Annual Report
2020
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CONTENTS
Corporate Calendar
Our FY20 Performance Highlights
Message from the Chairman
Message from the CEO
About Us
Our Property Portfolio
Our Tenants
Our Strategy
Our Performance
Financial Highlights
Our Commitment to Sustainability
Remuneration Report
Directors’ and Financial Report
Security Analysis
Directory
IFC
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124
IBC
MEETING OF UNITHOLDERS
This year’s AGM will be conducted as a Virtual AGM in accordance with COVID relief instruments, starting
at 2pm (AEDT) on Wednesday, 25 November 2020.
For further information, visit www.scaproperty.com.au/agm/
CORPORATE CALENDAR
25 November 2020
December 2020
January 2021
February 2021
June 2021
August 2021
August 2021
August 2021
Meeting of Unitholders
Estimated interim distribution announcement and units trade ex-distribution
Interim distribution payment
Interim results announcement
Estimated final distribution announcement and units trade ex-distribution
Full-year results announcement
Final distribution payment
Annual tax statement
UNITHOLDER REGISTER DETAILS
You can view your holdings, access information and make changes by visiting
www.investorcentre.linkmarketservices.com.au
RESPONSIBLE ENTITY
Shopping Centres Australasia Property Group RE Limited ABN 47 158 809 851 AFSL 426603
Shopping Centres Australasia Property Group comprises Shopping Centres Australasia Property Management Trust
(ARSN 160 612 626) and Shopping Centres Australasia Property Retail Trust (ARSN 160 612 788), together,
SCA Property Group or SCP
Front Cover: Bakewell Shopping Centre, NT
OUR FY20 PERFORMANCE
HIGHLIGHTS
(For period 1 July 2019 to 30 June 2020)
14.65¢
Cents per unit
Down by 10.3%
12.50¢
Cents per unit
Down by 15.0%
$85.5
million
Down by 22.0%
FUNDS FROM
OPERATIONS
(PER UNIT)
DISTRIBUTIONS
TO UNITHOLDERS
(PER UNIT)
STATUTORY PROFIT
AFTER TAX
SOLID PORTFOLIO PERFORMANCE
98.2%
PORTFOLIO
OCCUPANCY
$2.22
NET TANGIBLE
ASSETS
(per unit)
Within target range
Decreased $0.05
(per unit)
6.51%
PORTFOLIO
WEIGHTED
AVERAGE CAP
RATE
Softening by 3 bps
$8.8 million
DECREASE IN
AUSTRALIAN
PORTFOLIO
VALUE
Including
acquisitions,
disposals and
revaluation losses
REFINING OUR PORTFOLIO
1
ACQUIRED PROPERTY
One convenience-based shopping centre
acquired for $78.4 million
1
DIVESTED PROPERTY
One disposal for $21.5 million
PRUDENT CAPITAL AND COST MANAGEMENT
3.5% p.a.
WEIGHTED COST
OF DEBT
$622.8 million
CASH AND CASH EQUIVALENTS
AND UNDRAWN FACILITIES
25.6%
GEARING BELOW OUR TARGET
RANGE OF 30-40%
0.38%
MANAGEMENT EXPENSE RATIO
1
SCA Property Group | Annual Report 2020
MESSAGE FROM
THE CHAIRMAN
Philip Marcus Clark, AO
Chairman, SCA Property Group
12.50¢
Distribution
(Per unit)
99%
Distribution/AFFO
(%)
FY20 has been a challenging year
for SCA Property Group, particularly
the second half, when our financial
performance was impacted by the
COVID-19 pandemic. In FY20:
• Funds from Operations (FFO)
was $140.8 million, a decline of
0.7% on FY19.
• FY20 FFO per unit was 14.65
cpu, a decline of 10.3% on FY19.
• FY20 distributions totalled 12.5
cpu (comprising 7.50 cpu in
first half and 5.00 cpu in second
half), a decline of 15.0% on FY19.
We reported a strong result for the
six months to 31 December 2019.
This was reflected in a record unit
price of $3.17 per unit on
19 February 2020. However, the
unit price fell to a low of $2.05 on
19 March as the impact of COVID-19
was felt. It recovered some ground
and closed at $2.18 on
30 June 2020.
Financial impact of COVID-19
During 2020, the retail property
sector generally has been
significantly impacted by COVID-19.
But the impact on SCP has been less
severe than the impact on many of
our peers in the sector.
The impact of COVID-19 has
primarily been borne by our
specialty tenants.
Our rental collection rate fell to
77% during the COVID-19 period in
FY20, resulting in an overall cash-
collected rent shortfall of $26.8
million, against which an expected
credit loss provision of $15.3 million
has been raised. Notwithstanding
that provision, we will continue to
vigorously pursue payments from
tenants of all outstanding amounts
that are not covered by agreed
waivers or deferrals.
2
Despite COVID-19, our convenience-
based centres have been relatively
resilient:
• Anchor tenants have
experienced strong sales growth
and turnover rent is increasing.
• We have continued to complete
leasing deals, with 75 renewals
and 55 new lease deals
completed during the period
March to June 2020, and 232
renewals and 146 new deals
during FY20.
• The specialty vacancy rate is
stable at 5.1% and specialty
occupancy costs are also stable
at 10.0%.
• Ninety-two per cent of tenants
were open and trading when we
announced our results in August
2020.
A comprehensive disclosure of the
impacts of COVID-19 on the Group’s
results is set out in note 3 to the
Financial Statements.
Capital management
In April 2020, in response to the
onset of the COVID-19 crisis, the
Group raised $250 million by way
of an underwritten institutional
placement, which was followed in
May 2020 by a $29.3 million unit
purchase plan offered to our retail
holders, on the same terms as the
institutional placement. Institutional
demand for our placement
was approximately 3.5 times
oversubscribed, with final demand
of $889 million.
The purpose of the equity raising
was twofold: firstly, to strengthen
the Group’s balance sheet to provide
a buffer against future shocks, such
as a second wave of the pandemic
and a more stringent shutdown, as
subsequently occurred in Victoria;
and secondly, to provide funding
flexibility to continue to deliver on
the Group’s strategy of investing in
convenience-based, supermarket-
anchored shopping centres, as
suitable opportunities arise.
In addition, we secured $200
million of additional lines of credit,
thereby assuring that the Group
had adequate funding to meet
the repayment obligations of the
A$ medium term note due for
repayment in April 2021.
As a result, our balance sheet
remains strong. We have reduced
gearing from 34.2% at 31 December
2019 to 25.6% at 30 June 2020, and
the Group had $622.8 million in cash
and cash equivalents and undrawn
facilities as at 30 June 2020.
Group strategy and outlook
As you know, our core objective is
to produce defensive resilient cash
flows to support secure and growing
long-term distributions to our
Unitholders.
Our strategy to implement that
objective includes:
•
improving the tenancy mix with
a bias towards non-discretionary
categories;
• maintaining high retention rates
on lease renewals;
• maintaining low specialty
vacancy, by working proactively
with our tenants in these
challenging times.
Clearly, it is in the best interests of
our Unitholders to act to ensure
that our specialty tenants survive
the COVID-19 impacts and to ensure
that we have sustainable tenants
paying sustainable rents. However,
we are acutely aware that rent relief
for tenants comes at the expense of
Unitholders’ distributions.
The pandemic impact of the last
six months has been significant in
ways we yet do not know and we at
SCP believe there will continue to
be changes to the way we all live,
work and shop for years to come.
This is not something we are afraid
of, and in fact we are embracing
this as an opportunity to make our
centres more relevant for their local
communities. We will continue to
focus on strategies that will embed
our centres into their market where
appropriate, for example the roll out
of Click and Collect in many of our
assets.
Earnings forecast
In normal circumstances, SCP
can provide a reasonably
accurate forecast of earnings
and distributions, and we have a
history of providing reliable market
guidance. Unfortunately in the
present circumstances, we are not
able to do so.
Management and staff
Since the COVID-19 pandemic
struck, our management and staff
have been subjected to abnormal
disruption and demands which have
created stress and anxiety, both in
their working environment and in
their personal lives.
Our people have responded well. On
behalf of the Board I thank them for
their commitment.
Given the Group’s financial
circumstances, the Board has
decided, in consultation with our
Key Management Personnel (KMP),
not to pay Short-Term Incentives
to KMP in respect of FY20 nor to
increase total KMP remuneration in
FY21. Further details are provided in
the Remuneration Report.
The Directors and staff are sharing
the financial pain felt by Unitholders.
Most of our staff own SCP units
and all our Directors and KMP have
significant unitholdings in SCP. We
have also suffered a diminution in
the value of our investment in SCP
and a reduction in distributions
during the year, although I am
pleased that we outperformed many
of our peers in the sector.
The Board
Philip Redmond retired as a Director,
effective 30 September 2020. Philip
has been a Director of the Group
since we listed in 2012. Drawing
on his extensive knowledge and
experience as a former senior
investment banker, Philip has made
a great contribution as a Director,
particularly to our investment and
capital management strategies.
Philip has also made a significant
contribution as an effective Chair
of our Audit, Risk Management and
Compliance Committee (ARMCC),
a member of the Investment
Committee and a member of the
Nomination Committee. On behalf
of the Board, I thank Philip for his
contribution and wish him well.
Beth Laughton, who joined the
Board in December 2018, has been
appointed to Chair the ARMCC.
Beth is an experienced director with
strong accounting and financial
credentials.
Steve Crane has been appointed
Deputy Chair of the Group. Steve
also joined the Board in December
2018 and came to us with extensive
management and board experience
and strong credentials as a director.
Since joining the Board, Steve has
helped ensure that the Board has
met the challenges of a particularly
difficult operating environment, and
I welcome his appointment.
Significant demands were made on
Board members during the year and
they have all risen to the occasion.
I take this opportunity to thank
all my Board colleagues for their
contributions.
Finally, I acknowledge that 2020 has
also been a difficult and stressful
time for our Unitholders. On behalf
of your Board and management
team, I thank you all for your
continuing support.
Philip Marcus Clark AO
Chairman
SCA Property Group
3
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
MESSAGE FROM
THE CEO
Anthony Mellowes
Chief Executive Officer, SCA Property Group
25.6%
Gearing
$2.22
Net Tangible
Assets
(Per Unit)
The second half of FY20 has
certainly tested the resilience of
SCP.
COVID-19 impacts
We have suffered through terrible
bushfires, a pandemic, the full extent
of which is yet to play out, and we
now find ourselves in a recession,
the worst since the Second World
War. Throughout these catastrophes,
SCP has continued to play its role.
Our shopping centres are frequently
used as places of emergency refuge
during bushfires and floods and, in a
similar vein, investors view SCP as a
refuge in volatile financial times.
The financial impact of these crises
manifesting in reduced distributions
and unit pricing has been caused
by an increase in rental arrears as
forced shutdowns and reduced
foot traffic have impacted on
some of our tenants’ ability to pay
rent. In addition, various state and
territory legislation has mandated
rental and other relief for small-to-
medium enterprises that qualify
for the JobKeeper program. As at
30 June 2020, we have provided
$4.5 million in waived rent and
$4.3 million in deferred rent to
our specialty tenants as required
by this legislation. Combined with
this is an increase in operating
expenses, principally increased
cleaning and security costs as a
consequence of the pandemic. All
of these factors have impacted
our Funds from Operations and of
course distributions available for
Unitholders.
for the pandemic period as people
are increasing their supermarket
spend, not only due to panic
buying but also a growing trend
of preparing meals at home rather
than dining out. During the height
of the pandemic, SCP was able to
collect 77% of rental invoiced. I
am pleased to report a month-on-
month improvement in our rental
collections and aged debtors as
we process applications for rental
assistance during the peak of the
COVID-19 crisis.
Performance of our specialty
tenants
Specialty categories such as petrol,
discount variety, pharmacy and
medical, together with fresh food
and liquor, have also been largely
unaffected by the pandemic. This
leaves categories such as fashion
and personal services as the major
categories in our portfolio that
have been significantly impacted.
Fortunately, these categories only
represent approximately 15% of our
income. I remain optimistic that we
have seen the worst of the COVID-19
impacts on our business. This is
not the case across the country
of course, with metro Victoria still
navigating serious outbreaks and
state borders assuming a new
prominence. Our focus on playing
a role in the local communities in
which we operate has certainly
paid dividends, with very strong
visitation throughout the pandemic
as people look to minimise travel,
and our convenient locations allow
an efficient and safer shopping
experience.
Distributions are our priority
We remain focused on delivering
reliable distributions to our
Unitholders, and we will continue
to distribute income generated
in the form of rent receipts to
the extent it remains prudent to
do so. There are certainly some
signs of improvements in trading
performance in all states outside of
Victoria and, as I write this message,
we have 98.8% of our tenancies
open and trading nationally, except
for Victoria, where 60% of our
tenants are open and trading.
