ANNUAL REPORT
2020
CONTENTS
About Peet
What we do
How we do it
FY20 Performance at a Glance
Financial
Operational
Future proofing
Business Model
Our Strategy
National Reach
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 FY2021
Financials
2
3
4
6
6
7
7
8
9
10
12
14
18
18
20
22
24
28
30
D
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I
PEET LIMITED | ANNUAL REPORT 2020
Peet is one of Australia’s
leading residential real
estate developers, creating
places to live for thousands
of Australians each year.
1
ANNUAL REPORT 2020 | PEET LIMITED 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: Googong, NSWPEET LIMITED | ANNUAL REPORT 2020 WHAT WE DO
Peet acquires, develops and markets residential land
in Australia. Currently, Peet manages a broad property
portfolio of more than 47,000 lots with a gross development
value of approximately $13.9 billion across 51 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 housing allotments,
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 2020
financial year (FY20).
3
ANNUAL REPORT 2020 | PEET LIMITED HOW WE DO IT
Our values
4
Image: Tonsley Village, SAPEET LIMITED | ANNUAL REPORT 2020 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 2020 | PEET LIMITED FY20 PERFORMANCE
at a glance
Financial
Operating profit1
after tax
$15.1
million
EBITDA2
(Before restructuring and
divestment related provisions)
$37.0
million
OPERATING EARNINGS
OF 3.1 CENTS
PER SHARE
DIVIDEND OF 1.5
CENTS PER SHARE,
FULLY FRANKED
BOOK NTA3 PER
SECURITY $1.09
GEARING4 OF 28.8%
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/(unrealised) transactions outside the core ongoing business activities. In FY20,
a restructuring and divestment-related provision of $45.2 million after tax was excluded in calculating the operating profit.
EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
NTA before application of AASB16 Leases.
Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets).
6
PEET LIMITED | ANNUAL REPORT 2020
Image: Aston Craigieburn, VIC Operational
2,323
43%
LOTS SOLD5
INCREASE ON
FY19
1,794
LOTS SETTLED5
c.70%
of land bank under
development
MEDIUM DENSITY
2
+
1
BROADACRE PROJECT
ACQUIRED
TWO NEW PROJECTS
COMMENCED SALES /
DEVELOPMENT
APPROX
1,100
PIPELINE OF
TOWNHOUSES/LOW
RISE APARTMENTS
CONTRACTS ON HAND5
1,786
42%
INCREASE
ON 30 JUNE 2019
Future proofing
Land bank of
47,323 lots5
5
Includes equivalent lots.
Land Bank
of $13.9
billion gross
development
value
51 projects
nationally
In every
mainland state
and territory in
Australia
ANNUAL REPORT 2020 | PEET LIMITED
7
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 efficient business model. Peet pioneered retail land syndication in
Australia and its Funds Management and Joint Ventures businesses manage
some 36,000 lots across 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
48% of the Group’s EBITDA6, 7,8 in FY20.
OWNED
11,340 lots9
$2.6bn GDV
WHOLESALE/
INSTITUTIONAL
22,616 lots9
$6.7bn GDV
JOINT
VENTURES
7,090 lots9
$3.1bn GDV
T
O
W
N
H
O
U
S
E
S
RETAIL
6,277 lots9
$1.5bn GDV
6
7
8
9
EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
Before inter-segment transfers and other unallocated items.
Pre divestment and related provisions of $61.0 million (before tax).
Includes equivalent lots.
8
PEET LIMITED | ANNUAL REPORT 2020
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: Lumeah Townhouses, VICANNUAL REPORT 2020 | PEET LIMITED NATIONAL Reach
NT
PROJECTS: 1
ACT
PROJECTS: 2
SA
PROJECTS: 5
QLD
PROJECTS: 12
NSW
PROJECTS: 2
WA
PROJECTS: 19
VIC
PROJECTS: 10
47,323 LOTS10
$13.9bn GROSS DEVELOPMENT VALUE
51 PROJECTS NATIONALLY
10
Includes equivalent lots.
10
Image: Golden Bay, WA PEET LIMITED | ANNUAL REPORT 2020
Peet manages a broad
property portfolio,
encompassing 47,000 lots
across 51 projects
Diversified land bank
strategically located in
growth corridors of major
cities in every mainland
state of Australia
Range of affordable
product type appealing
to all buyer segments
with a core focus
on first home buyers
11
ANNUAL REPORT 2020 | PEET LIMITED Chairman’s
REVIEW
Dear Shareholders,
I am pleased to present Peet’s Annual Report for the year
ended 30 June 2020.
Key actions included the deferral of new project
commencements, minimising operating and capital
expenditure, and, managing settlement risk for contracts
on hand so to reduce cancellations of sales.
Peet has been creating communities for Australians for
over 125 years. Despite the difficult circumstances brought
on by the global COVID-19 pandemic in 2020, which has
had a significant impact on businesses and individuals,
we continued to execute our strategy and provide vibrant
communities for Australians to live.
The immediate and targeted response ensured the
Group was in a solid position to respond to the significant
increase in demand experienced in June 2020, following
the announcement of the Federal Government’s HomeBuilder
grant, in addition to support and stimulus provided by
State Governments.
Over the last few years, we have evolved elements of our
strategy to diversify the types of product we develop. The
flexibility afforded by this diversification has assisted in
managing challenges throughout the year.
With more than 47,000 lots in 51 projects across every
mainland state and territory, Peet is well positioned to benefit
from a sustained recovery in residential property markets
throughout the nation.
FY20 was a challenging year for our customers and our
people. In the first half of the year, we experienced an uplift
in sales and enquiries and an easing of tight credit conditions
for our customers, indicating positive signs of a recovery
in demand for residential housing. However, consumer
confidence and markets were impacted towards the end of
the third quarter with the onset of the COVID-19 pandemic
and various warnings and restrictions imposed by Federal and
State Governments.
Peet responded with a focus on protecting our people and
residents in our communities. In line with our disciplined and
proactive approach to capital management, we put in place
a range of initiatives to conserve capital and protect the
balance sheet.
Our financial results for FY20 include an operating profit11
after tax of $15.1 million and a statutory loss12 of $30.1
million (after a restructuring and divestment provision of
$45.2 million after tax). The FY20 results were impacted
by lower settlements, compared to FY19, on the back
of lower contracts on hand at 30 June 2019, the completion
or substantial completion of projects in FY19 and the impact
of COVID-19.
Strong sales achieved in June 2020 have provided the Group
with good momentum as it enters into the 2021 financial year.
At 30 June 2020, the Group had net interest-bearing debt
(including Peet Bonds) of $235.3 million, compared with
$211.6 million at 30 June 2019. Subsequent to year-end
the Group further extended the on-market share buyback
for up to 5% of Peet’s issued ordinary shares to 30 August
2021, subject to the Board’s right to extend or terminate the
buy-back at any time.
11 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 / unrealised transactions outside the core ongoing business activities. In FY20,
a restructuring and divestment-related provision of $45.2 million after tax was excluded in calculating the operating profit.
12 Statutory profit / (loss) after tax means net profit / (loss) measured in accordance with Australian Accounting Standards, attributable to the owners of Peet Limited.
12
PEET LIMITED | ANNUAL REPORT 2020
The flexibility afforded by our diversification strategy has
assisted in managing challenges throughout the year.
STRATEGY
CONCLUSION
We remain committed to:
• Investing in quality land.
• Enhancing, planning and creating communities.
• Expanding our product offerings.
• Maintaining strong capital management.
While Peet’s strategic pillars have not changed, we
announced some initiatives in seeking to position Peet
positively to a post COVID-19 environment, including
resetting the focus of the business on key growth corridors
across Australia. I refer you to the Managing Director and
CEO’s review for further detail on this matter.
DIVIDENDS
After year-end, the Directors declared a final dividend for
FY20 of 1.0 cent per share, fully franked. This brings the total
dividend for FY20 to 1.5 cents per share, fully franked. This
dividend is payable 19 November 2020, with a record date of
26 October 2020.
Despite the challenging year, we head into FY21 focused on
being positioned to benefit from any sustained improvement
in market conditions while keeping a cautious approach to
project delivery and identifying new growth opportunities.
Remaining agile will be key over the next 12 months as we
closely monitor the market and make the necessary decisions
to create long-term value for our shareholders and syndicate
investors, creating high quality communities for our residents
and providing a stimulating and rewarding environment for
the Peet Team.
This year has been extraordinary and I would like to thank
my fellow Board members for their guidance. I would also like
to thank our Managing Director and CEO Brendan Gore and
the entire team at Peet for their dedication and commitment
during an unprecedented year of change and disruption.
We would also like to extend our gratitude to our
shareholders for their support and we look forward to
sharing our progress with you in FY21.
Tony Lennon
Chairman
ANNUAL REPORT 2020 | PEET LIMITED
13
Managing Director and CEO’s
REVIEW
Dear Shareholders,
PEOPLE AND SAFETY
We entered FY2020 buoyed by signs of recovery in demand
for residential housing as market conditions improved across
the Group’s markets. As access to credit also improved,
we experienced an increase in customer demand for our
products, resulting in an uplift in sales during the first half of
the year, providing optimism for the remainder of FY20.
The onset of COVID-19 and the associated Government
restrictions that followed impacted consumer sentiment and
the ability of prospective customers to visit our projects in
March 2020, resulting in lower sales in April 2020.
However, enquiry levels and digital traffic recovered strongly
in April 2020, with Peet’s sales offices generally fully
operational in WA, ACT/NSW, SA and QLD with the easing
of government restrictions. The introduction of Federal
Government stimulus (in addition to support and stimulus
provided by State Governments) resulted in a significant
increase in enquiries and sales across the Group’s portfolio in
the latter half of the June 2020 quarter.
Enquiry levels increased by 75% during the quarter
ended 30 June 2020, compared to the previous quarter.
Sales increased 57% compared to the quarter ended
31 March 2020 and 25% compared to the quarter ended
31 December 2019.
COVID-19 RESPONSE
When the pandemic impacted Australia in March 2020,
we took decisive action to protect our people, residents
of our communities and the balance sheet through a
variety of initiatives.
The safety and wellbeing of our employees and residents
was our top priority and we moved quickly to implement a
targeted pandemic response. The speed of our transition
to working from home and the dedication and efficiency of
our people was impressive. Peet offices across the country
introduced measures to ensure our employees could return
to the office gradually and safely in line with Governments’
protocols. We prioritised supporting the ongoing viability of
our small business customers and we also communicated
digitally with residents in our communities.
BUSINESS OPERATIONS
Various initiatives were implemented to protect our business
including:
• Deferral of the commencement of new projects.
• Minimising development expenditure to reflect
management forecasts for COVID-19 sales rates
pre-Government stimulus.
• A strong focus on managing the settlement risk of
contracts on hand to minimise cancellations.
• Re-sequencing of masterplan staging to bring forward
affordable lots.
• Accelerated production to align with expected demand
following the introduction of Government stimulus.
• Negotiating variations to the Group’s senior debt facility,
which have resulted in a waiver of the measurement of
the Group’s debt covenants out to 30 June 2021, taking
account of the Group’s COVID-19 responses and the
organisational restructure being implemented.
MANAGEMENT RESPONSE
• Voluntary 20% reduction of the Leadership Team’s fixed
salaries for the three months ended 31 July 2020.
• Voluntary 20% reduction of Non-Executive Director fees
for the three months ended 31 July 2020.
• A 20% reduction in working hours across the balance of
the Peet Team (with a pro-rata reduction in base pay) for
the three months ended 31 July 2020.
• No FY20 short-term incentives.
• Reduction of discretionary spend and deferral of non-
essential capital expenditure.
14
PEET LIMITED | ANNUAL REPORT 2020
RIGHT-SIZING COST BASE AND
STRENGTHENING CAPITAL POSITION
The Group continues to remain cautious on the outlook for
FY21 and is seeking to position itself positively to a post
COVID-19 environment.
FY20 PERFORMANCE
The Peet Group achieved an operating profit13 after tax
of $15.1 million and a statutory loss14 after tax of $30.1
million for FY20, which represent decreases of 68%
and 163% respectively on FY19.
Peet has continued to focus on reducing its fixed corporate
overhead and efficiently managing its asset base with a view
to maximising returns on invested capital.
The performance has resulted in an operating earnings
per share of 3.1 cents (statutory loss per share of 6.2 cents)
for FY20, compared to 9.8 cents in FY19.
The Group has been investing in its information and digital
platforms during the past few years to improve the efficiency
of its workflows and the gathering of data to drive enquiry
and increase sales. At the same time, the Group continually
reviews its c.47,000-lot portfolio to identify opportunities
to recycle capital.
With a view to resetting the focus of the business on key
growth corridors around the country, Peet will seek to divest
non-core projects, including regional and sub-regional
projects. The expectation is that this will result in the
recycling of c.$75 million of capital over the next 18 to 24
months to further strengthen the Group’s balance sheet. This
will assist in streamlining the business and simplifying its
operating structure.
The divestment of projects, as well as resulting
efficiencies from our investment in digital platforms, has
resulted in the reduction of the number of people employed
by the Group. These difficult decisions are unfortunate but
necessary to ensure the Group is well positioned for the
post COVID-19 environment.
It is expected that these measures will result in annualised
savings of $5-7 million once fully implemented in 2H21.
However, for FY20 the Group recognised a restructuring and
divestment-related provision of approximately $45 million
after tax.
The operating result is on the back of lower settlements
impacted by lower contracts on hand as at 30 June 2019 and
completion of projects in FY19 and into FY20. The results
were also negatively impacted by the onset of COVID-19
towards the end of 3Q20 and the resulting Government
restrictions, as well as the Group’s own response to protect
the health and safety of its employees and its balance sheet.
The Group achieved 2,323 sales15 with a gross value of
$528.7 million, representing an increase of 43% on the
number of sales in FY19.
Sales in the first half of the year showed a solid increase
on the previous six months and sales activity continued to
improve in the first two months of CY2020. While the impact
of the COVID-19 pandemic and associated restrictions
contributed to lower sales in April 2020, sales recovered
strongly in the last quarter of the year.
The Group achieved 1,794 settlements15 for the full year
across its Funds Management, Development and Joint
Venture projects, representing a decrease of 32% compared
with FY19.
