from associates
Other
63,761
31,220
(21,951)
366
59,845
8,801
(6,880)
1,995
The credit risk is the risk that a counterparty will not meet
its obligations under a financial instrument or customer
contract, leading to a financial loss. The maximum exposure
to credit risk as at 30 June 2017 is the carrying amount of
the financial assets in the consolidated financial statements.
The credit risk arising on trade and other receivables is
monitored on an ongoing basis which results in the
exposure to bad debts for the Group not being significant.
There are no significant financial assets that have had
renegotiated terms that would otherwise have been past
due or impaired.
Based on the credit history of trade and other receivables, it
is expected that these amounts will be received. The Group
does not hold any collateral in relation to these receivables.
There is no significant concentration of credit risk with
respect to receivables as the Group has a large number of
balances with related parties and the remaining with other
parties that have a good credit history with the Group.
The Group manages this risk by:
• transacting with creditworthy counterparties that have
Carrying amount at 30 June
73,396
63,761
an appropriate credit history;
• providing loans as an investment into joint ventures and
associates where it is comfortable with the underlying
property exposure within that entity;
• performing ongoing checks to ensure that settlement
terms detailed in individual contracts are adhered to;
• regularly monitoring the performance of its associates,
joint ventures and third parties; and
• obtaining collateral as security (where appropriate).
12. Payables
Recognition and measurement
2017
$’000
2016
$’000
Where the Group enters into unconditional contracts with
land vendors to purchase properties for future development
that contain deferred payment terms, these borrowings
are disclosed at their present value. The unwinding of the
discount applied to the acquisition price is included in
finance costs. Generally, the land vendor holds the title
over the property until settlement has occurred.
Refer note 20 for fair value disclosures.
The below table analyses the maturity of the Group’s land
vendor liability obligation:
Current
Trade payables
Unearned revenue
GST payable
Accruals and other payables
6,997
13,797
4,976
43,739
69,509
7,168
17,779
5,723
50,889
81,559
Recognition and measurement
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial year
which are unpaid. These amounts are unsecured and
usually paid within 30 days of recognition.
0 – 1 years
1 – 2 years
Trade and other payables are presented as current liabilities
2 – 5 years
unless payment is not due within 12 months from the
Total contractual cash flows
reporting date. They are recognised initially at their fair
Carrying amount of liabilities
value and subsequently measured at amortised cost using
the effective interest method.
14. Provisions
In some joint arrangement contracts, costs are reimbursed
as incurred during development. As revenue is only
recognised on settlements, reimbursements received are
recognised as unearned revenue until settlement. Although
unearned revenue is classified as a liability in the
Current
Rebates
consolidated balance sheet, on settlement it will be
recognised in the consolidated statement of profit or loss
and not be repaid in cash.
Refer note 20 for fair value disclosures.
13. Land vendor liabilities
Employee entitlements
Non-current
Employee entitlements
2017
$’000
2016
$’000
15,975
14,700
6,350
37,025
33,828
16,100
49,625
35,100
100,825
89,269
2017
$’000
2016
$’000
3,138
3,107
6,245
199
199
5,154
2,982
8,136
164
164
Total provisions
6,444
8,300
Movements in the provision for rebates during the financial
2017
$’000
2016
$’000
year are set out below:
Current
Instalments for purchase of
development property
Non-current
Instalments for purchase of
development property
Future interest component of
deferred payments
Total land vendor liabilities
15,975
16,100
15,975
16,100
21,050
84,725
(3,197)
(11,556)
17,853
33,828
73,169
89,269
Carrying amount at 1 July
Charged/(credited) to the statement
of profit or loss:
– Additional provision recognised
– Paid during year
Carrying amount at 30 June
2017
$’000
5,154
2016
$’000
7,992
1,450
(3,466)
3,138
1,648
(4,486)
5,154
88 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 89
14. Provisions (continued)
15. Interests in joint operations
Recognition and measurement
Details of aggregate share of assets, liabilities, revenue,
expenses and results of joint operations.
Provisions are recognised when the Group has a present
legal or constructive obligation as a result of past events; it
Group’s share of:
Total
assets
$’000
Total
liabilities
$’000
Revenue
$’000
Expenses
$’000
29,608
7,411
17,424
12,080
4,997
2,340
13,465
10,567
10,393
6,561
4,083
3,601
21,903
5,446
2,599
2,642
34,788
11,238
21,315
12,867
7,757
3,998
14,154
10,950
11,124
2,697
6,577
6,002
As at 30 June 2017
The Village at
Wellard, WA
Lightsview Joint
Venture, SA
The Heights
Durack, NT
Redbank Plains
Joint Venture,
QLD
As at 30 June 2016
The Village at
Wellard, WA
Lightsview Joint
Venture, SA
The Heights
Durack, NT
is probable that an outflow of resources will be required to
settle the obligation; and the amount has been reliably
estimated. Provisions are not recognised for future
operating losses.
Provisions are measured at
the present value of
management’s best estimate of the expenditure required
to settle the present obligation at the balance date. The
discount rate used to determine the present value reflects
current market assessments of the time value of money
and the risks specific to the liability. The increase in the
provision due to the passage of time is recognised as
interest expense.
Rebates
The Group may be required under the terms of certain sale
contracts to provide rebates for expenditures undertaken
by land holders in respect of developments. These
expenditures relate to landscaping and fencing and are
generally payable where the land purchaser completes the
construction of their dwelling within a specified period of
time. This period is generally 12 to 18 months from the
date of settlement. A liability is recorded at settlement and
a related adjustment to profit or loss is recorded upon the
expiration of the time limit if the rebate has not been paid.
