ANNUAL REPORT 2019
For personal use only CONTENTS
About Peet
What we do
How we do it
FY19 Performance at a Glance
Financial
Operational
Future proofing
Business Model
Our Strategy
National Reach
Global Trends Shaping our Strategy
Chairman’s Review
Managing Director and CEO’s Review
Operational and Financial Review
Fund Management Projects
Joint Ventures
Development Projects
Living Sustainably. Environment Social and Innovation
Corporate Calendar FY2020
Financials
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PEET LIMITED | ANNUAL REPORT 2019 For personal use only
Peet is one of Australia’s
leading residential real
estate developers, creating
places to live for thousands
of Australians each year.
1
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only About
PEET
Peet is one of Australia’s leading residential real estate
developers, creating places to live for thousands
of Australians every year. Listed on the Australian
Stock Exchange (ASX) since 2004, Peet develops
masterplanned communities, medium density housing
and low-rise apartments in the major growth corridors
in every mainland state in Australia.
Established in 1895 by founder James Thomas Peet with
a vision for Australians to build or buy their own home,
Peet has enabled thousands of Australians achieve
their ownership dreams.
With strong roots in Western Australia and a presence
that now reaches across the country, Peet has played
a key role in shaping and enhancing the urbanisation of
cities by creating desirable communities with a strong
commitment to affordability.
2
Image: Bluestone, Mt Barker (SA)PEET LIMITED | ANNUAL REPORT 2019 For personal use only WHAT WE DO
Peet acquires, develops and markets residential land in Australia.
Currently, Peet manages a broad property portfolio of more than
49,000 lots with a gross development value of approximately $14.5
billion across 48 projects, making Peet Australia’s largest ‘pure play’
residential property developer.
For 125 years, Peet has continuously evolved its business with a
focus on providing choice for Australians. Historically, the company
has been a residential land developer, replenishing its land bank
in a disciplined manner, including using its unique and capital-lite
funds management platform. Bolstered by its deep knowledge of the
industry, Peet broadened its geographic scope resulting in a portfolio
with national reach and a product mix of land, completed homes,
medium density townhouses and low-rise apartments, in response to
the changing lifestyles sought by Australians. Peet’s range of product
type appeals across buyer segments whilst maintaining a core focus
on first homebuyers.
Peet prides itself on not only creating houses, but communities.
Investing in infrastructure is key – from amenities such as parks,
shopping centres and schools to installation works of public art,
Peet develops communities that offer residents a safe, secure and
convenient lifestyle and great places to live.
Peet harnesses its deep experience and knowledge of Australia’s real
estate markets to create long-term shareholder value by effectively
managing the development and sale of land, houses, townhouses and
apartments across the country’s cycles.
The Peet team comprises committed and engaged individuals who
work with specialist consultants to deliver projects ranging from
boutique townhouses to substantial urban renewal and master-
planned communities.
Peet’s brand ethos is Life Your Way. This means we have a
commitment to creating places that enable Australians to buy a new
home in a new community that suits the lifestyle and needs of their
family. Our financial results section provides an overview of our
performance during the 2019 financial year (FY19).
3
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only HOW WE DO IT
Our values
4
Image: Avon Ridge, Brigadoon (WA)PEET LIMITED | ANNUAL REPORT 2019 For personal use only Integrity
WE act with high integrity through
open, honest and professional
conduct.
Teamwork
WE recognise the strength of
working together, encourage the
development of 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.
5
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only FY19 PERFORMANCE
at a glance
Financial
Operating1 and
statutory2 profit after tax
EBITDA3
EBITDA3 margin of
$47.5 million
$86 million
33%
EARNINGS
PER SHARE
OF 9.8 CENTS
PER SHARE
BOOK NTA PER
SECURITY
$1.20
DIVIDEND
OF 5 CENTS
PER SHARE,
FULLY FRANKED
GEARING4
OF 24.6%
1
2
3
4
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 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 after tax means net profit measured in accordance with Australian Accounting Standards, attributable to the owners of Peet Limited.
EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets).
6
PEET LIMITED | ANNUAL REPORT 2019
Image: The Village at Wellard (WA)For personal use only
Operational
1,629
$336 million
lots sold5 at a value of
2,629
LOTS SETTLED5
c.65%
of land bank under
development
MEDIUM DENSITY
4
+
1
BROADACRE PROJECT
ACQUIRED
FOUR NEW PROJECTS
COMMENCED SALES /
DEVELOPMENT
1
NEW WHOLESALE
FUND ESTABLISHED
1,257
CONTRACTS
ON HAND5
Future proofing
Land bank of
49,413 lots5
5
Includes equivalent lots.
Land Bank
of $14.5
billion gross
development
value
48 projects
nationally
In every
mainland state
and territory in
Australia
ANNUAL REPORT 2019 | PEET LIMITED
7
For personal use only BUSINESS
Model
A unique funding model is one of Peet’s key differentiators. It funds
development through a combination of Company-owned Development
projects, Funds Management projects and Joint Ventures, resulting in a
capital-lite business model. Peet pioneered retail land syndication in Australia
and its Funds Management and Joint Ventures businesses manage some
30 projects, providing opportunities for investors ranging from mums and dads
to institutional and wholesale investors to participate in land development
projects.
Peet’s Funds Management and Joint Ventures contributed approximately 40%
of the Group’s EBITDA6 in FY19.
OWNED
11,750 lots
$2.7bn GDV
JOINT
VENTURES
10,781 lots
$4.0bn GDV
WHOLESALE/
INSTITUTIONAL
20,218 lots
$6.2bn GDV
RETAIL
6,664 lots
$1.6bn GDV
6
EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint
ventures.
8
PEET LIMITED | ANNUAL REPORT 2019
For personal use only
Our
STRATEGY
Peet’s strategy is to target the delivery of 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 products in growth corridors
of major Australian cities. We also take a strategic
approach to land acquisition, and our geographically
diversified portfolio means we are well positioned to
leverage different property cycles.
INVEST
Invest in high quality land in strategic
locations across the country
PEET’S
STRATEGY
FOCUSES ON
FOUR KEY
PILLARS
ENHANCE
EXPAND
MAINTAIN
Enhance, plan and create communities
and homes targeting the low to middle
market segment
Expand product offering and geographic
presence to appeal to a wider variety of
customers
Maintain strong capital management
9
Image: Lightsview Apartments (SA)ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 10
Image: Shorehaven Alkimos (WA)PEET LIMITED | ANNUAL REPORT 2019 For personal use only NATIONAL Reach
NT
PROJECTS: 1
ACT
PROJECTS: 2
SA
PROJECTS: 4
QLD
PROJECTS: 11
NSW
PROJECTS: 2
WA
PROJECTS: 19
VIC
PROJECTS: 9
49,413 LOTS7
$14.5bn GROSS DEVELOPMENT VALUE
48 PROJECTS NATIONALLY
7
Includes equivalent lots.
11
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only
GLOBAL TRENDS
shaping our strategy
URBANISATION
The percentage of people
living in urban areas is
expected to increase from
55% to 68% by 2050, according
to the World Urbanization
Project, United Nations. With
developments in Australia’s
growth corridors, Peet is
perfectly positioned to benefit
from this trend.
POPULATION
GROWTH
According to the Australian
Bureau of Statistics (ABS),
Australia’s population grew
1.6% from 2017 to 2018. World
Bank data ranks Australia
fifth among OECD members
for population growth. Peet’s
large residential portfolio will
provide places needed for
Australians to create homes.
12
PEET LIMITED | ANNUAL REPORT 2019
Image: Acacia Townhouses, Botanic Ridge (VIC)Image: Newhaven Tarneit (VIC)For personal use only AGEING
POPULATION
As Australia’s population ages,
their housing needs change as
they look to downsize. Peet has
recently expanded its product
range to include completed
homes, townhouses and low-
rise apartments.
PROPERTY
AS AN ASSET
CLASS
Australian property has,
historically, provided stable
returns for investors. Peet’s
Funds Management business
offers retail and wholesale
investors an opportunity to
invest in Australia’s land
development market.
ANNUAL REPORT 2019 | PEET LIMITED
13
Image: Lightsview (SA)Image: Newhaven Tarneit (VIC)Image: Googong (NSW)For personal use only Chairman’s
REVIEW
Dear Shareholders,
I am pleased to present Peet’s Annual Report for the year
ended 30 June 2019.
Peet has a long history of creating communities in Australia.
As the country’s largest ‘pure play’ residential property
developer, Peet has traditionally focused on replenishing its
land bank in a disciplined manner, predominantly under its
fund management platform, in core markets across Australia,
including Victoria, Queensland, South Australia, New
South Wales and Western Australia, taking advantage of
opportunistic acquisitions.
In recent years, the Group has evolved and broadened its
capabilities to offer a greater variety of products in every
mainland state and territory, appealing to a wider selection
of home-buyers and creating more flexibility for Peet to
actively manage market cycles. This year, Peet continued this
evolution and with almost 50,000 lots8 across 48 projects,
is well placed to benefit from a recovery in the residential
property market.
FY19 was challenging for the Group, with varying conditions
across Australia’s residential property sector. Consumer
uncertainty, state and federal elections, restrictive lending
conditions and the general economic and regulatory
environment resulted in reduced consumer confidence and a
more moderate real estate market.
With a moderating residential market backdrop, our Group
focused on the elements within its control; active portfolio
management and executing on our strategic priorities to
deliver a sound performance for FY19. As a result, we
achieved an operating9 and statutory10 profit for the year of
$47.5 million, we maintained a strong EBITDA11 margin and
gearing12 remains within our target range.
The Group continued its focus on prudent capital
management throughout the year. Our disciplined and
proactive approach to capital management gives us the
financial strength to make the most of market opportunities
that may arise.
During the year, the Group raised $75 million from the issue
of senior unsecured notes via the wholesale debt market
and as at 30 June 2019, the Group had net interest-bearing
debt (including Peet Bonds) of $211.6 million, compared with
$140.5 million at 30 June 2018 and gearing12 of 24.6%, being
maintained within our target range of 20% – 30%.
Given the Company’s strong balance sheet and its share price
trading at or below its NTA at the time, we commenced an
on-market share buyback in August 2018 for up to 5% of
Peet’s issued ordinary shares over 12 months. In August 2019,
we extended the buyback for an additional 12 months.
STRATEGY
We made significant progress against our strategy to deliver
quality residential communities around Australia through four
key pillars:
• Invest in quality land
• Enhance, plan and create communities
• Expand our product offering
• Maintain strong capital management
On Behalf of the Board, I am pleased to present Peet Limited’s
2019 Annual Report and outline our strategy to deliver quality
residential communities around Australia.
8
9
Includes equivalent lots.
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 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.
10 Statutory profit after tax means net profit measured in accordance with Australian Accounting Standards, attributable to the owners of Peet Limited.
11 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
12 Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets).
14
PEET LIMITED | ANNUAL REPORT 2019
For personal use only We aim to secure land predominantly through our Funds
Management platform using capital raised from a
combination of wholesale, institutional and retail investors.
This capital-lite model, developed over many years, provides
us with a distinct competitive advantage given the challenge
it would be to replicate this component of our business
model.
In response to changing customer needs, we have expanded
our market reach by continuing to broaden our product
offering to homebuyers and investors over recent years. Now,
in addition to developing and selling vacant land, we offer
completed homes, medium density townhouses and low-rise
apartments, diversifying our products and appealing to more
customers.
Peet has always targeted the low and middle market
segments, in line with our founder’s vision to enable
Australians to achieve home ownership. We continue to
uphold this reputation for delivering value-driven, affordable,
high quality land and homes.
CONCLUSION
The Peet Group’s fundamental strengths and strategic
approach to land acquisition, our geographically diversified
land bank and strong balance sheet, means we are well
positioned to manage through the current challenging
property market conditions.
I take this opportunity to thank my fellow Board members
for their work during the year, and on their behalf, thank
Managing Director and CEO Brendan Gore and his team
for their enthusiasm and dedication to the evolution of our
business as well their leadership of Peet’s values and culture
that underpin our success.
On behalf of the Board, thank you to our loyal shareholders
for your continued support of the company. We look forward
to continuing to create residential communities across
the country, adding value for current and future residents,
employees, our investment partners, other stakeholders
and you.
DIVIDENDS
The Board was pleased to declare a final FY19 dividend of 3.0
cents per share, full franked. This brings the total dividend for
FY19 to 5.0 cents per share, fully franked and in line with the
FY18 dividend.
Tony Lennon
Chairman
ANNUAL REPORT 2019 | PEET LIMITED
15
For personal use only Managing Director and CEO’s
REVIEW
Dear Shareholders,
Despite the moderation we have seen in residential property
markets, Peet has delivered sound results in line with
expectations. This underlines the strength of our strategic
approach and of our diverse landbank and the Group’s ability
to leverage opportunities in different markets and manage
through market cycles.
MARKET INSIGHT
Australia’s property markets were varied during the year and
they were all impacted by restrictive lending conditions.
FY19 PERFORMANCE
The Peet Group achieved an operating13 profit and statutory14
profit after tax of $47.5 million for FY19, which represents
a decrease of 3.2% on FY18 and earnings per share of 9.8
cents, down 2% on FY18. This solid result was underpinned
by strong settlements from several key projects, partly offset
by lower sales impacted by the broader market conditions
around the country, associated with restrictive lending
conditions, a moderating Victorian market and a subdued
Western Australian housing market.
While Victoria’s strong economic growth and significant
Government investment in infrastructure is expected to
underpin demand for homes in the long-term, our FY19
sales were impacted by a moderating market and restrictive
lending conditions.
The Group achieved 1,629 sales15 with a gross value of
$359.7 million and 2,629 settlements15, with a gross value of
$641.4 million for the full year across its Funds Management,
Development and Joint Venture projects. This represents a
45% and 10% decrease, respectively, compared with FY18.
Migration to Queensland is strong and above the 10-year
average with modest price growth in both house and land,
however our sales were impacted by restrictive lending
conditions.
The Western Australian market remains challenging,
impacting sales volumes during the year. While established
market metrics remain soft, sales and prices are generally
stable, albeit at lower levels.
Growth in employment and wages in the Australian Capital
Territory are supporting a steady market, though sales
volumes are down due to restrictive lending conditions.
Sales volumes and prices are steady in South Australia and
we expect continued Government investment in defence
and shipbuilding to support a population increase in South
Australia.
Peet delivered FY19 EBITDA16 of $86 million compared to
$101.3 million in FY18 and despite the lower sales activity,
maintained a strong EBITDA16 margin of 33%, compared with
34% in FY18, which can be attributed to solid settlements
from our low cost Victorian Development projects, a
continued focus on cost management across the portfolio of
projects and implementing efficiencies across the business.
Contracts on hand15 at 30 June 2019 decreased 44% to
1,257 lots (compared to 30 June 2018), with a value of $336
million (FY18: $616 million) due to lower sales activity. The
lower contracts on hand as a result of lower sales activity is
expected to impact settlements in FY20.
13 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 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.
14 Statutory profit after tax means net profit measured in accordance with Australian Accounting Standards, attributable to the owners of Peet Limited.
15
16 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
Includes equivalent lots.
16
PEET LIMITED | ANNUAL REPORT 2019
For personal use only ACHIEVEMENTS AGAINST OUR STRATEGY
We continue to make progress against our strategy:
Invest in quality land in strategic locations
across the country
Peet has a geographically diverse portfolio of 48 projects
comprising approximately 49,400 lots17 with a gross
development value of $14.5 billion located in growth corridors
of every mainland state and territory of Australia.
We have strategically targeted opportunities across QLD,
SA and WA over the past 3 years ensuring a strong market
position in affordable markets with a low cost base; and
avoided acquiring broadacre land across Melbourne and
Sydney during this time.
Expand our product offering and geographic
presence
We continued to extend our market reach by broadening our
offering in Completed Homes, Medium Density Townhouses
and low-rise Apartments, in response to changing customer
demands, acquiring four medium density projects during
the year.
Peet continued to transition to a solid delivery phase, with
settlements of Completed Homes and Medium Density
product up 42% on last year.
Maintain strong capital management
We continued to maintain a strong focus on capital
management throughout the year.
Since FY12, more than 90% of lot acquisitions have been on
capital-efficient terms, including the establishment of a new
wholesale fund to acquire an 80-hectare property in Perth’s
northern coastal corridor where we have approval to develop
1,100 lots.
During the year, the Group raised $75 million from the issue
of senior unsecured notes via the wholesale debt market,
which together with the extension of its existing senior debt
facility, increased the tenor of the Group’s debt maturity
profile.
Enhance, plan and create communities and
homes targeting the lower to middle market
segment
Four new projects commenced sales in 2019, bringing 65%
of our land bank under development. We expect up to seven
new land projects and five medium density townhouse sites
to commence development within the next two years and
80% of our land bank to be under development in the next
three years.
At 30 June 2019, the Group had net interest-bearing debt
(including Peet Bonds) of $211.6 million, compared with
$140.5 million at 30 June 2018. Approximately, 91% of the
Group’s interest-bearing debt was hedged as at 30 June
2019, which is the same as at 30 June 2018.
Peet’s balance sheet remains strong, including cash and
debt facility headroom of $156.1 million as at 30 June 2019,
a weighted average debt maturity of over three years and
gearing18 of 24.6% (up from 19.0% at 30 June 2018).
Strong relationships with government, investors and
other industry stakeholders form the basis of our Funds
Management and Joint Ventures businesses. During the year,
Peet Flagstone City Pty Limited (50% owned by Peet) entered
an infrastructure agreement to fund more than $1.2 billion of
essential infrastructure including roads and water supply for
Greater Flagstone, which will underpin development of the
Flagstone community.
17
18
Includes equivalent lots.
Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets).
ANNUAL REPORT 2019 | PEET LIMITED
17
For personal use only Outlook
The Peet Group enters FY20 with a strong balance sheet,
low gearing and a residential development pipeline well
positioned for sustainable long-term growth.
While the residential sector continues to be impacted
by restrictive lending conditions, recent macro-economic
announcements including the approval of cuts in income tax
rates following the Federal election in May 2019, reduction
in interest rates and APRA’s announcement of changes to its
residential mortgage lending guidelines would prove positive
in an improved market.
Despite a general improvement in enquiry from potential
buyers of the Group’s products, we expect the market to
take some time to normalise, with steady employment
growth, record low interest rates and high investment in
infrastructure by Government offset by the broad uncertainty
driven by reduced credit availability, weak consumer
sentiment and low wages growth.
We remain cautious about the timing of recovery in the
residential market and therefore expect a challenging year
ahead. The lower contracts on hand as at 30 June 2019 will
impact settlements in FY20 and result in earnings being
heavily weighted towards the second half of the year.
However, our strong pipeline of projects and the underlying
fundamentals of the residential property sector, means that
Peet is well positioned to deliver supply to the market as
demand improves and lending conditions normalise.
I thank Chairman Tony Lennon and our Board for their
contributions during the year and for their continued insight
and knowledge. Thanks also to Peet’s management team and
staff for their considerable efforts during the year and who
embody Peet’s values and culture.
Lastly, thank you to our loyal shareholders who continue to
support Peet. I look forward to updating you on our progress
during the year.
Brendan Gore
Managing Director and Chief Executive Officer
18
PEET LIMITED | ANNUAL REPORT 2019
Image: Lightsview (SA)For personal use only Our focus on our strategic
pillars means we have
delivered a sound financial
result and are well
positioned for a residential
market recovery.