Peet delivered FY20 EBITDA16 of $37.0 million (before
restructuring and divestment-related provisions) compared to
$86.0 million in FY19. FY20 EBITDA16 was impacted by lower
settlement volumes on lower sales volumes in FY19 carrying
into FY2020 and COVID-19.
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 / unrealised transactions outside the core ongoing business activities. In FY20,
a restructuring and divestment-related provision of $45.2 million after tax was excluded in calculating the operating profit.
14 Statutory profit / (loss) after tax means net profit / (loss) 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.
ANNUAL REPORT 2020 | PEET LIMITED
15
The reduction in our EBITDA17 margin to 19% (FY19: 33%),
is attributable to lower settlements, the completion of high
margin projects in ACT/NSW and VIC as well as reduced
development expenditure on new stock in response to
COVID-19.
Peet enters FY21 with cash and debt facility headroom of
$134.7 million as at 30 June 2020 and a weighted average
debt maturity of over two years. This provides the capacity to
accelerate delivery of product to meet the material increase
in demand following the introduction of Government stimulus.
OUTLOOK
FY21 is expected to remain challenging as the various
economic and social consequences of COVID-19 continue to
develop and impact both the property industry and country
more broadly.
Low interest rates, accommodating credit conditions and
Government stimulus are positive for the residential sector.
However, there remain uncertainties around the impact of
the roll-off of Government stimulus, including on the rate of
unemployment and the impact of COVID-19 on the Federal
Government’s immigration policy. Accordingly, the Group
continues to adopt a cautious approach as it enters FY21.
In a year of unprecedented change, I would like to thank
Chairman Tony Lennon and our board for their contributions
and insight during the year. Thanks also to Peet’s
management team and staff for their commitment and
dedication in what was a challenging year.
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
Contracts on hand18 at 30 June 2020 increased 42% to 1,786
lots (compared to 30 June 2019: 1,257 lots), with a value of
$428 million (up 27% on FY19: $336 million) on the back of
Government stimulus.
DELIVERY AGAINST STRATEGY
The Group’s portfolio is well positioned for positive medium
to longer-term growth and value creation.
Despite challenging conditions, we made progress against
our strategic pillars.
Invest in quality land in strategic locations across
the country
We continued to build our geographically diverse portfolio,
with two townhouse sites and one broadacre land project
secured during FY20 on attractive terms.
Enhance, plan and create communities and homes
targeting the lower to middle market segment.
Two new projects commenced development/sales in FY20,
with 70% of our projects now under development. We expect
80% of our projects to be under development by FY23.
Expand our product offerings and
geographic presence
We continued to extend our market reach by broadening
our offerings to townhouses and low-rise apartments.
We now have a pipeline of approximately 1,100
townhouses and apartments.
Maintain strong capital management
We continued to maintain a strong focus on capital
management throughout the year. Our robust capital position
allowed us to be proactive in implementing initiatives in
response to COVID-19. At 30 June 2020, the Group’s gearing19
was 28.8%, within the Company’s target range of 20% to
30%. Additionally, the recycling of c.$75 million of capital
over the next 18 to 24 months from the divestment of non-
core assets will further strengthen the Group’s balance sheet.
17 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
18
19 Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets).
Includes equivalent lots.
16
PEET LIMITED | ANNUAL REPORT 2020
When the pandemic
impacted Australia in
March 2020, we took
decisive action to protect
our people, residents and
the balance sheet through a
variety of initiatives.
ANNUAL REPORT 2020 | PEET LIMITED
17
Image: Pier Street, WA 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 efficient profit source
which is difficult to replicate while also providing long term earnings visibility.
23
20, 21, 22
EBITDA
29%
28,893 lots24
GDV25
$8.2 billion
20 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
21 Before inter-segment transfers and other unallocated items.
22 Pre divestment and related provisions of $61.0 million (before tax).
23 By number of lots.
24
25 Gross Development Value.
Includes equivalent lots.
18
PEET LIMITED | ANNUAL REPORT 2020
Comprised 61% OF GROUP’S LAND BANK S
T
O
L
6
2
D
L
O
S
S
T
O
L
6
2
D
E
L
T
T
E
S
S
T
C
A
R
T
N
O
C
6
2
D
N
A
H
N
O
7
2
A
D
T
I
B
E
A
D
T
I
B
E
I
7
2
N
G
R
A
M
FY20
1,412
value of
$310.0 million
FY19
909
value of
$193.8 million
FY20
924
Gross value of
$217.9 million
FY19
1,535
Gross value of
$355.2million
FY20
1,173
Total value of
$241.2 million
FY19
685
Total value of
$149.0 million
FY20
$13.0
million
FY19
$24.4
million
FY20
53%
FY19
71%
26
27
Includes equivalent lots.
EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates.
ANNUAL REPORT 2020 | PEET LIMITED
19
Image: Shorehaven Alkimos, WA
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.
31
28, 29, 30
EBITDA
19%
7,090 lots32
GDV33
$3.1 billion
28 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
29 Before inter-segment transfers and other unallocated items.
30 Pre divestment and related provisions of $61.0 million (before tax).
31 By number of lots.
32
33 Gross Development Value.
Includes equivalent lots.
20
PEET LIMITED | ANNUAL REPORT 2020
Comprised 15% OF GROUP’S LAND BANK S
T
O
L
4
3
D
L
O
S
S
T
O
L
4
3
D
E
L
T
T
E
S
S
T
C
A
R
T
N
O
C
4
3
D
N
A
H
N
O
5
3
A
D
T
I
B
E
A
D
T
I
B
E
I
5
3
N
G
R
A
M
FY20
479
FY19
414
value of
$100.5 million
value of
$98.0 million
FY20
436
FY19
539
Gross value of
$103.0 million
Gross value of
$123.1 million
FY20
404
FY19
361
Total value of
$128.1 million
Total value of
$130.5 million
FY20
$8.8
million
FY19
$13.7
million
FY20
22%
FY19
31%
34
35
Includes equivalent lots.
EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in joint ventures. Also before divestment and related provisions.
21
Image: Lightsview (SA)ANNUAL REPORT 2020 | PEET LIMITED
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.
39
36, 37, 38
EBITDA
52%
11,340 lots40
GDV41
$2.6 billion
36 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
37 Before inter-segment transfers and other unallocated items.
38 Pre divestment and related provisions of $61.0 million (before tax).
39 By number of lots.
40
41 Gross Development Value.
Includes equivalent lots.
22
PEET LIMITED | ANNUAL REPORT 2020
Comprised 24% OF GROUP’S LAND BANK S
T
O
L
2
4
D
L
O
S
S
T
O
L
2
4
D
E
L
T
T
E
S
S
T
C
A
R
T
N
O
C
2
4
D
N
A
H
N
O
3
4
A
D
T
I
B
E
A
D
T
I
B
E
I
3
4
N
G
R
A
M
FY20
432
value of
$118.2 million
FY19
306
value of
$67.9 million
FY20
434
FY19
555
Gross value of
$115.8 million
Gross value of
$163.1 million
FY20
209
FY19
211
Total value of
$58.4 million
Total value of
$56.0 million
FY20
$23.5
million
FY19
$58.5
million
FY20
18%
FY19
32%
Includes equivalent lots.
42
43 Before divestment and related provisions.
ANNUAL REPORT 2020 | PEET LIMITED
23
Image: Tonsley Village, SA
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 it has on the environment while looking for ways to make communities thrive.
BRABHAM ESTATE – A 6 STAR ‘GREEN STAR’ COMMUNITY
Peet’s newest community in Western Australia, Brabham Estate has in its first year been awarded a 6 Star ‘Green Star
Communities’ certification by the Green Building Council of Australia, making it a World Leading Sustainable Development.
The certification reflects our commitment to build sustainable outcomes for the lifecycle of the project across categories of
liveability, environment, economic prosperity, governance and innovation. Initiatives at Brabham Estate include:
• Creating a green environment by investing in alternative water solutions
• Reducing waste by reusing and recycling materials
• Retention of existing bushland
• Designing for healthy and active lifestyles through thoughtful streetscapes and infrastructure linking residents to parks
• Facilitating neighbourhood connections through investment in community
• Planting up to double the number of trees required by Council
• Investigating a community battery network and exploring eco-friendly technology
24
PEET LIMITED | ANNUAL REPORT 2020
GOOGONG TRIALS INNOVATIVE RECYCLED ROAD PRODUCT
Googong is adding to its already extensive sustainability credentials with the trial of a new innovative recycled road product,
known as Reconophalt - a first for the ACT / Queanbeyan region.
A one kilometre, two-lane road paved with Reconophalt can contain 500,000 plastic bags and packaging equivalents, 165,000
glass bottle equivalents and toner from 12,000 used printer cartridges. The trial will be implemented in the netball precinct
with a view to it being used more widely on the remaining roads at Googong.
In addition to the environmental benefits from the recycled asphalt, there is a 65 per cent improvement in fatigue for longer
life pavements when compared to standard asphalt.
Googong continues to be at the forefront of sustainable design by incorporating new and innovative technologies across a
range of areas to benefit its residents, which has seen the community win numerous awards including the 2019 UDIA NSW
Best Masterplanned Community.
CONSERVATION OF
THE SOUTHERN BROWN
BANDICOOT
AT SUMMERHILL,
BOTANIC RIDGE
Summerhill, located within Botanic
Ridge in Melbourne’s south east, has
a unique ecological landscape rich in
fauna and flora. In line with the project’s
Conservation Management Plan and Peet’s
ongoing commitment to sustainability,
Peet has worked with key stakeholders to
develop a plan to protect the population of
the Southern Brown Bandicoot within the
corridor from being landlocked.
The corridors comprise of drainage
reserves and include revegetation and
landscaping suitable for the Southern
Brown Bandicoot.
ANNUAL REPORT 2020 | PEET LIMITED
25
HELPING FIRST HOME
BUYERS THROUGH THE
BUYING JOURNEY
The home buying journey can
be overwhelming and daunting
for first-time buyers and Peet
identified a need to provide
additional support to customers
to help guide them through
the process. Peet’s First Home
Buyer Toolkit, simplified into an
easy to follow five step process,
offers buyers comprehensive
downloadable guides, checklists
and Q&A videos with experts.
Available completely online
allowing customers the
opportunity to work through the
steps at their own pace, the
Toolkit received an overwhelming
response when launched
during COVID-19, with buyers
recognising the opportunity to
use this time to prepare for this
exciting next chapter in their lives.
INNOVATION, SUSTAINABILITY AND
COMMUNITY CONNECTION AT FLAGSTONE
Flagstone, located near Jimboomba, QLD, is a large master-
planned community that will eventually feature a CBD servicing
approximately 150,000 people. In only a few years of operation,
the project has delivered significant amenities for the community
including drawcard parks, playgrounds and retail options.
The latest feature in the Regional Rec Park is the Waterplay
Park, which has not only provided a great source of play
and community connection but has also been delivered
sustainably. The Waterplay Park has been designed as a fully
recirculated water system ensuring water usage is minimal.
Among the many sustainable features, the park runs on
sensors with the water delivery system shutting down when
not in use, and reactivating when sensors are contacted.
A full-size Coles supermarket is now open within the
commercial precinct offering Flagstone residents convenience
and choice right on their doorstep. The Coles carpark also
includes an Electric Vehicle Charging Station which is
managed through ChargeFox. The station is powered by
100% renewable energy, offering a sustainable and cost-
effective mobility option.
26
PEET LIMITED | ANNUAL REPORT 2020
FOSTERING COMMUNITY
CONNECTION DURING
COVID-19
Facilitating community connection
has become more important than ever
during the COVID-19 pandemic. Peet
has a proud history of community
engagement, and in response to social
distancing requirements, we explored
opportunities to connect digitally with
our communities across the country.
At the close-knit community of
Googong in NSW, a program of
community initiatives was rolled out
to continue community connection and
bring much-needed entertainment to
our residents - all delivered virtually.
Programs included music concerts,
dance classes, plus the chance to
have a special ‘Driveway Portrait’
taken. A professional photographer
visited hundreds of homes within the
community to take socially-distanced
portraits of Googong families to record
this time in their lives.
A LONG RELATIONSHIP SUPPORTING
THE COMMUNITY WITH THE BEDFORD
GROUP
The Bedford Group is an organisation that supports
people living with disability by providing employment
opportunities. Peet is proud to have been working with
the Bedford Group for 12 years across landscaping
projects in our communities in South Australia.
Beginning with a small team that undertook landscaping
of front gardens and verges, the Bedford Group now
have approximately 35 staff working on Peet projects
and tender for all Peet’s landscaping work.
Bedford Group have delivered a range of large-scale,
high quality landscape projects for Peet, including the
landscaping of seven large reserves at Lightsview, the
linear reserve at Bluestone Mount Barker and street
landscaping at Tonsley Village. Landscaping work on the
larger reserve at Lightsview involved pouring of concrete
walls and footpaths, installing irrigation systems,
installation of shelters and furniture, installation of rain
gardens, planting of trees, shrubs and groundcover,
along with laying of instant turf and mulch.
ANNUAL REPORT 2020 | PEET LIMITED
27
Corporate
CALENDAR FY2021
5 OCTOBER 2020
Interest payment date for Peet Bond holders (PPCHB)
16 OCTOBER 2020
Annual Report and Notice of 2020 AGM dispatched to shareholders
26 OCTOBER 2020
Record date for final FY20 dividend
19 NOVEMBER 2020
2020 Annual General Meeting
19 NOVEMBER 2020
Payment date of final FY20 dividend
7 DECEMBER 2020
Interest payment date for unlisted notes
16 DECEMBER 2020
Interest payment date for Peet Bond holders (PPCHA)
5 JANUARY 2021
Interest payment date for Peet Bond holders (PPCHB)
FEBRUARY 2021
Release of results for the half-year ending 31 December 2020
5 APRIL 2021
Interest payment date for Peet Bond holders (PPCHB)
7 JUNE 2021
Interest payment date for unlisted notes
7 JUNE 2021
Final interest payment date and maturity date for Peet Bond holders (PPCHA)
28
Image: Lakelands Estate, WAPEET LIMITED | ANNUAL REPORT 2020 29
ANNUAL REPORT 2020 | PEET LIMITED PEET LIMITED | ANNUAL REPORT 2020 FINANCIAL REPORT
30 JUNE 2020
CONTENTS
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Report
Directors’ Declaration
Independent Auditor’s Report to the Members of Peet Limited
32
60
61
62
102
103
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PEET LIMITED | ANNUAL REPORT 2020 This page has been intentionally left blank
31
ANNUAL REPORT 2020 | PEET LIMITED 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 2020 (‘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.