Employee entitlements
The liability for long service leave and annual leave is
recognised in the provision for employee benefits and
measured as the present value of expected future
payments to be made in respect of services provided by
employees up to the balance date. Consideration is given
to expected future wage and salary levels, experience of
the employee, departures and periods of service. Expected
future payments are discounted using market yields at the
reporting date on high quality corporate bonds with terms
to maturity and currency that match, as closely as possible,
the estimated future cash outflows.
Liabilities for wages and salaries, including non-monetary
benefits and accumulating sick leave expected to be settled
within 12 months of the balance date are measured at the
amounts expected to be paid when the liabilities are settled.
Capital management
This section outlines how the Group manages its capital
Recognition and measurement
and related financing costs.
Borrowings are initially recognised at fair value, net of
For the purpose of the Group’s capital management,
transaction costs incurred. Borrowings are subsequently
capital includes:
• issued capital;
• debt facilities; and
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in the statement of profit or loss
over the period of the borrowings using the effective
• other equity reserves attributable to the equity holders
interest method.
of the parent.
For the purpose of presentation in the statement of cash
The Group’s objectives when managing capital are to:
flows, cash and cash equivalents includes cash on hand,
• safeguard its ability to continue as a going concern;
• continue to provide returns to shareholders and benefits
for other stakeholders;
deposits held at call with financial institutions, other short-
term, highly liquid investments with original maturities of
three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
• maintain an efficient capital structure to reduce the cost
risk of changes in value, and bank overdrafts. Bank
of capital; and
overdrafts are shown within borrowings in current liabilities
• ensure all covenants are complied with.
on the balance sheet.
In order to maintain or adjust the capital structure, the
Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
The Group monitors capital on the basis of the gearing
ratio. This ratio is calculated as total interest-bearing
liabilities (including deferred payment obligations) less
cash, divided by total assets adjusted for market value, net
Refer note 20 for fair value disclosures.
Debt facilities
The following provides details of the loans and borrowings
utilised as at 30 June 2017:
Facility
amount
$’000
Carrying
amount 1
$’000
Effective
interest
rate %
of cash and cash equivalents less intangible assets. The
Bank loans – note a
233,000
151,714
6.00%
Face
value
$’000
Carrying
amount 2
$’000
Effective
interest
rate %
Peet bonds – note b
100,000
98,094
8.06%
1. Excludes bank guarantees. Refer note 22 for bank guarantees information.
2. Net of transaction and finance costs.
market value is based on the latest independent mortgage
valuations, adjusted for settlements, development costs
and titled stock between the date of valuation and 30 June
2017. At 30 June 2017, the bank covenant gearing ratio
was 21.4% (2016: 28.8%).
16. Borrowings and derivative
financial instruments
Net debt
Borrowings – Current
Borrowings – Non-current
Total borrowings*
Cash and cash equivalents
Net debt
2017
$’000
5,791
2016
$’000
5,321
244,017
261,644
249,808
266,965
(88,367)
(73,373)
161,441
193,592
*Excludes vendor financing. Refer note 13 for vendor financing on deferred payment terms.
90 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 91
16. Borrowings and derivative
financial instruments (continued)
a. BANK LOANS
The bank facilities are secured by a first registered fixed
and floating charge over the assets and undertakings of
the Group with a carrying amount of $714 million
(2016: $795 million). Under these facilities the Group is
required to meet bank covenants relating to interest cover,
gearing ratio, real property ratio and minimum shareholders’
equity. All bank covenants have been met during the
reporting period and as at 30 June 2017.
The Group’s main bank facility of $200 million was
extended to 1 October 2019. The table below analyses the
maturity of the Group’s bank loans based on the remaining
period at reporting date to the contractual maturity date:
The bonds are presented in the balance sheet as follows:
Face value of bonds issued
100,000
100,000
2017
$’000
2016
$’000
Transaction costs
Cumulative interest expense 1
Cumulative coupon payable
(2,288)
97,712
8,316
(7,934)
382
(2,288)
97,712
496
(434)
62
Non-current liability
98,094
97,774
1.
Interest expense is calculated by applying the effective interest rate of 8.06% (2016: 8.06%) to the
liability component.
The bonds are repayable as follows:
0 – 1 years
1 – 2 years
2 – 5 years
2017
$’000
14,546
29,449
2016
$’000
15,245
25,074
126,922
150,652
0 – 1 years
1 – 2 years
2 – 5 years
Total contractual cash flows
Carrying amount of liabilities
2017
$’000
7,500
7,500
2016
$’000
7,500
7,500
114,733
122,233
129,733
137,233
98,094
97,774
Total contractual cash flows
170,917
190,971
c. DERIVATIVE FINANCIAL INSTRUMENTS
Carrying amount of liabilities
151,714
169,191
b. PEET BONDS
Peet Limited issued 1,000,000 Peet bonds with a face
value of $100 per bond on 7 June 2016. The bonds are
unsecured and interest-bearing at a fixed rate of interest of
7.5%, payable semi-annually in arrears and have a maturity
date of 7 June 2021.
Of the proceeds raised from the issuance of the Peet
bonds, $50 million was used to repay the Peet convertible
notes on 16 June 2016 with the remaining balance used to
further strengthen the Peet Group’s balance sheet and
support its growth objectives.
Non-current
Interest rate swap contracts –
cash flow hedges
2017
$’000
2016
$’000
4,551
8,150
Total derivative financial instruments
4,551
8,150
The below table analyses the maturity of the Group’s
interest rate swaps on a net settled basis:
2 – 5 years
>5 years
Total contractual cash flows
Carrying amount of liabilities
2017
$’000
4,551
–
4,551
4,551
2016
$’000
1,027
7,123
8,150
8,150
16. Borrowings and derivative
financial instruments (continued)
Swaps currently cover approximately 82.4% (2016: 74%) of
the variable bank loan principal outstanding and are timed to
expire as each loan repayment falls due. During the year fixed
Interest rate swap contracts – cash flow hedges
interest rate swaps range between 2.83% and 3.11% (2016:
Recognition and measurement
Derivatives are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently
measured at fair value at each reporting period. The
accounting for subsequent changes in fair value depends on
2.83% and 3.11%) and the variable rates are between 1.67%
and 1.87% (2016: 1.85% and 2.02%).