A new way of working
We have also had to adjust to a
different way of working. We are
currently operating on the basis
of 50% staff in the office and
50% working from home on daily
rotation. Our Board meetings are
conducted electronically as are most
of our meetings, which formerly
were conducted face to face. Our
staff have risen to these challenges
and continue to perform efficiently
and diligently.
Performance of our anchor tenants
I would like to take a moment to
discuss some of the fundamentals
of our business that have enabled
us to continue to pay a distribution
through these difficult times.
Approximately half of our income
is derived from major tenants,
primarily Woolworths Group
Limited, Coles Group Limited
and Wesfarmers Limited, and
to a lesser but growing extent
Aldi. Supermarkets and discount
department stores have performed
very well during the pandemic
and we have been able to recover
100% of rental payments due from
these organisations. We expect to
receive an increase in turnover rent
Love Local, Shop Local, Act Local is
the cornerstone of our strategy to
deliver reliable, resilient distributions
to Unitholders. Our centres and
our people have stood the test of
the pandemic and we believe our
centres are increasingly relevant for
consumers across Australia well into
the future.
I thank our investors, tenants and
other stakeholders for their support
and continued confidence in SCP.
Anthony Mellowes
Chief Executive Officer
SCA Property Group
Leasing
Unlisted funds
Another pleasing sign of recovery
is the fact that we have managed
to conclude 55 new lease deals
and 75 renewals of expiring leases
during the height of the pandemic.
While these new deals have been
at negative reversion spreads, we
believe that it is better to lease
vacant spaces at a reduced rental
rather than leave them vacant and
hope that the market improves over
time.
We have only a small proportion of
our tenancies on hold over (1.1%)
and our occupancy rate across the
portfolio is 98.2%.
New acquisitions and market
conditions
The market for convenience-based
shopping centres remains tight with
investors becoming increasingly
aware of their defensive attributes,
and competition for these assets is
currently strong. SCP has recently
acquired Bakewell Shopping Centre
in Palmerston near Darwin from
Woolworths Group Limited and
remains interested in acquiring
quality convenience assets which
meet our criteria and investment
hurdles. It is pleasing to see how
resilient these assets are, with
many assets trading on tight yields
throughout the COVID-19 crisis.
During FY20 we acquired Warner
Marketplace for $78.4 million, we
acquired Shell Cove Stage 3 on
completion of construction and we
sold Cowes Shopping Centre for
$21.5 million.
SCP remains the largest owner (by
number) of convenience-based
shopping centres in Australia.
I am pleased to report that our
first unlisted fund, SURF 1, has
been successfully completed with
all assets now sold, delivering an
internal rate of return of over 10%
during its five-year term. We have
also divested assets in SURF 2 and
SURF 3 in order to reduce gearing
in line with the strategy adopted for
SCP.
Sustainability
Our performance in the area
of environmental, social and
governance (ESG) continues
to evolve and deliver practical
environmental and financial benefits
across our portfolio. These benefits
include renewable energy solutions
such as rooftop solar plants and
processing food waste into organic
fertiliser. We strive to make our
centres more energy efficient
through the use of sophisticated
building management systems.
SCP’s ESG remains focused on four
key points:
• practical improvements to our
environmental impact;
• supporting the communities in
which we are located;
• responsible investment; and
• building strong environmental
and socially responsible
governance practices and
policies.
As I said earlier, there are
encouraging signs for SCP and our
strategy and asset class has proven
to be resilient in extremely testing
conditions.
4
5
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 ABOUT US
SCA Property Group (SCP) includes two internally managed real estate investment
trusts, the units of which are stapled together to form a stapled listed vehicle. The
Group owns and manages a portfolio of quality sub-regional and neighbourhood
shopping centres. The portfolio is focused on convenience retailing across
Australia.
As at 30 June 2020, our portfolio consisted of 85
convenience-based shopping centres valued at
$3,138.2 million. Convenience retailing has proven
to be a resilient asset class due to its exposure to
non-discretionary retail tenants. Many of the Group’s
convenience-based retail centres have a strong
weighting to food sales, due to grocery-based anchors
such as supermarkets.
SCP’s portfolio benefits from long-term leases to
Woolworths Group Limited and Coles Group Limited,
which act as an anchor tenant at each property.
Woolworths and Coles are Australia’s largest retailers by
sales revenue and number of stores.
SCA Property Group is listed on the Australian
Securities Exchange (ASX) under the code “SCP”.
SHORT HISTORY
SCP was created by Woolworths Group Limited
(Woolworths) in late 2012 to act as a landlord for a
number of its shopping centres. Woolworths transferred
its ownership in those shopping centres to SCP, which
was then listed on the ASX as a separate independent
real estate investment trust in December 2012.
Woolworths does not have any ownership interest in
SCP.
Since its creation, SCP has completed a number of
acquisitions and disposals. As at 30 June 2020, 71 of its
convenience-based shopping centres are anchored by
Woolworths including its affiliated retailers and 28 by
Coles Group Limited retailers.
GROUP STRUCTURE
SCP comprises two registered managed investment
schemes: Shopping Centres Australasia Property
Management Trust (SCA Management Trust)
(ARSN 160 612 626) and Shopping Centres Australasia
Property Retail Trust (SCA Retail Trust)
(ARSN 160 612 788). The units in each are stapled to
form the stapled listed vehicle, SCA Property Group.
SCP is internally managed, which allows us to align
management interests with the interests of our
Unitholders. Shopping Centres Australasia Property
Group RE Limited (SCPRE) (ACN 158 809 851) is the
Responsible Entity (AFSL 426603) of SCA Management
and SCA Retail Trusts. The Responsible Entity is a
wholly owned subsidiary of the SCA Management Trust.
SCA PROPERTY GROUP
STAPLED UNITS
SCA Management Trust
Stapling
deed/provisions
SCA Retail Trust
Hold Co
Operating Co
Australian
Real Estate Assets
SURF RE
SCPRE
SURF 11,2
SURF 21,3
SURF 31,4
Additional notes:
1. SURF RE Limited is the Responsible Entity of SCA Unlisted Retail Fund 1 (SURF 1), SCA Unlisted Retail Fund 2 (SURF 2) and SCA Unlisted Retail Fund 3 (SURF 3)
2. SURF 1 commenced activities on 1 October 2015. SCA Retail Trust owns 24.4% of SURF 1. SURF 1 has commenced the process of winding up.
3. SURF 2 commenced activities on 2 June 2017. SCA Retail Trust owns 28.6% of SURF 2.
4. SURF 3 commenced activities on 10 July 2018. SCA Retail Trust owns 26.2% of SURF 3.
6
New Town, TAS
SCA Property Group | Annual Report 2020 OUR PROPERTY PORTFOLIO
AS AT 30 JUNE 2020
SCA Property Group’s portfolio comprises
75 neighbourhood and 10 sub-regional
shopping centres located across Australia.
During the year ended 30 June 2020, the
Group acquired one new convenience-
based shopping centre and divested one
neighbourhood centre.
$3,138.2 million
OF VALUE IN INVESTMENT
PROPERTIES
85
INVESTMENT PROPERTIES
1,839
SPECIALTY TENANTS
7.4 yrs
WEIGHTED AVERAGE
LEASE EXPIRY
674,525m2
GROSS LETTABLE
AREA
OUR PROPERTY PORTFOLIO
CONTINUED
OUR TENANTS
The total value of the investment properties as at 30 June 2020 was $3,138.2 million (down from $3,147.0 million as
at 30 June 2019). The decrease in value of the properties during the year was principally due to:
The Group’s shopping centres are anchored by long-term leases to high-quality tenants with a weighted average
lease expiry of 7.4 years.
• Acquisition of Warner Marketplace for $83.4 million ($78.4 million acquisition price plus transaction costs of
$5.0 million);
• Disposal of Cowes for $21.5 million;
• Developments, capital expenditure and straight lining of $17.2 million (including completion of Shell Cove
Stage 3 for $4.8 million); and
Nearly half the portfolio is located in new growth corridors and regions, and comprises convenience-based
neighbourhood centres with a strong weighting to the non-discretionary retail segment. Anchor tenants represent
48% of gross income. The remaining 52% of gross income comes from specialty tenants skewed toward
non-discretionary categories.
• Like-for-like valuation decrease of $87.9 million of which $27.4 million is directly attributable to expected
COVID-19 impact on FY21 cash flows.
OVERALL LEASE EXPIRY (% of Gross Rent)
The weighted average capitalisation rate for the Australian portfolio is now 6.51%, compared to 6.48% as at
30 June 2019.
26.8%
As at
30 June 2020
Number
of centres
Number of
specialties
GLA
(sqm)
Site Area
(sqm)
Occupancy
(% GLA)
Value
($ million)
WALE
(yrs)
Weighted
average cap
rate (%)
Neighbourhood
Sub-regional
Total Investment
Properties
75
10
85
1,321
465,497
1,495,916
98.3%
2,334.3
518
209,028
545,090
98.0%
803.9
1,839
674,525 2,041,006
98.2%
3,138.2
7.3
7.8
7.4
6.39%
6.84%
6.51%
GLA means gross lettable area
WALE means weighted average lease expiry
GEOGRAPHIC DIVERSIFICATION (by value)
WA
15%
NSW
24%
QLD
25%
VIC
19%
10
TAS
11%
SA
6%
12.2%
11.0%
10.4%
9.4%
8.0%
8.0%
5.6%
4.4%
4.2%
FY21
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30 and
Beyond
TENANTS BY CATEGORY (by gross rent)1
SPECIALTY TENANTS BY CATEGORY
(by gross rent)1, 2
Specialties
52%
Other Retail
11%
Petrol
2%
Fresh Food/Food
Catering/Liquor
30%
Discount Variety
6%
Apparel
8%
Woolworths3
28%
Big W
5%
Coles
11%
Pharamacy & Health
Care
21%
Other Majors5
1%
Wesfarmers4
3%
Services
22%
1. Annualised gross rent excluding vacancy and percentage rent
2. Mini Majors represent 12% of annualised specialty gross rent. Mini major tenants have been split across the relevant categories
3. Woolworths includes Endeavour Drinks (1.6% of gross rent)
4. Wesfarmers includes Kmart 2.3%, Bunnings 0.5% and Target 0.4%
5. Other majors includes Aldi, Farmer Jacks and Grand Cinemas
11
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 OUR
STRATEGY
SCP aims to ensure
defensive, resilient cash
flows to support secure
and growing long-term
distributions to Unitholders.
SCP’s core strategy is to
invest in a geographically
diverse portfolio of
convenience-based retail
centres. Our portfolio
focuses on the non-
discretionary retail sector
(primarily convenience
retailers and grocery
outlets) and is anchored by
long-term leases to quality
tenants.
FOCUS ON
CONVENIENCE-
BASED RETAIL
CENTRES
WEIGHTED
TO NON-
DISCRETIONARY
RETAIL SEGMENTS
LONG LEASES TO
QUALITY ANCHOR
TENANTS
APPROPRIATE
CAPITAL
STRUCTURE
GROWTH
OPPORTUNITIES
SCP’s portfolio is relatively young, with an average age of less than ten
years (weighted by value). This presents both opportunities and challenges.
Our strategy for the immediate future is to generate incremental growth by
positioning the portfolio to maximise its long-term value.
We are doing this by:
• Optimising the existing portfolio: by increasing the rent per square
metre we generate from our specialty tenants, and by controlling our
costs;
• Growing the portfolio: by undertaking selected acquisitions and
divestments and by conducting selected small-scale development
opportunities in our completed portfolio;
• Capital management: we adopt a prudent approach to capital
management, with the aim of achieving a sustainably low cost of
capital and an appropriate level of gearing; and
• Sustainability: ensuring the sustainability of SCP’s business, including a
focus on safety, community and the environment.
OPTIMISING THE EXISTING PORTFOLIO
A key priority for SCP is to increase the rent per square metre we generate
from our specialty tenants. This can be achieved by remixing our tenancies
to higher rent-paying tenants, by annual rental increases that are built into
leases, and by increasing rentals at lease expiry. During the 12 months to
30 June 2020, there were 232 specialty tenancy renewals with an average
rental uplift of (1.1)%.
We are continuing to explore opportunities to reduce costs by utilising
our economies of scale to achieve savings in areas such as property
management, electricity, cleaning and security.
GROWING THE PORTFOLIO
The market for convenience-based retail centre ownership is fragmented
and provides acquisition opportunities from time to time.
There is a pipeline of new convenience-based centres due to population
growth. Private individuals and retailers are still the dominant developers of
convenience-based centres and will be for the medium term.
In addition, many of our completed centres have relatively low-risk
development opportunities such as supermarket expansions and small
centre expansions that we intend to pursue in coming years.
CAPITAL MANAGEMENT
Debt and gearing
The Group’s target gearing range is 30% to 40%, however the Group has a preference for gearing to remain below
35% at this point in the cycle. Gearing is below the target range following an institutional placement in April 2020
and a Unitholder purchase plan in May 2020 under which $279.3 million of equity was raised which reduced debt
and increased cash and cash equivalents. The purpose of these equity raisings was to strengthen the Group’s
balance sheet and to provide funding flexibility to continue to deliver on the Group’s strategy of investing in
convenience-based supermarket-anchored centres as opportunities arise.