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. He is a
World Fellow Member of The Duke of Edinburgh’s International Award.
Brendan Gore, BComm, FCPA, FGIA, FCG (CS, CGP), 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’s strategy through its land bank expansion, diversification of its product offering 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.
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 large scale operations,
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.
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.
32
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 01. DIRECTORS (CONTINUED)
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 Finance and Audit
Committee and is a member of its Risk and Compliance Committee and of its People and Culture Committee.
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, where he chairs its Risk and
Sustainability Committee and is the Deputy Chair of its Finance and Audit Committee.
Mr Allen is a former Non-executive Director of Yowie Group Limited (resigned January 2018) and Brighte Capital Pty Limited. He
is also a former Alternate Director, Company Secretary and Public Officer of Australian Fresh Milk Holdings Pty Ltd.
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 a former director of Western Power.
Robert McKinnon, FCPA, FGIA, FCG (CS, CGP), MAICD
Lead 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.
Mr McKinnon is also Non-executive Chairman of M8 Sustainable Limited.
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.
33
ANNUAL REPORT 2020 | PEET 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.
As at 30 June 2020, the Group employed 215 people in offices throughout Australia and managed and marketed a land bank of
more than 47,300 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 after tax of $15.1 million and statutory loss3 after tax of $30.1 million
• Operating earnings per share of 3.1 cents and statutory loss per share of 6.2 cents
• FY20 dividends of 1.5 cents per share, fully franked
• Revenue4 of $196.3 million, with 1,794 lots settled
• Restructuring and divestment-related provisions of $45.2 million after tax
• EBITDA5 of $37.0 million (before restructuring and divestment-related provisions)
• 1,786 contracts on hand6 as at 30 June 2020
• Gearing7 of 28.8%
Financial commentary
The Peet Group achieved an operating profit2 after tax of $15.1 million and statutory loss3 after tax of $30.1 million for the year
ended 30 June 2020, which represent decreases of 68% and 163% respectively on FY19.
The operating result is on the back of lower settlements impacted by the lower contracts on hand as at 30 June 2019 and the
completion of projects in 30 June 2019 and into 30 June 2020. The onset of the COVID-19 pandemic towards the end of 3Q20,
together with Government restrictions and protocols and the Company’s own responses to protect the health and safety of its
employees and its balance sheet, also had a negative impact on the FY20 results.
In July 2020, the Group announced that with a view to resetting the focus of the business on key growth corridors around the
country, it will seek to divest non-core projects, including regional and sub-regional projects. This is expected to result in the
recycling of circa $75 million of capital over the next 18 to 24 months and simplify the Group’s operating structure. While it is
expected that these measures will result in annualised overhead and fixed cost savings of $5 - 7 million once fully implemented
in 2H21, it has also resulted in a restructuring and divestment-related provision of $45.2 million after tax in FY20.
The Group derived EBITDA5 of $37.0 million (before restructuring and divestment-related provisions) during FY20, compared to
$86.0 million in FY19, with an EBITDA5 margin of 19%, compared to the margin achieved in FY19 of 33%. This margin reduction
is attributable to the completion of high margin projects in ACT/NSW and Vic and the Group’s reduced development expenditure
on new stock in response to COVID-19.
The performance has resulted in an operating earnings per share of 3.1 cents (statutory loss per share of 6.2 cents) for FY20,
compared to 9.8 cents in FY19.
1
2
3
4
5
6
7
Comparative period is 30 June 2019, 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 / unrealised transactions outside the core ongoing business activities. In FY20, a restruc-
turing and divestment-related provision of $45.2 million after tax was excluded in calculating the operating profit.
Statutory profit / (loss) after tax means net profit / (loss) measured in accordance with Australian Accounting Standards, attributable to the owners of Peet Limited.
Includes statutory revenue of $188.2 million (FY19: $249.5 million) and share of net profits from associates and joint ventures of $8.1 million (FY19: $13.3 million)
EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
Includes equivalent lots.
Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets).
34
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 03. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
The Group has maintained its focus on prudent capital management. The Group entered 2H20 in a strong capital position, which
allowed it to proactively implement capital management initiatives in response to COVID-19. At 30 June 2020, the Group’s
gearing8 was 28.8% and within the Company’s target range of 20% to 30%.
COVID-19 responses
In response to COVID-19, the Group proactively implemented a range of measures to protect the safety of employees and other
stakeholders, as well as capital management initiatives to shore up liquidity and protect the balance sheet, including:
prioritising the safety and wellbeing of Peet’s employees, customers and residents;
• a reduction or deferral of non-essential variable operating expenditures and corporate overheads, including placing a freeze
on remuneration and implementing other cost saving measures;
• a voluntary 20% reduction in Directors’ fees and the fixed salaries of Leadership Team members from 1 May 2020 to
• 31 July 2020;
• a temporary 20% reduction in working hours across the balance of the Peet Team (with a pro-rata reduction in base pay)
from 1 May 2020 to 31 July 2020;
• the deferral of the commencement of new projects;
• minimising development capital expenditure to reflect management forecasts for COVID-19 sales rates pre-Government
stimulus; and
• a strong focus on managing the settlement risk of contracts on hand.
Operational commentary
The Group achieved 2,323 sales9 (with a gross value of $528.7 million) for the full year across its Funds Management,
Development and Joint Venture projects, representing an increase of 43% on the number of sales achieved in FY19.
1H20 sales showed a solid increase on the previous six months and sales activity continued to improve in the first two months
of CY2020. However, the impact of the COVID-19 pandemic and associated restrictions contributed to lower sales in April 2020
on the back of lower customer traffic and enquiry levels during the latter part of March 2020.
Enquiry levels and digital traffic recovered strongly in April 2020, with Peet’s sales offices generally fully operational in WA,
ACT/NSW, SA and Qld with the easing of Government restrictions. The introduction of Government stimulus (including the
Federal Government’s HomeBuilder grant and the WA State Government’s Building Bonus grant) resulted in a significant
increase in enquiries and sales across the Group’s portfolio in the latter half of the June 2020 quarter.
Enquiry levels increased by 75% during the quarter ended 30 June 2020, compared to the quarter ended 31 March 2020. Sales
increased 57% compared to the quarter ended 31 March 2020 and 25% compared to the quarter ended 31 December 2019.
The Group achieved 1,794 settlements9 for the full year across its Funds Management, Development and Joint Venture
projects, representing a decrease of 32% compared with FY19. This decrease was on the back of the lower contracts on hand
at 30 June 2019, the completion or substantial completion of a number projects in FY19 and the minimising of development
expenditure on new stock in response to COVID-19.
At 30 June 2020, there were 1,786 contracts on hand9, with a gross value of $427.7 million, compared with 1,257 contracts on
hand9 with a gross value of $335.5 million at 30 June in 2019. This represents an increase of 42% in contracts on hand9 and a
27% increase in contract value, providing a positive momentum into FY21.
8
9
Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets).
Includes equivalent lots.
35
ANNUAL REPORT 2020 | PEET LIMITED 03. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
Funds management projects
Key highlights
• 1,412 lots sold10 for a gross value of $310.0 million, compared with 909 lots sold10 ($193.8 million) in FY19.
• 924 lots settled10 for a gross value of $217.9 million, compared with 1,535 lots settled10 ($355.2 million) in FY19.
• 1,173 contracts on hand10 as at 30 June 2020 with a total value of $241.2 million, compared with 685 contracts on hand10
($149.0 million) as at 30 June 2019.
• EBITDA11 of $13.0 million compared with $24.4 million in FY19.
• EBITDA11 margin decreased to 53% from 71% in FY19.
While sales increased 55% during the year, the 40% reduction in settlements resulted in EBITDA11 reducing 47%.
The increase in sales was experienced across the country, but particularly in WA, which saw some level of pent up demand
bolstered by the introduction of Federal and State Government stimulus and also saw the release of the first stage of the
Brabham project.
As at 30 June 2020, approximately 61% of the Group’s land bank comprised Funds Management projects. This business
provides Peet with a capital-lite earnings base which contributed approximately 29% of the Group’s EBITDA11,12 (before
divestment and related provisions) for FY20.
Development projects
Key highlights
• 432 lots sold10 for a gross value of $118.2 million, compared with 306 lots sold10 ($67.9 million) in FY19.
• 434 lots settled10 for a gross value of $115.8 million, compared with 555 lots settled10 ($163.1 million) in FY19.
• 209 contracts on hand10 as at 30 June 2020 with a total value of $58.4 million, compared with 211 contracts on hand10
($56.0 million) as at 30 June 2019.
• EBITDA11 of $23.5 million (before divestment and related provisions) compared with $58.5 million in FY19.
• EBITDA11 margin of 18% (before divestment and related provisions) compared with 32% in FY19.
The 41% increase in sales from the Development business was driven by new projects released during the year in Qld and Vic.
With settlements down 22%, Development projects’ EBITDA11 contribution (before divestment and related provisions)
reduced 60%. This reduction is primarily due to the lower number of settlements achieved from Craigieburn (Vic) as its
first phase completed.
As at 30 June 2020 approximately 24% of the Group’s land bank comprised Development projects.
Joint Ventures
Key highlights
• 479 lots sold10 for a gross value of $100.5 million, compared with 414 lots sold10 ($98.0 million) in FY19.
• 436 lots settled10 for a gross value of $103.0 million, compared with 539 lots settled10 ($123.1 million) in FY19.
• 404 contracts on hand13 as at 30 June 2020 with a total value of $128.1 million, compared with 361 contracts on hand10
($130.5 million) as at 30 June 2019.
• EBITDA11 of $8.8 million (before divestment and related provisions) compared with $13.7 million in FY19.
• EBITDA11 margin of 22% (before divestment and related provisions) compared with 31% in FY19.
Sales increased 16% during the year on the back of increases from the Wellard (WA) and Googong (NSW) projects.
Settlements were 19% lower in FY20, compared to FY19, resulting in the EBITDA11 contribution (before divestment and related
provisions) reducing 36%.
Includes equivalent lots.
10
11 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.
12 Before inter-segment transfers and other unallocated items.
36
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 03. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
As at 30 June 2020 approximately 15% of the Group’s land bank comprised Joint Venture projects, with major projects located
in Qld, NSW, WA and SA.
Land portfolio metrics
Lot sales13
Lot settlements13
Contracts on hand as at 30 June13
Number
Value
CAPITAL MANAGEMENT
FY20
2,323
1,794
1,786
FY19
1,629
2,629
1,257
$427.7 million
$335.5 million
Change
43%
(32%)
42%
27%
The Group continues to apply a prudent focus on capital management and its gearing14 as at 30 June 2020 was 28.8%
and within its target range of 20% to 30%.
At 30 June 2020, the Group had net interest-bearing debt15 (including Peet Bonds) of $235.3 million, compared with
$211.6 million at 30 June 2019.
Peet enters FY21 with cash and debt facility headroom of $134.7 million as at 30 June 2020 and a weighted average debt
maturity of over two years. It has the capacity to accelerate delivery of product to meet the material increase in demand
following the introduction of Government stimulus.
During FY20, Peet Limited:
• extended its on-market share buy-back of up to 5% of its issued ordinary shares. As at 30 June 2020, 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; and
• had pre-emptive discussions with the Group’s syndicate of banks resulting in variations to its senior debt facility, which have
provided a waiver of the measurement of the Group’s debt covenants out to 30 June 2021, taking account of the Group’s
COVID-19 responses and the organisational restructure announced to the market in July 2020.
DIVIDENDS
Subsequent to year end, the Directors declared a final dividend for FY20 of 1.0 cent per share, fully franked. This brings the total
dividend for FY20 to 1.5 cents per share. This compares to the FY19 dividend of 5.0 cents per share, fully franked. The final FY20
dividend is to be paid on Thursday, 19 November 2020, with a record date of Monday, 26 October 2020.
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;
• expanding market reach by continuing to broaden its product offering in 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.
Includes equivalent lots
13
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 AASB10.
37
ANNUAL REPORT 2020 | PEET LIMITED 03. REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS (CONTINUED)
RISKS
The Group’s operating and financial performance is influenced by a number of risks impacting the property sector. These include
bank lending conditions, general economic conditions, government policy influencing a range of matters including population
growth (immigration policy), household income and consumer confidence, the employment market and land development
conditions and requirements, including in relation to infrastructure, environmental and climate-change management.
In respect to climate change, the Group’s focus is currently on understanding and mitigating climate change risks on
development approvals processes, reputational matters and reporting obligations.
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. This continues to include managing risks associated
with changing consumer preferences for products – size, location, product typology (house and land, low-rise apartments and
medium density townhouses).
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
FY21 is expected to remain challenging as the various economic and social consequences of COVID-19 continue to develop and
impact both the property industry and country more broadly.
Low interest rates, accommodating credit conditions and Government stimulus are positive for the residential sector. However,
there remain uncertainties around the impact of the roll-off of Government stimulus, including on the rate of unemployment and
the impact of COVID-19 on the Federal Government’s immigration policy. Accordingly, the Group continues to adopt a cautious
approach as it enters FY21.
04. EARNINGS PER SHARE
Basic and diluted (loss)/ earnings per share
2020
Cents
(6.19)
2019
Cents
9.79
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 2020. 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
Other than the final FY20 dividend (details of which are included below), 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.
38
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 06. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR (CONTINUED)
07. DIVIDENDS
In August 2019, the Directors declared a final dividend of 3.0 cents per share, fully franked, in respect of the year ended
30 June 2019. The dividend of $14.5 million was paid on Monday, 7 October 2019.
In February 2020, the Directors declared an interim dividend of 0.5 cents per share, fully franked, in respect to the year then
ending 30 June 2020. The dividend of $2.4 million was paid on Thursday, 9 April 2020.
Subsequent to year end, the Directors declared a final dividend for FY20 of 1.0 cent per share, fully franked. This brings the total
dividend for FY20 to 1.5 cents per share. This compares to the FY19 dividend of 5.0 cents per share, fully franked. The final FY20
dividend is to be paid on Thursday, 19 November 2020, with a record date of Monday, 26 October 2020.
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 FY20 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.