The contracts require settlement of net interest receivable or
payable monthly. The settlement dates coincide with the
dates on which interest is payable on the underlying debt.
whether the derivative is designated as a hedging instrument,
The notional principal amounts and periods of expiry of the
and if so, the nature of the item being hedged. The Group
interest rate swap contracts were as follows:
designates certain derivatives as hedges of the cash flows of
recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges).
The Group documents at the inception of the hedging
transaction the relationship between hedging instruments
and hedged items, as well as its risk management objective
2 – 5 years
>5 years
2017
$’000
2016
$’000
125,000
25,000
–
100,000
125,000
125,000
and strategy for undertaking various hedge transactions. The
The full fair value of a hedging derivative is classified as a
Group also documents its assessment, both at hedge
non-current asset or liability when the remaining maturity of
inception and on an ongoing basis, of whether the derivatives
the hedged item is more than 12 months, otherwise current.
that are used in hedging transactions have been and will
continue to be highly effective in offsetting changes in fair
Liquidity risk
values or cash flows of hedged items.
Liquidity risk includes the risk that the Group, as a result of
The gain or loss from remeasuring the hedging instruments at
their operations:
fair value is recognised in other comprehensive income and
deferred in equity in the hedge reserve, to the extent that the
hedge is effective. It is reclassified into profit or loss when the
• will not have sufficient funds to settle a transaction on
due date;
hedged interest expense is recognised. The ineffective
• will be forced to sell financial assets at a value which is
portion is recognised in the statement of profit or loss
less than what they are worth; or
immediately. There was no ineffectiveness in the current or
• may be unable to settle or recover a financial asset at all.
prior year.
Prudent liquidity risk management implies maintaining
When a hedging instrument expires or is sold or terminated,
sufficient cash, the availability of funding through an
or when a hedge no longer meets the criteria for hedge
adequate amount of committed credit facilities to meet
accounting, any cumulative gain or loss existing in equity at
obligations when due, and the ability to close-out market
that time remains in equity and is recognised when the
positions. Due to the dynamic nature of the underlying
forecast transaction is ultimately recognised in the statement
business, the Group aims at maintaining flexibility in
of profit or loss. When a forecast transaction is no longer
funding by keeping committed credit lines available, and
expected to occur, the cumulative gain or loss that was
regularly updating and reviewing its cash flow forecasts to
reported in equity is immediately reclassified to the statement
assist in managing its liquidity. The maturity analysis of the
of profit or loss.
Bank loans of the Group currently bear a weighted average
Group’s derivative and non-derivative financial instruments
can be located in their respective notes.
variable interest rate for the year before hedges of 1.75%
The Group has unused borrowing facilities which can
(2016: 1.88%). It is the Group’s policy to protect part of the
further reduce liquidity risk.
loans from exposure to increasing interest rates. Accordingly,
the Group has entered into interest rate swap contracts under
which it is obliged to receive interest at variable rates and to
pay interest at fixed rates.
92 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 93
16. Borrowings and derivative
financial instruments (continued)
At 30 June 2017, the Group had the following mix of
financial assets and liabilities exposed to variable interest
rates:
17. Contributed equity and reserves
a. Movements in ordinary share capital
Date
30 June 2015
17 August 2015
Details
Closing balance
Vested Performance Rights less transaction costs 1
Deferred tax credit recognised in equity
Movement for the year
30 June 2016
Closing balance
30 June 2017
Closing balance
Movement for the year
1.
In August 2015, the Company issued 2,991,386 shares pursuant to the vesting of FY13 Performance Rights.
The nature of the Group’s contributed equity
Number of
shares
486,989,173
2,991,386
–
2,991,386
$’000
385,962
(10)
3
(7)
489,980,559
385,955
–
–
489,980,559
385,955
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares of options and/
or performance rights are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly
attributable to the issue of new shares, options and/or performance rights for the acquisition of a business are not
included in the cost of the acquisition as part of the purchase consideration. Ordinary shares entitle the holder to participate
in dividends and the proceeds on winding up of the parent entity in proportion to the number of and amounts paid on the
shares held. On a show to hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to
one vote, and upon a poll each share held is entitled to one vote.
Credit risk
The cash component of financial assets is considered
to have low credit risk as the counterparties are banks
Financial assets
2017
$’000
2016
$’000
with high credit ratings assigned by international credit-
Cash and cash equivalents (floating)
88,367
73,373
Financial liabilities
Borrowings (floating, unhedged)
(26,714)
(44,191)
Interest rate swap
Net movement
(4,551)
57,102
(8,150)
21,032
The potential impact of a change in interest rates by +/- 50
basis points on profit and equity has been tabulated below:
Post-tax profits
increase/
(decrease)
Equity
increase/
(decrease)
2017
$’000
2016
$’000
2017
$’000
2016
$’000
– 50 basis points
+ 50 basis points
(216)
216
(102)
102
(200)
200
(73)
73
rating agencies.
Interest rate risk
The Group’s main interest rate risk arises from cash and
long-term borrowings.
Borrowings issued at variable rates expose the Group to
cash flow interest rate risk.
The Group manages its cash flow interest rate risk by using
floating-to-fixed interest rate swaps. Such interest rate
swaps have the economic effect of converting borrowings
from floating rates to fixed rates. Generally, the Group
raises long-term borrowings at floating rates and swaps
them into fixed rates that are lower than those available if
the Group borrowed at fixed rates directly.
Under the interest rate swaps, the Group agrees with other
parties to exchange, at specified intervals (mainly monthly),
the difference between fixed contract rates and floating
rate interest amounts calculated by reference to the agreed
notional principal amounts.