We maintain a prudent approach to managing the balance sheet, with gearing of 25.6% as at 30 June 2020, which
is below our target range of 30–40%. At 30 June 2020, the Group had cash and cash equivalents and undrawn
debt facilities of $622.8 million.
We have diversified sources of debt with bank facilities, US Private Placement Notes (USPP) and Australian
medium-term notes (A$MTN). Our weighted cost of debt as at 30 June 2020 is 3.5%, which is among the lowest in
our sector. The weighted average term to maturity is 5.1 years and the earliest drawn debt expiry is April 2021.
DEBT FACILITIES EXPIRY PROFILE ($m)
300
250
200
150
100
50
0
25.0
225.0
200.0
175.0
225.0
Bank debt undrawn
Bank debt drawn
MTN
USPP
106.5
100.0
103.3
92.1
65.8
50.0
39.4
50.0
FY21
FY22
FY23
FY24
FY25
FY26
FY28
FY29
FY30
FY32
FY34
Interest rate hedging
SCP’s interest rate hedging policy is designed to reduce the volatility of future distributable earnings as a result of
changing interest rates. We manage this exposure by:
• Targeting a range for fixed or hedged interest rate exposure of 50–100% of drawn borrowings; and
• Using derivative contracts and/or other agreements to fix interest payment obligations.
The Directors will monitor this policy to ensure it meets SCP’s ongoing objectives and is in the best interests of
Unitholders. As at 30 June 2020, 91.1% of the Group’s debt was fixed or hedged.
Distribution payout ratio
SCP has a target distribution payout ratio of approximately 100% of Adjusted FFO (AFFO). For the year to
30 June 2020, our distribution payout ratio was 99% of AFFO. In FY21, we expect the distribution as a percentage
of AFFO to remain approximately 100%.
RESILIENCE OF EARNINGS
Throughout the COVID-19 pandemic, our convenience-based centres have been relatively resilient. Forty-eight per
cent of our rental income comes from anchor tenants which include Woolworths including its affiliates, Coles Group
Limited and Wesfarmers Limited. These tenants are of a high credit quality. The remaining 52% of our rental income
comes from specialty tenants. We have improved this income stream by securing quality tenants skewed to non-
discretionary categories which, we believe, will deliver sustainable rental income growth in the future.
We have actively managed our portfolio by acquiring assets that we believe will deliver strong returns. We have put
in place a solid capital structure, with diversified sources of funding, gearing at 25.6% (below our target range of
30–40%) and average weighted term to maturity of our debt of 5.1 years, and we have fixed or hedged 91.1% of our
debt.
13
SCA Property Group | Annual Report 2020
Shell Cove, NSW
OUR PERFORMANCE
IMPACT OF COVID-19 ON EARNINGS
RETURNS TO UNITHOLDERS
The events relating to COVID-19 have had a material adverse impact on both the operations and financial
performance of the Group during the period. These impacts have included: volatility in the retail sales performance
of our tenants, government-imposed trading restrictions on some of our tenants, the enactment of legislation in
each state and territory implementing the National Cabinet Mandatory Code of Conduct (“Code of Conduct”)
for small and medium sized enterprise tenants, a large increase in rental arrears compared to prior periods by
our specialty tenants directly attributable to the COVID-19 pandemic, an increase in expenses (for example, extra
cleaning and security) and reduction in the valuation of our investment properties.
As these COVID-19 related impacts are ongoing, there is continued uncertainty in relation to the future financial
performance of the Group.
Cash rent shortfall ($m)
COVID-19 period shortfall = $22.7m
(77% collection rate 1)
13.9
26.8
4.5
4.3
4.1
Pr e COVID-19
Perio d
Wai ved Rent
Deferred Rent Remaining Unpai d
Rent
FY20 Cash Rent
Short fall
The difference between invoiced rental income and cash rent collected during FY20 was $26.8 million. $4.1 million
relates to the pre-COVID period (February 2020 or before) and $22.7 million relates to the COVID period (March
2020 to June 2020), including $4.5 million of waived rent and $4.3 million of deferred rent pursuant to the
Mandatory Code of Conduct.
Accounting treatment2
The accounting treatment for this $26.8 million shortfall is $4.5 million waived rent is not included in rental
income or receivable. $22.3 million has been included in rental income and receivable, but an expected credit loss
allowance (“ECL”) of $15.3 million has been raised in receivables against this amount. As the starting ECL balance at
30 June 2019 was $0.9 million, the incremental $14.4 million has been included in property expenses3.
Impact of COVID-19 on FY20 FFO ($m)
14.4
20.5
1.6
4.5
COVID-19 Expenses
(i ncluded in property
expenses)
Wai ved Rent
(no t included in rental
income)
ECL Allowance
(i ncluded in property
expense)
FY20 FFO COVID-19
Direct Impact
The direct impact of COVID-19 on FY20 FFO is $20.5 million (or 2.13cpu). This is attributable to $1.6 million of
additional property expenses (e.g. cleaning and security), $4.5 million of waived rent not included in rental income
and $14.4 million of incremental ECL.
1. Collection rate is calculated as $22.7m cash rent shortfall, divided by total invoiced gross property income for the March 2020 to June 2020 period of
approximately $100m
2. For more information on the accounting treatments, refer to note 3 of the Financial Statements
3. This means that $7.9m of non-cash rental income is included in Net Profit After Tax and FFO, being $26.8m less $4.5m waived rent, less $14.4m incremental
ECL
16
SCP has provided stable and secure earnings and distributions that have been supplemented by strong unit price
performance.
Funds from Operations per unit (FFOPU) (cents)
12.4
12.8
13.8
14.7
15.3
16.3
14.7
FFOPU has grown by
2.8% per annum since
FY14.
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Distribution (cpu)
11.0
11.4
12.2
13.1
13.9
14.7
12.5
Since FY14 distributions
have grown by 2.2% per
annum.
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Total Unitholder Return (%)
1 Year
-4.1%
-21.3%
34.9%
23.9%
5 Year
SCP
ASX200 A-REIT
Accumulation Index
Over the last year and
the last five years SCP
has delivered total
unitholder return (unit
price appreciation plus
distributions) which
has outperformed its
listed retail peers and
the ASX200 A-REIT
Accumulation Index.
17
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 STRONG SALES GROWTH IN OUR CENTRES DESPITE SPECIALTIES
IMPACTED BY COVID-19
In FY20, comparable moving annual turnover (MAT) growth in our centres averaged 4.2% despite specialties
impacted by COVID-19. Anchor supermarket sales growth of 5.1% has improved from 2.0% in FY19 as customers
engaged in panic buying, shopped locally and government restrictions see customers eat and entertain at home.
Discount department store (DDS) sales growth of 7.6% has improved from 2.2% in FY19 due to panic buying during
COVID-19 and high demand for home and living products. Mini Majors sales growth of 2.9% has also improved from
(3.1)% in FY19. Continuing sales growth will assist SCP to generate increasing rental income in the future.
COMPARABLE STORE MAT1 SALES GROWTH BY CATEGORY (%)
SPECIALTY TENANT KEY METRICS
Specialty tenant non-discretionary categories MAT growth was 0.9%, continuing to outperform discretionary
categories that declined by (7.9)% over the year. The average specialty occupancy cost continues to be sustainable
at 10.0%. This enables SCP to secure rental increases when leases come up for renewal. During FY20, we had 232
renewals however due to COVID-19 and a challenging retail market, average uplift was (1.1)% with an average 0.5
month incentives paid. Most specialty leases are for five-year terms and have built-in annual rental increases of
3% to 4%.
While average leasing spreads were negative and average incentives were higher, we have achieved stable
occupancy and an improvement in tenancy mix across the portfolio. We are continuing to achieve 3%-5% annual
fixed increases for 88% of specialty tenants.
As at 30 June 2020
As at 30 June 2019
Existing Centres
30 June 2020
30June 2019
Comparable sales MAT growth (%)1
Average specialty occupancy cost (%)1
Average specialty gross rent ($ per sqm)
Specialty sales productivity ($ per sqm)1
Renewals
Number
Retention (%)
GLA (sqm)
Average uplift (%)
Incentive (months)
New Leases
Number
GLA (sqm)
Average Uplift (%)
Incentive (months)
(1.1)%
10.0%
$778
$8,229
232
76%
31,817
(1.1)%
0.5
146
18,656
(7.7)%
13.8
1.8%
10.1%
$772
$8,010
215
77%
26,455
(1.7)%
-
87
12,200
4.9%
11.0
5.1%
7.6%
2.9%
(1.1)%
4.2%
2.0%
2.2%
(3.1)%
1.8%
1.9%
1. MAT stands for moving annual turnover, and MAT sales growth measures the growth in sales over the last 12 months compared to the previous 12 month
period.
2. FY19 figures were adjusted from 53 week reporting period to 52 weeks comparable to FY20, with reported growth for existing centres of 3.8% for
supermarkets and 6.8% for DDS and FY19 Acquisitions 0.2% for supermarkets and 2.9% for DDS.
TURNOVER RENT ($m)
Captured in a Base Rent review
Total Portfolio
3.3
0.2
3.1
2.3
2.3
Existing Centres
Supermarkets2
DDS2
Mini Majors
Specialties
Total
TURNOVER RENT
THRESHOLDS BEING
ACHIEVED
Many of our anchor tenants are
achieving turnover rent thresholds.
Once turnover rent thresholds are
achieved, rental income increases with
store sales growth. As at
30 June 2020, 39 anchors were
generating turnover rent, and for the
12 months to 30 June 2020, turnover
rent was $3.3 million. We expect these
numbers to increase in coming years
as another 14 supermarkets are within
10% of their turnover thresholds.
OCCUPANCY RATE
REMAINS HIGH
SCP continues to enjoy high levels of
portfolio occupancy of around 98.2%.
This is within the normalised range for
neighbourhood shopping centres.
0.9
1.1
1.2
1.3
1.4
1. Sales growth, occupancy cost and sales productivity metrics only include sales reporting tenants trading over 24 months
FY14
8
Anchors
FY15
14
Anchors
FY16
15
Anchors
FY17
17
Anchors
FY18
20
Anchors
FY19
34
Anchors
FY20
39
Anchors
SPECIALTY LEASE COMPOSITION (as at 30 June 2020)
ANNUAL INCREASE MECHANISM
TENANT TYPE
PORTFOLIO OCCUPANCY (% of GLA)
98.6%
98.4%
98.4%
98.2%
98.2%
Other, 1%
CPI, 10%
Fixed, 89%
Local, 40%
National /
Regional, 60%
18
19
June 2016
June 2017
June 2018
June 2019
June 2020
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 ACTIVE PORTFOLIO MANAGEMENT
FUNDS MANAGEMENT BUSINESS
During FY20, we have actively managed our portfolio by acquiring one convenience-based neighbourhood
shopping centre for $78.4 million, and divesting one neighbourhood centre for $21.5 million.
WARNER MARKETPLACE (WARNER, QLD)
• Acquisition completed in December 2019 for $78.4m (5.92% implied
fully let yield)
• 34% of income from Anchors
• Overall WALE (by income): 6.4 years
• Occupancy at acquisition: 96%
• Year built: 2001; Expanded: 2014
DEVELOPMENT PIPELINE
We have identified over $125 million of development and refurbishment opportunities at 31 of our centres over the
next five years1.
The funds management business allows SCP to recycle non-core assets, and utilise its expertise and platform to
earn management fees in the future (subject to market conditions). The Group has three SCA unlisted retail funds.
The first of these funds, SURF 1, was launched in October 2015, and had a 5 year term as set out in the Product
Disclosure Statement. This fund has successfully sold its properties for $69.3 million (verses original cost of
$60.9 million). This resulted in an internal rate of return to the Unitholders of SURF 1 of 11% and a potential
performance fee of around $0.4 million to be realised by the SCP Group once the residual proceeds of the SURF 1
are distributed to SURF 1 Unitholders in FY21.
Estimated Capital Investment (A$ million)
FY20 FY212
FY22
FY23
FY24
FY25
5.9
7.1
11.7
18.3
20.1
21.7
CENTRE(S)
Shell Cove, Epping North, Belmont,
North Orange, Warner Marketplace,
Wyndham Vale, Northgate, Central
Highlands, Gladstone, Greenbank,
Jimboomba, Mackay, Ocean Grove
Treendale, West Dubbo
-
-
-
0.5
4.0
-
Warrnambool Target, VIC
Woodford Woolworths, QLD
Moama Marketplace, NSW
DEVELOPMENT
TYPE
Centre expansions
Supermarket
expansions
Centre
improvements
Burnie, Ocean Grove, Oxenford,
The Markets, New Town Plaza, West
End Plaza, Riverside, Shoreline, The
Gateway, Whitsunday SC, Sturt Mall,
Meadow Mews, Griffin Plaza, Warnbro,
Sugarworld, Wonthaggi, Northgate,
Kingston
0.8
22.3
11.1
2.3
2.3
2.3
Preliminary &
Defensive
Various
0.1
0.3
0.3
0.3
0.3
0.3
Total
6.8
29.7
23.1
21.4
26.7
24.3
In FY20 Shell Cove Stage 3 was completed. The major projects for FY21 are at The Markets and
Epping North.