39
ANNUAL REPORT 2020 | PEET LIMITED 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
21
21
21
21
21
21
21
21
20
20
21
20
–
–
7
7
–
7
–
–
7
7
–
7
–
–
3
3
3
3
–
–
2
3
3
3
4
4
4
4
4
4
4
4
3
2
4
3
On some occasions, Board and Committee meetings may have been called or rescheduled on short notice which meant that some
Directors may not have been able to attend.
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 Ms V Krause and Mr A J Lennon will retire by rotation and offer themselves for re-election. Your Board
of Directors recommend the re-election of Ms V Krause and Mr A J Lennon.
40
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 12. REMUNERATION
Dear Shareholder,
Peet is pleased to present its Remuneration Report for the year ended 30 June 2020. 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”). It focuses on the
remuneration decisions made by the Board and the pay outcomes that resulted.
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.
Peet achieved an operating net profit after tax of $15.1 million and a statutory loss after tax of $30.1 million for the 2020 financial year, compared to an
operating and statutory net profit after tax of $47.5 million in the previous year.
While the statutory financial statements show total revenue of $196.3 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of
($24.1) 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 $196.3 million and EBITDA of ($24.1) million, the
properties that Peet is also responsible for within its Fund Management and Joint Arrangement businesses generated revenues of $269.6 million and
EBITDA of $36.2 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 during the year ended 30 June 2020 included:
• The MD’s base pay for the year ended 30 June 2020 was the same as for the previous year.
• There were no increases in the base pay of the other KMP, including NEDs, during the year ended 30 June 2020.
• Short–term incentives will not be paid to the KMP in respect of the year ended 30 June 2020 in response to Peet’s financial performance during the
year.
• During the year, long-term incentive performance conditions were tested as at 30 June 2019 in respect to the performance over the three years
ended on that date resulting in the vesting of performance rights. The vesting was met by way of ordinary shares acquired on market during the 2020
financial year.
• In response to COVID-19:
-
-
all members of the Leadership Team, as well as other members of senior management, took a voluntary 20% reduction of fixed salaries for the
last two months of FY20. This was extended to 31 July 2020; and
all NEDs took a voluntary 20% reduction of Directors’ fees for the last two months of FY20. This was extended to 31 July 2020.
Peet also takes the opportunity to confirm that the MD’s base pay for the year ending 30 June 2021 will be the same as 2020, 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 FY21 base
pays of all other KMP, including NEDs, will remain the same as their FY20 base pays.
We encourage our shareholders to use the cash value of remuneration realised table on page 46 to assess the remuneration outcomes for KMP in the
year ended 30 June 2020 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 2020 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
41
ANNUAL REPORT 2020 | PEET LIMITED 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 2020. 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.
42
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 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 2020 financial year and will continue to be used for
the 2021 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.
43
ANNUAL REPORT 2020 | PEET LIMITED 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 2021 financial year will be the same as the 2020 financial year.
Executive pay
The Company’s pay and reward framework for Executives 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 2020 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 2020 and 2019 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.
44
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
For the year ended 30 June 2020, the MD and other Executives were assessed as follows against the KPIs:
Weighting
% Achieved
% Forfeited
MD
Executives
MD
Executives
Category
Financial
Strategic
Stakeholder
70.0%
65.0% to 80%
10.0% 7.5% to 35.0%
7.5%
0.0% to 2.5%
People, processes and culture
7.5% 0.0% to 12.5%
Health, safety and environment
5.0% 0.0% to 12.5%
100.0%
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
MD
100%
100%
100%
100%
100%
Executives
100%
100%
100%
100%
100%
For the year ended 30 June 2019, 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 2020 and 2019 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’.
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 47. 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.
45
ANNUAL REPORT 2020 | PEET LIMITED 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
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 Gore5
Total
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
224,129
231,857
138,395
143,167
89,841
92,939
111,911
115,770
147,841
152,939
885,054
916,769
1,597,171
1,653,441
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
740,467
1,040,125
–
–
740,467
1,040,125
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
D Scafetta
B C Fullarton
Total
2020
2019
2020
2019
2020
2019
2020
2019
443,833
460,000
317,331
329,469
400,333
415,000
1,161,497
1,204,469
–
205,155
–
138,250
–
165,000
–
508,405
–
–
226,705
194,197
–
244,135
226,705
438,332
–
–
–
–
–
–
–
–
–
–
10,000
10,000
10,000
10,000
–
–
–
–
–
–
–
–
21,292
24,462
13,148
13,601
8,535
8,829
10,632
10,998
8,535
8,829
21,003
20,531
83,145
87,250
25,000
25,000
21,003
20,531
25,000
25,000
71,003
70,531
245,421
256,319
151,543
156,768
98,376
101,768
122,543
126,768
156,376
161,768
916,057
2,727,892
1,690,316
3,531,283
468,833
690,155
565,039
682,447
425,333
849,135
1,459,205
2,221,737
1
2
3
4
5
Cash salary (including accrued annual leave) 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 2019 and 2020. The Company purchased ordinary shares in the Company on-market on behalf of KMP.
Other includes termination benefits, long service payments, motor vehicle costs, car-parking and other benefits.
During the year, B D Gore cashed out $327,010 of his accrued annual leave.
46
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 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
Cash salary
and fees1 Bonus2
Other3 Superannuation
Share-based
payments
Shares/
Options /
Performance
Rights4
Termination
benefits
$
$
$
$
$
$
DIRECTORS
AW Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore5
Total
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
224,129
231,857
138,395
143,167
89,841
92,939
111,911
115,770
147,841
152,939
885,054
–
–
–
–
–
–
–
–
–
–
–
916,769
740,467
1,597,171
–
1,653,441
740,467
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
D Scafetta
B C Fullarton
Total
2020
2019
2020
2019
2020
2019
2020
443,833
–
460,000
205,155
317,331
–
329,469
138,250
400,333
–
415,000
165,000
1,161,497
–
2019
1,204,469
508,405
–
–
–
–
–
–
–
–
–
–
10,000
10,000
10,000
10,000
–
–
–
–
–
–
–
–
21,292
24,462
13,148
13,601
8,535
8,829
10,632
10,998
8,535
8,829
21,003
20,531
83,145
87,250
25,000
25,000
21,003
20,531
25,000
25,000
71,003
70,531
–
–
–
–
–
–
–
–
–
–
518,760
229,121
518,760
229,121
160,006
77,273
96,224
46,470
120,967
58,419
377,197
182,162
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
245,421
256,319
151,543
156,768
98,376
101,768
122,543
126,768
156,376
161,768
1,434,817
1,916,888
2,209,076
2,720,279
628,839
767,428
434,558
534,720
546,300
663,419
1,609,697
1,965,567
1
2
3
4
5
Cash salary (including accrued annual leave) and fees include 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.
Other includes motor vehicle costs, car-parking and other benefits.
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.
During the year, B D Gore cashed out $327,010 of his accrued annual leave.
47
ANNUAL REPORT 2020 | PEET LIMITED 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
DIRECTORS
A W Lennon
T J Allen
V Krause
R J McKinnon
A J Lennon
B D Gore
2020
100%
100%
100%
100%
100%
64%
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
D Scafetta
B C Fullarton
75%
78%
78%
2019
100%
100%
100%
100%
100%
49%
63%
65%
66%
2020
2019
20201
20191
–
–
–
–
–
0%
0%
0%
0%
–
–
–
–
–
39%
27%
26%
25%
–
–
–
–
–
36%
25%
22%
22%
–
–
–
–
–
12%
10%
9%
9%
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.
48
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020
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.
49
ANNUAL REPORT 2020 | PEET LIMITED 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
Notes
date of report
exercisable at
Vested and
of report
Balance at date
2
0
0
0
,
0
0
2
1
,
0
0
0
,
0
0
2
1
,
3
4
3
5
3
5
3
5
3
4
3
5
3
5
3
5
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1
1
,
5
6
0
1
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–
–
7
4
3
4
7
8
,
8
8
2
0
7
8
,
7
9
7
7
9
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3
0
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6
2
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,
2
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0
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5
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0
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–
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2
9
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3
6
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5
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6
3
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,
9
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0
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5
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1
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1
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,
6
9
9
8
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1
1
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3
9
9
2
,
1
9
6
,
7
Lapsed/ forfeited
–
–
–
–
–
–
–
–
–
–
–
–
Exercised
–
–
–
–
–
–
–
–
–
)
4
6
8
,
8
9
1
(
Granted
–
–
–
–
–
–
–
–
)
4
6
8
,
8
9
1
(
6
8
8
,
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7
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,
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)
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6
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,
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(
6
8
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,
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5
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,
1
7
7
2
,
5
3
3
,
6
9
8
0
,
7
5
6
–
7
9
7
,
7
9
8
–
1
4
9
.
0
$
0
0
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v
o
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1 July 19
Balance as at
Vesting conditions
PR at Grant Date
Value per option/
Exercise
Expiry
Service Period
Performance/
Date of Grant
0
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50
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020
13. REMUNERATION REPORT (AUDITED) (CONTINUED)
NOTE 1
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 23 November 2016,
29 November 2017, 21 November 2018 and 20 November 2019, being the dates of Peet Limited’s, 2016, 2017, 2018 and
2019 AGMs, respectively.
NOTE 2
These options are convertible to ordinary shares on a 1:1 basis at the exercise price after the fourth anniversary of the
grant date.
The exercise condition in respect of these options is that Mr Gore remains employed as Managing Director for a period of four
years. Although the service period requirement has been met, the options have not been exercised.
NOTE 3
These PRs are convertible to ordinary shares on a 1:1 basis, with 40% subject to the Funds Under Management (FUM) growth
vesting condition.
FUM growth is measured as the total of the following during the performance period:
• the purchase price (ex GST) of land acquired by a Peet syndicate or Joint Venture; or
• the market value (ex GST) of land for which Peet has been appointed development manager at the time of its appointment;
or
• the selling price (ex GST) of land sold by Peet, a Syndicate, a Joint Venture or Peet-managed project to a third party and Peet
is appointed the development manager (and where applicable, to manage the leasing) of a commercial, industrial, retail or
residential built-form project on that property; or
• in all other property funds management-related transactions, as determined by the Board of Directors.
The aggregate of the FUM growth during the 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 $198.1 million for the three-year performance period ended 30 June 2019. Accordingly, the
performance condition was fully met and on 27 August 2019 the Directors resolved that 100% of the FY17 PRs thereto vested.
The FY18, FY19 and FY20 PRs remain unvested.
51
ANNUAL REPORT 2020 | PEET LIMITED 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 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 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 Group achieved ROCE of 14.2% against the target of 13.0% for the three-year performance period ended 30 June 2019.
Accordingly, the ROCE performance condition attached to the FY17 PRs was fully met and on 27 August 2019 the Directors
resolved that 100% of the FY17 PRs relating thereto vested.
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”), 1 July 2018 to 30 June 2021 (“FY19
Performance Period”) and 1 July 2019 to 30 June 2022 (“FY20 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, FY19 Performance
Period and the FY20 Performance Period, respectively.
52
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
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, FY19 and FY20 PRs remain unvested.
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
–
–
–
–
–
–
–
–
–
–
4,009,749
897,797
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
D Scafetta
B C Fullarton
1,141,435
524,598
659,495
278,736
167,625
210,728
–
–
–
–
–
–
–
(198,864)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,907,546
2,265,114
1,420,171
599,785
493,359
870,223
–
250,000
1 Includes performance rights for which performance conditions were not met for the performance period.
During the year ended 30 June 2020, 1,844,660 PRs (2019: 1,501,151) had vested and 198,864 (2019: 1,232,048) were exercised
by KMP at $ Nil exercise price. In order to settle the PRs exercised during year ended 30 June 2020, the Company purchased
ordinary shares in the Company on-market on behalf of KMP.
Since 30 June 2020, 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.
53
ANNUAL REPORT 2020 | PEET LIMITED 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
E. ADDITIONAL INFORMATION
Performance of Peet Limited
The overall level of executive compensation takes into account the performance of the Group. STI is generally based on an
assessment of performance over a 12-month period, while LTI is generally assessed over a three-year period. The high-level
performance of the Group over the last five years is compared below:
Net profit / (loss) after tax (NPAT)
$’000
NPAT growth
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
Growth%
cents per share
Growth%
cents per share
Growth%
cents per share
$
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
2020
(30,056)
(163.2%)
15,060
(68.3%)
(6.19)
(2.3%)
(163.2%)
9.79
3.10
(2.3%)
(68.3%)
5.00
1.12
1.50
0.97
(15.1%)
(13.4%)
Growth%
(18.3%)
27.7%
Details of remuneration: cash bonuses, options and PRs
For each cash bonus, grant of options and/or PRs included in the tables within the remuneration report, the percentage of
the available bonus or grant that was paid, or that vested and the percentage that was forfeited because the person did not
meet the service and performance criteria, is set out below. Generally, no part of the bonuses forfeited is payable in future
years. Subject to the rules of the PESOP and PPRP no options or PRs will vest if the conditions are not satisfied, subject to the
discretion of the Board, hence the minimum value of the option and PRs yet to vest is nil. The maximum value of the options
and PRs yet to vest has been determined as the amount of the grant date fair value of the options and PRs that is yet to
be expensed.
54
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
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
–
–
–
–
–
–
–
–
–
–
0%
100%
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
0%
100%
D Scafetta
0%
100%
B C Fullarton
0%
100%
–
–
–
–
–
2020
2019
2018
2017
2020
2019
2018
2017
2020
2019
2018
2017
2020
2019
2018
2017
–
–
–
–
–
–
–
–
100%
–
–
–
100%
–
–
–
100%
–
–
–
100%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2022
2021
2020
2019
2022
2021
2020
2019
2022
2021
2020
2019
2022
2021
2020
2019
–
–
–
–
–
655,597
654,382
696,680
–
203,541
203,163
211,572
–
227,597
183,301
127,234
–
153,880
153,594
159,952
–
1
2
Includes performance rights for which performance conditions were met for the performance period and confirmed by the Directors after balance date.
Includes performance rights for which performance conditions were not met for the performance period.
Further details relating to options and/or PRs, either granted, exercised or lapsed during the year, are set out below.
The amounts below are calculated in accordance with Australian Accounting Standards. The KMPs exercised 198,864 PRs over
shares in the Company and received shares in the Company during the 2020 financial year. Please refer to previous pages of the
Remuneration Report for commentary on vesting conditions met during the performance period ended 30 June 2020.