The Group’s fixed rate borrowings and receivables are
carried at amortised cost. They are therefore not subject to
interest rate risk as defined
in AASB 7, Financial
Investments: Disclosures.
Interest rate sensitivity
The sensitivity analysis below has been determined based
on the exposure to interest rates in existence at balance
date, and the stipulated change taking place at the
beginning of the financial year and held constant throughout
the reporting period. A 50 basis point increase or decrease
used in the interest rate sensitivity analysis was determined
based on the level of debt that was renewed and
forecasters’ economic expectations and
represents
management’s assessment of the possible change in
interest rates.
94 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 95
17. Contributed equity and reserves (continued)
b. Reserves
19. Reconciliation of profit after
income tax to net cash inflow
from operating activities
Cash flow
hedge
reserve 1
$’000
Share-based
payments
reserve 2
$’000
Convertible
notes
reserve 3
$’000
Non-
controlling
interest
reserve 4
$’000
11,122
1,933
101
At 1 July 2015
Cash flow hedges (gross)
Associates – cash flow hedge reserve
Deferred tax
Transfer to retained earnings
Share based payment (net)
At 30 June 2016
At 1 July 2016
Cash flow hedges (gross)
Deferred tax
Share based payment
Vesting of performance rights 5
Non-reciprocal contribution to a controlled entity
Capital return to non-controlling interests
(2,528)
(4,756)
162
1,428
–
–
(5,694)
(5,694)
4,164
(1,249)
–
–
–
–
–
–
2,280
13,402
13,402
–
–
2,099
(2,201)
–
–
At 30 June 2017
(2,779)
13,300
–
–
–
(1,933)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
101
101
–
–
–
–
(7,988)
(1,217)
(9,104)
Total
$’000
10,628
(4,756)
162
1,428
(1,933)
2,280
7,809
7,809
4,164
(1,249)
2,099
(2,201)
(7,988)
(1,217)
1,417
1. The cash flow hedge reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that is recognised directly in equity. Amounts are recognised in profit or loss when the associated hedged
transaction affects profit or loss.
2. The share-based payments reserve is used to recognise the fair value of options and performance rights granted.
3. The convertible notes reserve was used to recognise the value of the conversion rights relating to the 9.5% convertible notes, which matured during FY16.
4. This reserve is used to record the differences described in note 2(d) which may arise as a result of transactions with non-controlling interests that do not result in a loss of control.
5.
In September 2016, the Company repurchased 2,189,371 shares to settle the vesting of FY14 Performance Rights.
18. Dividends
Declared and paid during the period
Prior year franked dividend 2.75 cents, paid on 14 October 2016 (2016: 3.0 cents)
Fully franked interim dividend for 2017: 1.75 cents (2016: 1.75 cents)
2017
$’000
2016
$’000
13,474
8,575
22,049
14,699
8,575
23,274
Dividend not recognised at year end
Final dividend 3.00 cents per share to be paid on 4 October 2017 (2016: 2.75 cents per share)
14,699
13,475
Franking credit balance
Franking account balance as at the end of the financial year at 30% (2016: 30%)
Franking credits that will arise from the payment of income tax
Impact on the franking account of dividends proposed before the financial report was issued but not
recognised as a distribution to equity holders during the period
28,214
4,698
(6,300)
18,459
9,650
(5,775)
26,612
22,334
Other financial instruments – fair value
disclosures
The carrying value of receivables, payables and borrowings
is considered to approximate their fair values.
The fair value of Peet bonds is the quoted market value (on
ASX) of a bond which at 30 June 2017 was $102.3 per
bond (Level 1).
KEY ESTIMATES
FAIR VALUE ESTIMATION
2017
$’000
2016
$’000
44,260
41,788
2,722
817
(102)
3,195
336
2,280
(15,326)
(16,685)
(535)
320
(1,584)
1,256
The fair value of financial assets and financial
liabilities must be estimated for recognition and
measurement or for disclosure purposes.
3,949
5,756
(7,531)
61,929
(6,446)
(11,140)
(74,139)
6,326
The fair value of financial instruments traded in
active markets (such as publicly traded derivatives
and trading and available for sale securities) is
based on quoted market prices at the balance
date. The quoted market price used for financial
assets held by the Group is the current bid price;
Profit after income tax
Add/(deduct) non cash items:
Depreciation
Amortisation of intangible assets
Employee share-based payments
Equity accounting for investments
in associates and joint ventures
Interest received
Convertible notes effective interest
Add other items:
Distributions and dividends from
associates and joint ventures
Change in operating assets and
liabilities during the financial year
Increase in receivables
Decrease/(increase) in inventories
(Decrease)/increase in tax liabilities
(Decrease)/increase in payables
(31,632)
54,850
the appropriate quoted market price for financial
Decrease in provisions
Increase in deferred tax liabilities
(1,856)
6,658
Net cash inflow from operating activities
57,227
(3,285)
8,281
17,235
20. Fair value measurement
liabilities is the current ask price.
The fair value of financial instruments that are
not traded in an active market (for example,
unlisted securities) is determined using valuation
techniques. The Group uses a variety of methods
and makes assumptions that are based on market
Valuation of financial instruments
conditions existing at each balance date.
For financial assets and liabilities, the Group uses the
• Interest rate swaps are valued using valuation
following fair value measurement hierarchy:
• Level 1: the fair value is calculated using quoted prices in
active markets for identical assets and liabilities.
• Level 2: the fair value is determined using inputs other
than quoted prices included in level 1 that are observable
for the asset or liability either directly (as prices) or
indirectly (derived from prices).
• Level 3: the fair value is based on inputs for the asset or
liability that are not based on observable market data.