1. The exact timing of future developments, expansions and improvements are subject to prevailing market conditions and
regulatory approvals.
2. The $10.0m acquisition cost for the additional land at Greenbank occurring in December 2020 has been excluded from the
Indicative Development Pipeline.
PRUDENT CAPITAL MANAGEMENT
SCP maintains a prudent approach to managing the balance sheet, with gearing of 25.6% as at 30 June 2020. This
is below the target range of 30–40%. Our preference is for gearing to remain below 35% at this point in the cycle.
As at 30 June 2020, the weighted cost of debt was 3.5% p.a. and 91.1% of the Group’s debt was fixed or hedged.
In addition to $600 million of bank and syndicated financing facilities, we currently have $407.1 million of US Private
Placement notes (with maturities between August 2027 and September 2033), and $450 million of A$ Medium-
Term Notes (with maturities of between April 2021 and June 2024). These transactions have diversified our sources
of debt funding, and the weighted average term to maturity of our debt is now 5.1 years, with no debt drawn
expiring until April 2021. As at 30 June 2020 the Group had undrawn debt facilities and cash and cash equivalents
of $622.8 million.
We are well within debt covenant limits of less than 50% gearing and interest cover ratio greater than 2.0x
(currently 4.5x).
SCP will maintain its judicious approach to capital management, and will continually monitor and assess
opportunities to ensure an appropriate, efficient and sustainable funding structure. Gearing is below the target
range following the raising of $279.3 million of equity in April and May 2020 to strengthen the Group’s balance
sheet and to provide greater flexibility to continue to deliver on the Group’s strategy of investing in convenience-
based supermarket-anchored centres as opportunities arise.
20
21
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 FINANCIAL HIGHLIGHTS
PROFIT AND LOSS
FUNDS FROM OPERATIONS
For the financial year ended 30 June 2020, we delivered a statutory net profit after tax of $85.5 million. Our
primary measure for cash earnings is Funds from Operations (FFO), which was 14.65 cents per unit, 10.3% below
the prior year. Our distribution paid to Unitholders for the financial year was 12.50 cents per unit, down by 15.0% on
prior year.
$ million
30 June 2020
30 June 2019
% Change
Net profit after tax (statutory)
85.5
109.6
(22.0)%
$ million
Anchor rental income
Specialty rental income
Recoveries and recharge revenue
Other income
Straight lining and amortisation of incentives
Gross property income
Property expenses
Property expenses/Gross property income (%)1
Net property income
Distribution income from CQR
Funds management income from SURF funds
Net operating income
Corporate costs
Fair value of investment properties
Fair value of derivatives
Unrealised foreign exchange loss
Share of net profit from associates
Transaction costs
EBIT
Net interest expense
Tax expense
Net profit after tax
30 June 2020
30 June 2019
% Change
128.7
126.1
34.2
8.1
(8.1)
289.0
(108.6)
36.6%
180.4
1.7
1.7
183.8
(13.8)
(87.9)
51.4
(8.1)
-
(1.5)
123.9
(37.9)
(0.5)
85.5
120.0
116.6
30.4
7.2%
8.1%
12.5%
5.4
50.0%
(8.6)
(5.8)%
263.8
9.6%
(84.2)
29.0%
30.9%
5.7%
179.6
0.4%
4.4
1.8
(61.4)%
(5.6)%
185.8
(1.1)%
(13.1)
5.3%
(40.5)
117.0%
66.3
(22.5)%
(27.3)
(70.3)%
1.2
nm
(3.7)
(59.5)%
168.7
(26.6)%
(58.5)
(35.2)%
(0.6)
(16.7)%
109.6
(22.0)%
1. For the purpose of this ratio, gross property income excludes straight lining and amortisation of incentives
nm means not meaningful
22
Adjustment for non-cash items
Reverse: Straight lining & amortisation
8.1
8.6
(5.8)%
Reverse: Fair value adjustments
- Investment properties
- Derivatives
- Foreign exchange
Other adjustments
- Other income
- Net unrealised (profit)/loss from SURF funds
- Transaction costs
- Swap termination cost
FFO
Number of units (weighted average) (m)
FFO per unit (cents) (EPU)
Distribution ($m)
Distribution per unit (cents) (DPU)
Payout ratio (%)
Estimated tax deferred ratio (%)
Less: Maintenance capex
Less: Leasing costs and fitout incentives
AFFO
Distribution/AFFO (%)
87.9
(51.4)
8.1
(0.5)
1.6
1.5
-
140.8
960.9
14.65
123.5
12.5
85%
11%
(6.0)
(10.5)
124.3
99.4%
40.5
117.0%
(66.3)
(22.5)%
27.3
(70.3)%
-
0.7
3.7
17.7
nm
128.6%
(59.5)%
nm
141.8
(0.7)%
868.4
10.7%
16.33
(10.3)%
135.4
(8.8)%
14.7
(15.0)%
90%
(5.0)%
58%
(47.0)%
(5.6)
(8.8)
7.1%
19.3%
127.4
(2.4)%
106.3%
(6.9)%
23
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 BALANCE SHEET
SCP HISTORICAL KEY METRICS
As at 30 June 2020, we have net tangible assets of $2,374.0 million (up from $2,103.9 million as at 30 June 2019).
Net tangible assets per unit has decreased to $2.22 (from $2.27 as at 30 June 2019) due to the decrease in like-for-
like investment property valuations and dilutive equity raising in April/May 2020.
SCP Group Metrics as at 30 June
2014
2015
2016
2017
2018
2019
2020
Earnings/Profit and Loss
Gross property income ($m)
Net Profit after Tax ($m)
Funds from Operations ($m)
FFO per unit (cents per unit)
Distribution ($m)
Distribution (cents per unit)
Payout Ratio (%)
Adjusted Funds from Operations ($m)
Distribution/AFFO (%)
158.4
111.6
80.4
12.44
71.3
11.0
88%
79.4
90%
175.8
150.5
84.3
12.81
78.1
11.4
89%
73.7
106%
204.5
204.5
208.9
184.7
100.1
13.75
89.0
12.2
89%
92.3
96%
319.6
108.4
14.70
96.8
13.1
89%
100.1
97%
175.2
114.3
15.30
103.9
13.9
91%
105.7
98%
263.8
109.6
141.8
16.33
135.4
14.7
90%
127.4
106%
289.0
85.5
140.8
14.65
123.5
12.5
85%
124.3
99%
Management Expense Ratio (%)
0.65%
0.55%
0.51%
0.45%
0.43%
0.37%
0.38%
Balance Sheet
Net Tangible Assets (cents per unit)
$1.64
$1.77
$1.92
$2.20
$2.30
$2.27
$2.22
Net Tangible Assets ($m)
1,065.6
1,276.8
1,408.9
1,633.7
1,721.0
2,103.9
2,374.0
$ million
Cash
Investment properties
Investment in CQR
Other assets
Total assets
Debt
Accrued distribution
Other liabilities
Total liabilities
30 June 2020
30 June 2019
% Change
4.2
nm
3,147.0
(0.3)%
29.6
(23.3)%
191.4
28.0%
3,372.2
6.4%
1,137.5
(4.7)%
183.8
3,138.2
22.7
245.0
3,589.7
1,083.6
53.6
78.5
69.0
(22.3)%
Share Price as at 30 June ($ per unit)
61.8
27.0%
Closing Units on Issue (million)
Market Capitalisation ($m)
1,215.7
1,268.3
(4.1)%
Net tangible assets (NTA)
2,374.0
2,103.9
12.8%
Number of units (period-end) (m)
1,071.4
925.6
15.8%
NTA per unit ($)
Corporate costs
External funds under management
- SURF 1, 2 & 3 assets under management
- Less: SURF 1, 2 & 3 co-investment
2.22
13.8
104.8
(15.9)
2.27
(2.2)%
13.1
5.3%
186.4
(43.8)%
Portfolio Metrics
Number of Properties
(26.5)
(40.0)%
Weighted Average Cap Rate (%)
Acquisitions ($m)
Disposals ($m)
Debt Metrics
Gearing (%)
Average Cost of Debt (%)
Interest Bearing Liabilities ($m)
Average Debt Maturity (years)
Assets under management
3,678.6
3,532.1
4.1%
MER1 (%)
0.38%
0.37%
0.01%
1. MER stands for “Management Expense Ratio” and is calculated as Corporate Costs divided by Assets Under Management at year end (including SURF 1,
SURF 2 and SURF 3).
Portfolio Occupancy (%)
Specialty Vacancy (%)
Portfolio WALE (by GLA) Years
Anchor WALE (by GLA) Years
Comparable NOI Growth (%)
Supermarket MAT Growth (AUS) (%)
Anchors in Turnover Rent
Specialty MAT Growth (AUS) (%)
Specialty Occupancy Cost (%)
Specialty Rent psm ($)
Specialty Productivity ($)
Number of Specialty Renewals
- Retention (%)
- Specialty Renewals GLA
- Specialty Re-leasing Spreads (renewals) (%)
- Average Incentives on Renewals (months)
Number of Specialty New Leases
$1.72
648.6
$1,116
145.7
75.7
$2.13
721.5
$2.28
733.4
$2.19
742.8
$2.45
$2.39
$2.18
749.1
925.6
1,071.4
$1,537
$1,672
$1,627
$1,850
$2,212
$2,336
233.0
16.2
145.3
60.9
274.9
311.0
38.3
-
677.9
60.3
78.4
21.5
32.6%
33.3%
34.0%
31.8%
4.9%
535.8
3.5
4.0%
680.1
6.3
3.7%
634.7
5.7
3.8%
817.4
5.0
31.2%
3.8%
867.5
4.9
32.8%
25.6%
3.6%
3.5%
1,137.5
1,083.6
6.1
75
7.83%
97.8%
8.6%
13.5
16.9
ND
8.4%
8
5.6%
10.4%
ND
ND
ND
ND
ND
ND
-
58
82
83
75
77
85
85
7.49%
7.13%
6.47%
6.33%
6.48%
6.51%
98.9%
98.6%
98.4%
98.4%
98.2%
98.2%
3.9%
4.3%
4.8%
4.8%
12.6
15.6
3.9%
2.1%
14
5.6%
9.7%
$651
10.9
14.0
3.4%
0.2%
13
5.6%
9.3%
$676
9.8
12.8
3.0%
2.2%
16
3.8%
9.7%
$700
9.1
12.0
2.8%
1.9%
20
3.3%
9.8%
$716
5.3%
7.9
10.3
2.5%
2.0%
34
1.8%
10.1%
$772
5.1%
7.4
9.6
ND
5.1%
39
-1.1%
10.0%
$778
$6,711
$7,269
$7,801
$7,758
$8,010
$8,229
50
ND
69
ND
81
84%
123
82%
215
77%
232
76%
4,305
7,208
9,267
14,969
26,455
31,817
7.3%
7.5%
7.0%
6.1%
-1.7%
-
114
-
58
-
68
-
71
-
87
-1.1%
0.5
146
% of Debt Fixed/Hedged
85.6%
65.0%
68.4%
86.1%
81.6%
70.4%
Average Hedge Maturity (years)
2.8
3.8
4.2
4.6
3.6
4.8
5.1
91.1%
3.8
24
- Specialty New Leases GLA
6,810
10,107
7,131
8,468
7,677
12,200
18,656
- Average Uplift on New Leases (%)
- Average Incentives on New Leases (months)
ND
ND
ND
13.3
ND
11.9
4.5%
10.0
3.6%
10.9
4.9%
11.0
-7.7%
13.8
ND means non-disclosure
25
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 OUR COMMITMENT TO
SUSTAINABILITY
Our commitment to sustainability is a key element of our long-term planning for the
ongoing success of our centres and the communities they service. The three pillars
of our sustainability strategy guide the investments and initiatives we implement
each year. Our sustainability performance continues to mature and deliver practical
solutions across our growing portfolio.
OUR STRATEGY
SCP’s Sustainability Strategy is aligned to the core values that underpin the organisation. The strategy provides
a clear, achievable and solid platform that supports strong sustainability performance over the long term. The
strategy focuses on three objectives that complement the existing programs in our business which enhance
employee satisfaction, work health and safety, governance and ethical operations.
1
Stronger
Communities
Objective: Strengthen the
relationship between our
shopping centres and their local
communities and help improve
the wellbeing and prosperity of
those communities.
Benefits:
•
Improved services and
facilities for our local
communities
Increased engagement
and goodwill with our
customers and communities
Improved standing of our
centres as community hubs
Increased footfall for retail
partners.