ANNUAL REPORT 2019 | PEET LIMITED
19
For personal use only OPERATIONAL AND FINANCIAL REVIEW
FUNDS
MANAGEMENT
projects
The Peet group manages a number of projects on behalf of land syndicates using funds raised
from a combination of wholesale, institutional and retail investors. It also manages projects
under project management and co-investment arrangements. This provides Peet a capital-lite
profit source which is difficult to replicate while also providing long term earnings visibility.
EBITDA
25%
19
26,882 lots20
GDV21
$7.8 billion
19
20
21
EBITDA is a non-IFRS that includes affects of non-cash movements in investments in associates.
Includes equivalent lots.
Gross Development Value.
20
PEET LIMITED | ANNUAL REPORT 2019
Comprised 54% OF GROUP’S LAND BANKFor personal use only S
T
O
L
2
2
D
L
O
S
S
T
O
L
2
2
D
E
L
T
T
E
S
S
T
C
A
R
T
N
O
C
2
2
D
N
A
H
N
O
3
2
A
D
T
I
B
E
A
D
T
I
B
E
I
3
2
N
G
R
A
M
FY19
909
value of
$193.8 million
FY18
1,782
value of
$370.0 million
FY19
1,535
Gross value of
$355.2 million
FY18
1,796
Gross value of
$352.6million
FY19
685
Total value of
$149.0 million
FY18
1,311
Total value of
$310.8 million
FY19
$24.4
million
FY18
$28.3
million
FY19
71%
FY18
70%
22
23
Includes equivalent lots.
EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates.
ANNUAL REPORT 2019 | PEET LIMITED
21
Image: Yanchep Golf Estate (WA)For personal use only
OPERATIONAL AND FINANCIAL REVIEW
JOINT
ventures
The Peet Group has a number of high-profile joint venture projects, which are generally
entered into on a 50/50 basis with Governments, statutory authorities, private land owners
or partner developers.
24
EBITDA
14%
10,781 lots25
GDV26
$4.0 billion
24
25
26
EBITDA is a non-IFRS that includes non-cash movements in investments in Joint Ventures.
Includes equivalent lots.
Gross Development Value.
22
PEET LIMITED | ANNUAL REPORT 2019
Comprised 22% OF GROUP’S LAND BANKFor personal use only S
T
O
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7
2
D
L
O
S
S
T
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L
7
2
D
E
L
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E
S
S
T
C
A
R
T
N
O
C
7
2
D
N
A
H
N
O
8
2
A
D
T
I
B
E
A
D
T
I
B
E
I
8
2
N
G
R
A
M
FY19
414
FY18
756
value of
$98.0 million
value of
$204.3 million
FY19
539
FY18
690
Gross value of
$123.1 million
Gross value of
$163.0 million
FY19
361
FY18
486
Total value of
$130.5 million
Total value of
$154.1 million
FY19
$13.7
million
FY18
$16.6
million
FY19
31%
FY18
30%
27
28
Includes equivalent lots.
EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates.
23
Image: Lightsview (SA)ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only
OPERATIONAL AND FINANCIAL REVIEW
DEVELOPMENT
projects
Peet’s Development projects are 100% owned by Peet and held on
its balance sheet. 100% of returns are collected upon development,
sale and settlement of these projects, generating solid margins.
EBITDA
61%
11,750 lots29
GDV30
$2.7 billion
28
29
Includes equivalent lots.
Gross Development Value.
24
PEET LIMITED | ANNUAL REPORT 2019
Comprised 24% OF GROUP’S LAND BANKFor personal use only S
T
O
L
1
3
D
L
O
S
S
T
O
L
1
3
D
E
L
T
T
E
S
S
T
C
A
R
T
N
O
C
1
3
D
N
A
H
N
O
A
D
T
I
B
E
A
D
T
I
B
E
N
I
G
R
A
M
31
Includes equivalent lots.
FY19
306
value of
$67.9 million
FY18
412
value of
$140.2 million
FY19
555
FY18
438
Gross value of
$163.1 million
Gross value of
$195.8 million
FY19
211
FY18
460
Total value of
$56.0 million
Total value of
$151.0 million
FY19
$58.5
million
FY18
$67.2
million
FY19
32%
FY18
34%
ANNUAL REPORT 2019 | PEET LIMITED
25
Image: Greenlea Baldivis (WA)For personal use only
LIVING SUSTAINABLY
Environment Social and Innovation
As Australia grows, Peet provides places to build new homes. In doing so, Peet is not just creating homes but communities
that become part of Australia’s urban fabric for decades to come. As such, Peet focuses on planning, designing and developing
communities that minimise the impact we have on the environment while looking for ways to make communities thrive.
ENVIRONMENT
LIGHTSVIEW SA WATER SENSITIVE URBAN DESIGN
In line with Peet’s focus on planning, designing and developing communities that balance environmental, social and economic
needs, benefits include stormwater treatment and re-use from the Salisbury Water managed aquifer recharge scheme.
Treated stormwater is piped to each household and plumbed internally to toilets and for outdoor uses, including garden
irrigation and car washing.
26
PEET LIMITED | ANNUAL REPORT 2019
For personal use only GOOGONG NSW
SMART CITY
Peet and its development partner, together
with Queanbeyan-Palerang Regional Council
(Council), were recently awarded a grant from
the Federal Government Smart Cities Program
that will establish Googong as a showcase for
technology infrastructure.
The technology will help reduce everyday
community service costs including waste
management, utility consumption and the
maintenance of amenities.
The first element of the Smart City
infrastructure is already in place with the
installation of a smart wind turbine and solar-
powered pole, a foundation component in the
new township’s high-tech backbone.
The 5G ready ‘smart’ poles have the capability
to be seamlessly fitted with network
infrastructure to provide services such as free
public Wifi, digital wayfinding and surveillance
cameras. They will also enable Council to
remotely manage key services like waste
management, car park usage, irrigation,
lighting, BBQs and security.
Implementation of the infrastructure sees
Googong as one of the first towns in Australia
to have smart technology built in from
the ground up and a leader in innovative
technology-based urban living.
ANNUAL REPORT 2019 | PEET LIMITED
27
For personal use only SOCIAL
Peet designs its communities around the people who are going to live in them, offering a diverse range of housing options to
suit all ages and stages of life. They are not just houses, but 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 diverse and
healthy social connection.
PERTH SCORCHERS SPONSORSHIP
Peet supported BBL team Perth Scorchers as its Community Partner for the 2018-19 season. The partnership provided
Peet with the opportunity to host Community Fan Days and Cricket Workshops to provide engaging and unique experiences
for its residents, in line with Peet’s vision to create connected communities and opportunities for its residents to live healthy
active lifestyles. During the season, over 2,000 people from Peet communities attended fan days while thousands more
engaged on social media by sharing their #ScorchersLife photos, bringing together families to support Western Australia’s
20/20 cricket team.
NATIONAL COMMUNITY
GRANTS PROGRAM
Peet has a proud history of
supporting the community through
its National Community Grants
Program and corporate partnerships.
Peet has continued that tradition
throughout FY19 by supporting
over 50 community groups and
organisations around the country.
Typically, Peet supports initiatives in
the following areas:
• Environmental sustainability
• Family and community-based
activities
• Health and wellbeing
• Culture and the arts
• Educational opportunities /
youth development programs
28
PEET LIMITED | ANNUAL REPORT 2019
For personal use only FLAGSTONE CITY
QUEENSLAND
Flagstone is Peet’s largest project and will
ultimately have 12,000 homes and a CBD
that will support a population of approx.
50,000 in the Greater Flagstone region.
Earthworks commenced on the Coles
supermarket site at the end of April 2019
that will underpin the Flagstone Village
shopping centre. The development has
generated approximately 200 construction
jobs plus 100 operational jobs and is
expected to be the catalyst for significant
additional investment in the local area.
Peet Flagstone City is the biggest
project in the Greater Flagstone Priority
Development Area, and over the next
30 years, it will provide around 12,000
homes, 330 hectares of green space and a
126-hectare CBD, with plans for a future
hospital, tertiary campus and train station.
Residents will be well-served by retail,
commercial and hospitality options – all
contributing to employment opportunities
for an estimated 10,000 people.
INNOVATION
TONSLEY VILLAGE SA
LEADING-EDGE TECHNOLOGY
Sustainability is a key part of what we do, and Tonsley Village incorporates leading-edge technology to deliver environmental
benefits. Embedded into each street is a suite of innovative and world-leading infrastructure that will future-proof the power,
water, gas and internet provision that drives environmental sustainability within the precinct. The whole of Tonsley’s electrical
infrastructure has been designed to run off an independent embedded network owned by Enwave which distributes green
energy generated on-site and natural gas to all homes, resulting in a minimum of 30% of all power used being generated
on-site. All Tonsley Village homes will also receive smart meters. The meters provide the water utility with detailed data on
use to help customers better understand their water consumption.
ANNUAL REPORT 2019 | PEET LIMITED
29
For personal use only Corporate
CALENDAR FY2020
19 SEPTEMBER 2019
Record data for final FY19 dividend
7 OCTOBER 2019
Payment date of final FY19 dividend
7 OCTOBER 2019
Interest payment date for Peet Bond holders (PPCHB)
18 OCTOBER 2019
Annual Report and notice of 2019 AGM dispatched to shareholders
20 NOVEMBER 2019
2019 AGM at the InterContinental Perth City Centre Hotel, 815 Hay Street, Perth
9 DECEMBER 2019
Interest payment date for unlisted notes
16 DECEMBER 2019
Interest payment date for Peet Bond holders (PPCHA)
6 JANUARY 2020
Interest payment date for Peet Bond holders (PPCHB)
2020
Release of results for the half year ending 31 December 2019
6 APRIL 2020
Interest payment date for Peet Bond holders (PPCHB)
9 JUNE 2020
Interest payment date for unlisted notes
16 JUNE 2020
Interest payment date for Peet Bond holders (PPCHA)
30
Image: Shorehaven Alkimos (WA)PEET LIMITED | ANNUAL REPORT 2019 For personal use only 31
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only FINANCIAL REPORT
30 JUNE 2019
CONTENTS
1 Directors’ Report
2 Auditor’s Independence Declaration
3 Corporate Governance Statement
4 Financial Report
5 Directors’ Declaration
6 Independent Auditor’s Report to the Members of Peet Limited
7 Securityholder Information
8 Corporate Directory
34
61
62
64
106
107
114
118
32
PEET LIMITED | ANNUAL REPORT 2019 For personal use only THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
33
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 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 2019 (‘the Group’).
01. 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 general commercial experience and 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. He
is a World Fellow Member of The Duke of Edinburgh’s International Award.
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.
34
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 01. DIRECTORS (CONTINUED)
Anthony Lennon, BA, Grad Dip Bus Admin, MAICD
Non-executive Director
Anthony Lennon joined Peet in 1991 and became a Director in 1996.
He moved to Victoria to establish Peet’s operations in Australia’s eastern states and oversaw significant expansion.
Before joining the Company, Mr Lennon worked in the United Kingdom, where he completed his post-graduate qualification
whilst working for major international construction and development company, John Laing PLC. His time with this global
company saw him gain valuable experience in property planning, marketing, feasibility analysis and project management.
Mr Lennon’s responsibilities during his career with Peet included project management, broadacre acquisitions, marketing and
financing and a six-year term as Chairman of one of WA’s largest conveyancing businesses.
Until his transition from Executive to Non-executive Director on 27 August 2012, Mr Lennon was Peet Limited’s National
Business Development Director.
In 2019 he became a director of Habitat for Humanity (Vic). Part of a worldwide organisation, it is a registered charity which
assists low income families into affordable home ownership and out of the rental market by providing no interest mortgages.
Trevor Allen, BComm (Hons), CA, FF, FAICD
Independent Non-executive Director
Trevor Allen joined Peet in April 2012, with almost four decades of experience in the corporate and financial sectors, primarily
as a corporate and financial advisor to Australian and international public and privately-owned companies.
Mr Allen is an Independent Non-executive Director of Freedom Foods Group Limited, where he chairs its Audit and Risk
Management Committee and is a member of its Remuneration Committee. He is also an Alternate Director, Company Secretary
and Public Officer of Australian Fresh Milk Holdings Pty Ltd.
In addition, Mr Allen is a Non-executive Director of Eclipx Group Limited, where he chairs its Audit and Risk Management
Committee and is a member of its Remuneration Committee. He is also a non-executive director of TopCo Investments Pte Ltd, a
Singapore company which is the holding company of Real Pet Food Company Limited.
Mr Allen was a Non-executive Director of Yowie Group Limited (resigned January 2018) and Brighte Capital Pty Limited
(resigned June 2018).
Prior to Mr Allen’s Non-executive roles, he held 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. At the time of his retirement
from KPMG in 2011 he was the lead partner in its National Mergers and Acquisitions group.
Vicki Krause, BJuris LLB W.Aust, GAICD
Independent Non-executive Director
Vicki Krause was appointed to the Board of Peet Limited in April 2014.
An experienced commercial lawyer, Ms Krause had a 25 year career as a senior corporate executive with the Wesfarmers
Group, including seven years as its Chief Legal Counsel.
She supported successful outcomes in numerous significant acquisitions (including listed companies, trade sales and a
privatisation) and divestments.
As Chief Legal Counsel and a member of the Wesfarmers Executive Committee, Ms Krause led a large legal team and
was responsible for the provision of legal advice and strategic planning in relation to the management of legal risk in the
Wesfarmers Group with key outputs including the evaluation and completion of major business projects and major supply
arrangements.
Ms Krause has completed the PMD Management Course at Harvard Business School.
She is currently a director of Western Power and a member of its Safety Health Environment and People Committee.
35
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 01. DIRECTORS (CONTINUED)
Robert McKinnon, FCPA, FCIS, FGIA, MAICD
Independent Non-executive Director
Appointed as Non-executive Director in May 2014, Bob McKinnon has 40 years’ experience in finance and general management
positions in the light manufacturing and industrial sectors in Australia, New Zealand, and Canada.
He is the former Managing Director of Austal Ships and Fleetwood Corporation Limited and spent 28 years with Capral
Aluminium (formerly Alcan Australia) in various financial and senior executive positions.
Mr McKinnon is also a former Non-executive Director of Bankwest, Brierty Limited, Programmed Maintenance Services Limited
and Tox Free Solutions Limited.
02. 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 2019, the Group managed and
marketed a land bank of 49,413 lots in the growth corridors of major mainland Australian cities.
03. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS
OPERATING AND FINANCIAL REVIEW
Key results1
• Operating profit2 and statutory profit3 after tax of $47.5 million
• Earnings per share of 9.8 cents
• FY19 dividends of 5.0 cents per share, fully franked
• Revenue4 of $262.9 million, with 2,629 lots settled
• EBITDA5 of $86.0 million
• EBITDA5 margin of 33%
• 1,257 contracts on hand6 as at 30 June 2019
• Gearing7 of 24.6%
Financial commentary
The Peet Group achieved an operating profit2 and statutory profit3 after tax of $47.5 million for the year ended 30 June 2019,
which represents a decrease of 3.2% on FY18. This represents a solid result underpinned by strong settlements from several
key projects; but also impacted by overall lower sales on the back of moderated market conditions and restrictive lending
conditions.
The Group derived EBITDA5 of $86.0 million during FY19, compared to $101.3 million in FY18, with a strong EBITDA5 margin of
33%, compared to the margin achieved in FY18 of 34%.
1
2
3
4
5
6
7
Comparative period is 30 June 2018, unless stated otherwise. The non-IFRS measures have not been audited.
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 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 after tax means net profit measured in accordance with Australian Accounting Standards, attributable to the owners of Peet Limited.
Includes statutory revenue of $249.5 million (FY18: $287.6 million) and share of net profits from associates of $13.3 million (FY18: $14.1 million).
EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures totalling $13.3 million (FY18: $14.1 million).
Includes equivalent lots.
Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets).
36
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 03. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
The performance has resulted in earnings per share of 9.8 cents for the year ended 30 June 2019, compared to 10.0 cents per
share in FY18.
The Group has maintained its focus on prudent capital management and during 2H19 issued $75 million of unsecured notes,
further diversifying its debt structure. The Group’s balance sheet remains strong with gearing7 of 24.6%, within the Company’s
target range of 20% to 30%.
Operational commentary
The Group achieved 1,629 sales8 (with a gross value of $359.7 million) and 2,629 settlements8 (with a gross value of $641.4
million) for the full year across its Funds Management, Development and Joint Venture projects, representing a decrease of
45% and 10%, respectively compared with FY18.
Sales were impacted by the broader market conditions around the country, associated with restrictive lending conditions, a
moderating Victorian market and a subdued Western Australian housing market.
Settlements were affected by the completion of several syndicated Victorian projects during FY18, reduction in sales across the
portfolio and the reduction in englobo sales during FY19.
Despite the lower sales activity, Peet was able to achieve a strong EBITDA9 margin of 33% (FY18: 34%) across the business,
driven by settlements from low cost Victorian Development projects, a continued focus on cost management across the
portfolio of projects and implementing efficiencies across the business.
At 30 June 2019, there were 1,257 contracts on hand8, with a gross value of $335.5 million, compared with 2,257 contracts on
hand8 with a gross value of $615.9 million at 30 June in 2018. The lower contracts on hand as a result of lower sales activity is
expected to impact settlements in FY20.
Funds management projects
The Group’s Funds Management business performed solidly in FY19, with strong settlements from projects in Victoria partially
offsetting the impact of lower sales activity due to restrictive lending conditions and a moderation of market conditions
(particularly in Victoria). The sales variance when compared to the previous year is also attributable to the completion of several
projects in Victoria during FY18.
Funds Management continues to be a key platform of the Group’s strategy, and as at 30 June 2019, approximately 54% of the
Group’s land bank comprised Funds Management projects. This business provides Peet with a capital-lite earnings base which
contributed approximately 25% of the Group’s EBITDA9,10 for FY19.
• 909 lots sold8 for a gross value of $193.8 million, compared with 1,782 lots ($370.0 million) in FY18.
• 1,535 lots settled8 for a gross value of $355.2 million, compared with 1,796 lots ($352.6 million) in FY18.
• 685 contracts on hand8 as at 30 June 2019 with a total value of $149.0 million, compared with 1,311 contracts8 ($310.8
million) as at 30 June 2018.
• EBITDA9 of $24.4 million compared with $28.3 million in FY18.
• EBITDA9 margin increased slightly to 71% from 70% in FY18.
Development projects
During FY19, Development projects contributed 61% of the Group’s EBITDA10, with this performance underpinned by the results
achieved from the Victorian and ACT portfolios, offset by the lower contribution of englobo sales, compared to FY18.
During the year, the Group acquired a number of medium density townhouse and low-rise apartment sites that will expand the
Group’s market reach by broadening available product offerings to home buyers and investors.
Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets).
Includes equivalent lots.
EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
7
8
9
10 Before inter-segment transfers and other unallocated items.
37
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 03. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
As at 30 June 2019 approximately 24% of the Group’s land bank comprised Development projects.
• 306 lots sold11 for a gross value of $67.9 million, compared with 412 lots ($140.2 million) in FY18.
• 555 lots settled11 for a gross value of $163.1 million, compared with 438 lots ($195.8 million) in FY18.
• 211 contracts on hand11 as at 30 June 2019 with a total value of $56.0 million, compared with 460 contracts11 ($151.0
million) as at 30 June 2018.
• EBITDA12 of $58.5 million compared with $67.2 million in FY18.
• EBITDA12 margin of 32%, compared with 34% in FY18.