55
ANNUAL REPORT 2020 | PEET LIMITED 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
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
36%
25%
22%
22%
937,300
291,000
175,000
220,000
–
–
168,836
–
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 2019 annual general meeting
The instructions given to validly appointed proxies in respect of the resolution pertaining to the Company’s 2019 Remuneration
Report were as follows:
For
252,420,836
98.4%
Against
3,846,434
1.50%
Proxy’s discretion
312,026
0.1%
Abstain
1,611,622
The motion was carried as an ordinary resolution on show of hands.
56
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 13. REMUNERATION REPORT (AUDITED) (CONTINUED)
Interests in the shares and bonds of the Company
Shares
Bonds
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
Other
changes
during the year
Balance
at the end
of the year
DIRECTORS
A W Lennon
97,314,685
T J Allen
V Krause
R J McKinnon
B D Gore
A J Lennon
92,054
–
50,000
6,103,817
1,331,344
OTHER KEY MANAGEMENT PERSONNEL
P J Dumas
D Scafetta
B C Fullarton
1,087,882
1,279,989
603,850
–
–
–
–
–
–
–
–
–
–
–
(797,138)
–
–
198,864
(458,853)
–
–
97,314,685
92,054
–
50,000
5,306,679
1,331,344
1,087,882
1,020,000
603,850
4,875
500
1,000
500
–
500
–
–
–
Since 30 June 2020, no PRs were vested. No other options and PRs have been issued.
End of Remuneration report (audited)
–
–
–
–
–
–
–
–
–
4,875
500
1,000
500
–
500
–
–
–
57
ANNUAL REPORT 2020 | PEET LIMITED 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 60.
On 19 February 2019, the Board granted approval under section 324DAA of the Corporations Act 2001 for Mr Geoff Lotter
to continue as lead auditor, to play a significant role in the audit of the company for two additional successive financial
years, being the financial year ending 30 June 2020 and 30 June 2021. The approval was granted in accordance with a
recommendation from the Audit and Risk Management Committee which was satisfied the approval:
• is consistent with maintaining the quality of the audit provided to the company; and
• would not give rise to a conflict of interest situation (as defined in section 324CD of the Corporations Act 2001).
Reasons supporting this decision include:
• the benefits associated with the continued retention of knowledge regarding key audit matters and significant
judgements, in light of the changes in residential property markets and bank lending policies;
• the Audit and Risk Management Committee has been satisfied with the quality of Ernst & Young and Mr Lotter’s
work as auditor; and
• the Audit and Risk Management Committee is satisfied with the introduction of a new engagement quality review
partner on the completion of the 30 June 2019 audit.
The company maintains, and will continue to maintain, robust auditor independence policies and controls to ensure the
independence of the auditor is maintained. A copy of the Board resolution granting approval was lodged with ASIC in
accordance with section 324DAC of the Corporations Act 2001.
58
DIRECTORS’ REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 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
26 August 2020
PLACEHOLDER FOR AUDITORS
INDEPENDENCE CONFIRMATION
59
ANNUAL REPORT 2020 | PEET LIMITED AUDITOR’S INDEPENDENCE DECLARATION
6060
PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020 CORPRATE GOVERNANCE STATEMENT
A copy of the Group’s corporate governance policies and
practices in place during the financial year ended 30 June
2020 is available at the following link:
www.peet.com.au/-/media/peet/documents/corporate/
corporate/corporate-governance/2020
Unless otherwise stated, these are consistent with the 3rd
edition of the ASX Corporate Governance Council’s Principles
and Recommendations (released March 2014).
61
ANNUAL REPORT 2020 | PEET LIMITED 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
64
65
66
67
68
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 26 August 2020.
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
62
FINANICAL REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 This page has been intentionally left blank
63
ANNUAL REPORT 2020 | PEET LIMITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Revenue
Expenses
Finance costs (net of capitalised borrowing costs)
Share of net profit of associates and joint ventures
(Loss) / profit before income tax
Income tax benefit / (expense)
(Loss) / profit after income tax
Attributable to:
Owners of Peet Limited
Non-controlling interests
Other comprehensive income
Items that may be reclassified to profit or loss:
Gain / (loss) 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
2020
$’000
188,282
(230,253)
(7,428)
8,060
(41,339)
10,648
(30,691)
(30,056)
(635)
(30,691)
2,636
(794)
1,842
(28,849)
(28,214)
(635)
(28,849)
2019
$’000
249,545
(190,934)
(8,538)
13,329
63,402
(16,052)
47,350
47,549
(199)
47,350
(929)
279
(650)
46,700
46,899
(199)
46,700
Cents
9.79
(Loss) / earnings per share - attributable to the ordinary equity holders of the Company
Basic and diluted (loss) / earnings per share
Notes
7
Cents
(6.19)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
64
FINANICAL REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2020
Current assets
Cash and cash equivalents
Receivables
Contract assets
Inventories
Total current assets
Non-current assets
Receivables
Contract assets
Inventories
Investments accounted for using the equity method
Property, plant and equipment
Right-of-use assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Payables
Land vendor liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
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
12
9
10
2
13
14
17
2,17
17
15
17
2,17
17
8
15
18
18
2020
$’000
46,838
36,943
8,536
87,087
179,404
69,575
4,336
391,372
232,061
4,157
5,188
4,727
711,416
890,820
33,054
6,350
118,275
1,607
–
687
14,628
174,601
163,879
5,520
4,407
15,321
12,254
201,381
375,982
514,838
378,916
(2,557)
121,750
498,109
16,729
514,838
2019
$’000
33,606
18,999
6,234
105,750
164,589
95,970
4,037
412,919
233,668
5,237
–
5,704
757,535
922,124
38,746
6,350
5,083
–
221
8,915
21,449
80,764
240,103
–
5,310
24,213
11,783
281,409
362,173
559,951
378,916
(5,051)
168,722
542,587
17,364
559,951
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
65
ANNUAL REPORT 2020 | PEET LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Contributed
equity
$’000
385,955
Notes
–
–
–
–
Reserves
$’000
3,397
–
(6,343)
(650)
Retained
profits
$’000
145,539
47,549
–
–
Total
$’000
534,891
47,549
(6,343)
(650)
Non-controlling
interest
Total equity
$’000
11,220
(199)
6,343
–
$’000
546,111
47,350
–
(650)
(6,993)
47,549
40,556
6,144
46,700
Balance at 1 July 2018
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
18
25
19
(7,039)
–
–
–
–
(2,085)
630
–
Balance at 30 June 2019
378,916
(5,051)
Balance at 1 July 2019
378,916
(5,051)
Loss for the year
Other comprehensive income
Total comprehensive
income for the year
Vesting of performance rights
Share-based payments
Dividends paid
18
25
19
–
–
–
–
–
–
–
1,842
(647)
1,299
–
Balance at 30 June 2020
378,916
(2,557)
–
–
–
(24,366)
168,722
168,722
(30,056)
–
(7,039)
(2,085)
630
(24,366)
542,587
542,587
(30,056)
1,842
–
–
–
–
17,364
17,364
(635)
–
(7,039)
(2,085)
630
(24,366)
559,951
559,951
(30,691)
1,842
1,842
(30,056)
(28,214)
(635)
(28,849)
–
–
(16,916)
121,750
(647)
1,299
(16,916)
498,109
–
–
–
16,729
(647)
1,299
(16,916)
514,838
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
66
FINANICAL REPORTYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Notes
2020
$’000
2019
$’000
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 from operating activities
20
Cash flows from investing activities
Proceeds / (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 inflow / (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)
Payment of principle portion of lease liabilities
Share buyback (including transaction costs)
Net cash inflow / (outflow) from financing activities
Net increase / (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
191,596
(167,002)
(11,340)
(21,839)
7,962
39
(7,266)
(7,850)
42
–
1,705
(9,180)
11,016
3,583
(16,916)
(26,275)
62,120
–
(1,430)
–
17,499
13,232
33,606
46,838
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
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
67
ANNUAL REPORT 2020 | PEET LIMITED CONTENTS
BASIS OF REPORTING
1.
Reporting entity
2.
3
Basis of preparation
How to read the annual report
PERFORMANCE FOR THE YEAR
4.
Segment information
5.
6.
7.
8.
Revenue
Expenses
(Loss) / earnings per share
Taxes
OPERATING ASSETS AND LIABILITIES
9.
Inventories
10.
Investments accounted for using the equity method
11. Receivables
12. Contract assets
13. Payables
14. Land vendor liabilities
15. Provisions
16.
Interests in joint operations
CAPITAL MANAGEMENT
17. Borrowings, lease liabilities and derivative financial instruments
18. Contributed equity and reserves
19. Dividends
20.
Reconciliation of (loss) / profit after income tax to net cash
outflow 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
69
69
69
72
73
73
75
76
76
77
80
80
80
82
83
83
83
84
85
86
86
89
91
91
92
93
93
93
93
96
98
98
6868
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020 This page has been intentionally left blank
6969
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED 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
Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board and the
Corporations Act 2001;
• 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 financial 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 2020. 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.
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
unsecured
long-term receivables, the Group does not
recognise further losses, unless it has incurred obligations or
made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its
associates are eliminated to the extent of the Group’s interest
in the associates. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the
asset transferred.
7070
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020 BASIS OF REPORTING (CONTINUED)
c. Investments in joint arrangements
e. Changes in accounting policies
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.
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.
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.
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 2019, except for changes arising from
the adoption of new and amended accounting standards and
interpretations effective as at 1 July 2019. The Group has early
adopted AASB 2019-3 Amendments to Australian Accounting
Standards – Interest Rate Benchmark Reform which has
not had a material impact on adoption. Other than that, the
Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
The Group applies, for the first time, AASB 16 Leases (“AASB
16”). The nature and effect of these changes are disclosed
below. Several other amendments and interpretations apply
for the first time on 1 July 2019, but do not have a material
impact on the Group.
AASB 16 Leases
AASB 16 and related interpretations replaces AASB 117
Leases (“AASB 117”) for reporting periods beginning on or
after 1 January 2019. The standard sets out the principles for
the recognition, measurement, presentation and disclosure
of leases and requires lessees to account for all leases
under a single on-balance sheet model. Under AASB 16,
lessees are required to recognise a right-of-use asset and the
related lease liability at commencement of the lease, with
subsequent recognition of depreciation for the right-of-use
asset and interest expense in respect of the lease liability.
Lease payments on short term leases and low value leases are
recognised on a straight-line basis.
The Group adopted AASB 16 as of 1 July 2019 using the
modified retrospective approach. Under this approach, the
Group has not restated comparative
information which
continues to be reported under AASB 117. Lease liabilities
and right-of-use assets arising from the new leasing rules are
therefore recognised in the opening balance sheet on 1 July
2019.
(a) The Group’s leasing activities and how they are
accounted for
The Group leases office spaces across Australia, with lease
conditions individually negotiated. Rental periods are fixed for
up to ten years with renewal options. Previously, these office
leases were classified as operating leases under AASB 117,
and the full rental charges were recognised in profit or loss
on a straight-line basis over the period of the lease (net of any
lease incentive amortisation).
7171
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED BASIS OF REPORTING (CONTINUED)
On adoption of AASB 16, the Group recognised a lease liability
and a right-of-use asset for each contract that had a remaining
lease term of more than 12 months on the date of initial
application of 1 July 2019. Under the modified retrospective
approach, the lease liabilities were measured at the present
value of the remaining lease payments, discounted using
the Group’s incremental borrowing rate as of 1 July 2019,
which was 6.75%. The associated right-of-use assets were
measured at an amount equal to the lease liability adjusted
by any residual lease incentive liability balance immediately
before the application date, as permitted under the specific
transitional provisions in the standard.
Subsequently, the interest on the lease liability is recognised
in profit or loss over the remaining lease term. The associated
right-of-use assets are depreciated over the remaining lease
term on a straight-line basis.
(b) Impact of adopting AASB16
The impact to balance sheet line items as at 1 July 2019
(increase/(decrease)) and 30 June 2020 is shown below:
Assets
Right-of-use assets (office space)
Total Assets
Liabilities
Payables
Lease liability (current)
Lease liability (non-current)
Total Liabilities
1 July
2019
($’000)
30 June
2020
($’000)
6,529
6,529
5,188
5,188
(2,028)
1,430
7,127
6,529
-
1,607
5,520
7,127
(c) Judgement in determining the lease term
AASB 16 defines lease term to be the non-cancellable lease
period of the lease, together with optional extension periods
where the lessee is reasonably certain to extend, or optional
termination periods if the lessee is reasonably certain not to
exercise the option. As the Group’s current office leases are
from four to six years, the Group is not reasonably certain if the
extensions will occur. Therefore, the Group has not included
the optional extension periods of all leases in measuring lease
liabilities and right-of-use assets.
(d) Practical expedients applied
In applying AASB 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
• the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics,
• recognising the lease payments associated with
short-term leases (leases with a remaining lease term of
12 months or less as at 1 July 2019) and low value leases
as an expense on a straight-line basis over the lease term,
and
• relying on the assessment made previously under AASB
117 whether a contract is, or contains, a lease for
contracts entered into before the transition date without
reassessing at the date of the initial application.
f. Impact of the COVID-19 pandemic on
the significant accounting judgements,
estimates and assumptions.
The COVID-19 outbreak was declared a pandemic by the World
Health Organization in March 2020. The outbreak and the response
of Governments in dealing with the pandemic is interfering with
general activity levels within the community, the economy and
the operations of the Group. The scale and duration of these
developments remain uncertain as at the date of this report.
The Group has considered the potential impact of the COVID-19
pandemic in the significant accounting judgements, estimates
and assumptions. However, as these are subject to increased
uncertainty the actual outcomes may differ from the estimates.
The Group has managed and continues to actively manage the
risks arising from COVID-19. This includes a financial response
plan incorporating:
• the deferral of the commencement of new projects;
• minimising development expenditure to reflect
management forecasts for COVID-19 sales rates
pre-Government stimulus;
• a strong focus on managing the settlement risk of
contracts on hand; and
• negotiating variations to the Group’s senior debt facility
which have resulted in a waiver of the measurement
of the Group’s debt covenants out to 30 June 2021.
7272
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020 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
• Other notes
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:
Where an accounting policy is specific to one note, the policy
is described in the note to which it relates.