•
•
•
2
Environmentally
Efficient Centres
Objective: Reduce the
environmental footprint of our
shopping centres, particularly
greenhouse gas emissions,
through efficient energy
consumption.
Benefits:
• Reduced environmental
impacts
• Reduced operating costs
•
Improved quality of
environment at our
shopping centres.
3
Responsible
Investment
Objective: Manage
environmental, social and
governance (ESG) risks that
are material to investment
value, and communicate our
performance.
Benefits:
• Reduced risk to asset and
investment performance
• Enhanced corporate
transparency and
reputation.
Management
In FY20, we continued to operate a Sustainability Steering
Committee that focuses on a corporate-level approach and
performance, including our Responsible Investment objective.
We also held an Asset Performance Working Group forum,
which focuses on the practical implementation of our Stronger
Communities and Environmentally Efficient Centres objectives at
centre level.
We increased our public disclosure of key policies, charters and
codes of conduct available on our website. A range of policy
areas were disclosed, including employee work practices, supplier
engagement and diversity. We continue to grow our knowledge of
climate risk and the possible future impacts across the portfolio.
SCP engaged AECOM to perform a portfolio-wide climate impact
assessment to assist SCP in managing the risks associated with
owning a geographically diverse portfolio of convenience-based
neighbourhood and sub-regional shopping centres.
Community Event at Delroy Park, NSW
27
Coorparoo, QLD
SCA Property Group | Annual Report 2020 OUR PROGRESS AND COMMITMENT
During FY20, continued progress was made across our three strategic pillars. We have made significant
investments to reduce our energy consumption and greenhouse gas (GHG) emissions (while creating cost
efficiencies), which have produced positive results for our properties.
FY21 will deliver an expansion on our renewable energy strategy, furthering our understanding of climate risk, and
continued growth of engagement with our communities.
COMMITMENT FOR FY20
STATUS
Completed Advanced Underway
FY21 COMMITMENT
STRONGER COMMUNITIES
Roll out one national Stronger
Communities campaign. Implement
15 initiatives significant to the local
community. Build on current local
Stronger Communities initiatives.
60+ Stronger Communities
campaigns implemented were
significant to the local community.
However, due to COVID-19, various
stronger communities campaigns
were cancelled or postponed,
including the national campaign.
ENVIRONMENTALLY EFFICIENT CENTRES
Review three-year GRESB
performance and develop
improvement action plan.
Focused on developing a strategy
to continually improve GRESB
submission.
Promote recycling initiatives at the
centres to divert waste from landfill
Trial completed at one centre
for treatment of organic waste.
Preliminary results have shown a
reduction in waste sent to landfill.
Review performance of Building
Management System (BMS) plant
and installation at two centres.
BMS installation completed at three
centres with energy consumption
achieving the forecast reduction.
Leveraging a partnership with a
national charity or community
group to roll out one national
campaign and corporate
initiatives. Implement 60
initiatives significant to the local
community. Build on current local
Stronger Communities initiatives,
including raising awareness of
social issues via our social media
pages.
Continued focus on community
engagement through the
Stronger Communities initiative.
Advancement in understanding
SCP’s exposure to climate risk
across the portfolio. Improving
public disclosure of SCP’s ESG
performance.
Implementation of organic waste
management at a further five
centres.
Improve environmental
performance through
the installation of energy
management systems and LED
lighting at a further three centres.
Trial implementing energy
management systems into the
smaller neighbourhood centres in
the portfolio.
HVAC1 plant replacement at three
properties to eliminate R222.
HVAC plant replacement works have
commenced at Prospect Vale and
are due for completion in Q4 2020.
HVAC plant replacement at four
properties to eliminate R22.
Re-forecast targets in consideration
of expanded portfolio and delivered
initiatives.
Initial three-year targets have been
achieved.
Deploy onsite solar generation to a
further four centres, taking the total
to eight installations.
Solar generation plant fully
operational at five centres.
Formulate future targets to
include measures for energy and
emissions intensity, renewable
energy and climate risk.
Undertake industry review to
determine renewable energy
strategy across the portfolio.
Results from review expected in
Q4 2020.
1.
2.
Heating, Ventilation and Airconditioning.
R22 is an ozone depleting refrigerant. The use of R22 is being phased out and it will be a banned substance in 2030.
28
COMMITMENT FOR FY20
Continue roll-out of LED, BMS and
solar technology at commercially
viable properties.
STATUS
Completed Advanced Underway
LED lighting has been installed at
twenty sites, five sites have solar
generation plants and four sites
utilise building automation systems.
FY21 COMMITMENT
Undertake industry review to
determine renewable energy
strategy across the portfolio.
Results from review are expected
in Q4 2020.
RESPONSIBLE INVESTMENT
Annual review of Sustainability
Policy. Consideration of
Sustainability Policy with respects
to alignment with UN Sustainable
Development Goals (SDGs).
Policy review complete and
updated. ESG strategy aligned with
the UN SDGs and SCP’s overarching
business strategy.
External review of ESG strategy
and long-term targets to be
completed to ensure relevance
to industry practices and SCP’s
overarching business strategy.
2019 Sustainability Report content
and formatting to be aligned to UN
SDGs.
2019 and 2020 Sustainability
Reports aligned to UN SDGs.
Formal materiality assessment of
ESG risks and opportunities to be
reviewed annually.
Ongoing/annual review complete.
Increased focus on the impacts of
climate risk on the SCP portfolio.
Improve public disclosure through
the utilisation of SCP’s website.
Materiality assessment to be
updated through engagement
with our staff, property
management partners and our
external sustainability advisers.
Mt Gambier, SA
29
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 REMUNERATION
REPORT
WHS
The Board and senior management of SCP are committed to ensuring the ongoing safety and wellbeing of our
customers, employees, retail partners, visitors and contractors. Safety is always a core value across the Group and a
key focus for us. We are constantly striving to improve our health and safety performance across the Group.
The safety performance of the Group is an agenda item at every Board meeting. The Board receives monthly
reports on safety performance and trends from the Group’s management team and is kept informed of any key
safety risks facing the business.
Driving improvements in workplace safety standards and performance has been a key focus of the Group since
listing. We have a robust WHS framework and governance platform in place, and we continue to refine and enhance
how it operates to ensure it remains fit for purpose.
In FY20, the following initiatives were undertaken:
• Appointment of a dedicated resource to manage Safety across the owned/managed portfolio and Corporate
operations
• External audit of WHS Policy and Framework to ensure continued alignment to industry practices, laws and
regulations
• Revisions of monthly WHS reports to include updated Key Risk Indicators, performance benchmarking and key
highlights
• Submission of annual performance review on WHS management practices. Review identifies trends and
opportunities learnt from previous 12 months data. This flows into training for our people and service providers
to assist in managing WHS more effectively
• Active participant in Shopping Centre Council of Australia (SCCA) industry workshops with a view to
collaborating on safety performance and ensuring that best practice methods can be shared across the
industry
• Enhanced leadership across the portfolio through monthly newsletters and safety bulletins
• Our retail property management teams and externally engaged consultants refined their monthly, quarterly and
annual safety and property risk audits to ensure they remain fit for purpose
• Continuous improvement in contractor WHS performance requirements. An increased focus on WHS and
sustainability outcomes are built into contracts and scopes of works for the procurement of services.
EMPLOYMENT
SCA Property Group’s ongoing success is largely dependent on our people. The Group values and respects the
unique contributions of people with diverse backgrounds, experiences and perspectives. We recognise that team
members may assume changing domestic and carer responsibilities during their careers and are committed to sup-
porting this via flexible work and leave arrangements.
As at 30 June 2020, the gender-related statistics are as follows:
Female Board
Directors1
Female Board
Non-Executive
Directors2
Female Executives
in Senior
Management3
Female
employees
38%
50%
38%
57%
Percentage of all Board Directors.
1.
2. Non-Executive Directors of Board of SCPRE.
3. Senior Management means the CEO, his direct or functional reports and certain of their reports who have responsibility for an
area and/or report regularly to the Board or a Committee of the Board on the performance of that area.
The Group’s Diversity and Inclusion Policy is available at www.scaproperty.com.au/about/governance.
In view of the Group’s current small staff of 51, it is impractical for the Board to set measurable diversity-related
objectives and targets. The Board will continue to monitor this as the Group grows.
30
SCA Property Group | Annual Report 2020 Dear Unitholders,
On behalf of the Board, I am pleased to introduce the 2020 Remuneration Report.
Long Term Incentive outcomes
The purpose of this Report is to describe SCP’s approach to remuneration for Executives and Non-Executive
Directors (NEDs), and in particular, the links between SCP’s Remuneration Framework and business strategy,
performance and reward. A summary of performance, pay adjustments and pay outcomes is below.
Group performance
Prior to the onset of the COVID-19 pandemic, SCP had been on track to deliver a solid result for FY20 in line with
market guidance. The second half of FY20 was impacted by the COVID-19 pandemic, that has affected SCP and all
other retail businesses throughout the world. In relative terms, SCP has performed well in the retail environment.
This was a consequence of our sound defensive strategy focusing on convenience-based retail centres weighted
towards non-discretionary retail segments, with long leases to quality anchor tenants. Our supermarket anchored
centres continue to be resilient, hence many of the performance outcomes were solid:
• Anchor tenants have experienced strong sales growth and turnover rent has increased.
• We have continued to complete leasing deals, with 75 renewals and 55 new lease deals completed during the
COVID-19 period (March 2020 to June 2020).
FY16 Long Term Incentive (LTI) awards vested in August 2019, prior to the onset of the pandemic. Performance
measures were funds from operations per unit (FFOPU), return on equity (ROE) and relative total securityholder
return (TSR). Performance was slightly below the maximum required for full vesting. As a consequence of SCP’s
strong results across all three measures over the long term performance period, 95.86% of the FY16 LTI vested.
Remuneration Framework
For the FY20 Short-Term Incentive (STI) and Long-Term Incentive (LTI) plans, which were set in June 2019, the
Executives’ STI and LTI opportunities were increased from the prior period to provide for a stronger weighting
towards “at-risk” remuneration. The adjusted balance between TFR and at-risk pay was consistent with the Board’s
view of the potential to profitably grow the business. Further detail is provided section 1.1.
Director fees
A 2.5% increase was applied to NED base fees from 1 January 2020, again, prior to the onset of the pandemic.
There was no increase applied to Committee fees.
• Specialty vacancy is stable at 5.1% and specialty occupancy costs are also stable at 10.0%.
• As I write this, approximately 98.8% of tenants are now open and trading including approximately 60% in
More information
Victoria.
This strategy will continue to hold SCP in good stead once the pandemic is over.
More information on performance requirements and outcomes, remuneration levels, the remuneration framework
and its underlying rationale are detailed in the following pages.
Notwithstanding this, COVID-19 has impacted, and continues to impact, many of our specialty tenants:
On behalf of the Board, we recommend this Report to you.
Steven Crane
Chair, Remuneration Committee
The Remuneration Report has been audited by Deloitte Touche Tohmatsu.
• Sales performance has been mixed, with many experiencing sales declines
• We have provided rental assistance to over 600 tenants in accordance with the Mandatory Code of Conduct
• The rental collection rate during the COVID-19 period was 77%1. We will continue to pursue payment from
tenants of all of the outstanding amounts not covered by agreed waivers or deferrals
Therefore, in absolute terms, there was a poorer performance on key metrics in FY20 compared to FY19 which was
unaffected by COVID-19:
• Funds from Operations (FFO) of $140.8 million – a decrease of 0.7% compared to last year;
• An increase in SCP’s Management Expense Ratio (MER) to 0.38%, up from 0.37% compared to last year;
• FY20 FFO per unit of 14.65 cpu represents a decline of 10.3% compared to last year;
• FY20 distributions of 12.50 cpu represents a decline of 15.0% compared to last year.
We continue to actively manage our portfolio, and acquired Warner Marketplace, a Woolworths and Aldi-anchored
convenience centre in Brisbane QLD, for $78.4 million (excluding transaction costs) in December 2019, disposed of
Cowes VIC for $21.5 million in February 2020 (9.7% above June 2019 book value), and completed the sale process
for the SURF 1 investment properties for $69.3 million, achieving an 11.0% IRR for our SURF 1 investors.
An agile response to the pandemic to raise equity in April and May resulted in lower gearing, and a balance sheet in
a strong position to take advantage of opportunities that may arise as a result of the pandemic, should they arise.
Fixed remuneration adjustments
Executive total fixed remuneration (TFR) was increased between 5.2% and 6.0% on 1 October 2019 following
the annual review undertaken by the Remuneration Committee. The review referenced market data from an
independent source. This was the first adjustment to Executive TFR since 1 October 2017. The increases were
applied well before the onset of the pandemic, and reflected an assessment of Executive experience, knowledge
and competence acquired with longevity in the role, as well as the period of time elapsed without an adjustment.
As FFO remained strong and there was no risk that any employees needed to be stood down as a result of the
pandemic, there was no need to seek any temporary TFR reductions from Management.