Joint Ventures
As at 30 June 2019 approximately 22% of the Group’s land bank comprised Joint Venture projects, with major projects located
in Qld, NSW, WA and SA. In FY19, Joint Venture projects contributed 14% of the Group’s EBITDA12, 13.
Restrictive lending conditions and moderating east coast markets contributed to the reduced contribution from the Group’s Joint
arrangements business in FY19. While sales and settlement activity reduced across the joint venture portfolio, average sales
prices were generally able to be maintained, with some modest growth also evident.
• 414 lots sold11 for a gross value of $98.0 million, compared with 756 lots ($204.3 million) in FY18.
• 539 lots settled11 for a gross value of $123.1 million, compared with 690 lots ($163.0 million) in FY18.
• 361 contracts on hand11 as at 30 June 2019 with a total value of $130.5 million, compared with 486 contracts11 ($154.1
million) as at 30 June 2018.
• EBITDA12 of $13.7 million compared with $16.6 million in FY18.
• EBITDA12 margin of 31%, compared with 30% in FY18.
Land portfolio metrics
Lot sales11
Lot settlements11
Contracts on hand as at 30 June11
Number
Value
CAPITAL MANAGEMENT
FY19
1,629
2,629
1,257
FY18
2,950
2,924
2,257
$335.5 million
$615.9 million
Change
(45%)
(10%)
(44%)
(46%)
The Group continues to apply a prudent focus on capital management and during FY19 derived $46.4 million net cash inflows
from operations (before payments for purchase of land) and kept its gearing14 within its target range of 20% to 30% at 24.6%
as at 30 June 2019.
During the year, the Group raised $75 million from the issue of senior unsecured notes via the wholesale debt market, which
together with the extension of its existing senior debt facility increased the tenor of the Group’s debt maturity profile, continued
to diversify Peet’s capital funding sources and provides greater operating flexibility to fund investment opportunities that may
arise.
At 30 June 2019, the Group had net interest-bearing debt15 (including Peet Bonds) of $211.6 million, compared with $140.5
million at 30 June 2018. Approximately, 91% of the Group’s interest-bearing debt152was hedged as at 30 June 2019, which is
the same as at 30 June 2018.
Includes equivalent lots.
11
12 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
13 Before inter-segment transfers and other unallocated items.
14 Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets).
15
Including net debt of syndicates consolidated under AASBID
38
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 03. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
Peet’s balance sheet remains strong, including cash and debt facility headroom of $156.1 million as at 30 June 2019 and a
weighted average debt maturity of over three years.
The Group is taking a cautious view into FY20, with a disciplined and conservative approach to the deployment of capital as
a result of current market conditions. The strong balance sheet and available capital provides the Group with the capacity to
accelerate delivery of product in response to any improvements in market conditions.
In FY19, Peet Limited implemented a 12-month on-market share buy-back of up to 5% of its issued ordinary shares. As at 30
June 2019, the Company had acquired 6.7 million of its ordinary shares, representing approximately 27% of the total shares to
be acquired, and subsequent to year end announced that the on-market buy-back has been extended for a further 12 months.
DIVIDENDS
Subsequent to year end, the Directors declared a final dividend for FY19 of 3.0 cents per share, fully franked. This brings the
total dividend for FY19 to 5.0 cents per share, fully franked which is the same as the FY18 dividend. The dividend is to be paid
on Monday, 7 October 2019, with a record date of Thursday, 19 September 2019.
The Directors have resolved to keep the Company’s Dividend Reinvestment Plan deactivated.
GROUP STRATEGY
The Group will continue to target the delivery of 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.
Key elements of the Group’s strategy for the year ahead and beyond include:
• selectively acquiring residential land holdings as cycles, markets and opportunities allow to restock the project pipeline with
a focus on securing low cost projects, and predominantly under its funds management platform;
• expanding market reach by continuing to broaden its product offering in Completed Homes, Medium Density Townhouses
and low-rise Apartment product;
• delivering affordable product targeted at the low and middle market segments; and
• maintaining a strong balance sheet and cash flow position.
FY19 saw the Group further invest in its Completed Homes and Medium Density Townhouse business. FY20 is expected to see
further capital invested into development and construction of Completed Homes and Medium Density Townhouse pipeline, with
a substantial recycling of this capital expected in FY21.
FY19 also saw the Company establish a new wholesale fund to acquire an 80-hectare property in Perth’s northern coastal
corridor, with approvals in place to develop more than 1,100 lots. Peet retains a 19.9% interest in the syndicate and will act as
development manager of the property.
Peet has an experienced and highly committed team and continues to make good progress on the delivery of its strategic
priorities and on broadening its capital base to place it in a position to leverage any improvements in market conditions.
RISKS
The Group’s operating and financial performance is influenced by a number of risks impacting the property sector. These include
ongoing restrictive bank lending conditions, 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, including in relation to infrastructure, environmental and climate-change 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.
39
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 03. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
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 17 to the Financial Report.
OUTLOOK
The Peet Group enters FY20 with a strong balance sheet, low gearing16 and a residential development pipeline well positioned
for sustainable long-term growth.
While the residential sector continues to be impacted by restrictive lending conditions, recent macro-economic announcements
including the approval of cuts in income tax rates following the Federal election in May 2019, reduction in interest rates and
APRA’s announcement of changes to its residential mortgage lending guidelines would prove positive in an improved market.
Despite a general improvement in enquiry from potential buyers of the Group’s products, we expect the market to take
some time to normalise, with steady employment growth, record low interest rates and high investment in infrastructure by
Government offset by the broad uncertainty driven by reduced credit availability, weak consumer sentiment and low wages
growth.
We remain cautious about the timing of recovery in the residential market. However, our strong pipeline of projects, and the
underlying fundamentals of the residential property sector, means that Peet is well positioned to deliver supply to the market as
demand improves and lending conditions normalise.
04. EARNINGS PER SHARE
Basic and diluted earnings per share
2019
Cents
9.79
2018
Cents
10.02
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 2019. The weighted average number of shares on issue used to calculate earnings per share is
discussed at note 7 to the Financial Report.
05. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the year.
06. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL
YEAR
No 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.
16 Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets).
40
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 07. DIVIDENDS
In August 2018, the Directors declared a final dividend of 3.0 cents per share, fully franked, in respect of the year ended 30 June
2018. The dividend of $14.7 million was paid on Friday, 5 October 2018.
In February 2019, the Directors declared an interim dividend of 2.0 cents per share, fully franked, in respect to the year then
ending 30 June 2019. The dividend of $9.7 million was paid on Tuesday, 9 April 2019.
Subsequent to the year end, the Directors declared a final dividend for FY19 of 3.0 cents per share, fully franked. This brings
the total dividend for FY19 to 5.0 cents per share, fully franked which is consistent with FY18 dividend (5 cents per share, fully
franked). The dividend is to be paid on Monday, 7 October 2019, with a record date of Thursday, 19 September 2019.
The Directors have resolved to keep the Company’s Dividend Reinvestment Plan deactivated.
08. ENVIRONMENTAL REGULATION
The Group is subject to environmental regulation by way of the Environment Protection and Biodiversity Conservation 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, which is the responsibility of the relevant contractor undertaking the works, and the remainder of the
Group’s activities fall below the reporting thresholds for the FY19 reporting period.
09. INFORMATION ON DIRECTORS AND GROUP COMPANY
SECRETARY
Please refer to the Board of Directors section of this report for information on Directors.
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.
41
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 10. DIRECTORS’ MEETINGS
The number of meetings of Directors (including meetings of committees of Directors) held during the year and the number of
meetings attended by each Director were as follows:
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
11
11
11
11
11
11
11
11
10
11
10
11
–
–
6
6
–
6
–
–
6
6
–
6
–
–
–
3
3
3
–
–
–
3
2
3
1
1
1
1
1
1
1
1
1
0
1
1
11. RETIREMENT, ELECTION AND CONTINUATION IN OFFICE OF
DIRECTORS
Directors are elected at the Annual General Meeting (AGM) of the Company. Retirement will occur on a rotational basis so that
one third of the Directors, but not less than two, shall retire at each AGM. The Directors may also appoint 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 A W Lennon and Mr R J McKinnon will retire by rotation and offer themselves for re-election. Your
Board of Directors recommend the re-election of Mr A W Lennon and Mr R J McKinnon.
42
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 12. REMUNERATION
Dear Shareholder,
Peet is pleased to present its Remuneration Report for the year ended 30 June 2019. 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.
Peet achieved an operating net profit after tax of $47.5 million for the 2019 financial year, compared to $49.1 million in the
previous year. During the year, Peet secured several new projects, embarked on an on-market share buy back and further
diversified its debt capital strengthening its balance sheet.
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.
While the statutory financial statements show total revenue of $249.5 million and earnings before interest, tax, depreciation
and amortisation (EBITDA) of $86.0 million, Peet management remains responsible for a greater scale 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
$249.5 million and EBITDA of $86.0 million, the properties that Peet is also responsible for within its Fund Management and
Joint Arrangement Businesses generated revenues of $389.5 million and EBITDA of $84.4 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 2019 was the same as for the previous year.
• There were no increases in the base pay of the other non-director KMP during the year ended 30 June 2019.
• Short–term incentives will be paid to the KMP in respect of the year ended 30 June 2019. This follows a positive
assessment of the individual members’ performance against a balanced scorecard, which includes consideration of Group
financial and strategic targets, together with individual targets. However, the quantum of short-term incentives paid to KMP
reduced by 19%, compared to that paid in respect to the financial year ended 30 June 2018.
• During the year, long-term incentive performance conditions were tested as at 30 June 2018 resulting in the partial vesting
of performance rights. The vesting was met by way of ordinary shares acquired on market during the 2019 financial year.
Peet also takes the opportunity to confirm that the MD’s base pay for the year ending 30 June 2020 will be the same as 2019,
notwithstanding his contractual entitlement to an adjustment of at least CPI. The MD’s base pay was last amended with effect
from 1 July 2014. Additionally, the 2020 base pays of all other KMP will remain the same as their 2019 base pays.
We encourage our shareholders to use the cash value of remuneration realised table on page 47 to assess the remuneration
outcomes for KMP in the year ended 30 June 2019 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 2019 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
43
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 13. REMUNERATION REPORT (AUDITED)
The Remuneration report is set out under the following main headings:
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
Position
Managing Director and Chief Executive Officer
Chief Investment Officer
Group Company Secretary
B C Fullarton
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
Terms of Agreement
Superannuation1 Termination Benefit2,3
Base pay including
B D Gore
On-going renewed 5 August 2011
$937,300
Refer below4
P J Dumas
On-going commenced 4 February 2008
$485,000
3 months base pay inclusive of superannuation
D Scafetta
On-going commenced 10 June 1998
$350,000
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
2
3
4
Base pays, inclusive of superannuation, for the year ended 30 June 2019. Base pays are reviewed annually by the Remuneration Committee.
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.
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).
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 remunera-
tion-related arrangements was disclosed to the market on 5 August 2011 with certain parts approved by shareholders at the 2011 AGM.
44
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
B. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
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.
For the purpose of assessing Executives’ eligibility to short-term incentives, the Remuneration Committee and Board have
traditionally agreed to the use of a balanced scorecard. This methodology will continue to be used for the 2020 financial year,
and will comprise a combination of financial and non-financial key performance indicators.
During the 2018 financial year, the Remuneration Committee recommended to the Board, and it agreed, to assess financial
performance for the purposes of long-term incentive awards against earnings per share (EPS) growth, together with funds under
management growth. These performance measures were also used for the 2019 financial year and will continue to be used for
the 2020 financial year.
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.
NEDs’ fees (including the Chairman’s fees)
Fees and payments to NEDs reflect the demands which are made on, and the responsibilities of, the NEDs. NEDs’ fees and
payments are reviewed periodically by the Remuneration Committee and the Board. The Remuneration Committee considers,
as appropriate, the advice of independent remuneration consultants to ensure NEDs’ fees and payments are appropriate and in
line with the market. NEDs do not receive share options or performance rights.
The NEDs’ remuneration is inclusive of committee fees and fees for their membership on any subsidiary Boards. The fees
payable to NEDs and the Chairman of the Remuneration Committee and the Chairman of the Audit and Risk Management
Committee were last amended with effect from 1 July 2018 (after last being amended with effect from 1 July 2014). NEDs may
also be entitled to fees where they represent Peet on the Board of Syndicates.
45
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
NEDs’ fees are determined within an aggregate Directors’ fee pool limit, which is periodically recommended for 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.
NEDs’ fees for the 2020 financial year will be the same as the 2019 financial year.
Executive pay
The Company’s pay and reward framework for Executive’s has the following 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.
Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. As and when 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. There were no changes to the
quantum of total base pay for Executives during the 2019 financial year.
Short-term performance incentives (“STI”)
Executives have a target STI opportunity depending on the accountabilities of their specific role and impact on the Group’s
performance. The maximum target bonus opportunity for the Executives for the years ended 30 June 2019 and 2018 ranged
between 50% and 100% of the relevant Executive’s base pay. However, the Board of Directors has the discretion to pay over
and above these amounts.
Each year, the Remuneration Committee considers the appropriate targets and key performance indicators (“KPIs”) to link to
the STI plan and the level of payout if targets are met for the Managing Director and Chief Executive Officer (“MD”). This may
include setting any maximum payout under the STI plan and minimum levels of performance to trigger payment of STI. The MD
will then set the STI KPIs to apply to the other Executives.
KPIs for each Executive are set by reference to the following criteria based on their specific role:
• financial;
• strategy;
• stakeholder engagement;
• people and processes improvements; and
• health, safety and environment.
46
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
For the year ended 30 June 2019, the MD and other Executives were assessed as follows against the KPIs:
Category
Financial
Strategic
Stakeholder
Weighting
% Achieved
% Forfeited
MD
Executives
MD
Executives
MD
Executives
70.0%
65.0% to 80%
49.0% 45.5% to 59.0% 21.0%
19.5% to 21.0%
10.0% 7.5% to 35.0%
10.0% 6.0% to 25.0%
7.5%
0.0% to 2.5%
7.5%
0.0% to 2.5%
0.0%
0.0%
0.0%
0.0%
0.0% to 10.0%
0.0%
0.0% to 2.5%
0.0%
People, processes and culture
7.5% 0.0% to 12.5%
7.5% 0.0% to 10.0%
Health, safety and environment
5.0% 0.0% to 12.5%
5.0% 0.0% to 12.5%
100.0%
100.0%
79.0% 70.5% to 79.0% 21.0%
21.0% to 29.5%
For the year ended 30 June 2018, the KPI’s linked to STI plan were based on similar criteria.
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 2019 and 2018 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’.
47
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 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 49. 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, bonus, 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
Value of PRs
vested3
Bonus2
Other4 Superannuation
Total
DIRECTORS
A W Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore
Total
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
231,857
216,847
143,167
136,283
92,939
86,055
115,770
108,886
152,939
146,055
916,769
917,251
1,653,441
1,611,377
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
D Scafetta
B C Fullarton
Total
2019
2018
2019
2018
2019
2018
2019
2018
460,000
460,000
329,469
329,951
415,000
415,000
1,204,469
1,204,951
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
740,467
918,554
740,467
918,554
205,155
261,900
138,250
161,000
165,000
198,000
508,405
620,900
1,040,125
856,369
1,040,125
856,369
–
259,844
194,197
148,470
244,135
201,004
438,332
609,318
–
–
–
–
–
–
–
–
–
–
10,000
10,000
10,000
10,000
–
–
–
–
–
–
–
–
24,462
20,453
13,601
12,947
8,829
8,175
10,998
10,344
8,829
8,175
20,531
20,049
87,250
80,143
25,000
25,000
20,531
20,049
25,000
25,000
70,531
70,049
256,319
237,300
156,768
149,230
101,768
94,230
126,768
119,230
161,768
154,230
2,727,892
2,722,223
3,531,283
3,476,443
690,155
1,006,744
682,447
659,470
849,135
839,004
2,221,737
2,505,218
1
2
3
4
Cash salary and fees, as well as fees paid to Directors for their directorship on Syndicate Boards.
All cash bonuses are earned in the financial year to which they relate and are paid during the following financial year.
Amount paid by the Company in order to settle the PRs exercised during years ended 30 June 2018 and 2019. The Company purchased ordinary shares in the Co mpany on-market on behalf of KMP.
Other includes termination benefits, long service payments, motor vehicle costs, car-parking and other benefits.
48
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
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
Bonus2
Other3 Superannuation
Cash salary
and fees1
$
231,857
216,847
143,167
136,283
92,939
86,055
115,770
108,886
152,939
146,055
$
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
DIRECTORS
AW Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore
Total
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
916,769
740,467
917,251
918,554
1,653,441
740,467
1,611,377
918,554
10,000
10,000
10,000
10,000
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
D Scafetta
B C Fullarton
Total
2019
2018
2019
2018
2019
2018
2019
2018
460,000
205,155
460,000
261,900
329,469
138,250
329,951
161,000
415,000
165,000
415,000
198,000
1,204,469
508,405
1,204,951
620,900
–
–
–
–
–
–
–
–
Share-based
payments
Shares/
Options /
Performance
Rights4
Termination
benefits
$
24,462
20,453
13,601
12,947
8,829
8,175
10,998
10,344
8,829
8,175
20,531
20,049
87,250
80,143
25,000
25,000
20,531
20,049
25,000
25,000
70,531
70,049
$
–
–
–
–
–
–
–
–
–
–
229,121
972,099
229,121
972,099
77,273
302,842
46,470
182,122
58,419
228,953
182,162
713,917
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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.
Total
$
256,319
237,300
156,768
149,230
101,768
94,230
126,768
119,230
161,768
154,230
1,916,888
2,837,953
2,720,279
3,592,173
767,428
1,049,742
534,720
693,122
663,419
866,953
1,965,567
2,609,817
49
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 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 as follows:
Fixed remuneration
At risk STI
At risk LTI
2019
2018
2019
2018
20191
20181
DIRECTORS
A W Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore
100%
100%
100%
100%
100%
49%
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
D Scafetta
B C Fullarton
63%
65%
66%
100%
100%
100%
100%
100%
33%
46%
51%
51%
–
–
–
–
–
39%
27%
26%
25%
–
–
–
–
–
33%
25%
23%
23%
–
–
–
–
–
12%
10%
9%
9%
–
–
–
–
–
34%
29%
26%
26%
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.
50
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
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 dates and times 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.
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.
51
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
2
3
4
3
4
3
5
3
5
3
4
3
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3
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Notes
date of report
exercisable at
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of report
Balance at date
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0
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July 18
Balance as at 1
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Performance/
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T
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only
Notes
date of report
exercisable at
Vested and
of report
Balance at date
July 18
Balance as at 1
conditions
Vesting
PR at Grant Date
Value per option/
Exercise
Expiry
:
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Date of Grant
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2
3
4
3
4
3
5
3
5
3
4
3
4
3
5
3
5
NOTE 1
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
–
–
–
–
–
–
–
4
1
1
,
5
6
0
,
1
7
4
3
,
4
7
8
8
8
2
,
0
7
8
6
4
5
,
9
7
7
5
2
9
,
9
3
6
4
5
9
,
6
3
6
Lapsed/ forfeited
–
–
–
–
–
–
–
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 25 November 2015, 23 November
2016, 29 November 2017 and 21 November 2018, being the dates of Peet Limited’s, 2014, 2015, 2016, 2017 and 2018 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.
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.