Financial instruments measured at fair value
The Group’s derivative financial instruments were valued
using market observable inputs (Level 2) at the carrying value
of $4.6 million (2016: $8.2 million).
techniques, which employs the use of market
observable inputs such as forward pricing and
swap models.
• Receivables/borrowings are evaluated by the
Group based on parameters such as interest
rates and individual creditworthiness of the
counter party. Based on this evaluation,
allowances are taken into account for the
expected losses of these receivables.
• Fair value of the Peet bonds is based on price
quotations at the reporting date.
The carrying amount of trade receivables and
payables less impairment provision of trade
receivables are assumed to approximate their fair
values. The fair value of financial liabilities for
There have been no transfers between levels during the year.
disclosure purposes is estimated by discounting
the future contractual cash flows at the current
market interest rate that is available to the Group
for similar financial instruments.
96 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 97
Other notes
23. Parent entity financial information
b. Subsidiaries
and subsidiaries
SIGNIFICANT INVESTMENTS IN SUBSIDIARIES
a. Parent entity financial information
The consolidated financial statements incorporate the
21. Remuneration of auditors
22. Contingencies and commitments
SUMMARY FINANCIAL INFORMATION
assets, liabilities and results of the following significant
subsidiaries in accordance with the accounting policy
2017
$
2016
$
Details of the estimated maximum amounts of contingent
liabilities (for which no amounts are recognised in the
financial statements) are as follows:
Audit services
Audit and review of financial reports
and other audit work under the
Corporations Act 2001
Bank guarantees outstanding
Ernst & Young
381,559
441,422
Insurance bonds outstanding
Total remuneration for audit services
381,559
441,422
2017
$’000
19,605
15,388
34,993
2016
$’000
21,864
10,735
32,599
14,405
71,168
1 year.
All contingent liabilities are expected to mature within
Other services
Ernst & Young
Taxation services
Tax compliance services including
review of Company income tax
returns
Ernst & Young
204,333
172,867
At 30 June 2017, the Group had commitments of
$19.4 million to purchase lots from associates and joint
ventures, at arms-length, to be on-sold to third party
buyers through the Group’s Peet Complete program.
The Directors are not aware of any circumstances or
information, which would lead them to believe that these
contingent liabilities will eventuate and consequently
no provisions are included in the accounts in respect of
these matters.
The individual financial statements for the parent entity
described in note 2(a):
show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Share-based payments reserve
Retained profits
Total equity
2017
$’000
2016
$’000
Name of Subsidiary
CIC Australia Limited 1
74,012
62,362
Peet Craigieburn Pty Limited 2
479,742
540,630
Peet Greenvale No. 2 Pty Limited 2
15,055
82,159
14,887
95,133
Peet Southern JV Pty Limited 2
Peet Brigadoon Pty Limited 2
Secure Living Pty Limited 2
385,955
385,955
Peet No. 85 Pty Limited 2
13,300
(1,672)
13,402
46,140
Peet No. 108 Pty Limited 2
Peet No. 112 Pty Limited 2
Peet No. 113 Pty Limited 2
397,583
445,497
Peet Treasury Pty Limited 2
(Loss)/profit for the year
Total comprehensive income
(25,762)
(25,762)
16,243
16,243
Peet Estates (VIC) Pty Limited 2
Peet Development Management Pty Limited 2
GUARANTEES ENTERED INTO BY THE PARENT ENTITY
Details of the estimated maximum amounts of contingent
liabilities (for which no amounts are recognised in the
financial statements) are as follows:
Bank guarantees outstanding
2017
$’000
586
2016
$’000
636
Peet Estates (QLD) Pty Limited 2
Peet No. 130 Pty Limited 2
Peet Estates (WA) Pty Limited 2
Peet Funds Management Limited 2
Peet No. 1895 Pty Limited 2
Peet No. 119 Pty Limited 2
Peet No. 125 Pty Limited 2
Peet No. 126 Pty Limited 2
Peet No. 73 Pty Limited 2
Lakelands Retail Centre Development Pty Limited 2
Peet Mt. Pleasant Pty Limited 2
Peet No. 127 Pty Limited 2
Peet Tonsley Pty Limited 2
Peet Yanchep Land Syndicate 2
Peet Tri-State Syndicate Limited 2,3
Holding
2017
%
2016
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
–
–
66.4
66.4
–
24.43
Incorporated in ACT.
Incorporated in WA.
1.
2.
3. Peet has a direct interest of more than 20% and has decision making authority in its capacity as
manager and earns remuneration for development and management activities. Peet has also
provided a loan to this syndicate. The combination of the investment, together with its remuneration
and exposure to credit risk, creates exposure to variability of returns from the activities of the fund
that is of such a magnitude that it indicates that Peet is deemed to be acting principal.
98 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 99
23. Parent entity financial information and subsidiaries (continued)
23. Parent entity financial information and subsidiaries (continued)
MATERIAL PARTLY-OWNED SUBSIDIARIES
Financial information of subsidiaries that have material non-controlling interests is provided below. This information is
based on amounts before inter-company eliminations.
Deed of cross guarantee
Consolidated balance sheet
Peet Limited and certain wholly-owned subsidiaries are
Set out below is a consolidated balance sheet at 30 June
parties to a deed of cross guarantee under which each
2017 of the closed group consisting of Peet Limited and
company guarantees the debts of the other. By entering
certain wholly owned subsidiaries.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Non-controlling interest
Revenue
Profit or loss after tax
Profit attributable to non-controlling interest
Summarised cash flow information:
Operating
Investing
Financing
Net outflow
Peet Yanchep
Land Syndicate
2017
$ ’000
18,740
64,325
12,858
15,919
18,238
4,917
(153)
51
2016
$ ’000
16,874
64,914
12,352
15,000
18,290
16,584
892
314
Peet Yanchep
Land Syndicate
2017
$ ’000
(188)
–
449
261
2016
$ ’000
7,455
(6)
(8,419)
(970)
Peet Beachton Syndicate Limited was put into liquidation during the year ended 30 June 2017.