Annual incentive outcomes
As set out above, financial and operational targets were ultimately not met as a result of COVID-19. Therefore, for
Executives no Short-Term Incentive (STI) payments were made for these components.
While each Executive was on track to achieve results in regard to the personal performance component, the Board
exercised negative discretion so that payment for meeting or exceeding any personal performance requirements
was also reduced to zero. This determination was made in recognition of the fact that Unitholders have been
impacted by the decline in distributions and the value of their units over the period.
1. March 2020 to June 2020 period
32
33
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 REMUNERATION REPORT
1.
1.1
1.2
1.3
2.
2.1
2.2
3.
3.1
3.2
3.3
3.4
3.5
3.6
3.7
4.
4.1
4.2
4.3
5.
5.1
5.2
6.
REMUNERATION SNAPSHOT
REMUNERATION OVERVIEW
SCP’S KEY MANAGEMENT PERSONNEL
ACTUAL REMUNERATION EARNED IN RESPECT OF FY20
REMUNERATION POLICY
SCP’S REMUNERATION PRINCIPLES, POLICY AND PHILOSOPHY
REMUNERATION GOVERNANCE
EXECUTIVE REMUNERATION
EXECUTIVE REMUNERATION AT SCP
FY20 STI OUTCOMES
HOW REMUNERATION WAS STRUCTURED IN FY20
PAST FINANCIAL PERFORMANCE
LTI GRANTS IN FY20
TOTAL REMUNERATION EARNED IN FY20
SERVICE AGREEMENTS FOR EXECUTIVE KMP
NON-EXECUTIVE DIRECTOR REMUNERATION
BOARD REMUNERATION STRATEGY
TOTAL REMUNERATION FOR NON-EXECUTIVE DIRECTORS
NON-EXECUTIVE DIRECTOR UNITHOLDING
ADDITIONAL INFORMATION
EVENTS SUBSEQUENT
DEFINITIONS
INDEPENDENT AUDITORS REPORT
35
35
39
40
41
41
42
43
43
43
46
50
51
52
53
55
55
55
55
56
56
57
58
Key points to note in relation to this Report are:
• The disclosures in this Report have been prepared in accordance with the provisions of section 300A of the
Corporations Act 2001, even though, as stapled trusts, there is no obligation for SCP to comply with section
300A of the Corporations Act.
• The term “remuneration” has been used in this Report as having the same meaning as “compensation” as
defined by AASB 124 “Related Party Disclosures”.
• For the purposes of this Report, the term “Executives” means Key Management Personnel (KMP) who are
Executives and therefore excludes Non-Executive Directors (NEDs).
1. REMUNERATION SNAPSHOT
1.1
Remuneration Overview
Key questions
Our approach
1. Were there any pay
increases?
2. Were there any
remuneration
reductions as a
result of COVID-19?
Total fixed remuneration (TFR) increases of between 5.2% and 6.0% were
awarded to Executives on 1 October 2019 following the annual review
undertaken by the Committee during the period. Prior to these increases,
fixed remuneration for all Executives had remained at the levels set on 1
October 2017.
As FFO remained strong and there was no risk that any employees
needed to be stood down as a result of the pandemic, we did not seek
any temporary TFR reductions from Management. However, no STIs were
awarded as a result of pandemic impacts on financial and operational
results, and negative discretion applied in consideration of its impact on
Unitholder distributions. See further detail below.
Further
information
3. Were any changes
made to the
remuneration
structure in FY20?
The Short-Term Incentive (STI) and Long-Term Incentive (LTI)
opportunities for all Executives were increased as set out below
during the period, resulting in a stronger weighting towards “at-risk”
remuneration for all Executives as part of their total remuneration
opportunity (TRO). Refer to key question 11 for further details.
Sections 3.2
and 3.3
Executive
Anthony Mellowes
Mark Fleming
Mark Lamb
FY19 STI
% of TFR
FY20 STI
% of TFR
FY19 LTI
% of TFR
FY20 LTI
% of TFR
85%
60%
30%
100%
70%
35%
90%
60%
25%
100%
70%
35%
4. Were there
any changes to
performance
measures?
The FY20 STI and LTI metrics for Executives were based on those
developed in FY19 and updated for the strategic objectives set for the
business in FY20, providing Executives with meaningful and robust
stretch targets.
There were minor adjustments made to the weightings of the cash net
operating income (cash NOI) and Management Expense Ratio (MER)
performance conditions of the STI award, in order to focus Executives
on driving recurring income from stabilised assets. There was also a new,
additional performance condition included for FY20 to focus Executives
on driving income from the portfolio of 10 assets acquired from Vicinity in
October 2018. Details are set out in section 3.2.
5. What is the FY20
STI payout to
Executives and
why?
The final months of FY20 were impacted by the extreme health, social
and economic impacts of the COVID-19 pandemic, which in turn impacted
SCP’s financial performance. Consequently, the payout for the financial
components of the STI was assessed at zero.
Section 3.2
Each Executive had a 20% personal performance component. Based on
an assessment against the requirements of this component payments
would ordinarily have been made. However, the Board exercised
negative discretion to reduce the payment for the personal performance
component to zero. This negative discretion was applied in recognition
of the fact that Unitholders have been impacted by the decline in
distributions, and value of their units over the period.
34
35
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 Key questions
Our approach
6. Did any LTI awards
vest in FY20?
Yes, the FY16 LTI awards vested in August 2019. Details of the
performance period and metrics were set out in section 9.1 of the 2015
Remuneration Report, and details of actual performance against metrics
were set out in sections 1.1 and 1.3 of the 2019 Remuneration Report.
While not in FY20, SCP also notes that the FY17 LTI awards vested
in July 2020. The performance period for the distributable earnings
per unit (DEPU) and return on equity (ROE) performance conditions
ended on 30 June 2019, and the performance period for the relative
total securityholder return (TSR) performance condition ended on 30
September 2019. Performance was assessed as slightly below maximum
as a consequence of SCP’s strong results over the performance period,
which resulted in an 89.78% payout of the total FY17 LTI maximum
opportunity for each Executive.
In making a determination with respect to the FY17 LTI awards, the Board
considered both the impacts of COVID-19 on SCP and its Unitholders, and
the actual performance delivered by Executives over the performance
period to 30 June 2019, prior to the pandemic, and current LTIs on foot
that measure performance over the pandemic period. After careful
consideration of each of these factors, the Board determined that the
FY17 LTI awards should vest and negative discretion should not be
exercised, given the performance period for the FY17 LTI award had
concluded pre-pandemic. The FY18 and FY19 LTI performance periods
and assessments will include pandemic effects, with a reasonable
probability that some or all of the grants will not vest as a result of the
pandemic.
The Board exercised negative discretion in determining that payments for
the personal component of the FY20 STI awards be reduced to zero.
As a general principle, where a formulaic application of the relevant
remuneration metrics is likely to produce a material and perverse
remuneration outcome, or where it is in the best interests of Unitholders
for the Board to do so, the Board may consider exercising its discretion in
determining awards.
NED base fees were increased by 2.5% from 1 January 2020, with no
increase having been applied to base fees in the prior year. There was no
increase applied to Committee fees, with the exception of the Nomination
Committee where the fee payable to the Chair was increased. No fees are
paid to members of the Nomination Committee.
Total NED remuneration payable in FY20 was $1,184,027 up from
$1,071,103 in FY19.
7. Did the Board
exercise discretion
when considering
Executive awards in
FY20?
8. Were any changes
made to NED fees
in FY20?
Further
information
Section 3.1
Further
information
Key questions
Our approach
11. What portion of
remuneration is
at-risk?
STI and LTI awards are based on performance and are therefore
considered at-risk.
• 66.67% of the CEO’s TRO is at-risk;
• 58.33% of the CFO’s TRO is at-risk; and
• 41.18% of the General Counsel/Company Secretary’s (GC/CS) TRO is
at-risk.
12. Are there any
clawback provisions
for incentives?
All incentives contain “malus” provisions allowing for the forfeiture
of unvested rights in certain circumstances including in the event of
termination for cause or for failing to meet prescribed minimum business
and individual performance standards.
13. Do all Board
members, including
Executive Directors,
hold units in SCP?
Yes, all members of the SCP Board, including both Executive Directors,
hold units in SCP; however, there is no mandated minimum holding
requirement, as it is considered that this may be a deterrent to achieving
Board or Executive diversity.
14. How is risk
managed at the
various points in
the Remuneration
Framework?
Risk is managed at various points in the Remuneration Framework
through:
• Part deferral of STI awards for the CEO and CFO, with the vesting of
STI rights deferred for two years;
• LTI performance hurdles that reflect the long-term performance of
SCP, measured over a three-year performance period with a further
one-year deferral;
• SCP’s incentive plan contains broadly framed malus provisions that
allow the Board in its sole discretion to determine that all, or part, of
any unvested incentive awards be forfeited in certain circumstances;
and
• Board discretion on performance outcomes where a formulaic
application of the relevant remuneration metrics is likely to produce
a material and perverse remuneration outcome, or where it is in the
best interests of Unitholders for the Board to do so.
Section 4.1
Short-Term Incentives (STIs)
15. What are the
The FY20 performance measures are:
STI performance
measures that
determine if the STI
vests?
• FFOPU;
• MER;
• Cash NOI;
• VCX portfolio acquisition NOI (VCX NOI) and
• Personal component.
Sections 3.2
and 3.3
Remuneration Framework
9. How does
the Board set
remuneration
hurdles?
The Board focuses the STI and LTI performance conditions and hurdles
on those areas where it believes the Executives can create the best value
for Unitholders, while at the same time ensuring that the hurdles build
on prior-year performance, and provide Executives with meaningful and
robust stretch targets within SCP’s stated risk parameters. These areas
include:
Section 2.1
• Securing sustainable FFOPU and earnings growth;
• Driving NOI at the portfolio level, focusing on the underlying cash
flow quality for the current period and for future periods;
• Appropriately managing corporate cost relative to the scale of funds
managed, measured by the MER;
• Ensuring SCP has a competitive cost of capital through appropriate
capital management practices ensuring medium and long-term
competitiveness in the market; and
• Demonstrating the personal characteristics and qualities expected of
high-quality management personnel.
10. How and when
does the Board
determine it uses
discretion?
Refer to key question 7.
These performance measures were chosen as they are directly linked to
SCP’s strategic objectives.
16. Are any STI
payments deferred?
Yes, 50% of STIs for the CEO and CFO are in the form of deferred rights,
with a two-year deferral period.
Section 3.3
17. Are STI payments
capped?
Yes, the total maximum STI opportunity as a percentage of TFR is as
follows:
Section 3.3
• CEO – 100% of TFR;
• CFO – 70% of TFR; and
• GC/CS – 35% of TFR.
18. Are distributions
paid on unvested
STI awards?
On vesting, each STI right awarded entitles the relevant Executive to
receive one stapled unit in SCP plus an additional number of stapled units
calculated on the basis of the distributions that would have been paid in
respect of those stapled units over the two-year STI deferral period.
Section 3.3
19. Have any
adjustments,
positive or
negative, been
made to the STI
payments?
There were no FY20 STI payments made to Executives during the period.
Refer to key question 7 in relation to the exercise of negative discretion
concerning the personal component of the FY20 STI awards.
Section 3.2
36
37
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 Key questions
Our approach
Long-Term Incentives (LTIs)
20. What are the
performance
measures that
determine if the LTI
awards vest?
FY20 LTI rights will be tested against three performance hurdles over
a three-year performance period followed by a one-year deferral (total
vesting period is four years). The performance hurdles are weighted as
follows:
• TSR relative to the constituents of the S&P/ASX 200 A-REIT
Accumulation Index (33.33% of grant);
• Specified FFOPU growth (33.33% of grant); and
• Specified ROE (33.33% of grant).
Further
information
Sections 3.3
and 3.5
1.2
SCP’s Key Management Personnel
Key Management Personnel (KMP), as defined by AASB 124, refers to those people having authority and
responsibility for planning, directing and controlling the activities of the consolidated entity, directly or indirectly,
including any Director of an entity (whether Executive or otherwise) of the consolidated entity. KMP includes
Directors of Shopping Centres Australasia Property Group RE Limited and other Executives of SCP.
Name
Position as at 30 June 2020
Board appointment date
Non-Executive Directors (NEDs)
Philip Marcus Clark AO
These performance conditions were chosen as they are directly linked to
SCP’s strategic objectives.
Dr Kirstin Ferguson
21. Does the LTI have
No, there is no re-testing.
re-testing?
22. Are distributions
paid on unvested
LTI awards?
On vesting, each LTI right awarded entitles the relevant Executive to
receive one stapled unit in SCP plus an additional number of stapled units
calculated on the basis of the distributions that would have been paid in
respect of those stapled units over the four-year LTI deferral period.