Funds management
Key estimates are described in the following notes:
• Note 5 - constraints on selling fees and estimates on
percentage completion
• Note 8 - deferred tax assets
• Note 9 - net realisable value
• Note 11 - receivables
• Note 21 - fair value estimation
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 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.
PERFORMANCE FOR THE YEAR
This section focuses on the results and performance
of the Group.
4. SEGMENT INFORMATION
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.
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.
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.
Joint arrangements
Joint arrangements are entered
into with government,
statutory authorities and private landowners. The form of these
arrangements can vary from project to project but generally
involves Peet undertaking the development of 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.
Certain property syndicates are consolidated where the Group is
considered to have control. 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.
7373
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED 4. SEGMENT INFORMATION (CONTINUED)
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7474
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020
5. REVENUE
Project management
2020
$’000
2019
$’000
Revenue from contracts with customers
sales of land and built form
151,506
214,032
-
-
project management and
selling services
Other revenue
33,245
33,789
3,531
1,724
188,282
249,545
Recognition and measurement
The main streams of revenue recognised by the Group
relate to the sale of land and built form, 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.
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.
Selling services
This 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 of the service. 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,
on a portfolio basis, is used to determine an appropriate
constraint for revenue recognised against selling fees.
The potential impact of the COVID-19 pandemic has been
considered in the analysis.
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:
2020
$’000
2019
$’000
Revenue from related parties1
Associates
Project management and selling services
19,843
23,630
Syndicate administration services
1,441
1,505
Joint arrangements
Project management and selling services
3,815
3,738
25,099
28,873
1
Refer to note 3 for information on related party transactions.
7575
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED 6. EXPENSES
Related party expenses
2020
$’000
2019
$’000
2020
$’000
2019
$’000
(Loss) / profit before income tax includes
the following specific expenses:
KMP remuneration1
Short-term employee benefits
2,769
4,117
Land and development costs
94,707
110,268
Share-based payments
Post-employment benefits
154
896
158
411
3,819
4,686
Amortised interest and finance expense
6,486
11,711
Total land and development cost
101,193
121,979
Divestment and related provisions1
61,027
Depreciation2
- Right-of-use assets
- Property, plant and equipment
Amortisation
Total depreciation and amortisation
1,341
933
1,096
3,370
–
–
1,233
1,102
2,335
Employee benefits expense3
30,865
31,459
Project management, selling and other
operating costs
Other expenses
Total other expenses
Total expenses
16,551
17,247
16,763
18,398
64,663
66,620
230,253
190,934
Finance costs
Interest and finance charges
- Bank borrowings
- Lease liabilities
Hedging losses reclassified to profit or
loss
Interest on corporate bonds
Amount capitalised
5,951
10,151
534
2,424
–
–
16,219
12,609
(17,700)
(14,222)
7,428
8,538
1
2
3
This amount includes provisions of write-downs to a number of divesting projects (refer to
note 9 for the inventory component) and provisions of related costs.
Refer to note 27 (b), (c) and (d) for accounting policies.
Refer to note 27 (e) for accounting policies.
7676
1
Refer to note 3 for information about related party transactions.
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).
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. (LOSS) / EARNINGS PER SHARE
(Loss) / 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 (loss) /
earnings per share (cents)
2020
2019
(30,056)
47,549
485,658,321 485,658,321
(6.19)
9.79
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 2020. These PRs are contingently
issuable shares and accordingly not included in diluted
earnings per share.
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020
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
2020
$’000
2019
$’000
2,996
18,165
(3,958)
3,957
(962)
22,122
(13,717)
4,031
(2,188)
(3,882)
(9,686)
(6,070)
(10,648)
16,052
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
(2,313)
(7,373)
(4,627)
(1,443)
(9,686 )
(6,070)
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
(Loss) / profit before income tax
Tax at Australian tax rate of 30%
(41,339)
(12,402)
63,402
19,021
Tax effect of amounts which are not
assessable or deductible:
Share of net profit of associates
Employee benefits
Franking credits
Deferred tax assets not recognised
Sundry items
452
195
(384)
1,237
254
(1,035)
(437)
(2,024)
178
349
(10,648)
16,052
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.
7777
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED
8. TAXES (CONTINUED)
b. Deferred tax assets
Inventory
Cash flow
hedges
Receivables Tax losses
At 1 July 2018
Effect of adoption of new accounting
standards
$’000
3,547
–
Balance at 1 July 2018 (restated)
3,547
Credited/(charged):
- to profit or loss
- to other comprehensive income
- directly to equity
375
–
–
$’000
503
–
503
877
279
–
Property,
plant and
equipment
(including
leases)
$’000
1,935
Other
$’000
4,613
Total
$’000
12,825
–
–
2,285
$’000
–
2,285
$’000
2,227
–
2,285
2,227
1,935
4,613
15,110
7,053
(1,710)
28
(1,996)
–
–
–
–
–
–
–
(3)
4,627
279
(3)
Total deferred tax assets
3,922
1,659
9,338
517
1,963
2,614
20,013
3,922
1,659
9,338
517
1,963
2,614
20,013
(20,013)
–
(195)
–
3,727
457
(794)
1,322
2,732
–
546
–
12,070
1,063
3,048
1,085
(2,312)
–
–
302
2,313
(794)
21,532
(21,532)
–
Set off against deferred tax liabilities
pursuant to set off provisions
At 30 June 2019
At 1 July 2019
Credited/(charged):
- to profit or loss
- to other comprehensive income
Total deferred tax assets
Set off against deferred tax liabilities
pursuant to set off provisions
At 30 June 2020
7878
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020
8. TAXES (CONTINUED)
c. Deferred tax liabilities
Movements
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
At 1 July 2019
Charged/(credited):
- to profit or loss
Total deferred tax liabilities
Set off against deferred tax liabilities
pursuant to set off provisions
At 30 June 2020
Finance
charges
$’000
25,612
Accrued
income
$’000
7,450
(3,689)
21,923
(4,909)
2,541
Share of joint
arrangements
Inventory
$’000
9,337
5,481
14,818
$’000
3,115
1,674
4,789
Other
$’000
155
-
155
Total
$’000
45,669
(1,443)
44,226
(20,013)
24,213
21,923
2,541
14,818
4,789
155
44,226
3,902
25,825
1,648
4,189
(13,355)
1,463
432
5,221
-
155
(7,373)
36,853
(21,532)
15,321
7979
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED 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
9. INVENTORIES
Cost of acquisition
2020
$’000
2019
$’000
287,301
291,335
Capitalised development costs
159,250
150,004
Capitalised finance costs
Total inventory at cost
Provision for write-downs to net
realisable value 1
88,375
77,330
534,926
518,669
(56,467)
–
Total inventory
478,459
518,669
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.
The potential impact of the COVID-19 pandemic has been
considered in assessing NRV.
Current
Non-current
Total inventory
87,087
105,750
391,372
412,919
478,459
518,669
10. INVESTMENTS ACCOUNTED FOR
USING THE EQUITY METHOD
Investments in associates and joint ventures are accounted for
using the equity method of accounting.
1
The write-downs are from several non-core projects that are to be divested. The estimated
net realisable values used to calculate the write-down provisions are based on the latest
valuations and management’s assessment of the market for each project.
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.
a. Movements in carrying amounts of
investments in associates and joint ventures
2020
$’000
2019
$’000
Carrying amount at 1 July
233,668
222,820
Acquisitions/additional investments
-
11,278
Dividends
Capital returns
Share of profit after income tax
(7,962)
(1,705)
8,060
(12,280)
(1,479)
13,329
Carrying amount at 30 June
232,061
233,668
The Group assesses, at each balance date, the carrying value
of investments in associates and joint ventures to ensure the
assets are not impaired.
8080
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020 10. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
b. Investments in associates and joint ventures (JVs) including summarised financial information
s
t
e
s
s
a
t
n
e
r
r
u
c
-
n
o
N
s
e
i
t
i
l
i
b
a
i
l
t
n
e
r
r
u
C
s
t
e
s
s
a
t
n
e
r
r
u
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n
i
t
s
e
r
e
t
n
i
f
o
e
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l
a
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g
n
i
y
r
r
a
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e
r
u
t
n
e
v
t
n
i
o
j
r
o
e
t
a
i
c
o
s
s
a
s
t
e
s
s
a
t
e
N
s
e
i
t
i
l
i
b
a
i
l
t
n
e
r
r
u
c
-
n
o
N
x
a
t
r
e
t
f
a
)
s
s
o
l
(
/
t
fi
o
r
p
t
e
N
)
s
s
o
l
(
/
t
fi
o
r
p
f
o
e
r
a
h
S
e
u
n
e
v
e
R
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
p
i
h
s
r
e
n
w
O
%
As at 30 June 2020
Associates
Peet Alkimos Pty Limited, WA
33
7,587 405,389 123,857
34,675 254,444
66,430
9,359
(3,633)
(1,212)
Peet Caboolture Syndicate Limited, QLD 20
3,331
43,344
631
16,820
29,224
5,845
15,432
Peet Werribee Land Syndicate, VIC
17
7,701
32,620
1,879
5,385
33,057
5,672
19,144
1,154
3,081
231
529
Joint Ventures*
Peet Flagstone City Pty Limited, QLD
Googong Township Unit Trust, NSW
Peet Golden Bay Pty Limited, WA
Peet Mt Barker Pty Limited, SA
Peet No.1895 Pty Limited, VIC
Peet Brabham Pty Ltd, WA
Other associates and JVs
Total
50
50
50
50
50
50
As at 30 June 2019
Associates
3,771 177,828
56,862
4,063 120,674
60,337
19,358
907
454
35,638 128,554
2,618
45,000 116,573
58,287
43,533
9,684
4,842
1,014
23,789
687
–
24,116
12,058
6,647
2,299
23,213
1,572
3,336
20,604
10,302
11,930
2,166
99,173
2,343
84,080
14,916
7,473
24,627
7,805
37,546
419
45,840
(908)
(291)
(454)
6,111
232,061
173
360
2,755
(440)
86
180
1,380
(220)
1,790
8,060
Peet Alkimos Pty Limited, WA
33
8,967 399,865 117,575
32,578 258,679
71,534
8,624
(2,421)
(807)
Peet Caboolture Syndicate Limited, QLD 20
16,092
40,516
3,979
28,815
23,814
8,240
17,031
497
Peet Werribee Land Syndicate, VIC
Joint Ventures*
Peet Flagstone City Pty Limited, QLD
Googong Township Unit Trust, NSW
Peet Golden Bay Pty Limited, WA
Peet Mt Barker Pty Limited, SA
Peet No.1895 Pty Limited, VIC
Peet Brabham Pty Ltd, WA
Other associates and JVs
Total
17
50
50
50
50
50
50
5,045
35,994
7,705
3,355
29,979
5,144
38,461
4,032
7,850 168,931
54,149
2,822 119,810
59,905
35,536
5,724
41,613 118,776
4,999
42,000 113,390
56,695
49,896
10,236
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
3,533
96,262
30,827
55,552
13,416
6,708
59,913
1,287
33,465
35,230
–
(478)
(82)
(239)
2,575
233,668
(74)
237
5,393
(474)
99
692
2,862
5,118
(37)
119
2,697
(237)
2,823
13,329
* 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.
8181
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED
10. INVESTMENT 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
$’000
3,475
9,589
1,647
2,191
2,014
475
7,058
4,125
3,198
2,841
3,205
20
Current
financial
liabilities1
$’000
53,557
–
–
–
–
–
48,360
–
–
7,000
–
–
Non-current
financial
liabilities1
$’000
–
45,000
–
3,000
77,867
45,150
–
42,000
–
–
77,724
35,103
Interest
expense
$’000
Income tax
expense/
(benefit)
$’000
–
–
–
–
–
–
–
–
–
–
–
–
398
(16)
72
102
1,181
–
2,496
(60)
(38)
735
4,028
–
As at 30 June 2020
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 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
1 Excluding trade and other payables and provisions
8282
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020
8,444
4,210
Current
Trade receivables
11. RECEIVABLES
Current
Trade receivables at amortised cost 1
Other receivables at amortised cost 1
Loans to associates and joint ventures 2
- Amortised cost
-
ECL allowance
∙ At amortised cost (net of ECL
allowance)
∙ At fair value 2
Non-current
Loans to associates and joint ventures 2
- Amortised cost
-
ECL allowance
∙ At amortised cost (net of ECL
allowance)
∙ At fair value
Other receivables
Total receivables
2020
$’000
2019
$’000
8,224
1,182
7,774
(73)
7,701
–
–
–
19,836
6,345
36,943
18,999
26,848
38,553
(2,692)
(2,766)
24,156
35,787
40,060
55,184
5,359
4,999
69,575
95,970
106,518 114,969
1
2
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 (2019: $Nil).
The Group has entered into financing arrangements (including loans and equity contri-
butions 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%.
Refer note 27(a) for accounting policy on financial assets
and note 21 for fair value disclosures.
Key estimates
ECL allowance
ECL allowance is determined on a probability of default on
a loan by loan basis.
Related party balances with associates and
joint ventures included above:
2020
$’000
2019
$’000
2,048
2,927
7,701
–
19,836
6,345
24,156
35,787
40,060
55,184
5,359
4,999
99,160
105,242
97,316
9,180
(11,016)
–
(3,727)
91,753
86,996
29,690
(9,702)
(7,618)
(2,050)
97,316
2020
$’000
2019
$’000
8,536
6,234
4,336
4,037
12,872
10,271
Loans to associates and joint ventures
- Amortised cost (net of ECL
allowance)
-
Fair value
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
Other
Carrying amount at 30 June
12. CONTRACT ASSETS
Current
Accrued income1
Non-current
Deferred management fees2
Total contract assets
1
2
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 deferred management fees are receivable from residents in the Lattitude Lakelands
retirement village, who entered into an agreement to pay the fee upon their departure. The
fee is based on 3% of the resale price of the unit for each year of occupation (up to 24%).
13. PAYABLES
Current
Trade payables and accruals
Advance from joint operators
2020
$’000
2019
$’000
27,034
6,020
33,054
27,532
11,214
38,746
8383
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED 13. PAYABLES (CONTINUED)
Recognition and measurement
15. PROVISIONS
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.
Current
Rebates
Employee entitlements
Provision for development costs to
complete
Non-current
Employee entitlements
Provision for development costs to
complete
Refer note 21 for fair value disclosures.