Granted
–
–
–
–
–
–
–
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 relevant performance period is reduced by the equity interest retained by the
Group and is then compared to the rolling three-year 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
Target – medium
Medium – maximum
Maximum
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%
$60 million to $100 million
Pro-rata between 50% and 70%
$100 million to $150 million
Pro-rata between 70% and 100%
Greater than $150 million
100%
The Group achieved FUM growth of $230.7 million for the three-year performance period ended 30 June 2018. Accordingly, the
performance condition was fully met and on 21 August 2018 the Directors resolved that 100% of the FY16 PRs thereto vested.
The FY17, FY18 and FY19 PRs remain unvested.
53
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
NOTE 4
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 (“FY17
Performance Period”), respectively.
ROCE is measured as the average of the below formula calculated on an annual basis over the relevant Performance Period:
EBIT
Average (Capital Employed)
Where:
EBIT means the earnings before interest, tax, write-downs of inventories and development costs and increases in the carrying
value of inventories for the relevant financial year.
Profits from associates are to be grossed up so as to be an EBIT equivalent.
Capital Employed means the sum of (bank debt, corporate bonds, contributed equity, minority interests and retained earnings
and less cash) at the start and end of the relevant financial year.
Peet syndicates which are treated as subsidiaries under accounting standards will be treated as syndicates in the calculation of ROCE.
Of the FY16 PRs subject to ROCE, the proportion to vest will be as follows:
Performance level
Less than 75% of the target
75% of the target
75% to 85% of the target
85% to 100% of the target
100% to 110% of the target
Proportion of performance rights that may
be eligible to vest
0%
30%
Pro-rata between 30% and 50%
Pro-rata between 50% and 70%
Pro-rata between 70% and 100%
Greater than 110% of the target
100%
The Group achieved underlying ROCE of 13.75% against the target of 12.93% for the three-year performance period ended 30
June 2018. Accordingly, the ROCE performance condition attached to the FY16 PRs was partially met and on 21 August 2018 the
Directors resolved that 89.1% of the FY16 PRs relating thereto vested.
Of the FY17 PRs subject to ROCE, the proportion to vest will be as follows:
Performance level
Less than 90% of the target
90% of the target
90% to 95% of the target
95% to 100% of the target
100% to 105% of the target
Proportion of performance rights that
may be eligible to vest
0%
30%
Pro-rata between 30% and 50%
Pro-rata between 50% and 65%
Pro-rata between 65% and 100%
Greater than 105% of the target
100%
The FY17 PRs remain unvested.
54
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
NOTE 5
These PRs are convertible to ordinary shares on a 1:1 basis, with 60% subject to the EPS growth vesting condition, measured
over a three-year period from 1 July 2017 to 30 June 2020 (“FY18 Performance Period”) and 1 July 2018 to 30 June 2021 (“FY19
Performance Period”), respectively.
The EPS growth condition will be measured as the average growth in operating EPS over the relevant Performance Period, with
the EPS derived for the previous financial year as the base year.
The earnings component of EPS is calculated as net profit measured in accordance with Australian Accounting Standards,
excluding write-downs of inventories and development costs and increases in the carrying value of inventories during the
relevant financial year, and is subject to other adjustments at the Board’s discretion.
EPS growth is then compared to the Board’s internal target EPS growth for the FY18 Performance Period and the FY19
Performance Period, respectively.
Of the PRs subject to EPS growth, the proportion to vest will be as follows:
Performance level
Less than 80% of the EPS growth target
80% of the EPS growth target
80% to 100% of the EPS growth target
100% to 120% of the EPS growth target
Proportion of performance rights that
may be eligible to vest
0%
50%
Pro-rata between 50% and 80%
Pro-rata between 80% and 100%
Greater than 120% of the EPS growth target
100%
The FY18 and FY19 PRs remain unvested.
55
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
Option and performance rights holdings
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 is convertible into one
ordinary share of Peet Limited.
Balance at
the start of the
year
Granted during
the year
Exercised
during the
year
Lapsed/
forfeited
during the
year1
Balance
at end of
the year
Vested and
exercisable
at the end of
the year
DIRECTORS
A W Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,067,481
870,288
(866,771)
(61,249)
4,009,749
1,200,000
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
D Scafetta
B C Fullarton
890,256
535,377
673,046
270,195
162,488
204,271
–
(161,831)
(203,446)
(19,016)
(11,436)
(14,376)
1,141,435
269,103
524,598
659,495
–
–
1 Includes performance rights for which performance conditions were not met for the performance period.
During the year ended 30 June 2019, 1,501,151 PRs (2018: 1,204,578) had vested and 1,232,048 (2018: 1,204,578) were
exercised by KMP at $ Nil exercise price. In order to settle the PRs exercised during year ended 30 June 2019, the Company
purchased ordinary shares in the Company on-market on behalf of KMP.
Since 30 June 2019, no PRs were vested. No other options and PRs have been issued. Refer note 25 of the financial report for
the total options and PRs outstanding.
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:
2015
38,460
27.0%
38,460
21.9%
8.26
18.0%
8.26
13.2%
4.5
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
1.20
2018
49,112
9.6%
49,112
9.6%
10.02
9.6%
10.02
9.6%
5.00
1.32
10%
2019
47,549
(3.2%)
47,549
(3.2%)
9.79
(2.3%)
9.79
(2.3%)
5.00
1.12
( 15.1%)
Growth%
cents per share
Growth%
cents per share
Growth%
cents per share
$
Growth%
(14.8%)
(18.3%)
27.7%
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
Share price 30 June
Share price growth
56
DIRECTORS’ REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
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
Vested1
%
Forfeited1,2
%
Financial
years in which
options/PRs
may vest
Maximum total
value of grant
yet to expense
$
DIRECTORS
A W Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore
–
–
–
–
–
–
–
–
–
–
79%
21%
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
71%
29%
D Scafetta
79%
21%
B C Fullarton
75%
25%
–
–
–
–
–
2019
2018
2017
2016
2019
2018
2017
2016
2019
2018
2017
2016
2019
2018
2017
2016
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
93.4%
6.6%
–
–
–
–
–
–
93.4%
6.6%
–
–
–
–
–
–
93.4%
6.6%
–
–
–
–
–
–
93.4%
6.6%
–
–
–
–
–
2021
2020
2019
2019
2021
2020
2019
2019
2021
2020
2019
2019
2021
2020
2019
2019
–
–
–
–
–
736,339
851,780
–
–
228,608
258,674
–
–
167,999
155,560
–
–
172,831
195,561
–
–
1
2
Includes performance rights for which performance conditions were met for the performance period ended 30 June 2018 and confirmed by the Directors after balance date.
Includes performance rights for which performance conditions were not met for the performance period.
57
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only DIRECTORS’ REPORT
Year ended 30 June 2019
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
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 1,232,048 PRs over
shares in the Company and received shares in the Company during the 2019 financial year. Please refer to previous pages of the
Remuneration Report for commentary on vesting conditions met during the performance period ended 30 June 2019.
DIRECTORS
B D Gore
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
D Scafetta
B C Fullarton
Remuneration consisting
of options & performance
rights1
Value of options &
performance rights
granted2
Value of options &
performance rights
exercised3
12%
10%
9%
9%
818,071
844,234
253,983
152,739
192,015
-
154,873
194,698
1
2
3
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.
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.
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.
Voting and comments made at the Company’s 2018 annual general meeting
The instructions given to validly appointed proxies in respect of the resolution pertaining to the Company’s 2018 Remuneration
Report were as follows:
For
216,025,881
96.8%
Against
6,847,574
3.1%
Proxy’s discretion
210,502
0.1%
The motion was carried as an ordinary resolution on show of hands.
Abstain
142,646
58
PEET LIMITED | ANNUAL REPORT 2019 For personal use only
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
Interests in the shares and bonds of the Company
Shares
Balance at the
start of the
year
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
DIRECTORS
A W Lennon
T J Allen
V Krause
R J McKinnon
B D Gore
A J Lennon
97,314,685
92,054
–
50,000
5,237,046
1,331,344
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
D Scafetta
B C Fullarton
1,087,882
1,118,158
400,404
–
–
–
–
866,771
–
–
161,831
203,446
–
–
–
–
–
–
–
–
–
97,314,685
92,054
–
50,000
6,103,817
1,331,344
1,087,882
1,279,989
603,850
4,875
5,114
1,000
500
–
500
–
–
–
Since 30 June 2019, no PRs were vested. No other options and PRs have been issued.
End of Remuneration report (audited)
Bonds
Other
changes
during the
year
–
(4,614)
–
–
–
–
–
–
–
Balance at
the end of
the year
4,875
500
1,000
500
–
500
–
–
–
59
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only DIRECTORS’ REPORT
Year ended 30 June 2019
14. INDEMNITY OF OFFICERS AND AUDITORS
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.
15. NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the 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
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 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 22 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 61.
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
28 August 2019
6060
PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only AUDITOR’S INDEPENDENCE DECLARATION
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent Auditor's Report to the Members of Peet Limited
Report on the Audit of the Financial Report
Auditor’s Independence Declaration to the Directors of Peet Limited
Opinion
As lead auditor for the audit of the financial report of Peet Limited for the financial year ended
We have audited the financial report of Peet Limited (the Company) and its subsidiaries (collectively the
30 June 2019, I declare to the best of my knowledge and belief, there have been:
Group), which comprises the consolidated balance sheet as at 30 June 2019, the consolidated statement
of profit or loss and other comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, notes to the financial statements, including
a summary of significant accounting policies, and the directors' declaration.
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
This declaration is in respect of Peet Limited and the entities it controlled during the financial year.
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2019
a)
and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
Ernst & Young
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
G Lotter
ethical responsibilities in accordance with the Code.
Partner
28 August 2019
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
64
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
23
61
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only CORPORATE GOVERNANCE STATEMENT
A copy of the Group’s corporate governance policies and
practices in place during the financial year ended 30 June
2019 is available at the following link:
www.peet.com.au/corporate-governance-statement-2019
Unless otherwise stated, these are consistent with the 3rd
edition of the ASX Corporate Governance Council’s Principles
and Recommendations (released March 2014).
62
PEET LIMITED | ANNUAL REPORT 2019 For personal use only THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
63
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only CONTENTS
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
66
67
68
69
70
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 28 August 2019.
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
64
FINANICAL REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
65
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
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
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
Notes
5
6
6
10
8
2019
$’000
249,545
(190,934)
(8,538)
13,329
63,402
(16,052)
47,350
47,549
(199)
47,350
631
(1,560)
279
(650)
46,700
46,899
(199)
46,700
2018
$’000
287,619
(223,856)
(10,232)
14,081
67,612
(18,972)
48,640
49,112
(472)
48,640
3,129
(862)
(680)
1,587
50,227
50,699
(472)
50,227
Earnings per share for profit attributable to the ordinary equity holders of the Company
Basic and diluted earnings per share
Notes
7
Cents
9.79
Cents
10.02
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
66
FINANICAL REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2019
Current assets
Cash and cash equivalents
Receivables
Contract assets
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
Derivative financial instruments
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
11
12
9
11
9
10
13
14
17
17
15
14
17
17
8
15
18
18
2019
$’000
33,606
18,999
6,234
105,750
164,589
100,007
412,919
233,668
5,237
5,704
757,535
922,124
65,715
6,350
5,083
221
8,915
6,047
92,331
-
240,103
5,310
24,213
216
269,842
362,173
559,951
378,916
(5,051)
168,722
542,587
17,364
559,951
2018
$’000
76,749
10,770
16,622
119,259
223,400
95,665
375,540
222,820
5,411
6,087
705,523
928,923
82,066
14,700
-
-
15,398
5,826
117,990
5,380
217,204
3,777
32,844
285
259,490
377,480
551,443
385,955
3,397
150,871
540,223
11,220
551,443
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
67
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Contributed
equity
$’000
385,955
Notes
–
–
–
–
–
–
Reserves
$’000
1,417
–
1,587
1,587
(1,883)
2,276
–
Balance at 1 July 2017
Profit for the year
Other comprehensive income
Total comprehensive
income for the year
Vesting of performance rights
Share-based payments
Dividends paid
Balance at 30 June 2018
385,955
3,397
Retained
profits
$’000
126,258
49,112
–
49,112
–
–
(24,499)
150,871
Total
$’000
513,630
49,112
1,587
50,699
(1,883)
2,276
(24,499)
540,223
Non-controlling
interest
Total equity
$’000
11,692
(472)
–
(472)
–
–
–
11,220
$’000
525,322
48,640
1,587
50,227
(1,883)
2,276
(24,499)
551,443
Balance at 1 July 2018 – as
previously reported
Effect of adopting new
accounting standards
(Note 2e)
Balance at 1 July 2018 –
restated
Profit for the year
Non-reciprocal contribution to
a controlled entity
Other comprehensive income
Total comprehensive income
for the year
Share buyback, including
transaction costs
Vesting of performance rights
Share-based payments
Dividends paid
385,955
3,397
150,871
540,223
11,220
551,443
–
–
(5,332)
(5,332)
–
(5,332)
385,955
3,397
145,539
–
47,549
(6,343)
(650)
–
–
534,891
47,549
(6,343)
(650)
11,220
(199)
6,343
–
546,111
47,350
–
(650)
(6,993)
47,549
40,556
6,144
46,700
(7,039)
–
–
–
–
(2,085)
630
–
–
–
–
(24,366)
168,722
(7,039)
(2,085)
630
(24,366)
542,587
–
–
–
–
17,364
(7,039)
(2,085)
630
(24,366)
559,951
–
–
–
–
Balance at 30 June 2019
378,916
(5,051)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
68
FINANICAL REPORTYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Notes
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Payments for purchase of land held for sale
Interest and other finance costs paid
Distributions and dividends received from associates and joint ventures
Interest received
Income tax paid
Net cash (outflow)/inflow from operating activities
20
Cash flows from investing activities
Payments for property, plant and equipment
Payments for investment in associates and joint ventures
Proceeds from capital returns from associates and joint ventures
Loans to associates and joint ventures
Repayment of loans by associates and joint ventures
Net cash outflow from investing activities
Cash flows from financing activities
Dividends paid
Repayment of borrowings
Proceeds from borrowings
Proceeds from issue of Peet bonds and notes (net of transaction costs)
Share buyback (including transaction costs)
Net cash outflow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
2019
$’000
269,825
(186,511)
(58,501)
(21,134)
12,280
592
(28,605)
(12,054)
(1,812)
(6,365)
1,479
(29,690)
9,702
(26,686)
(24,366)
(48,500)
1,926
73,576
(7,039)
(4,403)
(43,143)
76,749
33,606
2018
$’000
325,252
(183,177)
(50,690)
(18,983)
10,185
552
(15,806)
67,333
(2,252)
(8,725)
3,249
(21,024)
7,826
(20,926)
(24,499)
(108,129)
25,598
49,005
-
(58,025)
(11,618)
88,367
76,749
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
69
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 71
71
71
74
75
75
77
78
78
79
82
82
82
85
85
86
86
86
87
88
88
92
93
93
94
95
95
95
96
99
101
101
CONTENTS
BASIS OF REPORTING
1.
2.
3. How to read the annual report
Reporting entity
Basis of preparation
PERFORMANCE FOR THE YEAR
4.
5.
6.
7.
8.
Segment information
Revenue
Expenses
Earnings per share
Taxes
Inventories
Investments accounted for using the equity method
OPERATING ASSETS AND LIABILITIES
9.
10.
11. Receivables
12. Contract assets
13. Payables
14. Land vendor liabilities
15. Provisions
16.
Interests in joint operations
CAPITAL MANAGEMENT
17. Borrowings and derivative financial instruments
18. Contributed equity and reserves
19. Dividends
20. Reconciliation of profit after income tax to net cash inflow from operating activities
21. Fair value measurement
OTHER NOTES
22. Remuneration of auditors
23. Contingencies and commitments
24. Parent entity financial information and subsidiaries
25. Share-based payments
26. Matters subsequent to the end of the financial year
27. Other accounting policies
7070
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only BASIS OF REPORTING
This section of the financial report sets out the basis of
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 business is; Level 7,
200 St Georges Terrace, Perth WA 6000. The nature of the
operations and principal activities 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:
• has been prepared
in accordance with Australian
issued by
Accounting Standards and
the Australian Accounting Standards Board and the
Corporations Act 2001;
Interpretations
• complies with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards
Board (IASB);
• has been prepared under the historical cost convention,
except for derivative instruments and certain financial
assets which have been measured at fair value;
• 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.
a. Principles of consolidation
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 2019. 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
• the ability to use its power over the investee to affect its
returns.
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, income and
expenses of a subsidiary acquired or disposed of during the
year are included in the statement of comprehensive income
from the date the Group gains control until the date the Group
ceases to control the subsidiary.
Profit or loss and each component of other comprehensive
income (OCI) are attributed to the equity holders of the parent
of the Group and to the non-controlling interests, even if this
results in the non-controlling interests having a deficit balance.
All intra-group assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation.
b. Associates
Associates are all entities over which the Group has
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 the Group’s position as
project manager. Investments in associates are accounted for
using the equity method of accounting, after i nitially being
recognised at cost.
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 a reduction in the carrying
amount of the investment.
When the Group’s share of losses in an associate equals
or exceeds its interest in the associate, including any other
long-term receivables, the Group does not
unsecured
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.
7171
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 2. BASIS OF PREPARATION (CONTINUED)
c. Investments in joint arrangements
Joint arrangements are arrangements of which two or 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 applies, for the first time, AASB 15 Revenue from
Contracts with Customers (“AASB 15”) and AASB 9 Financial
Instruments (“AASB 9”). The nature and effect of these
changes are disclosed below.
Several other amendments and interpretations apply for the
first time in 2019, but do not have a material impact on the
Group.
(a) AASB 15
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 as a joint
operation and as such, the Group recognises its:
• assets, including its share of any assets held jointly;
• liabilities, including its share of any liabilities incurred
jointly;
• share of revenue from the sale of the output by the joint
operation; and
• expenses, including its share of any expenses incurred
jointly.
AASB 15 establishes a five-step model to account for
revenue arising from contracts with customers. Under AASB
15, revenue is recognised at an amount that reflects the
consideration to which an entity expects to be entitled in
exchange for transferring goods or services to a customer.
The Group adopted AASB 15 as of 1 July 2018 using the full
retrospective method of adoption. Under this approach, the
Group has elected to apply the standard only to contracts
that are not completed contracts at the beginning of the
comparative period being 1 July 2017.
Impact of adoption
Other than a balance sheet reclassification adjustment
relating to the presentation of contract assets and liabilities,
the impact of AASB 15 on the Group for the year ended 30
June 2019 is immaterial.
In accordance with AASB 15, when either party to a contract
has performed, the Group is required to present the contract
in the Consolidated Balance Sheet as a contract asset or
contract liability depending on the relationship between the
Group’s performance and the customer’s payment. The Group
is obliged to present any unconditional right to payment as a
receivable. Contract assets are considered to be unconditional
if the right to receive payment is only conditional on the
passage of time. Accordingly, a contract asset is recognised
for the earned consideration that is conditional. Under AASB
118, amounts due from customers were previously included in
receivables.
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 of the venture.
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.
e. Changes in accounting policies
The accounting policies adopted in the preparation of the
financial report are consistent with those followed in the
preparation of the Group’s annual financial statements for the
year ended 30 June 2018, except for changes arising from the
adoption of new accounting standards effective as at 1 July
2018. 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 27(x)).
7272
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only 2. BASIS OF PREPARATION (CONTINUED)
e. Changes in accounting policies (continued)
The impact of the application of AASB 15 is analysed by financial statement line items below.