Peet has provided loans to other partly-owned subsidiaries amounting to $1.4 million (2016: $4.8 million). The Group has
no further contractual obligations to provide ongoing financial support.
into the deed, the wholly-owned entities have been
relieved from the requirements to prepare a financial report
and directors’ report under ASIC Corporations (Wholly-
owned Companies) Instrument 2016/785 issued by the
Australian Securities and Investments Commission.
The companies represent a ‘closed group’ for the purposes
of the Class Order.
Consolidated statement of profit or loss
Revenue
Expenses
Finance costs
Share of net profit of associates
accounted for using the equity method
Profit before income tax
Income tax expense
Profit for the year
2017
$’000
2016
$’000
291,687
251,832
(235,908)
(206,266)
(7,965)
15,211
63,025
(18,182)
44,843
(4,558)
17,043
58,051
(16,154)
41,897
Current assets
Cash and cash equivalents
Receivables
Inventories
Total current assets
Non-current assets
Receivables
Inventories
Investments accounted for using
the equity method
Property, plant & equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Payables
Land vendor liabilities
Borrowings
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Land vendor liabilities
Other comprehensive income
Items that may be reclassified to profit or loss:
Changes in the fair value of cash
flow hedges
Share of other comprehensive income
of associates
Income tax relating to components
of other comprehensive income
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
4,164
(4,756)
–
162
(1,249)
1,428
Borrowings
2,915
(3,166)
Derivative financial instruments
Deferred tax liabilities
47,758
38,731
Provisions
Total non-current liabilities
Total liabilities
Net assets
Summary of movement in consolidated retained profits
Retained profits at the beginning of the
financial year
Profit for the year
Dividends paid
Transfer between reserves
Retained profits at the end
of the financial year
105,054
84,498
Equity
44,843
41,897
(22,049)
(23,274)
–
1,933
127,848
105,054
Contributed equity
Reserves
Retained earnings
Total equity
2017
$’000
2016
$’000
87,378
55,471
114,869
257,718
71,136
68,564
131,657
271,357
100,524
60,994
279,231
385,940
246,480
231,262
8,283
6,246
11,363
2,321
640,764
691,880
898,482
963,237
56,824
15,975
–
11,626
5,933
70,242
16,100
–
10,156
7,073
90,358
103,571
17,853
73,169
228,098
246,173
4,551
33,762
199
8,150
33,905
164
284,463
361,561
374,821
523,661
465,132
498,105
385,955
385,955
9,858
127,848
523,661
7,096
105,054
498,105
100 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 101
24. Share-based payments
Peet Employee Share Option Plan (PESOP)
and Peet Performance Rights Plan (PPRP)
Vesting and exercise conditions
Fair value of options and performance rights granted
Under the plans, options and/or PRs only vest if the
The fair value of an option and PRs at grant date is determined using a Black-Scholes option pricing model and the value
24. Share-based payments (continued)
The establishment of the PESOP was approved by the
employees are still employed by the Group at the end of
of a performance right at grant date is determined using a Binomial pricing model. The models take into account the
Board and shareholders during the 2004 financial year and
the vesting period, subject to the Board’s discretion, and
exercise price, the term of the option and/or performance right, the vesting and performance criteria, the impact of
the Peet Limited PPRP was approved by shareholders at
any set performance hurdles have been met.
dilution, the non-tradeable nature of the option or performance right, the share price at grant date and expected price
the 2008 AGM. Employees of any Group Company
(including Executive Directors) will be eligible to participate
in the PESOP and/or PPRP at the discretion of the Board.
Generally, as a pre-condition to exercise, any exercise
conditions in respect of an option and/or performance right
volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option and/
or performance right.
must be satisfied. However, the Board has the discretion
The inputs for assessing the fair value of the performance rights issued during the year under the PPRP were:
Invitations to apply for options and/or
performance rights
to enable an option and/or performance right holder to
exercise options and/or performance rights where the
exercise conditions have not been met, including, for
Eligible employees, at the discretion of the Board, may be
example, where a court orders a meeting to be held in
invited to apply for options and/or performance rights on
relation to a proposed compromise or arrangement in
terms and conditions to be determined by the Board
respect of the Company, or a resolution is passed or an
including as to:
• the method of calculation of the exercise price of each
option;
• the number of options and/or performance rights being
offered and the maximum number of shares over which
each option and/or performance rights is granted;
• the period or periods during which any of the options
and/or performance rights may be exercised;
• the dates and times when the options and/or performance
rights lapse;
order is made for winding up the Company. Options
granted under the PESOP and performance rights under
the PPRP carry no dividend or voting rights.
Lapse of options and performance rights
Unexercised options and/or performance rights will lapse
upon the earlier to occur of a variety of events specified
in the rules of the PESOP and PPRP including, on the date
or in circumstances specified by the Board in the invitation,
failure to meet the options’ or performance rights’ exercise
conditions in the prescribed period or on the expiry date
• the date and time by which the application for options
of options and/or performance rights, as determined by
and/or performance rights must be received by Peet;
the Board.
• any applicable conditions which must be satisfied or
circumstances which must exist before the options and/
or performance rights may be exercised.
Eligible employees may apply for part of the options and/or
performance rights offered to them, but only in specified
multiples.
Consideration
Unless the Board determines otherwise, no payment will
be required for a grant of options and/or performance rights
under the PESOP and/or PPRP.
Grant
Date
23 Nov 16
21 Dec 16
Exercise
price
$0.00
$0.00
Expiry
date
Share price
at grant date
23 Nov 31
21 Dec 31
$0.905
$0.950
Expected
price volatility
of shares
30%
30%
Risk free
interest rate
1.88%
2.03%
Assessed
fair value
$0.801
$0.849
The expected price volatility is based on the historic volatility (based on the remaining life of the options and/or performance
rights), adjusted for any expected changes to future volatility due to publicly available information.