Total provisions
2020
$’000
2019
$’000
2,524
3,183
2,812
3,235
8,921
15,402
14,628
21,449
216
216
12,038
11,567
12,254
11,783
26,882
33,232
14. LAND VENDOR LIABILITIES
Movements in the provision for rebates during the financial
year are set out below:
Current
Instalments for purchase of
development property
2020
$’000
2019
$’000
6,350
6,350
Total land vendor liabilities
6,350
6,350
Carrying amount at 1 July
Charged/(credited) to the statement of
profit or loss:
- Additional provision recognised
This liability was deferred and paid in July 2020.
- Paid during year
Carrying amount at 30 June
2020
$’000
2,812
2019
$’000
2,778
716
1,238
(1,004)
(1,204)
2,524
2,812
Recognition and measurement
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
Total contractual cash flows
Carrying amount of liabilities
2020
$’000
6,350
6,350
6,350
2019
$’000
6,350
6,350
6,350
Recognition and measurement
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.
8484
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020 16. INTERESTS IN JOINT OPERATIONS
Details of aggregate share of assets, liabilities, revenue,
expenses and results of joint operations
Group’s share of:
Total
assets
Total
liabilities Revenue Expenses
As at 30 June 2020
$’000
$’000
$’000
$’000
The Village at
Wellard, WA
Lightsview Joint
Venture, SA
The Heights
Durack, NT
Redbank Plains Joint
Venture, QLD
As at 30 June 2019
The Village at
Wellard, WA
Lightsview Joint
Venture, SA
The Heights
Durack, NT
Redbank Plains
Joint Venture, QLD
12,532
3,128
7,708
5,756
9,134
5,181
6,567
5,674
9,882
6,482
2,270
1,827
25,023
6,180
7,952
6,455
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
15. PROVISIONS (CONTINUED)
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.
Development costs to complete
Provisions for development costs not yet incurred for lots
settled are recognised at each reporting date based on the
estimated costs to complete.
8585
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED 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 2020. At 30 June 2020, the bank
covenant gearing ratio was 29.7% (2019: 25.8%).
17. BORROWINGS, LEASE LIABILITIES AND
DERIVATIVE FINANCIAL INSTRUMENTS
Net debt
Borrowings – Current
Borrowings – Non-current
Total borrowings*
Cash and cash equivalents
Net debt
2020
$’000
118,275
2019
$’000
5,083
163,879 240,103
282,154 245,186
(46,838)
(33,606)
235,316 211,580
* 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 2020:
Facility
amount
Utilised
amount1
Effective
interest
rate
$’000
$’000
%
Bank loans – note a
181,450
59,341
5.9%
Face
value
$’000
Carrying
amount2
$’000
Effective
interest
rate
%
100,000
50,000
75,000
99,500
49,517
73,796
225,000
222,813
8.06
5.95
7.21
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.
8686
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020 17. BORROWING, LEASE LIABILITIES 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 $655 million (2019: $687 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 or waived during the reporting period and as
at 30 June 2020.
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:
The bonds and notes are presented in the balance sheet as
follows:
Face value of bonds and notes issued
225,000 225,000
2020
$’000
2019
$’000
Transaction costs
Cumulative interest expense
Cumulative coupon payable
(4,669)
(4,669)
220,331 220,331
48,519
32,164
(46,037)
(30,496)
2,482
1,668
Total bonds and notes liability
222,813 221,999
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
2020
$’000
21,583
2019
$’000
1,115
8,150
23,656
35,577
–
65,310
24,771
59,341
23,187
0 – 1 years
1 – 2 years
2 – 5 years
2020
$’000
2019
$’000
115,019
15,751
7,807 115,475
135,549 143,921
Total contractual cash flows
258,375 275,147
Carrying amount of liabilities
222,813 221,999
b. Peet bonds and notes
Peet bonds Series 1, Tranche 1
c. Lease liabilities
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 has commenced the process to refinance the Series 1,
Tranche 1 bonds and is considering a number of alternatives.
The directors are confident that refinancing will be achieved.
Current
Office space leases
Non-current
Office space leases
Total lease liabilities
2020
$’000
2019
$’000
1,607
5,520
7,127
–
–
–
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.
During the year, total cash outflow for these leases is
$2.0 million.
The below table analyses the maturity of the Group’s lease
liabilities based on the remaining period at reporting date to
the contractual maturity date:
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 June 2024.These
bonds are unsecured and carry a fixed interest rate of 6.75%.
0 – 1 years
1 – 2 years
2 – 5 years
> 5 years
Total contractual cash flows
Carrying amount of liabilities
2020
$’000
2,039
2,115
3,898
101
8,153
7,127
2019
$’000
–
–
–
–
–
–
8787
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED
17. BORROWINGS, LEASE LIABILITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
d. Derivative financial instruments
Current
Interest rate swap contracts
Non-current
Interest rate swap contracts
Total derivative financial instruments
2020
$’000
2019
$’000
–
221
4,407
4,407
5,310
5,531
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
2020
$’000
–
4,407
–
4,407
4,407
2019
$’000
221
–
5,310
5,531
5,531
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).
Hedge accounting is only applied where there is an economic
relationship between the hedged item and hedging instrument.
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.
The Group’s policy is 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. In FY20, the Group has determined the interest rate
swap contracts no longer meet the Group’s risk management
objective. As a result, the Group has discontinued hedge
accounting.
During the year, the fixed interest rate on the interest rate
swap contracts was 3.11% (2019: 3.11%). The variable base
rates are between 0.09% and 1.22% (2019: 1.42% and 2.01%).
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
2020
$’000
2019
$’000
–
25,000
100,000
–
– 100,000
100,000 125,000
The full fair value of interest rate swap is classified as a non-
current asset or liability when the remaining maturity 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
implies maintaining
Prudent
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
8888
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020
17. BORROWING, LEASE LIABILITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
At 30 June 2020, 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
2020
$’000
2019
$’000
46,838
33,606
59,896
55,184
(24,341)
(23,187)
(4,407)
(5,531)
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)
2020
$’000
(282)
282
2019
$’000
(221)
221
2020
$’000
(282)
282
2019
$’000
(221)
221
- 50 basis points
+50 basis points
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).
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
(2019: $2.8 million) has been recognised for loans measured
at amortised cost of $34.6 million (2019: $38.5 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 interest rate risk by both variable
and fixed rate debt instruments.
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.
8989
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED
18. CONTRIBUTED EQUITY AND RESERVES
a. Movements in ordinary share capital
Date
30 June 2018
Details
Closing balance
Share buyback, including transaction costs
30 June 2019
Closing balance
30 June 2020
Closing balance
Movement for the year
The nature of the Group’s contributed equity
Number of shares
489,980,559
(6,680,070)
483,300,489
–
483,300,489
$’000
385,955
(7,039)
378,916
–
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 2018
Cash flow hedges (gross)
Deferred tax
Share based payment
Buyback on vesting of performance rights4
Transactions with non–controlling interests
At 30 June 2019
At 1 July 2019
Cash flow hedges (gross)
Deferred tax
Share based payment
Buyback on vesting of performance rights5
At 30 June 2020
Cash flow hedge
reserve1
Share-based
payments reserve2
Non-controlling
interest reserve3
$’000
(1,192)
(929)
279
–
–
–
(1,842)
(1,842)
2,636
(794)
–
–
–
$’000
13,693
–
–
630
(2,085)
–
12,238
$’000
(9,104)
–
–
–
–
(6,343)
(15,447)
Total
$’000
3,397
(929)
279
630
(2,085)
(6,343)
(5,051)
12,238
(15,447)
(5,051)
–
–
1,299
(647)
12,890
–
–
–
–
2,636
(794)
1,299
(647)
(15,447)
(2,557)
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/September 2018, the Company purchased 1,711,425 shares to settle the vesting of FY16 Performance Rights.
In September 2019, the Company purchased 572,160 shares to settle the vesting of FY17 Performance Rights.
9090
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020
19. DIVIDENDS
Declared and paid during the period
Prior year fully franked dividend 3.00
cents, paid on 7 October 2019 (2019:
3.00 cents)
Fully franked interim dividend for 2020:
0.5 cents (2019: 2.00 cents)
Dividend not recognised at year end
Final dividend 1.0 cents per share to be
paid on 19 November 2020 (2019: 3.00
cents per share)
Franking credit balance
Franking account balance as at the
end of the financial year at 30%
(2019: 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
2020
$’000
2019
$’000
14,499
14,699
2,417
9,667
16,916
24,366
4,833
14,499
57,718
55,017
687
8,915
(2,071)
(6,214)
56,334
57,718
20. RECONCILIATION OF (LOSS) / PROFIT
AFTER INCOME TAX TO NET CASH
OUTFLOW FROM OPERATING ACTIVITIES
(Loss) / profit after income tax
Add/(deduct) non cash items:
Depreciation
Amortisation of intangible assets
Employee share-based payments
Equity accounting for investments in
associates and joint ventures
Interest received
2020
$’000
2019
$’000
(30,691)
47,350
2,274
1,096
1,233
1,102
652
(1,455)
(8,060)
(13,329)
1,820
902
675
814
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
7,962
4,014
12,280
5,537
Decrease / (Increase) in inventories
40,210 (22,900)
Decrease in tax liabilities
Decrease in payables
Decrease in provisions
(8,228)
(6,483)
(3,677)
(23,131)
(6,350)
(7,768)
Decrease in deferred tax liabilities
(9,686)
(6,067)
Net cash outflow from operating
activities
(7,850)
(12,054)
9191
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED
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.
The potential impact of the COVID-19 pandemic has been
considered in the assessment of fair values.
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
Certain loans to associates and joint ventures 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 2020, the carrying amount and fair value of these
loans to associates and joint ventures is $70.1 million and
$59.9 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 2020 is $4.4 million
(30 June 2019: $5.5 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 2020 of a Peet
bond Series 1, Tranche 1 is $100.5 per bond and of a Peet bond
Series 2, Tranche 1 is $94.1 per bond (Level 1).
The fair value of Peet Notes as at 30 June 2020 is $975.0 per
note. These notes are measured using significant observable
inputs (level 3 of the fair value hierarchy).
At 30 June 2020, the carrying value of Peet bonds and notes is
$222.8 million (fair value $220.7 million).
9292
DIRECTORS’ REPORTYear ended 30 June 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 PEET LIMITED | ANNUAL REPORT 2020 OTHER NOTES
22. REMUNERATION OF AUDITORS
2020
2019
$
$
301,900 286,200
Fees to Ernst & Young (Australia)
Fees for auditing the statutory financial
report of the parent covering the group
and auditing the statutory financial reports
of any controlled entities
Fees for assurance services that are
required by legislation to be provided by
the auditor
- Compliance Plan & AFSL audits
12,000 11,500
Fees for other assurance and agreed-
upon-procedures services under other
legislation or contractual arrangements
Fees for other services
-
-
Tax compliance
Tax advice
54,750 81,000
184,585 152,122
99,650 48,200
Total Fees to Ernst & Young (Australia)
652,885 579,022
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
2020
$’000
2019
$’000
21,684
21,128
13,604
20,526
35,288
41,654
24. PARENT ENTITY FINANCIAL
INFORMATION AND SUBSIDIARIES
a. Parent entity financial information
Summary financial information
The individual financial statements for the parent entity show
the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Share-based payments reserve
Retained profits
Total equity
Profit / (loss) for the year
Total comprehensive income
2020
$’000
2019
$’000
69,254
70,457
638,152
584,023
13,600
16,618
160,178
159,192
378,917
378,917
12,890
86,167
12,239
33,675
477,974
424,831
69,407
(14,083)
69,407
(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:
All contingent liabilities are expected to mature within 1 year.
Bank guarantees outstanding
At 30 June 2020, the Group had commitments of $29.4 million
(2019: $34.0 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.
2020
$’000
586
2019
$’000
586
9393
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED 24. PARENT ENTITY FINANCIAL INFORMATION AND SUBSIDIARIES (CONTINUED)
b. Subsidiaries
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.
Peet Yanchep Land Syndicate
2020
$’000
3,861
2019
$’000
5,941
80,049
78,628
20,310
1,645
12,241
29,671
17,258
17,893
2,819
(1,889)
3,228
(624)
635
199
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Non-controlling interest
Revenue
Loss after tax
Loss attributable to non-controlling
interest
Summarised cash flow information:
Peet Yanchep Land Syndicate
2020
$’000
2019
$’000
(998)
(2,232)
871
(127)
1,926
(306)
Operating
Financing
Net outflow
Peet has not provided loans to other partly-owned subsidiaries.
The Group has no further contractual obligations to provide
ongoing financial support.
Significant investments in subsidiaries
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 Limited 1
Peet Craigieburn Pty Limited 2
Peet Greenvale No. 2 Pty Limited 2
Peet Cranbourne (51A Craig Rd) Pty Limited 2
Peet No. 88 Pty Limited 2
Peet Southern JV Pty Limited 2
Peet Brigadoon Pty Limited 2
Secure Living Pty Limited 2
Peet No. 108 Pty Limited 2
Peet No. 112 Pty Limited 2
Peet Treasury Pty Limited 2
Peet Estates (VIC) Pty Limited 2
Peet Development Management Pty Limited 2
Peet Estates (QLD) Pty Limited 2
Peet Estates (WA) Pty Limited 2
Peet Estates (SA) Pty Limited 1
Peet Funds Management Limited 2
Peet R B Plains Pty Limited 2
Peet No. 125 Pty Limited 2
Peet No. 126 Pty Limited 2
Peet No. 73 Pty Limited 2
Lakelands Retail Centre Development Pty
Limited 2
Peet Mt. Pleasant Pty Limited 2
Peet No. 127 Pty Limited 2
Lightsview Apartments Pty Limited 1
Peet Tonsley Pty Limited 2
JTP Homes Pty Limited 2
Peet Tonsley Apartments Pty Limited 2
Holding
2020
2019
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Peet Yanchep Land Syndicate2
66.4
66.4
1
2
Incorporated in ACT.
Incorporated in WA.
9494
PEET LIMITED | ANNUAL REPORT 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSOTHER NOTESYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 24. PARENT ENTITY FINANCIAL INFORMATION AND SUBSIDIARIES (CONTINUED)
Deed of cross guarantee
Consolidated balance sheet
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
Set out below is a consolidated balance sheet at 30 June 2020
of the closed group consisting of Peet Limited and certain
wholly owned subsidiaries.