7
1
0
2
y
l
u
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A
53,319
–
53,319
n
o
i
t
a
c
fi
i
s
s
a
l
c
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5
1
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S
A
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(25,005)
25,005
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8
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0
2
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28,314
25,005
53,319
27,392
–
27,392
(16,622)
16,622
–
8
1
0
2
y
l
u
J
1
t
A
10,770
16,622
27,392
Receivables
Contract assets
Total current assets
(b) AASB 9
AASB 9 replaces aspects of AASB 139 Financial Instruments
(“AASB 139”) that relate to the recognition, classification
and measurement of financial assets and financial liabilities,
including derecognition, impairment and hedge accounting.
AASB 9 also amends other standards dealing with financial
instruments such as AASB 7 Financial Instruments: Disclosures.
The Group applied AASB 9 with the initial application date
being 1 July 2018. The Group has not restated comparative
information which continues to be reported under AASB 139.
Differences arising from the adoption of AASB 9 have been
recognised directly in retained earnings. The nature of the
adjustments is described below:
Classification and measurement
Under AASB 9 debt instruments are measured at fair value
through profit or loss, amortised cost or fair value through
other comprehensive income (OCI). The classification is based
on two criterion: the Group’s business model for managing the
assets; and whether the instruments’ contractual cash flows
represent ‘solely payments of principal and interest’ on the
principal amount outstanding.
The assessment of the Group’s business model was done on
the date of initial application, 1 July 2018. The assessment of
whether contractual cash flows on debt instruments are solely
comprised of principal and interest was made based on the
facts and circumstances as at the initial recognition of the
financial asset.
Under AASB 139 all financial assets were classified as loans
and receivables carried at amortised cost. Under AASB 9
with the exception of certain loans to associates and joint
ventures, all financial assets are classified as financial assets
at amortised cost. Under AASB 9, certain loans to associates
and joint ventures did not meet the criteria to be classified
at amortised cost in accordance with AASB 9 because the
cash flows do not represent payments of principal and interest
solely and will be reclassified from loans and receivables
carried at amortised cost under AASB 139 to financial assets
at fair value through profit and loss under AASB 9. There
were no changes in the classification of the Group’s financial
liabilities. The change in classification of the Group’s financial
assets has resulted in a measurement adjustment of $4.9
million arising on adoption of AASB 9 which has been reflected
as an adjustment to opening retained earnings of $3.4 million
(net of tax) at 1 July 2018.
Impairment
AASB 9 also changes the accounting for impairment losses for
financial assets by replacing AASB 139’s incurred loss approach
with a forward-looking expected credit loss (ECL) approach.
AASB 9 requires the Group to recognise an allowance for ECL
for all debt instruments not held at fair value through profit and
loss. For trade receivables and contract assets, the Group has
applied AASB 9’s simplified approach and has calculated the
expected credit loss based on lifetime expected credit losses.
In this regard, the Group has established a provision matrix
that is based on the Group’s historical credit loss experience,
adjusted for forward-looking factors specific to the debtors
and the economic environment.
As at 1 July 2018, the Group reviewed and assessed the
existing financial assets carried at amortised cost for
impairment using reasonable and supportable information.
For cash and cash equivalents, all balances were assessed as
having low credit risk as they are either on demand or short-
term deposits held with reputable financial institutions. Whilst
no trade receivables and contract assets were in default at
the date of initial application, the Group has recognised
additional impairment on the Group’s financial assets carried
at amortised cost of $2.8 million which resulted in a reduction
in retained earnings of $1.9 million (net of tax) at 1 July 2018.
7373
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only
2. BASIS OF PREPARATION (CONTINUED)
e. Changes in accounting policies (continued)
Hedge accounting
The new hedge accounting rules align the accounting for
hedging instruments more closely to the Group’s financial risk
management practices. The interest rate swaps in place at 30
June 2019 designated as cash flow hedges under AASB 139
qualify as cash flow hedges under AASB 9 and accordingly are
treated as continuing hedges under AASB 9.
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.
The impact of the application of AASB 9 is illustrated below.
Where an accounting policy is specific to one note, the policy
is described in the note to which it relates.
7
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n
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a
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9
B
S
A
A
86,996 (86,996)
t
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e
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a
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m
9
B
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A
A
–
8
1
0
2
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t
a
t
s
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R
–
–
42,288
(2,766)
39,522
–
44,708
(4,852)
39,856
Loans to
associates and
joint ventures
Loans to
associates and
joint ventures –
amortised cost
Loans to
associates and
joint ventures –
fair value
Other receivables
8,669
Receivables
(non-current)
Deferred tax
asset
95,665
12,825
Opening retained
profits
150,871
–
–
–
–
–
8,669
(7,618)
88,047
2,285
15,110
(5,332) 145,539
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 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 17);
• liquidity risk (note 17); and
• interest rate risk (note 17).
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.
7474
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only
PERFORMANCE FOR THE YEAR
This section focuses on the results and performance of the
Group.
Company-owned projects
The Group acquires parcels of land in Australia, primarily for
residential development purposes. Certain land holdings will
also produce non-residential blocks of land.
4. SEGMENT INFORMATION
Joint arrangements
into with government,
Joint arrangements are entered
statutory authorities and private landowners. The form of these
arrangements can vary from project to project but generally
involves Peet undertaking the development of land on behalf
of the landowner or in conjunction with the co-owner. The
Group is typically entitled to ongoing fees for management of
the development project and also a share of the profits.
Inter-segment transfers and other
unallocated
Segment revenue, expenses and results include transfers
between segments. Such transfers are based on an arm’s
length basis and are eliminated on consolidation.
The adoption of AASB 10 Consolidated Financial Statements
from 1 July 2013, resulted in certain property syndicates being
consolidated. These entities however, 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
Group’s consolidated statement of profit or loss.
Operating segments are reported in a manner that is
consistent with the internal reporting provided to the chief
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.
The executive management group assesses the performance of
the operating segments based on multiple measures including
earnings before interest (including interest and finance
charges amortised through cost of sales), tax, depreciation and
amortisation (“EBITDA”), earnings before interest (including
interest and finance charges amortised through cost of sales)
and tax (“EBIT”) and profit after tax.
The share of profits from associates and joint ventures is
included as segment revenue as it is treated as revenue for
internal reporting purposes.
The Group operates only in Australia.
The executive management group considers the business to
have the following reportable business segments:
Funds management
Peet enters into asset and funds management agreements
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.
7575
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 4. SEGMENT INFORMATION (CONTINUED)
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DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only
5. REVENUE
Project management
2019
$’000
2018
$’000
Revenue from contracts with customers
• sales of land and built form
214,032
240,360
• project management and
selling services
33,789
43,647
Project management
represents a single performance
obligation that is satisfied over time for the oversight and
management of the development. The consideration receivable
under the contract allocated to project management is variable
and is measured using an expected value approach subject to
a constraint. The transaction price is based on the relative
standalone selling price. Revenue is recognised using an
output method based on development milestones reached.
Payment is received on settlement.
• other revenue
1,724
3,612
Selling services
249,545
287,619
Recognition and measurement
The main streams of revenue recognised by the Group relate
to the sale of land and the provision of management and
selling services. Revenue from contracts with customers
is recognised when or as the Group transfers control of the
goods and services to a customer at an amount that reflects
the consideration to which the Group is expected to be
entitled in exchange for those goods and services. Revenue
is recognised when or as each performance obligation is
satisfied at the amount of the transaction price allocated
to that performance obligation. If the consideration in the
contract includes a variable amount, the Group estimates the
amount of the consideration to which it is entitled in exchange
for transferring the goods and services to the customer. The
variable consideration is estimated at contract inception and
constrained until it is highly probable that a significant revenue
reversal of the amount of the cumulative revenue recognised
will not occur when the associated uncertainty with the
variable consideration is subsequently resolved. When a
performance obligation is satisfied by transferring a promised
good or service to the customer before the customer pays
consideration or before payment is due, the Group presents
the contract as a contract asset, unless the Group’s rights to
the amount of consideration are unconditional, in which case
the Group recognises a receivable.
The Group recognises contract fulfilment costs as an asset only
if the costs relate directly to a contract, the costs generate or
enhance resources of the Group that will be used to satisfy
future performance obligations and the costs are expected to
be recovered. If not capitalised, contract fulfilment costs are
expensed as incurred.
Sale of land and built form
Revenue from the sale of land and built form is recognised on
settlement of the sale. This represents the point when control
(title) has passed to the customer.
A sale service represents a performance obligation to facilitate
the sale of an individual lot which is satisfied over the short
period of time relating to the procedural steps of finalising
the sale of the property to a purchaser. The consideration
receivable under the contract allocated to selling services is
considered to be variable consideration and is measured on
a portfolio basis using an expected value approach subject
to a constraint. The transaction price is based on the relative
standalone selling price. Payment is received on settlement.
Key estimates
Constraints on 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 constraint for revenue
recognised against selling fees.
Percentage completion
An analysis of development milestones is performed to
determine an appropriate percentage of completion for
completed lots.
Revenue from related parties included
above:
2019
$’000
2018
$’000
Revenue from related parties1
Associates
Project management and selling services
23,630
32,017
Syndicate administration services
1,505
1,336
Joint arrangements
Project management and selling services
3,738
5,158
28,873
38,511
1
Refer to note 3 for information on related party transactions.
7777
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 6. EXPENSES
Related party expenses
2019
$’000
2018
$’000
Profit before income tax includes the
following specific expenses:
KMP remuneration1
Short-term employee benefits
Post-employment benefits
Land and development costs
110,268 128,617
Share-based payments
Amortised interest and finance expense
11,711
19,685
2019
$’000
4,117
158
411
4,686
2018
$’000
4,366
150
1,686
6,202
Total land and development cost
121,979 148,302
1. Refer to note 3 for information about related party transactions.
Depreciation
Amortisation
Total depreciation and amortisation1
1,233
1,102
2,335
2,604
1,164
3,768
Land and development costs
Land and development costs represent the portion of the land
and development costs associated with the lots sold during
the year (cost of sales).
Employee benefits expense2
31,459
34,166
Project management, selling and other
operating costs
Other expenses
Total other expenses
Total expenses
16,763
18,923
18,398
18,697
66,620
71,786
190,934 223,856
Finance costs
Interest and finance charges paid/
payable
Interest on corporate bonds
Amount capitalised
1.
2.
Refer to note 27 (iii) and (iv) for accounting policies.
Refer to note 27 (v) and (vi) for accounting policies.
10,151
10,364
12,609
11,275
(14,222)
(11,407)
8,538
10,232
Borrowing costs
Borrowing costs incurred for the construction of any qualifying
asset are capitalised during the period of time that is required
to complete and prepare the asset for its intended use or sale.
Other borrowing costs are expensed in the period they are
incurred. The capitalisation rate used to determine the amount
of finance costs to be capitalised is the weighted average
interest rate applicable to the Group’s outstanding borrowings
during the year (refer note 17).
7. EARNINGS PER SHARE
Profit attributable to the
ordinary equity holders of the
Company ($’000)
Weighted average number of
ordinary shares used as the
denominator in calculating
basic earnings per share
Basic and diluted earnings per
share (cents)
2019
2018
47,549
49,112
485,658,321 489,980,559
9.79
10.02
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.
Refer note 25 for the number of Performance Rights (PRs)
outstanding at 30 June 2019. These PRs are contingently
issuable shares and accordingly not included in diluted
earnings per share.
7878
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only 8. TAXES
a. Income tax expense
Major components of tax expense
Current income tax expense
Current tax
Adjustments for prior periods
Deferred income tax expense
Deferred tax
Adjustments for prior periods
2019
$’000
2018
$’000
18,165
27,144
3,957
(638)
22,122
26,506
(2,188)
(3,882)
(7,534)
-
(6,070)
(7,534)
16,052
18,972
Deferred income tax expense included in income tax
expense comprises:
Deferred taxes
Deferred tax assets and
liabilities are recognised for
temporary differences at the tax rates expected to apply, when
the assets are recovered or liabilities are settled, based on
those tax rates which are enacted or substantively enacted
for each jurisdiction 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.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those
temporary differences and losses.
Increase in deferred tax assets
Decrease in deferred tax liabilities
(4,627)
(1,443)
(2,747)
(4,787)
(6,070)
(7,534)
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority.
Current 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
Deferred tax assets
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 authority against which the
unused tax losses can be utilised. However, utilisation of the
tax losses also depends on the ability of the entity, to satisfy
certain tests at the time the losses are recouped.
Tax reconciliation
Profit before income tax
Tax at Australian tax rate of 30%
63,402
19,021
67,612
20,284
Tax effect of amounts which are not assessable
or deductible:
Share of net profit of associates
Employee benefits
Franking credits
Sundry items
(1,035)
(437)
(2,024)
527
(913)
118
(806)
289
16,052
18,972
Recognition and measurement
Current taxes
The income tax expense for the period is the tax payable on
the current period’s taxable income based on the applicable
income tax rate, adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences between the
tax bases of assets and liabilities and their carrying amounts in
the financial statements. 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.
7979
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only
$’000
2,692
Other
$’000
3,531
Total
$’000
10,758
(465)
3,017
2,747
–
2,227
–
6,548
(680)
12,825
(12,825)
–
2,227
6,548
12,825
2,285
–
–
2,285
2,285
2,227
6,548
15,110
7,053
(1,710)
(1,968)
4,627
–
–
517
–
(3)
279
(3)
4,577
20,013
(20,013)
–
8. TAXES (CONTINUED)
b. Deferred tax assets
Inventory
Cash flow
hedges
Receivables
Tax losses
At 1 July 2017
Credited/(charged):
– to profit or loss
– to other comprehensive
income
Total deferred tax assets
$’000
3,352
195
–
3,547
Set off against deferred tax liabilities pursuant
to set off provisions
At 30 June 2018
At 1 July 2018
Effect of adoption of new
accounting standards
Balance at 1 July 2018
(restated)
Credited/(charged):
– to profit or loss
– to other comprehensive
income
– directly to equity
3,547
–
3,547
375
–
–
$’000
1,183
–
(680)
503
503
–
503
877
279
–
$’000
–
–
–
–
–
–
–
Total deferred tax assets
3,922
1,659
9,338
Set off against deferred tax liabilities pursuant
to set off provisions
At 30 June 2019
8080
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only
8. TAXES (CONTINUED)
Deferred tax liabilities
Movements
At 1 July 2017
Charged/(credited):
– to profit or loss
Total deferred tax liabilities
Set off against deferred tax
assets pursuant to set off
provisions
At 30 June 2018
At 1 July 2018
Charged/(credited):
– to profit or loss
Total deferred tax liabilities
Set off against deferred tax
liabilities pursuant to set off
provisions
At 30 June 2019
Interest and
finance charges
Accrued
income
$’000
28,547
(2,935)
25,612
$’000
6,518
932
7,450
Share of joint
arrangements
deferred tax
liabilities
$’000
3,224
(109)
3,115
Inventory
$’000
12,012
(2,675)
9,337
25,612
7,450
9,337
3,115
(3,689)
21,923
(4,909)
2,541
5,481
14,818
1,674
4,789
Other
$’000
155
–
155
155
–
155
Total
$’000
50,456
(4,787)
45,669
(12,825)
32,844
45,669
(1,443)
44,226
(20,013)
24,213
8181
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 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
addressed in the capital management section.
Key estimates
Net realisable value
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 the
inventories are expected to realise and the estimate of
costs to complete. The key assumptions require the use of
management 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
2019
$’000
2018
$’000
Carrying amount at 1 July
222,820
213,448
Acquisitions/additional
investments
Dividends
Capital returns
Share of profit after income tax
11,278
8,725
(12,280)
(10,185)
(1,479)
13,329
(3,249)
14,081
Carrying amount at 30 June
233,668
222,820
The Group assesses, at each balance date, the carrying value
of investments in associates and joint ventures to ensure the
assets are not impaired.
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
2019
$’000
2018
$’000
27,990
66,356
11,404
28,659
76,965
13,635
105,750
119,259
263,345
230,980
83,648
65,926
82,329
62,231
412,919
375,540
518,669
494,799
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.
8282
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only 10. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
b. Investments in associates and joint ventures (JVs) including summarised financial information
s
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S
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
8,967 399,865 117,575
32,578 258,679
71,534
8,624
(2,421)
(807)
5,045
35,994
7,705
3,355
29,979
5,144
38,461
4,032
16,092
40,516
3,979
28,815
23,814
8,240
17,031
497
692
99
7,850 168,931
54,149
2,822 119,810
59,905
35,536
5,724
2,862
41,613 118,776
4,999
42,000 113,390
56,695
49,896
10,236
5,118
1,161
30,235
5,433
–
25,963
12,982
7,674
3,418
30,725
13,459
436
20,248
10,124
13,659
(74)
237
(37)
119
3,533
96,262
30,827
55,552
13,416
6,708
59,913
5,393
2,697
1,287
33,465
35,230
–
(478)
(239)
(82)
(474)
(237)
2,575
233,668
2,823
13,329
7,928 377,199 103,706
20,385 261,036
69,150
5,075
(2,594)
(708)
2,134
43,728
5,934
11,202
28,726
4,929
44,245
6,317
1,084
9,351
48,446
41,882
4,994
10,921
2,184
20,780
1,634
327
11,210 151,643
47,194
1,598 114,061
57,031
32,641
2,795
1,398
49,216 110,773
41,836
– 118,153
59,077
77,349
16,106
8,053
3,319
30,038
5,320
–
28,037
14,019
7,991
415
2,840
29,495
11,971
354
20,010
10,005
11,138
1,507
208
754
7,200 107,617
48,868
57,729
8,220
4,110
15,872
2,599
1,300
3,503
30,419
33,932
–
(10)
(5)
4
(10)
(5)
2,320
222,820
1,670
14,081
p
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s
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e
n
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O
%
33
17
20
50
50
50
50
50
50
27
17
20
50
50
50
50
50
50
As at 30 June 2019
Associates
Peet Alkimos Pty Limited, WA
Peet Werribee Land Syndicate, VIC
Peet Caboolture Syndicate Limited, QLD
Joint Ventures1
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
Peet Brabham Pty Ltd, WA
Other associates and JVs
Total
As at 30 June 2018
Associates
Peet Alkimos Pty Limited, WA
Peet Werribee Land Syndicate, VIC
Peet Caboolture Syndicate Limited, QLD
Joint Ventures1
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
Peet Brabham Pty Ltd, WA
Other associates and JVs
Total
1
Refer to note 10(c) for further breakdown of financial information of joint ventures.
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. For Peet Alkimos Pty Ltd, the Group
has agreed to defer payment of project management and selling fees to a future date. The Group has no further contractual obligations to
provide ongoing financial support.