Section 3.3
Philip Redmond1
Chair - Board
Member - Nomination Committee
Member - Audit, Risk Management and
Compliance Committee
Chair - Nomination Committee
Member - Remuneration Committee
Member - Audit, Risk Management and
Compliance Committee
Member - Investment Committee
Member - Nomination Committee
Chair - Audit, Risk Management and
Compliance Committee
Member - Remuneration Committee
Chair - Investment Committee
Member - Nomination Committee
Member - Audit, Risk Management and
Compliance Committee2
Member - Remuneration Committee
Member - Nomination Committee
Chair - Remuneration Committee
Member - Nomination Committee
Member - Investment Committee
19 September 2012
1 January 2015
26 September 2012
27 September 2012
13 December 2018
13 December 2018
Chief Executive Officer
Member - Investment Committee
Appointed as Director:
2 October 2012
Appointed as Chief Executive
Officer from 1 July 2013
Belinda Robson
Beth Laughton
Steven Crane
Executive Directors
Anthony Mellowes
Mark Fleming
Chief Financial Officer
Member - Investment Committee
Appointed as Chief Financial Officer
from 20 August 2013
Other Executives
Mark Lamb
General Counsel and Company Secretary
26 September 2012
1.
Philip Redmond retired as a Director of SCP on 30 September 2020
2. Beth Laughton was appointed as Chair of the Audit, Risk Management and Compliance Committee effective 1 October 2020
Appointed as Director:
26 May 2015
23. Is LTI grant
quantum based on
“fair value” or “face
value”?
In the year of issue, LTI grant quantum is determined based on the face
value of SCP units, calculated by dividing the intended LTI grant value by
the volume-weighted average price for the five trading days following the
release of the prior period’s full year results.
24. Can LTI participants
hedge their
unvested rights?
No. LTI participants must not use any hedging strategy that has the
effect of reducing or eliminating the impact of market movements on any
unvested rights that are still subject to disposal restrictions.
Section 3.3
25. Does SCP buy
securities or issue
new securities to
satisfy unit-based
awards?
Executive Agreements
26. What is the
maximum an
Executive can
receive on
termination?
Board structure
27. How is the Board
assessing the
skills of NEDs to
ensure appropriate
and rigorous
performance
review?
SCP has issued new units to satisfy unit-based awards to date; however,
SCP may elect to buy units in certain circumstances.
Termination payments will be managed differently in various termination
scenarios, depending upon whether the Executive ceases employment
with or without cause.
Section 3.7
At least annually, the Nomination Committee reviews the composition of
the Board and Committees and makes recommendations to the Board in
respect of the appropriateness of the skills mix of Directors, giving due
consideration to the business’s strategy and operations.
In addition, the Nomination Committee considers the form of the Board
performance evaluation annually, including whether an external facilitator
should be used in the process. The Chair of the Nomination Committee
coordinates the performance review and the Nomination Committee’s
recommendations are considered by the Board.
A more detailed review of the skills of Board members is included in the
Directors’ Report.
38
39
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 1.3
Actual remuneration earned in respect of FY20
The table below sets out the actual value of remuneration earned by each Executive during FY20. The reason
the figures in this table are different to those shown in the statutory remuneration table in section 3.6 is because
the latter table includes an apportioned accounting value for all STI and LTI equity grants (some of which remain
subject to satisfaction of performance and service conditions and so may not ultimately vest).
The table below represents:
• Fixed remuneration including superannuation;
• Cash STI – the non-deferred portion of STI payments to be made in September 2019 in recognition of
performance during FY19; and
• Equity that vested during the year that relates to prior years’ awards. The value ascribed to this equity is
based on the closing value on the day the equity vested. This value is not the same as the value used for
financial reporting.
ACTUAL REMUNERATION EARNED IN FY20
Fixed
remuneration
including
Superannuation
$1
Deferred
STI vested
equity
number
units3
Cash
STI2
Deferred
STI vested
equity value
$4
LTI vested
equity
number
units5
Financial
Year
LTI vested
equity
value $6
Other
remuneration
$
Total
remuneration
$7
2020
2019
2020
2019
2020
2019
2020
2019
951,250
-
137,948
353,147
403,553 1,033,096
910,000 324,290
130,945
322,125
561,590
1,381,511
653,125
-
63,062
161,439
184,482
472,274
625,000
157,219
59,118
145,430
195,943
482,020
595,000
-
572,500
152,016
-
-
-
-
67,643
173,166
72,516
178,389
2,199,375
-
201,010
514,586
655,678
1,678,536
2,107,500 633,525
190,063
467,555
830,049 2,041,920
-
-
-
-
-
-
-
-
2,337,493
2,937,926
1,286,838
1,409,669
768,166
902,905
4,392,497
5,250,500
Executive KMP
Anthony Mellowes
Mark Fleming
Mark Lamb
Total
1.
Fixed remuneration comprises fixed remuneration including superannuation contributions.
2. Cash STI payments are paid shortly after the end of the financial year to which they are attributed.
3. Deferred STI vested equity units were issued on 8 August 2019 and 9 August 2018 in respect of the financial year ending two
years previously respectively.
4. Value of STI is calculated by reference to the closing price on the day of issue, which was 8 August 2019 $2.56 and 9 August
2018 $2.46. This price does not represent the value for financial reporting.
5. LTI vested units were issued on 8 August 2019 in respect of the plans covering the preceding period. For the prior period, LTI
vested units were issued on 9 August 2018 in respect of plans covering the preceding period.
6. The LTI vested value is calculated by reference to the closing price on the day of issue, which was 8 August 2019 $2.56 and 9
August 2018 $2.46.
7. Total remuneration is made up of fixed remuneration, including Superannuation $ plus cash STI $ plus Deferred STI vested
equity value $ plus LTI vested equity value.
2. REMUNERATION POLICY
2.1
SCP’s remuneration principles, policy and philosophy
The Board believes that the structure, design and mix of remuneration should, through the alignment of Unitholder
interests with those of a motivated and talented Executive, provide Unitholders with the best value. At the same
time, the Board recognises that it is important to have programs and policies that may be adjusted, as appropriate,
to address:
• Industry trends and developments, as well as evolving Executive remuneration and good governance
practices; and
• Feedback from engagement with Unitholders and other stakeholders.
In support of this philosophy, SCP’s remuneration policies are framed around two key remuneration principles:
1. Fairly reward and motivate Executives having regard to the external market, individual contributions to SCP
and overall performance of SCP.
• TRO (including fixed component) is regularly independently benchmarked against a peer group of
comparable entities (reflecting size, complexity and structure) to ensure that Executive remuneration is
aligned over time to market levels.
• The quantum and mix of each Executive’s TRO take into account a range of factors including that Executive’s
position and responsibilities, ability to impact achievement of SCP’s strategic objectives, SCP’s overall
performance, and the desire to secure tenure of Executive talent.
• Fixed remuneration rewards Executives for performing their key responsibilities that are aligned to the
Board-endorsed strategy to a high standard. This high standard includes stretch targets above core business
performance.
2. Appropriately align the interests of Executives and Unitholders.
• A meaningful portion of an Executive’s TRO is at-risk through performance-contingent incentive awards.
• The structure and metrics of incentive awards are tied directly to the achievement of an appropriate balance
of short and long-term goals and objectives agreed in advance that provide Executives with appropriate
stretch. Actual performance drives what Executives are paid.
• The threshold, target and maximum hurdles within each key performance indicator (KPI) are set each financial
year and are designed to encourage strong to exceptional performance within SCP’s stated risk parameters.
• For the CEO and the CFO, the majority of their at-risk pay is delivered through conditional and deferred rights
to SCP securities.
• To encourage Management to secure the long-term future of SCP, unvested incentive opportunities are
retained by the Executive upon resignation or retirement unless the Board determines they should be
forfeited.
• Performance-based remuneration opportunities are designed to ensure they do not encourage excessive risk
taking or breaches of workplace health and safety, environmental or other regulations that may compromise
SCP’s value and/or reputation. SCP considers key risk parameters to include maintaining levels of gearing
within the target range of 30–40% with a preference for gearing to remain below 35% at this point in the
cycle. SCP remains focused on owning and operating neighbourhood shopping centres predominantly
tenanted by non-discretionary retail.
• All incentives contain “malus” provisions permitting the Board to exercise its discretion to forfeit some or
all of an Executive’s unvested STI rights where FFO is not maintained in the deferral period following the
performance period.
This philosophy is substantially the same as for FY19. The Committee continues to benefit from discussions with key
stakeholders and where appropriate will take these views into account in formulating SCP’s remuneration strategy.
40
41
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 2.2
Remuneration governance
Role of the Remuneration Committee
The Board of SCP (Board) has adopted a Board Charter which sets out the objectives, responsibilities and
framework for the operation of the Board. A copy of the Board Charter is available at
www.scaproperty.com.au/about/governance.
3. EXECUTIVE REMUNERATION
3.1
Executive remuneration at SCP
The Board believes that SCP’s remuneration structure, design and mix should align and motivate a talented
Executive team with Unitholder interests, providing Unitholders with the best value.
The Board Charter underlines that the Board is accountable to Unitholders for SCP’s performance and for the
proper management of SCP’s business and affairs.
SCP’s Executive remuneration is performance based, equity linked and multi-year focused. The graph below sets
out the remuneration structure and mix for each Executive for FY20.
To assist the Board in carrying out its responsibilities, the Board has established the Remuneration Committee
which has responsibility for reviewing, making recommendations to the Board and, where relevant, approving the
remuneration arrangements in place for the Non-Executive Directors, the CEO and other Executives.
The charter for the Remuneration Committee is reviewed by the Board annually and can be found at
www.scaproperty.com.au/about/governance.
How remuneration decisions are made
Remuneration of all KMP is determined by the Board, acting on recommendations made by the Remuneration
Committee.
The Board and the Remuneration Committee have absolute discretion when considering the awarding and vesting
of STI and LTI opportunities to Executives. The purpose of preserving this discretion is to allow the Board to ensure
remuneration amounts and structure are at all times appropriate and to prevent any unintended vesting of awards
that would arise from a purely formulaic application of the metrics included as part of the STI and LTI opportunities.
Where a formulaic application of the metrics is likely to produce a material and perverse remuneration outcome,
or where it is in the best interests of Unitholders for the Board to do so, the Board may exercise its discretion in
determining awards. The Board, Remuneration Committee and Management progressively monitor corporate
actions throughout the year that may produce a material and perverse remuneration outcome.
The Board is ultimately responsible for recommendations and decisions made by the Remuneration Committee.
When determining awards for Executives, the Committee seeks to acknowledge material performance
improvement in the period it was achieved where the Committee believes that Executives’ interests are aligned with
Unitholders. The Committee will make appropriate adjustments to hurdles set for subsequent periods to reflect
the award given, to ensure the same performance is not rewarded twice. NEDs meet without Executives present
from time to time to discuss remuneration objectives and outcomes. The CEO provided the Committee with his
perspectives on fixed remuneration and STI and LTI performance outcomes for his direct and functional reports.
External advisers and independence
The Committee may seek external professional advice on any matter within its terms of reference.
During the year, the Committee engaged the services of Guerdon Associates to advise on various aspects of
remuneration including:
• Remuneration Framework;
• Market trends;
• Compliance and disclosure; and
• Stakeholder engagement.
The Committee also engaged the services of BDO to undertake independent remuneration calculations.
Guerdon Associates and BDO did not make any ‘remuneration recommendations’ (as defined in the Corporations
Act) in relation to any KMP during FY20.
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33.33%
16.67%
16.67%
33.33%
CEO
29.17%
14.58%
14.58%
41.67%
CFO
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P
20.59%
20.59%
58.82%
GC/CS
Fixed remuneration
STI - Cash
STI - Deferred equity
LTI
3.2
FY20 STI outcomes
SCP’s financial performance directly affects STI award outcomes, as 80% of the maximum STI opportunity for each
Executive is based on the achievement of financial performance conditions: FFOPU, MER, cash NOI, and VCX NOI.
STI is awarded annually based on the achievement of the relevant performance conditions. The weighting of these
performance conditions reflects SCP’s FY20 strategic drivers around maximising cash NOI, driving income from the
VCX assets, lowering the MER to competitive levels through managing costs relative to the size of SCP’s portfolio
of assets, while maintaining a competitive and conservative capital structure. Building on SCP’s achievements in the
prior financial year, each performance condition comprises stretch for Executives so as to ensure that “at-risk” pay
is genuinely “at-risk”. The degree of stretch is carefully balanced with SCP’s stated risk appetite.
As noted in section 1.1, there were minor adjustments made to the weightings of the cash NOI and MER
performance conditions of the STI award, in order to focus Executives on driving recurring income from stabilised
assets. The VCX NOI performance condition was also included as part of the FY20 STI, with a weighting of 15%.