2020
$’000
2019
$’000
46,719
33,330
23,335
26,390
87,087
99,890
157,141 159,610
101,649 135,773
302,472 319,684
266,175 266,031
5,188
4,151
4,725
–
5,227
5,700
684,360 732,415
841,501 892,025
40,896
53,752
6,350
105,066
1,607
687
5,550
6,350
5,083
–
8,981
5,873
Current assets
Cash and cash equivalents
Total current assets
Non-current assets
Receivables
Inventories
Investments accounted for using the
equity method
Right-of-use assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Payables
Land vendor liabilities
Borrowings
Lease liabilities
Current tax liabilities
Provisions
Non-current liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Deferred tax liabilities
Provisions
Total current liabilities
160,156
80,039
158,313 221,999
5,520
4,407
–
5,531
15,321
27,425
216
216
183,777 255,171
343,933 335,210
497,568 556,815
378,916 378,916
(2,423)
9,785
121,075 168,114
497,568 556,815
959595
2020
$’000
2019
$’000
Consolidated statement of profit or loss
Revenue
183,785 246,630
Expenses
Finance costs
(224,921) (187,489)
(7,428)
(8,492)
Share of net profit of associates
accounted for using the equity method
6,774
12,936
(Loss) / profit before income tax
(41,790)
63,585
Income tax expense
(Loss) / profit for the year
11,667 (16,062)
(30,123)
47,523
Other comprehensive income
Items that may be reclassified to profit or loss:
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 loss for
the year
2,636
(929)
(794)
279
1,842
(650)
(28,280)
46,873
Summary of movement in consolidated
retained profits
Retained profits at the beginning of the
financial year
168,114 152,575
(Loss) / profit for the year
Dividends paid
AASB9 measurement
(30,123)
47,523
Total non-current liabilities
(16,916)
(24,366)
Total liabilities
-
(7,618)
Net assets
Retained profits at the end of the
financial year
121,075 168,114
Equity
Contributed equity
Reserves
Retained profits
Total equity
ANNUAL REPORT 2020 | PEET LIMITEDANNUAL REPORT 2020 | PEET LIMITED 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
20 Nov 19
$0.00 20 Nov 34
$1.17
0.84%
$1.044
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 $1,298,700 (2019: $628,877).
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
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSOTHER NOTESYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 –
–
–
–
–
–
–
–
–
–
–
–
–
–
e
t
a
d
t
n
a
r
G
y
r
i
p
x
E
e
t
a
d
30 June 2020
Options
30 Nov 07
Performance rights
21 Dec 30
21 Dec 15
N/A
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
20 Nov 19
20 Nov 34
30 June 2019
Options
30 Nov 07
Performance rights
21 Nov 30
21 Nov 15
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
25. SHARE-BASED PAYMENTS (CONTINUED)
Set out below are summaries of options and performance rights granted under the plans:
$
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
t
a
e
c
n
a
l
a
B
y
l
u
J
1
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
g
n
i
r
u
d
d
e
t
i
e
f
r
o
f
r
a
e
y
e
h
t
/
d
e
s
p
a
L
0
3
t
a
e
c
n
a
l
a
B
e
n
u
J
t
a
e
l
b
a
s
i
c
r
e
x
E
e
n
u
J
0
3
$4.10
$1.12
1,200,000
–
–
–
–
–
–
–
$0.957
$0.801
$0.849
$1.328
$1.299
$0.940
$1.044
269,103
1,065,114
1,380,552
874,347
1,232,635
2,097,201
–
–
–
(572,160)
–
–
–
–
–
2,333,607
6,918,952
2,333,607
(572,160)
8,118,952
2,333,607
(572,160)
–
–
–
–
–
–
–
–
–
–
1,200,000
1,200,000
269,103
269,103
1,065,114
1,065,114
808,392
874,347
1,232,635
2,097,201
2,333,607
808,392
–
–
–
–
8,680,399
2,142,609
9,880,399
3,342,609
N/A $4.10
$1.12
1,200,000
–
–
–
–
–
–
–
$0.974
$0.957
$0.801
$0.849
$1.328
$1.299
$0.940
928,020
1,192,460
1,065,114
1,380,552
874,347
1,232,635
–
2,097,201
–
–
1,200,000
1,200,000
(866,771)
(844,655)
(61,249)
(78,702)
–
–
269,103
269,103
–
–
–
–
–
–
–
–
–
–
1,065,114
1,380,552
874,347
1,232,635
2,097,201
–
–
–
–
–
Total
7,873,128
2,097,201
(1,711,426)
(139,951)
8,118,952
1,469,103
6,673,128
2,097,201
(1,711,426)
(139,951)
6,918,952
269,103
97
ANNUAL REPORT 2020 | PEET LIMITED
26. MATTERS SUBSEQUENT TO THE END OF
Subsequent measurement
THE FINANCIAL YEAR
The Directors have declared a final fully franked dividend of
1.0 cents per share in respect to the year ended 30 June 2020.
The dividend is to be paid on Thursday, 19 November 2020,
with a record date of Monday, 26 October 2020. 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
a. Financial assets
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.
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
losses upon
no recycling of cumulative gains and
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.
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSOTHER NOTESYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 27. OTHER ACCOUNTING POLICIES (CONTINUED)
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. The potential
impact of the COVID-19 pandemic has been considered in the
assessment of ECLs.
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.
b. Leases
The Group’s new accounting policy for leases arising on
adoption of AASB 16 and applied from 1 July 2019 is detailed
below:
For leases with a lease term greater than 12 months that are
not considered low value leases (see below), right-of-use
assets and associated lease liabilities are recognised at the
commencement of the lease.
Right-of-use assets are measured at cost initially and then
depreciated over the shorter of the asset’s useful life and the
lease term on a straight-line basis. The cost of right-of-use
assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives
received. Right-of-use assets are subject to impairment.
The lease liability is initially measured at net present value of
future lease payments using the Group’s incremental borrowing
rate. The lease payments include fixed payments less any
lease incentives receivable and variable lease payments
that depend on an index or a rate. The lease payments are
allocated between repayment of lease liability and interest
expense (charged to profit or loss over the lease period). In
addition, the carrying amount of lease liabilities is remeasured
if there is a modification or a change in the lease term.
For short-term leases and leases of low-value assets, lease
payments are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 month or less. Low-value assets are generally
small items of office equipment.
c.
Intangible assets
Intangible assets primarily consist of software and are shown
at historical costs less depreciation.
Depreciation on intangible assets is calculated using the
straight-line method over their estimated useful lives as below.
• Software – 5 years
99
ANNUAL REPORT 2020 | PEET LIMITED 27. OTHER ACCOUNTING POLICIES (CONTINUED)
d. Property, plant and equipment
g. Government grants
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
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.
e. Termination benefits
Termination benefits are payable when employment
is
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.
f. Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is
recognised as part of the cost of acquisition of the asset or 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.
Government grants are recognised where there is reasonable
assurance that the grant will be received, and all attached
conditions will be complied with. When the grant relates to an
expense item, it is recognised as income on a systematic basis
over the periods that the related costs are expensed.
h. 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.
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in
the separate 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.
i. New accounting standards and interpretations
issued but not yet effective
There are no new and amended accounting 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.
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSOTHER NOTESYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 This page has been intentionally left blank
101
ANNUAL REPORT 2020 | PEET LIMITED DIRECTORS’ DECLARATION
Year ended 30 June 2020
In the Directors’ opinion:
a. the financial statements and notes set out on pages 64 – 100 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 2020 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 discloses that the financial statements and notes also comply with International Financial Reporting Standards.
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
26 August 2020
102
PEET LIMITED | ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
Year ended 30 June 2020
103
ANNUAL REPORT 2020 | PEET LIMITED 104
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSOTHER NOTESYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 105
ANNUAL REPORT 2020 | PEET LIMITED 106
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSOTHER NOTESYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 107
ANNUAL REPORT 2020 | PEET LIMITED 108
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSOTHER NOTESYear ended 30 June 2020PEET LIMITED | ANNUAL REPORT 2020 109
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 42 to 57 of the directors' report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Peet Limited for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young G Lotter Partner Perth 26 August 2020 ANNUAL REPORT 2020 | PEET LIMITED SECURITYHOLDER INFORMATION
Distribution of ordinary shares and Peet Bonds
As at 17 September 2020 there were 2,167 current holders of ordinary shares, 1,382 current holders of Series 1, Tranche 1
Peet Bonds (“PPCHA Bonds”) and 537 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
507
627
342
621
70
2,167
0.03
0.40
0.55
3.59
95.43
100.00
1,278
91
6
6
1
1,382
37.04
18.74
4.27
17.55
22.40
100.00
473
54
6
3
1
537
31.76
23.05
8.67
7.76
28.76
100.00
There were 361 shareholdings of less than a marketable parcel of $500 (443 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 (six PPCHB Bonds).
Securityholders
The names of the 20 largest holders of ordinary shares as at 17 September 2020 are listed below:
Name
Scorpio Nominees Pty Ltd
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
CS Third Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
360 Capital FM Limited <360 Capital Active REIT A/C>
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
Zero Nominees Pty Ltd
Netwealth Investments Limited
HSBC Custody Nominees (Australia) Limited
360 Capital FM Limited
360 Capital FM Limited
Mr Julian Charles Peet
Total for 20 largest shareholders
Total other shareholders
Total ordinary shares on issues
110
Number of Shares Held
% of Shares
86,582,433
64,856,897
53,680,147
47,353,201
31,367,572
26,542,152
23,419,317
19,248,105
18,152,705
17,459,881
12,707,352
8,656,230
5,331,530
5,303,817
5,000,000
4,733,250
4,450,095
3,360,953
3,138,808
1,528,344
442,872,789
40,427,700
483,300,489
17.91
13.42
11.11
9.80
6.49
5.49
4.85
3.98
3.76
3.61
2.63
1.79
1.10
1.10
1.03
0.98
0.92
0.70
0.65
0.32
91.64
8.36
100.00
PEET LIMITED | ANNUAL REPORT 2020 SECURITYHOLDER INFORMATION (CONTINUED)
The names of the 20 largest holders of PPCHA Bonds as at 17 September 2020 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
Jamplat Pty Ltd
Passini Pty Ltd
Tierney Pty Limited
George Tauber Management Pty Ltd
Hibou Holdings Pty Ltd
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
Majana Pty Ltd
Invia Custodian Pty Limited < RISF A/C>
Invia Custodian Pty Limited
Super RAB Pty Ltd
Pulo Rd Pty Ltd
Investment Management Co Pty Ltd
Mrs Robin Lynn Beech
Mr Ah Khing Teo & Mrs Kit Har Ng
Total for 20 largest PPCHA Bondholders
Total other PPCHA Bondholders
Total PPCHA Bonds on issue
Number of PPCHA
Bonds Held
% of PPCHA
Bonds
223,971
22.40
52,084
43,200
26,400
22,612
20,000
11,230
8,500
8,000
7,500
6,886
6,264
5,500
5,000
5,000
5,000
4,680
4,107
4,000
3,766
5.21
4.32
2.64
2.26
2.00
1.12
0.85
0.80
0.75
0.69
0.63
0.55
0.50
0.50
0.50
0.47
0.41
0.40
0.38
473,700
526,300
1,000,000
47.37
52.63
100.00
111
ANNUAL REPORT 2020 | PEET LIMITED SECURITYHOLDER INFORMATION
SECURITYHOLDER INFORMATION (CONTINUED)
The names of the 22 largest holders of PPCHB Bonds as at 17 September 2020 are listed below:
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Grizzly Holdings Pty Limited
Keppoch Pty Limited
Finot Pty Limited
HSBC Custody Nominees (Australia) Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
Mr Joseph Compagnone & Mrs Cheryl Robyn Compagnone
BT Portfolio Services Limited
Roni H Pty Ltd
Invia Custodian Pty Limited
Mr Joseph Compagnone & Mrs Cheryl Robyn Compagnone
Hamilton Industries (Victoria) Pty Limited
Trancape Pty Ltd
Netwealth Investments Limited
Trendmead Pty Ltd
A Cameron Holdings Pty Limited
Bentleigh Nominees Pty Ltd
Invia Custodian Pty Limited
Mr Thomas Kiss & Mrs Amanda Aizenstros
Mr Archibald John McKirdy
Mr Jian Wang
Total for 22 largest PPCHB Bondholders
Total other PPCHB Bondholders
Total PPCHB Bonds on issue
Substantial shareholders
Number of PPCHB
Bonds Held
% of PPCHB
Bonds
143,815
28.76
14,224
12,600
12,000
8,000
7,900
7,409
7,050
7,000
6,000
4,690
4,262
4,000
4,000
3,746
3,500
3,125
3,000
3,000
3,000
3,000
3,000
2.84
2.52
2.40
1.60
1.58
1.48
1.41
1.40
1.20
0.94
0.85
0.80
0.80
0.75
0.70
0.63
0.60
0.60
0.60
0.60
0.60
268,321
231,679
500,000
53.66
46.34
100.00
As disclosed in substantial holding notices lodged with ASX (as applicable) as at 17 September 2020:
Name
Date of Last Notice
Received
Number of
Shares Held
% of Issued
Shares1
Scorpio Nominees Pty Ltd and its associates
Allan Gray Australia Pty Ltd and its related bodies corporate
L1 Capital Pty Ltd
13 November 2018
14 August 2020
31 March 2020
360 Capital Whiskey Pty Ltd as trustee of 360 Capital Whiskey Trust
1 September 2020
Eley Griffiths Group Pty Limited
20 April 2020
99,156,523
88,722,096
67,316,177
25,747,866
24,406,898
20.50
18.36
13.93
5.33
5.05
1. Percentage of issued shares held as at the date notice provided.
112
PEET LIMITED | ANNUAL REPORT 2020 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 Australian Securities Exchange (“ASX”) Listing Rules or the Corporations Act.
Securities Exchange Listings
Peet Limited’s ordinary shares are listed on the 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 17 September 2020, Peet Limited had 1,200,000 options on issue, held by one key management person, as disclosed
elsewhere in the Annual Report.
As at 17 September 2020, Peet Limited had 7,020,590 performance rights on issue, held by a total of 10 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 17 September 2020, 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.
113
ANNUAL REPORT 2020 | PEET LIMITED 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, FGIA, FCG (CS, CGP), 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, FGIA, FCG (CS, CGP), 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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