8383
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only
10. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
c. Additional summarised information in relation to amounts included in assets, liabilities
and profit/(loss) of joint ventures
Cash and cash
equivalents
Current
financial
liabilities1
Non-current
financial
liabilities1
$’000
7,058
4,125
3,198
2,841
3,205
20
10,756
3,092
3,475
2,949
8,177
502
$’000
48,360
–
–
7,000
–
–
–
33,445
–
7,000
–
–
$’000
–
42,000
–
–
77,724
35,103
39,110
–
–
–
77,747
33,784
Interest
expense
$’000
–
–
–
–
–
–
–
–
–
–
2
–
Income tax
expense/
(benefit)
$’000
2,496
(60)
(38)
735
4,028
–
1,283
35
175
647
1,203
–
As at 30 June 2019
Peet Flagstone City Pty Limited
Googong Township Unit Trust
Peet Golden Bay Pty Limited
Peet Mt Barker Pty Limited
Peet No. 1895 Pty Limited
Peet Brabham Pty Limited
As at 30 June 2018
Peet Flagstone City Pty Limited
Googong Township Unit Trust
Peet Golden Bay Pty Limited
Peet Mt Barker Pty Limited
Peet No. 1895 Pty Limited
Peet Brabham Pty Limited
1
Excluding trade and other payables and provisions
8484
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only 11. RECEIVABLES
Current
Trade receivables1
Other receivables1
Loans to associates at fair
value2
Non-current
Loans to associates and
joint ventures2
- Amortised cost
- ECL allowance3
Amortised cost (net of ECL
allowance)
Fair value
Other receivables4
Total receivables
2019
$’000
8,444
4,210
6,345
2018
$’000
9,517
1,253
-
18,999
10,770
38,553
(2,766)
42,288
-
35,787
42,288
55,184
9,036
100,007
119,006
44,708
8,669
95,665
106,435
1
2
3
4
Trade and other receivables are non-interest bearing and generally have 30-60 day terms.
There were no past due or impaired trade receivables at the end of the year (2018: $Nil).
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%.
The ECL allowance is determined on a probability of default on a loan by loan basis.
Includes deferred facilities fee – Those that purchase homes in the Lattitude Lakelands re-
tirement 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.
Refer note 27(i) and 27(ii) for accounting policy on financial
assets and note 21 for fair value disclosures.
Related party balances with associates and
joint ventures included above:
Current
Trade receivables
Loans to associates
Non-current
Loans to associates and
joint ventures
Amortised cost (net of ECL
allowance)
Fair value
Other receivables
Total
Movements in loans to
associates and joint ventures:
Carrying amount at 1 July
Loans advanced
Loan repayments
AASB 9 remeasurement (refer to
note 2(e))
Other
Carrying amount at 30 June
12. CONTRACT ASSETS
Accrued Income
Total contract assets
2019
$’000
2,927
6,345
2018
$’000
1,791
–
35,787
42,288
55,184
4,999
105,242
86,996
29,690
(9,702)
(7,618)
(2,050)
97,316
2019
$’000
6,234
6,234
44,708
4,418
93,205
73,396
21,024
(7,826)
–
402
86,996
2018
$’000
16,622
16,622
These amounts
represent project management and
performance fees from associates and other managed
entities. They are recognised for the earned consideration
that is conditional under AASB 15. Refer note 5 for revenue
related accounting policies.
The reduction in contract assets as at 30 June 2019 is a
result of lower number of contracts on hand compared with
contracts on hand as at 30 June 2018.
8585
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 13. PAYABLES
Recognition and measurement
Current
Trade payables
Advance from joint operators
GST payable
Accruals and other payables
2019
$’000
7,859
11,214
1,481
45,161
65,715
2018
$’000
392
19,433
5,952
56,289
82,066
Where the Group enters into unconditional contracts with land
vendors to purchase properties for future development that
contain deferred payment terms, these borrowings are initially
measured at fair value and subsequently carried at amortised
cost. 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 21 for fair value disclosures.
The below table analyses the maturity of the Group’s land
vendor liability obligation:
0 – 1 years
1 – 2 years
Total contractual cash flows
Carrying amount of liabilities
15. PROVISIONS
Current
Rebates
Employee entitlements
Non-current
Employee entitlements
Total provisions
2019
$’000
6,350
-
6,350
6,350
2019
$’000
2,812
3,235
6,047
216
216
6,263
2018
$’000
14,700
6,350
21,050
21,050
2018
$’000
2,778
3,048
5,826
285
285
6,111
Movements in the provision for rebates during the financial
year are set out below:
–
–
–
6,350
(970)
5,380
20,080
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
2019
$’000
2,778
2018
$’000
3,138
1,238
2,079
(1,204)
2,812
(2,439)
2,778
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.
Trade and other payables are presented as current liabilities
unless payment is not due within 12 months from the reporting
date. They are recognised initially at their fair value and
subsequently measured at amortised cost using the effective
interest method.
In some joint arrangement contracts, costs are reimbursed as
incurred during development. As revenue is only recognised
on settlements, reimbursements received are recognised as
advance from joint operators until settlement.
Refer note 21 for fair value disclosures.
14. LAND VENDOR LIABILITIES
2019
$’000
2018
$’000
6,350
14,700
6,350
14,700
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
6,350
8686
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only
15. PROVISIONS (CONTINUED)
Recognition and measurement
16. INTERESTS IN JOINT OPERATIONS
Details of aggregate share of assets, liabilities, revenue,
expenses and results of joint operations.
Group’s share of:
As at 30 June 2019
The Village at
Wellard, WA
Lightsview Joint
Venture, SA
The Heights
Durack, NT
Redbank Plains
Joint Venture,
QLD
As at 30 June 2018
The Village at
Wellard, WA
Lightsview Joint
Venture, SA
The Heights
Durack, NT
Redbank Plains
Joint Venture,
QLD
Total
assets
Total
liabilities Revenue Expenses
$’000
$’000
$’000
$’000
14,341
2,441
10,612
7,177
13,305
9,244
9,244
7,078
9,879
6,819
2,286
2,088
25,936
6,578
7,494
5,916
18,739
4,159
12,261
8,085
16,078
13,184
9,758
8,649
9,600
6,738
4,231
3,604
23,511
5,731
10,026
8,684
Provisions are recognised when the Group has a present
legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle
the obligation; and the amount 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 for rebates at settlement and is measured
at the amount of consideration receivable under the sales
contract for which the Group does not expect to be entitled.
The provision is updated at the end of each reporting period
for changes in circumstances.
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.
8787
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only CAPITAL MANAGEMENT
This section outlines how the Group manages its capital and
related financing costs.
For the purpose of the Group’s capital management, capital
includes:
• issued capital;
• debt facilities; and
• other equity reserves attributable to the equity holders of
the parent.
The Group’s objectives when managing capital are to:
• safeguard its ability to continue as a going concern;
• continue to provide returns to shareholders and benefits for
other stakeholders;
• maintain an efficient capital structure to reduce the cost
of capital; and
• ensure all covenants are complied with.
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 of cash and cash
equivalents less intangible assets. The 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 2019. At 30 June 2019, the bank
covenant gearing ratio was 25.8% (2018: 18.2%).
17. BORROWINGS AND DERIVATIVE
FINANCIAL INSTRUMENTS
Net debt
Borrowings – Current
Borrowings – Non-current
Total borrowings1
Cash and cash equivalents
Net debt
2019
$’000
5,083
240,103
245,186
(33,606)
211,580
2018
$’000
–
217,204
217,204
(76,749)
140,455
1
Excludes vendor financing. Refer note 14 for vendor financing on deferred payment terms.
Recognition and measurement
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption amount
is recognised in the statement of profit or loss over the period
of the borrowings using the effective interest method.
For the purpose of presentation in the statement of cash flows,
cash and cash equivalents includes cash on hand, 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 risk of changes in
value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
Refer note 21 for fair value disclosures.
Debt facilities
The following provides details of the loans and borrowings
utilised as at 30 June 2019:
Facility
amount
$’000
179,000
Utilised
amount1
$’000
23,187
Face
value
Carrying
amount2
Effective
interest
rate
%
6.0%
Effective
interest
rate
$’000
$’000
%
100,000
50,000
75,000
99,030
49,348
73,621
225,000
221,999
8.06
6.82
7.21
Bank loans – note a
Peet bonds and notes
– note b
Series 1, Tranche 1
Series 2, Tranche 1
Peet notes
1
2
Excludes bank guarantees. Refer note 23 for bank guarantees information..
Net of transaction and finance costs.
8888
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only 17. 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 $687 million (2018: $700
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 2019.
The Group’s main bank facility of $150 million was extended to
1 October 2022. 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:
2019
$’000
1,115
6,199
18,319
25,633
23,187
2018
$’000
4,229
55,035
16,371
75,635
69,456
0 – 1 years
1 – 2 years
2 – 5 years
Total contractual cash flows
Carrying amount of liabilities
b. Peet bonds and notes
Peet bonds Series 1, Tranche 1
On 7 June 2016, Peet issued 1,000,000 Peet bonds with a face
value of $100 per bond with a maturity date of 7 June 2021.
These bonds are unsecured and interest-bearing at a fixed rate
of interest of 7.5%.
Peet bonds Series 2, Tranche 1
On 5 July 2017, Peet issued 500,000 Bonds at a face value
of $100 per bond with a maturity date of 5 October 2022.
These bonds are unsecured and carry a floating interest rate
of BBSW+ 4.65% margin.
Peet Notes
On 4 April 2019, Peet issued 75,000 notes to eligible
professional and sophisticated investors at a face value of
$1,000 per bond with a maturity date of 7 October 2024.These
bonds are unsecured and carry a fixed interest rate of 6.75%.
The bonds and notes are presented in the balance sheet as
follows:
Face value of bonds and notes
issued
Transaction costs
Cumulative interest expense1
Cumulative coupon payable
2019
$’000
2018
$’000
225,000
150,000
(4,669)
220,331
32,164
(30,496)
1,668
(3,245)
146,755
19,602
(18,609)
993
Non-current liability
221,999
147,748
1
Interest expense is calculated by applying the effective interest rate of 8.06% (Series 1),
6.82% (Series 2) (2018: 6.82%) and Notes 7.21% (2018: nil) to the liability component.
The bonds and notes are repayable as follows:
0 – 1 years
1 – 2 years
2 – 5 years
Total contractual cash flows
Carrying amount of liabilities
2019
$’000
15,751
15,743
243,654
275,148
221,999
2018
$’000
10,680
10,689
164,438
185,807
147,748
c. Derivative financial instruments
Current
Interest rate swap contracts –
cash flow hedges
Non-current
Interest rate swap contracts –
cash flow hedges
Total derivative financial
instruments
2019
$’000
2018
$’000
221
–
5,310
3,777
5,531
3,777
The below table analyses the maturity of the Group’s interest
rate swaps on a net settled basis:
0 – 1 years
1 – 2 years
2 – 5 years
Total contractual cash flows
Carrying amount of liabilities
2019
$’000
221
-
5,310
5,531
5,531
2018
$’000
335
3,442
3,777
3,777
8989
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only
17. BORROWINGS AND DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
Interest rate swap contracts – cash flow
hedges
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 whether the
derivative is designated as a hedging instrument, and if so, the
nature of the item being hedged. The Group designates certain
derivatives as 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
and strategy for undertaking various hedge transactions. The
Group also documents how it will assess hedge effectiveness
(including the analysis of sources of hedge ineffectiveness)
and how the hedge ratio is determined. Hedge accounting is
only applied where there is an economic relationship between
the hedged item and hedging instrument and the hedge ratio
of the hedging relationship is the same as that resulting from
the quantity of the hedged item that the Group actually hedges
and the quantity of the hedging instrument that the Group
actually uses to hedge that quantity of hedged item.
The gain or loss from remeasuring the hedging instruments at
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
hedged interest expense is recognised. The ineffective portion
is recognised in the statement of profit or loss immediately.
When a hedging instrument expires or is sold or terminated,
or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at
that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in the statement of profit
or loss. When a forecast transaction is no longer expected to
occur, the cumulative gain or loss that was reported in equity
is immediately reclassified to the statement of profit or loss.
Bank loans of the Group currently bear a weighted average
variable interest rate for the year before hedges of 1.81%
(2018: 1.83%). It is the Group’s policy to protect part of the
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.
Swaps currently cover approximately 68.3% (2018: 83.7%)
of the variable debt principal outstanding and are timed to
expire as each loan repayment falls due. During the year fixed
interest rate swaps range between 2.82% and 3.11% (2018:
2.83% and 3.11%) and the variable rates are between 1.42%
and 2.01% (2018: 1.59% and 1.90%).
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.
The notional principal amounts and periods of expiry of the
interest rate swap contracts were as follows:
0 – 1 years
1 – 2 years
2 – 5 years
2019
$’000
25,000
–
100,000
125,000
2018
$’000
–
25,000
100,000
125,000
The full fair value of a hedging derivative is classified as a
non-current asset or liability when the remaining maturity of
the hedged item is more than 12 months, otherwise current.
Liquidity risk
Liquidity risk includes the risk that the Group, as a result of
their operations:
• will not have sufficient funds to settle a transaction on due
date;
• will be forced to sell financial assets at a value which is
less than what they are worth; or
• may be unable to settle or recover a financial asset at all.
liquidity risk management
Prudent
implies maintaining
sufficient cash, the availability of funding through an adequate
amount of committed credit facilities to meet obligations when
due, and the ability to close-out market positions. Due to the
dynamic nature of the underlying business, the Group aims at
maintaining flexibility in funding by keeping committed credit
lines available, and regularly updating and reviewing its cash
flow forecasts to assist in managing its liquidity. The maturity
analysis of the Group’s derivative and non-derivative financial
instruments can be located in their respective notes.
The Group has unused borrowing facilities which can further
reduce liquidity risk (refer to note 17 for analysis of maturities
on borrowing facilities).
9090
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only 17. BORROWINGS AND DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
At 30 June 2019, the Group had the following mix of financial
assets and liabilities exposed to variable interest rates:
Financial assets
Cash and cash equivalents
(floating)
Loans to associates and joint
ventures measured at fair value
Financial liabilities
Borrowings (floating, unhedged)
Interest rate swap
2019
$’000
2018
$’000
33,606
76,749
55,184
44,708
(23,187)
(5,531)
(19,456)
(3,777)
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)
2019
$’000
(221)
221
2018
$’000
(351)
351
2019
$’000
(221)
221
2018
$’000
(351)
351
– 50 basis points
+ 50 basis points
Credit risk
The cash component of financial assets is considered to have
low credit risk as the counterparties are banks with high credit
ratings assigned by international credit-rating agencies. An
expected credit loss provision of $2.8 million (2018: Nil) has
been recognised for loans measured at amortised cost of $38.5
million (2018: $42.3 million) (refer to note 11 and 27).
Interest rate risk
The Group’s main interest rate risk arises from cash, loans to
associates and joint ventures measured at fair value 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 both fixed and floating rates.
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 certain loans to
associates and joint ventures are carried at amortised cost.
They are therefore not subject to interest rate risk.
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.
9191
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only
18. CONTRIBUTED EQUITY AND RESERVES
a. Movements in ordinary share capital
Date
Details
30 June 2017
Closing balance
Movement for the year
30 June 2018
Closing balance
Share buyback, including transaction costs
30 June 2019
Closing balance
The nature of the Group’s contributed equity
Number of shares
489,980,559
-
489,980,559
(6,680,070)
483,300,489
$’000
385,955
-
385,955
(7,039)
378,916
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 of 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.
b. Reserves
At 1 July 2017
Cash flow hedges (gross)
Deferred tax
Share based payment
Vesting of performance rights4
At 30 June 2018
At 1 July 2018
Cash flow hedges (gross)
Deferred tax
Share based payment
Vesting of performance rights5
Transactions with non-controlling interests
At 30 June 2019
Cash flow hedge
reserve1
Share-based
payments reserve2
Non-controlling
interest reserve3
$’000
(2,779)
2,267
(680)
-
-
(1,192)
(1,192)
(929)
279
-
-
-
(1,842)
$’000
13,300
-
-
2,276
(1,883)
13,693
$’000
(9,104)
-
-
-
-
(9,104)
13,693
(9,104)
-
-
630
(2,085)
-
12,238
-
-
-
-
(6,343)
(15,447)
Total
$’000
1,417
2,267
(680)
2,276
(1,883)
3,397
3,397
(929)
279
630
(2,085)
(6,343)
(5,051)
1
2
3
4
5
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.
The share-based payments reserve is used to recognise the fair value of options and performance rights granted.
The non-controlling interest 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.
In August 2017, the Company purchased 1,400,275 shares to settle the vesting of FY15 Performance Rights.
In August/September 2018, the Company purchased 1,711,425 shares to settle the vesting of FY16 Performance Rights.
9292
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only
19. DIVIDENDS
Declared and paid during
the period
Prior year fully franked dividend
3.00 cents, paid on 5 October
2018 (2018: 3.00 cents)
Fully franked interim dividend
for 2019: 2.00 cents (2018: 2.00
cents)
Dividend not recognised at
year end
Final dividend 3.00 cents per
share to be paid on 7 October
2019 (2018: 3.00 cents per
share)
Franking credit balance
Franking account balance as at
the end of the financial year at
30% (2018: 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
2019
$’000
2018
$’000
20. RECONCILIATION OF PROFIT AFTER
INCOME TAX TO NET CASH INFLOW
FROM OPERATING ACTIVITIES
14,699
14,699
Profit after income tax
Add/(deduct) non cash
items:
Depreciation
Amortisation of intangible assets
Employee share-based payments
9,667
24,366
9,800
24,499
Equity accounting for investments in
associates and joint ventures
Interest received
2019
$’000
2018
$’000
47,350
48,640
1,233
1,102
(1,455)
2,604
1,164
395
(13,329)
(14,081)
902
(157)
649
675
Peet bonds and notes effective interest
rate adjustment
Add other items:
Distributions and dividends from
associates and joint ventures
Change in operating assets and liabilities
during the financial year
Decrease in receivables
12,280
5,537
10,185
24,541
(Increase)/decrease in inventories
(Decrease)/increase in tax liabilities
Decrease in payables
Increase/(decrease) in provisions
(30,843)
(6,483)
(23,108)
152
197
10,700
(9,637)
(333)
Decrease in deferred tax liabilities
(6,067)
(7,534)
14,499
14,699
55,017
35,840
8,915
15,398
Net cash (outflow)/inflow from
operating activities
(12,054)
67,333
(6,214)
57,718
(6,300)
44,938
9393
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only
Key estimates
Fair value estimation
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;
the appropriate quoted market price for financial liabilities
is the current ask price. Fair value of the Peet bonds is based
on price quotations at the reporting date.
The fair value of financial instruments that are not
traded in an active market is determined using valuation
techniques. The Group uses a variety of methods and makes
assumptions that are based on market conditions existing at
each balance date.
• Interest rate swaps are valued using valuation techniques,
which employs the use of market observable inputs such
as forward pricing and swap models.
• Receivables/borrowings are evaluated by the Group
interest rates and
based on parameters such as
individual creditworthiness of the counter party. Based
on this evaluation, allowances are taken into account for
the expected losses of these receivables.
trade
impairment provision of
The carrying amount of trade receivables and payables
less
receivables are
assumed to approximate their fair values. The fair value of
financial liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the current
market interest rate that is available to the Group for similar
financial instruments.
21. FAIR VALUE MEASUREMENT
Valuation of financial instruments
For financial assets and liabilities, the Group uses the 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, upon adoption of AASB 9 Financial Instruments,
have reclassified certain loans to associates and joint ventures
from loans and receivables carried at amortised cost to
financial assets carried at fair value through profit or loss. The
fair values of these financial assets have been estimated using
discounted cashflows with significant unobservable inputs at
each reporting date (level 3 of the fair value hierarchy).
At 30 June 2019, the carrying amount and fair value of these
loans to associates and joint ventures is $61.6 million and
$58.3 million, respectively.
The Group measures its derivative financial liabilities at fair
value at each reporting date. These derivatives are measured
using significant observable inputs (level 2 of the fair value
hierarchy). The fair value at 30 June 2019 is $5.5 million (30
June 2018: $3.8 million).