Total expenses arising from share-based payment transactions recognised during the year as part of employee benefits
expense is $2,098,936 (2016: $2,280,000).
Set out below are summaries of options and performance rights granted under the plans:
Grant date Expiry date
Exercise
price $
Assessed
fair value $
Balance
at 1 July
Granted
during the
year
Exercised
during the
year
Lapsed/
forfeited
during the
year
Balance at
30 June
Exercisable
at 30 June
30 June 2017
Options
30 Nov 07
N/A
$4.10
$1.12
1,200,000
Performance rights
20 Dec 13
20 Dec 18
8 Sep 14
8 Sep 19
26 Nov 14
26 Nov 19
22 Dec 14
22 Dec 19
21 Nov 15
21 Nov 30
21 Dec 15
21 Dec 30
23 Nov 16
23 Nov 31
21 Dec 16
21 Dec 31
–
–
–
–
–
–
–
–
$1.27
$1.27
$1.065
$0.938
$0.974
$0.957
$0.801
$0.849
1,896,513
328,459
833,897
988,794
928,020
1,192,460
–
–
1,200,000
1,200,000
(1,866,169)
(30,344)
(323,203)
(5,256)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
833,897
988,794
928,020
1,192,460
1,065,114
1,380,552
–
–
1,065,114
1,380,552
6,168,143
2,445,666
(2,189,372)
(35,600)
6,388,837
7,368,143
2,445,666
(2,189,372)
(35,600)
7,588,837
1,200,000
Total
30 June 2016
Options
30 Nov 07
N/A
$4.10
$1.12
1,200,000
–
–
1,200,000
1,200,000
Performance rights
28 Nov 12
28 Nov 17
20 Dec 13
20 Dec 18
8 Sep 14
8 Sep 19
26 Nov 14
26 Nov 19
22 Dec 14
22 Dec 19
21 Nov 15
21 Nov 30
21 Dec 15
21 Dec 30
–
–
–
–
–
–
–
$0.95
$1.27
$1.27
$1.065
$0.938
$0.974
$0.957
3,494,610
1,896,513
328,459
833,897
988,794
–
–
928,020
1,192,460
(2,991,386)
(503,224)
–
–
–
–
–
–
–
–
–
–
–
–
–
1,896,513
328,459
833,897
988,794
928,020
1,192,460
7,542,273
2,120,480
(2,991,386)
(503,224)
6,168,143
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
102 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 103
Total
8,742,273
2,120,480
(2,991,386)
(503,224)
7,368,143
1,200,000
25. Matters subsequent to the end of
MEASUREMENT
26. Other accounting policies (continued)
report as the dividend was not declared or determined by
determined are disclosed in note 20.
of profit or loss.
the financial year
On 4 July 2017, it was announced that Peet Limited (“Peet”)
had been named the Western Australian Government’s
preferred proponent for final negotiations as development
partner for a housing project on a 220-hectare landholding
in Brabham – 22 kilometres from the Perth CBD. The
Brabham joint venture will potentially yield more than 3,000
dwellings, schools and neighbourhood shops and
recreational areas. As part of this joint venture, Peet will
establish a new wholesale fund with the Perron Group to
jointly develop the project, with Peet appointed as the
development manager.
On 5 July 2017, Peet announced the close of the issue of
Series 2, Tranche 1 Peet Bonds, raising a total of $50 million
from the issue of 500,000, 2017 Peet Bonds at $100 each.
The Directors have declared a final franked dividend of 3.00
cents per share in respect to the year ended 30 June 2017.
The dividend is to be paid on Wednesday, 4 October 2017,
with a record date of Friday, 22 September 2017. No
At initial recognition, the Group measures a financial asset
at its fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.
Available for sale financial assets and financial assets at fair
value through profit or loss are subsequently carried at fair
value. Gains or losses arising from changes in the fair value
of the financial assets at fair value through profit or loss
category are presented in the statement of profit or loss
within other income or other expenses in the period in
which they arise. Dividend income from financial assets at
fair value through profit or loss is recognised in the
statement of profit or loss as part of revenue from
continuing operations when the Group’s right to receive
payments is established.
FAIR VALUE
provision has been made for this dividend in the financial
Details on how the fair value of financial instruments is
the directors on or before the end of the financial year.
IMPAIRMENT
26. Other accounting policies
i. Investments and other financial assets
The Group assesses at each balance date whether there is
objective evidence that a financial asset or group of
financial assets is impaired. In the case of equity securities
RECOGNITION AND DERECOGNITION
classified as available for sale, a significant or prolonged
Regular purchases and sales of investments are recognised
on trade-date – the date on which the Group commits to
purchase or sell the asset. Investments are initially
recognised at fair value plus transaction costs for all
financial assets not carried at fair value through profit or
loss. Financial assets carried at fair value through profit or
loss are initially recognised at fair value and transaction
costs are expensed in the statement of profit or loss.
Financial assets are derecognised when the rights to
receive cash flows from the financial assets have expired
or have been transferred and the Group has transferred
substantially all the risks and rewards of ownership.
When securities classified as available for sale are sold or
impaired,
the accumulated
fair value adjustments
recognised in other comprehensive income are reclassified
to the statement of profit or loss as gains or losses from
investment securities.
decline in the fair value of a security below its cost is
considered in determining whether the security is impaired.