There have been no transfers between levels during the period.
Other financial instruments – fair value
disclosures
Except for the Peet bonds and notes, the carrying value of
financial liabilities is considered to approximate fair values.
The quoted market value (on ASX) as at 30 June 2019 of a Peet
bond Series 1, Tranche 1 is $107.50 per bond and of a Peet
bond Series 2, Tranche 1 is $105.75 per bond (Level 1).
The fair value of Peet Notes as at 30 June 2019 is $1,012.50 per
note. These notes are measured using significant observable
inputs (level 3 of the fair value hierarchy).
At 30 June 2019, the carrying value of Peet bonds and notes is
$222.0 million (fair value $236.3 million).
9494
DIRECTORS’ REPORTYear ended 30 June 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only OTHER NOTES
22. REMUNERATION OF AUDITORS
2019
$
2018
$
Audit services
Audit and review of financial
reports and other audit work
under the Corporations Act
2001
Ernst & Young
357,200
367,450
Total remuneration for audit
services
357,200
367,450
Other services
Ernst & Young
29,454
21,423
Taxation services
Tax compliance services
including review of Company
income tax returns
Ernst & Young
125,800
217,762
23. CONTINGENCIES AND COMMITMENTS
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
Insurance bonds outstanding
2019
$’000
21,128
20,526
41,654
2018
$’000
24,585
18,680
43,265
All contingent liabilities are expected to mature within 1 year.
At 30 June 2019, the Group had commitments of $34.0 million
(2018: $40.3 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.
9595
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended 30 June 2019
24. PARENT ENTITY FINANCIAL
INFORMATION AND SUBSIDIARIES
b. Subsidiaries
Significant investments in subsidiaries
a. Parent entity financial information
Summary financial information
The individual financial statements for the parent entity show
the following aggregate amounts:
The consolidated financial statements incorporate the assets,
liabilities and results of the following significant subsidiaries
in accordance with the accounting policy described in note
2(a):
Name of Subsidiary
CIC Australia Pty Limited1
Peet Craigieburn Pty Limited2
Peet Greenvale No. 2 Pty Limited2
Peet Southern JV Pty Limited2
Peet Brigadoon Pty Limited2
Secure Living Pty Limited2
Peet No. 85 Pty Limited2
Peet No. 108 Pty Limited2
Peet No. 112 Pty Limited2
Peet No. 113 Pty Limited2
Peet Treasury Pty Limited2
Peet Estates (VIC) Pty Limited2
Peet Development Management Pty Limited2
Peet Estates (QLD) Pty Limited2
Peet No. 130 Pty Limited2
Peet Estates (WA) Pty Limited2
Peet Funds Management Limited2
Peet No. 119 Pty Limited2
Peet No. 125 Pty Limited2
Peet No. 126 Pty Limited2
Peet No. 73 Pty Limited2
Holding
2019
2018
%
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
Lakelands Retail Centre Development Pty
Limited2
Peet Mt. Pleasant Pty Limited2
Peet No. 127 Pty Limited2
Peet Tonsley Pty Limited2
JTP Homes Pty Limited2
Peet Tonsley Apartments Pty Limited2
100
100
100
100
100
100
100
100
100
100
100
100
Peet Yanchep Land Syndicate2
66.4
66.4
1
2
Incorporated in ACT.
Incorporated in WA.
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Share-based payments reserve
Retained profits
Total equity
Profit/(loss) for the year
2019
$’000
2018
$’000
70,457
584,023
16,618
159,192
62,769
588,705
14,962
113,754
378,917
385,955
12,239
33,675
424,831
(14,083)
13,693
75,303
474,951
101,474
101,474
Total comprehensive income
(14,083)
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
2019
$’000
586
2018
$’000
498
9696
PEET LIMITED | ANNUAL REPORT 2019
PEET LIMITED | ANNUAL REPORT 2019 For personal use only 24. 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.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Non-controlling interest
Revenue
Profit or loss after tax
Loss attributable to non-controlling interest
Summarised cash flow information:
Operating
Financing
Net outflow
Peet Yanchep Land Syndicate
2019
$’000
5,941
78,628
1,645
29,671
17,893
3,228
(624)
199
2018
$’000
5,661
77,496
1,463
27,818
18,100
5,866
(412)
138
Peet Yanchep Land Syndicate
2019
$’000
(2,232)
1,926
(306)
2018
$’000
(649)
259
(390)
Peet has provided loans to other partly-owned subsidiaries amounting to nil (2018: $7.6 million). The Group has no further
contractual obligations to provide ongoing financial support.
ANNUAL REPORT 2019 | PEET LIMITED
979797
ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 24. PARENT ENTITY FINANCIAL INFORMATION AND SUBSIDIARIES (CONTINUED)
Deed of cross guarantee
Consolidated balance sheet
Set out below is a consolidated balance sheet at 30 June 2019
of the closed group consisting of Peet Limited and certain
wholly owned subsidiaries.
Peet Limited and certain wholly-owned subsidiaries are
parties to a deed of cross guarantee under which each
company guarantees the debts of the other. By entering 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.
Receivables
Inventories
Current assets
Cash and cash equivalents
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
2019
$’000
2018
$’000
33,330
26,390
99,890
159,610
76,178
29,318
115,062
220,558
135,773
319,684
126,916
298,044
266,031
255,577
5,227
5,700
732,415
892,025
53,752
6,350
5,083
8,981
5,873
5,398
6,082
692,017
912,575
81,925
14,700
–
14,061
5,767
80,039
116,453
–
5,380
221,999
201,026
5,531
27,425
216
255,171
335,210
556,815
378,916
9,785
168,114
556,815
3,777
35,234
285
245,702
362,155
550,420
385,955
11,890
152,575
550,420
279
(680)
Deferred tax liabilities
(650)
1,587
Total non-current liabilities
Provisions
46,873
50,813
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
Total equity
2019
$’000
Consolidated statement of profit
or loss
Revenue
246,630
2018
$’000
282,469
Expenses
Finance costs
(187,489)
(218,012)
(8,492)
(9,911)
Share of net profit of associates
accounted for using the equity
method
Profit before income tax
Income tax expense
Profit for the year
12,936
63,585
13,805
68,351
(16,062)
(19,125)
47,523
49,226
Other comprehensive income
Items that may be reclassified
to profit or loss:
(929)
2,267
Changes in the fair value of
cash flow hedges
Income tax relating to
components of other
comprehensive income
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Summary of movement in
consolidated retained profits
Retained profits at the
beginning of the financial year
152,575
Profit for the year
Dividends paid
AASB9 measurement
47,523
(24,366)
(7,618)
127,848
49,226
(24,499)
–
Retained profits at the end
of the financial year
168,114
152,575
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 25. SHARE-BASED PAYMENTS
Peet Employee Share Option Plan (PESOP)
and Peet Performance Rights Plan (PPRP)
The establishment of the PESOP was approved by the Board
and shareholders during the 2004 financial year and the Peet
Limited PPRP was approved by shareholders at 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.
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 performance rights 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 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;
• the date and time by which the application for options and/
or performance rights must be received by Peet;
• 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.
Vesting and exercise conditions
Under the plans, options and/or PRs 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.
Generally, as a pre-condition to exercise, any exercise
conditions in respect of an option and/or performance right
must be satisfied. However, the Board has the discretion 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 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 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 of options and/ or
performance rights, as determined by the Board.
Fair value of options and performance rights
granted
The fair value of an option and PRs at grant date is determined
using a Black-Scholes option pricing model and the value of a
performance right at grant date is determined using a Binomial
pricing model. The models take into account the exercise
price, the term of the option and/or performance right, the
vesting and performance criteria, the impact of dilution, the
non-tradeable nature of the option or performance right, the
share price at grant date and expected price 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.
The inputs for assessing the fair value of the performance
rights issued during the year under the PPRP were:
Grant
Date
Exercise
Price
Expiry
date
Share
price at
grant
date
Risk
free
interest
rate
Assessed
fair value
21 Nov 18
$0.00 21 Nov 33
$1.06
1.97%
$0.94
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 $628,877 (2018: $2,276,087).
99
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 25. SHARE-BASED PAYMENTS (CONTINUED)
Set out below are summaries of options and performance
rights granted under the plans:
e
t
a
d
t
n
a
r
G
y
r
i
p
x
E
e
t
a
d
$
e
c
i
r
P
e
s
i
c
r
e
x
E
r
i
a
f
d
e
s
s
e
s
s
A
$
e
u
l
a
v
y
l
u
J
1
t
a
e
c
n
a
l
a
B
g
n
i
r
u
d
d
e
t
n
a
r
G
r
a
e
y
e
h
t
g
n
i
r
u
d
d
e
s
i
c
r
e
x
E
r
a
e
y
e
h
t
d
e
t
i
e
f
r
o
f
/
d
e
s
p
a
L
r
a
e
y
e
h
t
g
n
i
r
u
d
e
n
u
J
0
3
t
a
e
c
n
a
l
a
B
e
l
b
a
s
i
c
r
e
x
E
e
n
u
J
0
3
t
a
30 June 2019
Options
30 Nov 07
Performance rights
21 Nov 15
21 Nov 30
N/A
21 Dec 15
21 Dec 30
23 Nov 16
23 Nov 31
21 Dec 16
21 Dec 31
29 Nov 17
29 Nov 32
5 Dec 17
5 Dec 32
21 Nov 18
21 Nov 33
30 June 2018
Options
30 Nov 07
Performance rights
26 Nov 14
26 Nov 19
N/A
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
29 Nov 17
29 Nov 32
5 Dec 17
5 Dec 32
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$4.10
$1.12
1,200,000
$0.974
928,020
$0.957
1,192,460
$0.801
1,065,114
$0.849
1,380,552
$1.328
874,347
$1.299
1,232,635
–
–
1,200,000
1,200,000
(866,771)
(61,249)
–
–
(844,655)
(78,702)
269,103
269,103
–
–
–
–
–
–
–
–
–
–
1,065,114
1,380,552
874,347
1,232,635
2,097,201
–
–
–
–
–
$0.940
–
2,097,201
6,673,128
2,097,201 (1,711,426)
(139,951)
6,918,952
269,103
7,873,128
2,097,201 (1,711,426)
(139,951)
8,118,952
1,469,103
$4.10
$1.12
1,200,000
–
–
1,200,000
1,200,000
$1.065
$0.938
$0.974
833,897
988,794
928,020
$0.957
1,192,460
$0.801
1,065,114
$0.849
1,380,552
$1.328
$1.299
–
–
874,347
1,232,635
(703,809)
(130,088)
(834,543)
(154,251)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
928,020
1,192,460
1,065,114
1,380,552
874,347
1,232,635
6,388,837
2,106,982 (1,538,352)
(284,339)
6,673,128
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
7,588,837
2,106,982 (1,538,352)
(284,339)
7,873,128
1,200,000
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only
26. MATTERS SUBSEQUENT TO THE END OF
Impairment
THE FINANCIAL YEAR
The Directors have declared a final fully franked dividend of
3.00 cents per share in respect to the year ended 30 June 2019.
The dividend is to be paid on Monday, 7 October 2019, with
a record date of Thursday, 19 September 2019. No provision
has been made for this dividend in the financial report as the
dividend was not declared or determined by the directors on or
before the end of the financial year.
27. OTHER ACCOUNTING POLICIES
i. Financial assets – pre 1 July 2018
Recognition and derecognition
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.
Measurement
At initial recognition, the Group measures a financial asset
at its fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.
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.
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 classified as
available for sale, a significant or prolonged 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. Financial assets – post 1 July 2018
The Group’s new accounting policy for financial assets arising
on adoption of AASB 9 and applied from 1 July 2018 is detailed
below:
Initial recognition and measurement
Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value through
other comprehensive income (OCI), and fair value through
profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing
them. With the exception of trade receivables that do not
contain a significant financing component or for which the
Group has applied the practical expedient, the Group initially
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. Trade receivables that do not contain
a significant financing component or for which the Group
has applied the practical expedient are measured at the
transaction price determined under AASB 15. Refer to section
2.e(a) Revenue from contracts with customers.
In order for a financial asset to be classified and measured
at amortised cost or fair value through OCI, it needs to give
rise to cash flows that are ‘solely payments of principal and
interest (SPPI)’ on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at
an instrument level.
The Group’s business model for managing financial assets
refers to how it manages its financial assets in order to
generate cash flows. The business model determines whether
cash flows will result from collecting contractual cash flows,
selling the financial assets, or both.
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ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 27. OTHER ACCOUNTING POLICIES (CONTINUED)
27. OTHER ACCOUNTING POLICIES (CONTINUED)
Subsequent measurement
For purposes of subsequent measurement, financial assets are
classified in four categories:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through OCI with recycling of
cumulative gains and losses (debt instruments)
• Financial assets designated at fair value through OCI
with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
• Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt
instruments)
This category is the most relevant to the Group. The Group
measures financial assets at amortised cost if both of the
following conditions are met:
• The financial asset is held within a business model with
the objective to hold financial assets in order to collect
contractual cash flows; and
• The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured
using the effective interest (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss
when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost includes trade
receivables, and loans to associates and JVs included under
Receivables.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include
financial assets held for trading, financial assets designated
upon initial recognition at fair value through profit or loss, or
financial assets mandatorily required to be measured at fair
value. Financial assets are classified as held for trading if
they are acquired for the purpose of selling or repurchasing
in the near term. Derivatives, including separated embedded
derivatives, are also classified as held for trading unless they
are designated as effective hedging instruments. Financial
assets with cash flows that are not solely payments of
principal and interest are classified and measured at fair
value through profit or loss, irrespective of the business
model. Notwithstanding the criteria for debt instruments to be
classified at amortised cost or at fair value through OCI, as
described above, debt instruments may be designated at fair
value through profit or loss on initial recognition if doing so
eliminates, or significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried
in the statement of financial position at fair value with net
changes in fair value recognised in the statement of profit or
loss.
This category includes loans to associates and joint ventures
and derivative instruments.
Impairment
The Group recognises an allowance for expected credit losses
(ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract
and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows
from the sale of collateral held or other credit enhancements
that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for
which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses
that result from default events that are possible within the next
12-months (a 12-month ECL). For those credit exposures for
which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group applies
a simplified approach in calculating ECLs. Therefore, the
Group does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime ECLs at each
reporting date. The Group has established a provision matrix
that is based on its historical credit loss experience, adjusted
for forward-looking factors specific to the debtors and the
economic environment.
The Group considers a financial asset in default when internal
or external information indicates that the Group is unlikely to
receive the outstanding contractual amounts in full before
taking into account any credit enhancements held by the Group.
A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2019PEET LIMITED | ANNUAL REPORT 2019 For personal use only 27. OTHER ACCOUNTING POLICIES (CONTINUED)
iii. Intangible assets
vii. Goods and services tax (GST)
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
iv. Property, plant and equipment
Property, plant and equipment are shown at historical cost
less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
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
• Property – 40 years
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at each balance date. An
asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount. Gains and losses on
disposals are determined by comparing proceeds with carrying
amount. These are included in the statement of profit or loss.
v. Termination benefits
is
Termination benefits are payable when employment
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.
vi. Retirement benefit obligations
Contributions to defined contribution funds are recognised as
an expense as they become payable. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a
reduction in the future payments is available.
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 as
part of the expense.
Receivables and payables are stated inclusive of the amount of
GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included with
other receivables or payables in the balance sheet.
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.
viii. Leases
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.
ix. Parent entity financial information
Tax consolidation legislation
Peet Limited and its wholly-owned Australian controlled
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.
Any difference between the amount assumed and amounts
receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) the
wholly-owned entity.
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ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended 30 June 2019
27. OTHER ACCOUNTING POLICIES (CONTINUED)
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the seperate 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.
x. New accounting standards and interpretations issued but not yet effective
Certain new and amended accounting standards and interpretations have been published that are not mandatory for 30 June
2019 reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.
Reference Title
Summary
AASB 16
Leases 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.
Application
date for Group
year ending
30 June 2020
Impact on Group
financial report
A review has been
undertaken. Based on
existing significant lease
agreements, the extent
of the impact of the
amendment is not expected
to be material.
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.
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105
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only DIRECTORS’ DECLARATION
Year ended 30 June 2019
In the Directors’ opinion:
a. the financial statements and notes set out on pages 64 to 105 are in accordance with the Corporations Act 2001, including:
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 2019 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 24 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 24.
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
28 August 2019
106
PEET LIMITED | ANNUAL REPORT 2019 For personal use only INDEPENDENT AUDITOR’S REPORT
Year ended 30 June 2019
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent Auditor's Report to the Members of Peet Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Peet Limited (the Company) and its subsidiaries (collectively the
Group), which comprises the consolidated balance sheet as at 30 June 2019, the consolidated statement
of profit or loss and other comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, notes to the financial statements, including
a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2019
and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
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ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 1.
Recoverability of inventories
1.
Why significant
Recoverability of inventories
How our audit addressed the key audit matter
Land held for development and resale is treated
Why significant
by the Group as inventories which are measured
at the lower of cost and net realisable value.
Land held for development and resale is treated
Cost includes the cost of acquisition,
by the Group as inventories which are measured
development and borrowing costs incurred
at the lower of cost and net realisable value.
during development. As at 30 June 2019, total
Cost includes the cost of acquisition,
inventories amounted to $518,669,000.
development and borrowing costs incurred
during development. As at 30 June 2019, total
This was considered a key audit matter as the
inventories amounted to $518,669,000.
determination of net realisable value is affected
by subjective elements within the projected costs
This was considered a key audit matter as the
and revenues over the assumed life of each
determination of net realisable value is affected
development. These values are sensitive to
by subjective elements within the projected costs
changes in the underlying economic environment
and revenues over the assumed life of each
and market forces.
development. These values are sensitive to
changes in the underlying economic environment
Disclosure of inventories including significant
and market forces.
judgments is included in Note 9 of the financial
report.
Disclosure of inventories including significant
judgments is included in Note 9 of the financial
report.
Our audit procedures included the following:
How our audit addressed the key audit matter
► We assessed the effectiveness of controls over
Our audit procedures included the following:
the Group’s review process related to project
monitoring, including the preparation and review
► We assessed the effectiveness of controls over
of feasibility reports and updates at the related
the Group’s review process related to project
executive and board level. We also assessed
monitoring, including the preparation and review
controls over the process for the approval to
of feasibility reports and updates at the related
commence or amend significant projects.
executive and board level. We also assessed
controls over the process for the approval to
► We evaluated all available independent property
commence or amend significant projects.
valuations and a selection of internal projections
prepared by the Group that we have identified as
► We evaluated all available independent property
higher risk.
valuations and a selection of internal projections
prepared by the Group that we have identified as
► We also examined the qualifications, competence
higher risk.
and objectivity of the independent valuation
experts.
► We evaluated all projects we considered
► We also examined the qualifications, competence
and objectivity of the independent valuation
► We evaluated all projects we considered
experts.
significant, to understand project costs to date
and estimated costs to complete, the progress of
the development, and contingency estimates for
significant, to understand project costs to date
remaining development risks.
and estimated costs to complete, the progress of
the development, and contingency estimates for
► We assessed the valuation models prepared by
remaining development risks.
the Group for a sample of developments
currently in progress. This included an
► We assessed the valuation models prepared by
evaluation of the assumptions adopted by
the Group for a sample of developments
comparing project costs and sales to the most
currently in progress. This included an
recent historical or comparable sales and costs,
evaluation of the assumptions adopted by
including signed contracts or actual costs
comparing project costs and sales to the most
incurred for comparable projects and agreed
recent historical or comparable sales and costs,
relevant data to the current development
including signed contracts or actual costs
application submissions and/or approvals.
incurred for comparable projects and agreed
relevant data to the current development
► We tested the mathematical accuracy of the
application submissions and/or approvals.
valuation models.
► We tested the mathematical accuracy of the
► We performed sensitivity analysis in relation to
valuation models.
the key forward looking assumptions including
sales price, cost per lot and escalation rates.
► We performed sensitivity analysis in relation to
the key forward looking assumptions including
We assessed the disclosure relating to inventories in
sales price, cost per lot and escalation rates.
accordance with Australian Accounting Standards.
We assessed the disclosure relating to inventories in
accordance with Australian Accounting Standards.
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PEET LIMITED | ANNUAL REPORT 2019 For personal use only 2.
Land and capitalised development costs expensed during the year
Why significant
How our audit addressed the key audit matter
The Group has expensed as cost of sales, land
and development costs of $121,979,000 related
to sold lots. Development costs includes
estimates of infrastructure costs which are
incurred over the life of the development.
Our audit procedures included the following:
► We evaluated the basis of estimation and
allocation of total development costs and the
allocation of costs to complete for lots sold.
This was considered a key audit matter as the
recognition of land and development costs is
dependent on forecast development timing and
future costs that are affected by expected
performance and market conditions.
Disclosure of land and development costs is
included in Note 6 of the financial report.
► We assessed the effectiveness of controls over
the review and approval of cost calculations.
► We selected a sample of cost calculations to
assess whether they were mathematically
accurate and the period they related to was
appropriate.
► We assessed the costs allocated to each lot and
compared the land and development costs to
sales transactions. This included comparison to
historical averages of similar projects, and the
gross margin over the life of the project to
identify and substantiate significant differences.
We assessed the adequacy of the disclosures in the
financial report in accordance with Australian
Accounting Standards.
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ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 3. Investments accounted for using the equity method
Why significant
3. Investments accounted for using the equity method
How our audit addressed the key audit matter
Our audit procedures included the following:
Our audit procedures included the following:
►
►
►
How our audit addressed the key audit matter
►
For new associates entered into during the year,
we assessed the arrangements to understand
the ownership interest and rights of each party.
For new associates entered into during the year,
This included considering the Group’s
we assessed the arrangements to understand
assessment of whether an entity is jointly
the ownership interest and rights of each party.
controlled and whether their application of the
This included considering the Group’s
equity method accounting to the investment was
assessment of whether an entity is jointly
appropriate.
controlled and whether their application of the
For existing joint ventures and associates, we
equity method accounting to the investment was
considered whether there had been any changes
appropriate.
to the arrangement with respect to decision
For existing joint ventures and associates, we
making power and exposure to variable returns.
considered whether there had been any changes
► We assessed the financial performance and
to the arrangement with respect to decision
financial position of the associates and joint
making power and exposure to variable returns.
ventures, and the Group’s going concern
► We assessed the financial performance and
assessment of the relevant entities as one of the
financial position of the associates and joint
indicators of potential impairment.
ventures, and the Group’s going concern
► We evaluated the recoverability of interests in
assessment of the relevant entities as one of the
associates and joint ventures by assessing the
indicators of potential impairment.
feasibilities of the underlying development asset.
► We evaluated the recoverability of interests in
We obtained an understanding of the status of
associates and joint ventures by assessing the
the underlying developments, considered the
feasibilities of the underlying development asset.
historical accuracy of the forecast development
We obtained an understanding of the status of
outcomes and evaluated the assumptions
the underlying developments, considered the
adopted in light of current market evidence.
historical accuracy of the forecast development
► We considered the Group’s assessment of the
outcomes and evaluated the assumptions
recoverability of the loans.
adopted in light of current market evidence.
► We assessed the interest rates used to value
► We considered the Group’s assessment of the
loans at fair value through the profit and loss
recoverability of the loans.
against prevailing market rates and external
► We assessed the interest rates used to value
borrowings for similar debt.
loans at fair value through the profit and loss
We assessed the adequacy of the disclosures in the
against prevailing market rates and external
financial report in accordance with Australian
borrowings for similar debt.
Accounting Standards.
We assessed the adequacy of the disclosures in the
financial report in accordance with Australian
Accounting Standards.
The Group has interests in joint ventures and
Why significant
associates which are involved in property
investment or development of $233,668,000
The Group has interests in joint ventures and
and are accounted for using the equity method.
associates which are involved in property
An associate is an entity over which the Group
investment or development of $233,668,000
has significant influence. The classification of an
and are accounted for using the equity method.
interest in an entity as a joint venture is
An associate is an entity over which the Group
predicated on the Group having joint control with
has significant influence. The classification of an
the other party(ies) under the arrangement.
interest in an entity as a joint venture is
Interests in associates and joint ventures
predicated on the Group having joint control with
comprise of:
the other party(ies) under the arrangement.
(a)
Interests in associates and joint ventures
comprise of:
The Group’s equity accounted investment
in a number of joint venture arrangements
and associates; and
The Group’s equity accounted investment
Loan facilities provided by the Group to
in a number of joint venture arrangements
certain associates and joint ventures.
and associates; and
These unsecured loans are either
Loan facilities provided by the Group to
recognised at amortised cost using the
certain associates and joint ventures.
effective interest rate method, less an
These unsecured loans are either
allowance for expected credit loss or at
recognised at amortised cost using the
fair value through the profit and loss.
effective interest rate method, less an
This was considered a key audit matter due to
allowance for expected credit loss or at
the following:
fair value through the profit and loss.
(a)
(b)
(b)
►
►
►
The judgment involved in assessing whether
►
This was considered a key audit matter due to
the Group has control, joint control or
the following:
significant influence over the investee. The
The judgment involved in assessing whether
Group’s assessment is based on the relevant
the Group has control, joint control or
contractual agreements.
significant influence over the investee. The
The assessment of the recoverability of the
Group’s assessment is based on the relevant
interests is subject to significant judgment
contractual agreements.
as to the performance of the underlying
The assessment of the recoverability of the
developments. Significant changes in
interests is subject to significant judgment
feasibility assumptions impacting project
as to the performance of the underlying
cash flows may give rise to impairment.
developments. Significant changes in
The assessment of loans at fair value
feasibility assumptions impacting project
through the profit and loss is subject to
cash flows may give rise to impairment.
significant judgment as to the appropriate
The assessment of loans at fair value
interest rates for each development.
through the profit and loss is subject to
Disclosure of investments accounted for using
significant judgment as to the appropriate
the equity method, including significant
interest rates for each development.
judgments is included in Notes 2 and 10 of the
Disclosure of investments accounted for using
financial report.
the equity method, including significant
judgments is included in Notes 2 and 10 of the
financial report.
►
►
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PEET LIMITED | ANNUAL REPORT 2019 For personal use only Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2019 Annual Report, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
►
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
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ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only ►
►
►
►
►
►
►
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
estimates and related disclosures made by the directors.
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
based on the audit evidence obtained, whether a material uncertainty exists related to events or
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
a going concern.
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
Evaluate the overall presentation, structure and content of the financial report, including the
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
disclosures, and whether the financial report represents the underlying transactions and events in a
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
manner that achieves fair presentation.
a going concern.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
Evaluate the overall presentation, structure and content of the financial report, including the
business activities within the Group to express an opinion on the financial report. We are
disclosures, and whether the financial report represents the underlying transactions and events in a
responsible for the direction, supervision and performance of the Group audit. We remain solely
manner that achieves fair presentation.
responsible for our audit opinion.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
►
We communicate with the directors regarding, among other matters, the planned scope and timing of the
business activities within the Group to express an opinion on the financial report. We are
audit and significant audit findings, including any significant deficiencies in internal control that we
responsible for the direction, supervision and performance of the Group audit. We remain solely
identify during our audit.
responsible for our audit opinion.
We also provide the directors with a statement that we have complied with relevant ethical requirements
We communicate with the directors regarding, among other matters, the planned scope and timing of the
regarding independence, and to communicate with them all relationships and other matters that may
audit and significant audit findings, including any significant deficiencies in internal control that we
reasonably be thought to bear on our independence, and where applicable, related safeguards.
identify during our audit.
From the matters communicated to the directors, we determine those matters that were of most
We also provide the directors with a statement that we have complied with relevant ethical requirements
significance in the audit of the financial report of the current year and are therefore the key audit
regarding independence, and to communicate with them all relationships and other matters that may
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
reasonably be thought to bear on our independence, and where applicable, related safeguards.
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
From the matters communicated to the directors, we determine those matters that were of most
expected to outweigh the public interest benefits of such communication.
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
Report on the Audit of the Remuneration Report
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
Opinion on the Remuneration Report
expected to outweigh the public interest benefits of such communication.
We have audited the Remuneration Report included in pages 10 to 21 of the directors' report for the year
Report on the Audit of the Remuneration Report
ended 30 June 2019.
Opinion on the Remuneration Report
In our opinion, the Remuneration Report of Peet Limited for the year ended 30 June 2019, complies with
section 300A of the Corporations Act 2001.
We have audited the Remuneration Report included in pages 44 to 59 of the directors' report for the year
ended 30 June 2019.
In our opinion, the Remuneration Report of Peet Limited for the year ended 30 June 2019, complies with
section 300A of the Corporations Act 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
112
Liability limited by a scheme approved under Professional Standards Legislation
69
69
PEET LIMITED | ANNUAL REPORT 2019 For personal use only Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
G Lotter
Partner
Perth
28 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
70
113
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only SECURITYHOLDER INFORMATION (CONTINUED)
SECURITYHOLDER INFORMATION
Distribution of ordinary shares and Peet Bonds
As at 23 September 2019 there were 2,223 current holders of ordinary shares, 1,387 current holders of Series 1, Tranche 1
Peet Bonds (“PPCHA Bonds”) and 522 current holders of Series 2, Tranche 1 Peet Bonds (“PPCHB Bonds”). These holdings were
distributed in the following categories:
Size of Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
No. of
Shareholders
% of Issued
Shares
No. of PPCHA
Bondholders
% of Issued
PPCHA Bonds
No. of PPCHB
Bondholders
% of Issued
PPCHB Bonds
479
643
367
658
76
2,223
0.03
0.41
0.58
3.86
95.12
100.00
1,281
92
7
6
1
1,387
36.50
18.49
5.24
16.03
23.74
100.00
461
52
5
3
1
522
32.10
23.29
6.88
7.01
30.72
100.00
There were 341 shareholdings of less than a marketable parcel of $500 (435 shares).
There were 2 holdings of PPCHA Bonds of less than a marketable parcel of $500 (five PPCHA Bonds).
There were nil holdings of PPCHB Bonds of less than a marketable parcel of $500 (five PPCHB Bonds).
Securityholders
The names of the 20 largest holders of ordinary shares as at 23 September 2019 are listed below:
Name
Citicorp Nominees Pty Limited
Scorpio Nominees Pty Ltd
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
CS Third Nominees Pty Limited
Argo Investments Limited
Mr Warwick Donald Hemsley
Ian Murray Charles Palmer & Helen Christina Palmer
Golden Years Holdings Pty Ltd
BNP Paribas Noms Pty Ltd
Mr Brendan David Gore
UBS Nominees Pty Ltd
Brispot Nominees Pty Ltd
Netwealth Investments Limited
BNP Paribas Nominees Pty Ltd
Mr Julian Charles Peet
Domar Investments Pty Ltd
HSBC Custody Nominees (Australia) Limited
HSBC Custody Nominees (Australia) Limited – A/C 2
Total for 20 largest shareholders
Total other shareholders
Total ordinary shares on issue
Number of Shares Held
% of Shares
88,558,482
86,582,433
68,306,233
51,304,070
35,222,464
20,729,143
18,152,705
17,459,881
12,707,352
8,656,230
7,679,676
6,103,817
3,566,468
3,485,776
3,240,531
2,631,851
1,528,344
1,458,853
1,446,533
1,351,011
440,171,853
43,128,636
483,300,489
18.33
17.91
14.13
10.62
7.29
4.29
3.76
3.61
2.63
1.79
1.59
1.26
0.74
0.72
0.67
0.54
0.32
0.30
0.30
0.28
91.08
8.92
100.00
114
PEET LIMITED | ANNUAL REPORT 2019 For personal use only SECURITYHOLDER INFORMATION (CONTINUED)
The names of the 20 largest holders of PPCHA Bonds as at 23 September 2019 are listed below:
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Australian Executor Trustees Limited
Grizzly Holdings Pty Ltd
Jove Pty Ltd
Finot Pty Ltd
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd DRP
Jamplat Pty Ltd
Passini Pty Ltd
Tierney Pty Limited
George Tauber Management Pty Ltd
Riseley Family Investments Pty Ltd
Sunstone Finance Pty Ltd
Majana Pty Ltd
Invia Custodian Pty Limited < RISF A/C>
Invia Custodian Pty Limited
Invia Custodian Pty Limited
Super Rab Pty Ltd
Pulo Rd Pty Ltd
Mrs Robin Lynn Beech
Total for 20 largest PPCHA Bondholders
Total other PPCHA Bondholders
Total PPCHA Bonds on issue
Number of PPCHA
Bonds Held
237,342
43,720
35,330
26,400
22,612
20,000
12,268
10,000
8,500
8,000
7,500
7,250
5,632
5,500
5,000
5,000
5,000
5,000
4,680
4,000
478,734
521,266
1,000,000
% of PPCHA
Bonds
23.73
4.37
3.53
2.64
2.26
2.00
1.23
1.00
0.85
0.80
0.75
0.73
0.56
0.55
0.50
0.50
0.50
0.50
0.47
0.40
47.87
52.13
100.00
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ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only SECURITYHOLDER INFORMATION
SECURITYHOLDER INFORMATION (CONTINUED)
SECURITYHOLDER INFORMATION (CONTINUED)
The names of the 20 largest holders of PPCHB Bonds as at 23 September 2019 are listed below::
Name
HSBC Custody Nominees (Australia) Limited
Grizzly Holdings Pty Limited
Keppoch Pty Limited
J P Morgan Nominees Australia Pty Limited
Finot Pty Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd DRP
BT Portfolio Services Limited
Roni H Pty Ltd
Mr Joseph Compagnone & Mrs Cheryl Robyn Compagnone
BLB Corporation Pty Ltd
Invia Custodian Pty Limited
Hamilton Industries (Victoria) Pty Limited
Mr Joseph Compagnone and Mrs Cheryl Robyn Compagnone
Trendmead Pty Ltd
Netwealth Investments Limited
A Cameron Holdings Pty Limited
Netwealth Investments Limited
Bentleigh Nominees Pty Ltd
Invia Custodian Pty Limited
Mr Thomas Kiss and Mrs Amanda Aizenstros
Mr Archibald John McKirdy
Trancape Pty Ltd
Mr Jian Wang
Total for 20 largest PPCHB Bondholders
Total other PPCHB Bondholders
Total PPCHB Bonds on issue
Substantial shareholders
Number of PPCHB
Bonds Held
153,590
12,600
12,000
10,449
8,000
7,607
7,000
6,000
5,800
4,970
4,690
4,000
3,662
3,500
3,350
3,125
3,102
3,000
3,000
3,000
3,000
3,000
3,000
% of PPCHB
Bonds
30.72
2.52
2.40
2.09
1.60
1.52
1.40
1.20
1.16
0.99
0.94
0.80
0.73
0.70
0.67
0.63
0.62
0.60
0.60
0.60
0.60
0.60
0.60
271,445
228,555
500,000
54.29
45.71
100.00
As disclosed in substantial holding notices lodged with ASX (as applicable) as at 23 September 2019:
Name
Date of Last Notice
Received
Number of
Shares Held
% of Issued
Shares1
Scorpio Nominees Pty Ltd and its associates
13 November 2018
Allan Gray Australia Pty Ltd and its related bodies corporate
3 September 2019
L1 Capital Pty Ltd
23 July 2018
99,156,523
94,507,563
28,058,347
20.50
19.55
5.73
1. Percentage of issued shares held as at the date notice provided.
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PEET LIMITED | ANNUAL REPORT 2019 For personal use only SECURITYHOLDER INFORMATION (CONTINUED)
Voting rights of Ordinary Shares
The constitution provides for votes to be cast:
(i) on a show of hands, one vote for each shareholder; and
(ii) on a poll, one vote for each fully paid ordinary share.
Voting rights of Peet Bonds
Bondholders have certain rights to vote at meetings of bondholders but are not entitled to vote at general meetings, unless
provided for by the ASX Listing Rules or the Corporations Act.
Securities Exchange Listings
Peet Limited’s ordinary shares are listed on the Australian Securities Exchange (“ASX”). The Company’s ASX code is PPC.
Peet Limited’s Series 1, Tranche 1 Peet Bonds are listed on the ASX, with the code being PPCHA.
Peet Limited’s Series 2, Tranche 1 Peet Bonds are listed on the ASX, with the code being PPCHB.
Options and Performance Rights
As at 23 September 2019, Peet Limited had 1,200,000 options on issue, held by one key management person, as disclosed
elsewhere in the Annual Report.
As at 23 September 2019, Peet Limited had 6,346,792 performance rights on issue, held by a total of eight key management
personnel and other senior managers.
These options and performance rights, which are not listed, were issued under the PESOP and PPRP, respectively.
Peet Notes
As at as at 23 September 2019, Peet Limited had 75,000 unsecured and unsubordinated, 6.75% fixed-rate notes on issue, with a
maturity date of 7 June 2024. Noteholders are not entitled to vote at general meetings, however, are entitled to vote on certain
matters that affect their rights under the notes’ Trust Deed. The notes were issued to professional and sophisticated investors
and are not listed.
Website address
www.peet.com.au
The Peet Limited website offers the following features:
• Investor relations page with the latest Company announcements;
• News service providing up to date information on the Company’s activities and projects; and
• Access to annual and half year reports.
117
ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only CORPORATE DIRECTORY
PEET LIMITED
A.B.N. 56 008 665 834
Website Address – www.peet.com.au
Directors
Tony Lennon, FAICD, Non-executive Chairman
Brendan Gore, BComm, FCPA, FCIS, FGIA, FAICD, Managing Director and Chief Executive Officer
Anthony Lennon, BA, Grad Dip Bus Admin, MAICD, Non-executive Director
Trevor Allen, BComm (Hons), CA, FF, FAICD, Independent Director
Vicki Krause, BJuris LLB W.Aust, GAICD, Independent Director
Robert (Bob) McKinnon, FCPA, FCIS, FGIA, MAICD, Independent Director
Group Company Secretary
Dom Scafetta, BComm, CA
Registered Office and Principal Place of Business
7th Floor, 200 St Georges Terrace
Perth, Western Australia 6000
Tel. (08) 9420 1111
Share Register
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth, Western Australia 6000
Tel: (08) 9323 2000
Auditor
Ernst & Young
Ernst & Young Building
11 Mounts Bay Road
Perth, Western Australia 6000
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PEET LIMITED | ANNUAL REPORT 2019 For personal use only NOTES
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ANNUAL REPORT 2019 | PEET LIMITEDFor personal use only NOTES
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PEET LIMITED | ANNUAL REPORT 2019 For personal use only NOTES
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PEET LIMITED | ANNUAL REPORT 2019 PEET LIMITED | ANNUAL REPORT 2019 For personal use only NOTES
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ANNUAL REPORT 2019 | PEET LIMITEDANNUAL REPORT 2019 | PEET LIMITEDFor personal use only 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
For personal use only