If any such evidence exists for available for sale financial
assets, the cumulative loss – measured as the difference
between the acquisition cost and the current fair value,
less any impairment loss on that financial asset previously
recognised in profit or loss – is removed from equity and
recognised in the statement of profit or loss. Impairment
losses recognised in the statement of profit or loss on
equity instruments classified as available for sale are not
reversed through the statement of profit or loss.
ii. Intangible assets
Intangible assets primarily consist of software and
management rights. The management rights acquired by
the Company are initially carried at cost. Amortisation is
calculated based on the timing of projected cash flows of
the management rights over their estimated useful lives.
• Management rights – 10 to 25 years
iii. Property, plant and equipment
v. Retirement benefit obligations
Property, plant and equipment are shown at historical cost
Contributions to defined contribution funds are recognised
less depreciation. Historical cost includes expenditure that
as an expense as they become payable. Prepaid contributions
is directly attributable to the acquisition of the items.
are recognised as an asset to the extent that a cash refund
Depreciation on property, plant and equipment is calculated
using the straight line method to allocate their cost, net
of their residual values, over their estimated useful lives,
as follows:
• Fixtures and fittings – 3 to 10 years
• Leasehold improvements – 10 years
or a reduction in the future payments is available.
vi. Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is
recognised as part of the cost of acquisition of the asset or
• Property – 40 years
as part of the expense.
The assets’ residual values and useful lives are reviewed,
Receivables and payables are stated inclusive of the
and adjusted if appropriate, at each balance date. An
amount of GST receivable or payable. The net amount of
asset’s carrying amount is written down immediately to its
GST recoverable from, or payable to, the taxation authority
recoverable amount if the asset’s carrying amount is
is included with other receivables or payables in the
greater than its estimated recoverable amount. Gains and
balance sheet.
losses on disposals are determined by comparing proceeds
with carrying amount. These are included in the statement
Cash flows are presented on a gross basis. 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.
iv. Termination benefits
Termination benefits are payable when employment is
vii. Leases
terminated before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for
these benefits. The Group recognises termination benefits
when it is demonstrably committed to either terminating
the employment of current employees according to a
detailed formal plan without possibility of withdrawal or
providing termination benefits because of an offer made to
encourage voluntary redundancy. Benefits falling due more
than 12 months after balance date are discounted to
present value.
Leases in which a significant portion of the risks and
rewards of ownership are not transferred to the Group as
lessee are classified as operating leases. Payments made
under operating leases (net of any incentives received from
the lessor) are charged to profit or loss on a straight-line
basis over the period of the lease.
104 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 105
Directors’ Declaration
In the Directors’ opinion:
a. the financial statements and notes set out on pages 70 to 106 are in accordance with the Corporations Act 2001,
i. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
ii. giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2017 and of its performance for
the financial year ended on that date; and
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
c. at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group
identified in note 23 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue
of the deed of cross guarantee described in note 23.
Note 2 confirms that the financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Brendan Gore
Managing Director and Chief Executive Officer
Perth, Western Australia
24 August 2017
INVESTMENTS IN SUBSIDIARIES
including:
26. Other accounting policies (continued)
viii. Parent entity financial information
Any difference between the amount assumed and amounts
TAX CONSOLIDATION LEGISLATION
receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) the
Peet Limited and its wholly-owned Australian controlled
wholly-owned entity.
entities have implemented the tax consolidation legislation
as of 1 July 2003. Peet Limited is the head entity of the tax
consolidated group. Members of the group are taxed as a
single entity and the deferred tax assets and liabilities of the
entities are set-off in the consolidated financial statements.
The entities in the tax consolidated group entered into a tax
sharing agreement which limits the joint and several liability
of the wholly-owned entities in the case of a default by the
head entity, Peet Limited. At the balance sheet date the
possibilities of default were remote.
Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the Group.
Investments in subsidiaries are accounted for at cost in the
individual financial statements of Peet Limited. Such
investments include both investments in shares issued by
the subsidiary and other parent entity interests that in
substance form part of the parent entity’s investment in
the subsidiary. These include investments in the form of
interest-free loans which have no fixed repayment terms
and which have been provided to subsidiaries as an
additional source of long-term capital.
ix. New accounting standards and interpretations
Except as disclosed below, accounting policies have been consistently applied over all periods presented. The Group has
adopted all new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2016.
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017
reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.
Reference
Title
Summary
AASB 9
Financial Instruments
AASB 9 includes requirements for the
classification and measurement of
financial assets.
These requirements improve and
simplify the approach for classification
and measurement of financial assets
compared with the requirements of
AASB 139.
Application
date for Group
year ending
30 June 2019
Impact on Group
financial report
The Group is in the
process of determining
the extent of the impact
of the amendment, if any.
AASB 15
Revenue from Contracts
with Customers
AASB 16
Leases
AASB 15 establishes principles for
reporting useful information to users of
financial statements about the nature,
amount, timing and uncertainty of
revenue and cash flows arising from
an entity’s contracts with customers.
Based on existing
significant revenue
contracts, the extent
of the impact of the
amendment is not
expected to be material.
AASB 16 eliminates the classification
of leases as either operating or finance.
Lessees are required to recognise leases
on the balance sheet for leases with a
term of more than 12 months, unless the
underlying asset is of low value.
Based on existing
significant lease
agreements, the extent
of the impact of the
amendment is not
expected to be material.
30 June 2019
30 June 2020
There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the
current or future reporting periods and on foreseeable future transactions.
106 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 107
Independent Auditor’s Report
Independent Auditor’s Report (continued)
108 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 109
Independent Auditor’s Report (continued)
Independent Auditor’s Report (continued)
110 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 111
Independent Auditor’s Report (continued)
Independent Auditor’s Report (continued)
112 ANNUAL REPORT 2017 | PEET LIMITED
PEET LIMITED | ANNUAL REPORT 2017 113
Securityholder Information
Securityholder Information (continued)
The names of the 20 largest holders of PPCHA Bonds as at 27 September 2017 are listed below:
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Australian Executor Trustees Limited
Continue reading text version or see original annual report in PDF format above