Details are set out below:
CEO/CFO
Performance
condition
FFOPU
MER
Cash NOI
VCX NOI
Non-financial
(personal component)
FY19 weighting FY20 weighting
40%
15%
25%
0%
20%
40%
10%
15%
15%
20%
GC/CS
Performance
condition
FFOPU
MER
Cash NOI
VCX NOI
Non-financial
(personal component)
FY19 weighting FY20 weighting
40%
15%
15%
0%
30%
40%
10%
15%
15%
20%
42
43
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 The COVID-19 pandemic negatively impacted SCP’s financial results in the second half of the financial year,
resulting in performance being assessed by the Remuneration Committee as below threshold for each of
the financial performance conditions for the FY20 STI. In relation to the personal performance condition,
notwithstanding the extent that targets and hurdles were met by Executives, the Board exercised negative
discretion to forfeit all payments for this component of the STI award. This determination was made in recognition
of the fact that Unitholders have been impacted by the decline in distributions and the value of their units over the
period. The table below sets out SCP’s performance highlights and the resulting STI outcomes:
Weighting of total
STI award
40%
Measure
FFOPU
FY20 performance highlights
This condition rewards performance where FFOPU as
shown in SCP’s FY20 audited Financial Statements
exceeds specified levels.
The KPI was selected to focus Executives on active
portfolio and operational management in the context of
SCP’s adopted risk profile.
FFOPU was 14.65 cents, down
by 10.3% compared to last year.
Performance was assessed at
below Threshold (as detailed in
section 3.3).
The hurdles were set having regard to the mix and
characteristics of SCP’s portfolio
10%
MER
This condition rewards performance where SCP’s MER, as
at 30 June 2020, is less than specified levels.
The KPI was selected to focus Executives on efficiently
resourcing the operations of SCP.
Threshold, Target and Maximum levels were set
considering SCP’s budget and referencing its A-REIT
peers.
MER was 0.42%, up from 0.37%.
Performance was assessed at
below Threshold (as detailed in
section 3.3).
*MER for remuneration purposes
only includes total funds under
management. This is the sum of
investment properties, assets
held for sale and other assets.
Market- reported MER was lower
at 0.38% due to total assets used
for funds under management.
15%
Cash NOI
This condition rewards performance where the FY20 cash
NOI from shopping centres owned by SCP for at least one
year as at 30 June 2019 (but excluding assets subject to
development and assets sold and acquired during FY20)
is greater than specified levels.
Performance was assessed at
below Threshold (as detailed in
section 3.3).
The KPI was selected to focus Executives on improving
occupancy levels, maximising rental receipts and
managing expenses.
This metric looks through to the underlying quality of
the cash flows with a focus on recurring income from
stabilised assets.
15%
VCX NOI
This condition rewards performance where the FY20 cash
NOI from the shopping centres acquired from VCX in
October 2018 is greater than specified levels.
Performance was assessed at
below Threshold (as detailed in
section 3.3).
The KPI was selected to focus Executives on improving
occupancy levels, maximising rental receipts and
managing expenses in the assets acquired from VCX.
44
FY20 performance highlights
The Board has exercised
negative discretion to forfeit all
payments for this component of
the FY20 STI award.
Six-monthly reviews are held
with each Executive to evaluate
and monitor performance
against personal objectives.
Weighting of total
STI award
Measure
20%
Personal performance
The personal performance component assesses individual
contributions based on factors judged as important
for adding value for each individual Executive. While
the factors assessed are common to Executives, the
expectations of each person will vary depending on the
focus and accountabilities of their position. Therefore, the
weighting of these factors may vary for each Executive.
These factors include:
•
•
•
•
(People) Maintain an effective team of people
through recruitment, performance management
and retention, and promote the development and
engagement of SCP’s staff through a positive
collaborative culture, with good communication and
high levels of employee engagement.
(Strategy) Further develop and progress SCP’s
corporate strategy including developing and
executing strategic initiatives outside the current
portfolio or corporate structure.
(Stakeholder) Maintain strong stakeholder
relations measured by receiving positive feedback
from investors and analysts, promoting strong
and positive relationships with major tenants
balancing commercial parameters and potential
future opportunities, and ensuring positive and
productive relationships with external contractors,
service providers and regulatory bodies (property
management companies, auditors, lawyers, banks
etc.).
(Operational Performance) including optimising
the performance of SCP’s centres, successfully
completing Board-approved development projects
and identifying and commencing other development
opportunities. Ensure appropriate policies are in
place and followed and a sound and effective system
of risk management and internal controls are in
place.
The following table shows the actual STI outcomes for each of the Executive KMP for FY20.
FY20 STI Outcomes
STI target
(% of Fixed
Remuneration)
STI max
(% of Fixed
Remuneration)
Actual STI
(% max)
STI forfeited
(% max)
Actual STI
(total) ($)
Anthony Mellowes
Mark Fleming
Mark Lamb
75.00%
52.50%
26.25%
100%
70%
35%
0%
0%
0%
100%
100%
100%
-
-
-
45
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
3.3 How remuneration was structured in FY20
The SCP Executive remuneration structure comprised a combination of fixed remuneration plus performance or “at-
risk” remuneration. The performance remuneration comprises STIs and LTIs.
Performance measures
For each performance measure, a Threshold, Target and Maximum performance
target is set. Award payouts reflect the level of performance achieved during the
relevant financial year.
TFR – how does it work?
TFR provides a fixed level of income to recognise Executives for their level of responsibility, relative expertise and
experience. It includes the fully costed value of salary, superannuation, motor vehicle and other short-term benefits
including Fringe Benefit Tax (FBT). The TFR package is paid in cash, superannuation contributions as well as motor
vehicle and other employee benefits provided on salary sacrifice.
The opportunity value for the at-risk components of remuneration is determined by reference to TFR, so SCP is
conscious that any adjustments to TFR have flow-on impacts on potential STI and LTI awards. TFR is reviewed
annually on 1 October, with no obligation to adjust. Increases of between 5.2% and 6.0% were made to TFR for the
period. Prior to these increases, fixed remuneration for all Executives had remained at the levels set on 1 October
2017.
A benchmarking exercise was undertaken during the period, which benchmarked Executive remuneration to
comparable entities.
The Board believes that the FY20 remuneration structure is aligned with business strategy, and appropriate to
ensure Executive retention.
STIs – how does it work?
Purpose
Eligibility
Instrument
Awards
The STI is designed to motivate and reward Executives for achieving or exceeding
annual strategic objectives set for SCP over the short term and is aligned with value
creation. STI recognises individual contributions to SCP’s performance.
The eligible Executives for FY20 are the CEO, Anthony Mellowes, the CFO, Mark
Fleming and the GC/CS, Mark Lamb.
For the CEO and CFO, 50% of the actual STI award is delivered in cash, and 50%
in the form of deferred rights to units in SCP. All other Executives receive their STI
award in cash only.
For the CEO and CFO, each vested STI right entitles the relevant Executive
to receive one stapled unit in SCP plus an additional number of stapled units
calculated on the basis of the distributions that would have been paid in respect
of those stapled units had they been on issue over the two-year deferral period.
The additional units are calculated as the number of units that would have been
acquired if distributions as announced to the Australian Securities Exchange (ASX)
during the vesting period had been paid and reinvested in units, applying the
formula set out in clause 3.3 of SCA Property Group’s Distribution Reinvestment
Plan (DRP) (whether or not that plan is operative at the relevant time) assuming
no discount. Fractions of stapled units will be rounded down to the nearest whole
number and no residual positive balance carried forward. No distributions accrue in
respect of STI rights that lapse.
Specific quantifiable performance measures have been determined by the Board,
based upon recommendations made by the Remuneration Committee. These
performance criteria, and their weighting, reflect the FY20 strategic priorities for
SCP as detailed in this Report.
Award payout levels have been calibrated between Threshold (minimum expected
performance), Target and Maximum (exceptional performance, which is significantly
above agreed targets and guidance). Target is set at 75% of Maximum for all STI
financial and operational management performance conditions.
Maximum STI opportunities for each Executive are as follows:
CEO – 100% of TFR;
CFO – 70% of TFR; and
CG/CS – 35% of TFR.
Performance schedule –
FFOPU (All Executives)
Performance schedule –
MER (All Executives)
Awards can range from zero up to the maximum percentage stated above, based
upon the level of performance against STI performance measures.
Performance schedule –
Cash NOI (All Executives)
Category
Measure
Weighting of total
STI award
Rationale for using
measure
Focuses Management
on active portfolio
and operational
management in the
context of SCP’s
adopted risk profile
To ensure Management
sufficiently and
efficiently resource the
operations of SCP
Focuses Management
on improving
occupancy levels,
maximising rental
receipts and managing
expenses in shopping
centres owned by SCP
for at least one year as
at 30 June 2019
Focuses Management
on improving
occupancy levels,
maximising rental
receipts and managing
expenses in the
portfolio of shopping
centres acquired from
VCX in October 2018
Management are
assessed on factors
judged as important
for adding security
holder value
Financial
FFOPU
40%
Financial
MER
10%
Financial
Cash NOI
15%
Financial
VCX NOI
15%
Non-financial Personal (factors
20%
include people
management,
strategy, stakeholder
relations and
operational
performance)
Threshold
50% of max
Target
Maximum
Threshold
50% of max
Target
Maximum
Threshold
50% of max
Target
Maximum
% of relevant STI award that vests
0%
50%
75%
100%
% of relevant STI award that vests
0%
50%
75%
100%
% of relevant STI award that vests
0%
50%
75%
100%
46
47
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 Performance schedule –
VCX NOI (All Executives)
Discretion
Deferral
Termination/Forfeiture
Clawback
% of relevant STI award that vests
Grant price
Threshold
50% of max
Target
Maximum
0%
50%
75%
100%
Where a formulaic application of the metrics is likely to produce a material and
perverse remuneration outcome, or where it is in the best interests of Unitholders
for the Board to do so, the Board may exercise its discretion in determining
awards. The purpose of preserving this discretion is to allow the Board to ensure
remuneration amounts and structure are at all times appropriate and to prevent any
unintended vesting of awards that would arise from a purely formulaic application
of the STI metrics.
As noted in sections 1.1 and 3.2, negative discretion was applied in FY20 in relation
to the personal component of the FY20 STI awards.
STI rights are subject to a two-year deferral. Rights will not be issued to the CEO
and CFO for FY20.
If an Executive ceases employment by way of termination by SCP without cause,
redundancy, diminution of responsibility, retirement, death or disability or other
circumstances approved by the Board, the Executive retains unvested incentive
opportunities to encourage Management to secure the long-term future of SCP.
In the event of the Executive’s termination by SCP for cause prior to the end of
the performance period, all STI unpaid and unvested incentive opportunities are
forfeited.
Consistent with good governance and to reinforce the importance of integrity and
risk management in SCP’s Remuneration Framework, SCP’s incentive plan contains
broadly framed malus provisions that allow the Board in its sole discretion to
determine that all, or part, of any unvested incentive awards be forfeited in certain
circumstances.
These circumstances include, but are not limited to:
• A material misstatement or omission in the Financial Statements of SCP;
• If actions or inactions seriously damage SCP’s reputation or put SCP at
significant risk;
• If FFO is not maintained in the deferral; and/or
• A material abnormal occurrence results in an unintended increase in the
award.
Performance hurdles (each
apply to one-third of the
LTI grant)
Vesting schedule – Relative
TSR
Vesting Schedule – FFOPU
Hedging
Participants are prohibited from hedging their unvested deferred rights.
Vesting Schedule – ROE
LTIs – how does it work?
Purpose
Eligibility
Instrument
LTI performance rights
granted in FY20
The LTI is aimed at aligning Executive and Unitholder value while also providing a
retention tool, as the LTI is intended to vest over time.
The eligible Executives for the current period are the CEO, Anthony Mellowes, the
CFO, Mark Fleming and the GC/CS, Mark Lamb.
Each vested LTI right entitles the relevant Executive (or participant) to receive one
stapled unit in SCP plus an additional number of stapled units calculated on the
basis of the distributions that would have been paid in respect of those stapled
units over the four-year performance period. The additional units are calculated as
the number of units that would have been acquired if distributions as announced to
the ASX during the vesting period had been paid and reinvested in units, applying
the formula set out in clause 3.3 of SCA Property Group’s DRP (whether or not that
plan is operative at the relevant time) assuming no discount. Fractions of stapled
units will be rounded down to the nearest whole number and no residual positive
balance carried forward. No distributions accrue in respect of LTI rights that lapse.
The number of performance rights granted to Executives in FY20 is as follows:
• Anthony Mellowes – 377,528 LTI rights;
• Mark Fleming – 181,428 LTI rights; and
• Mark Lamb – 82,498 LTI rights.
Vesting/delivery
Discretion
The grant price has been calculated by dividing the relevant award opportunity by
the volume-weighted average price of SCP units on the ASX for the five trading
days following the release of SCP’s 2019 full year results, being $2.5561.
Relative TSR (Tranche 1)
FFOPU (Tranche 2)
ROE (Tranche 3)
Measures SCP’s TSR
performance over the
Tranche 1 performance
period (being from 1
October 2019 to 30
September 2022)
relative to the TSR for
the constituents of the
S&P/ASX 200 A-REIT
Accumulation Index over
that same period.
This condition requires
the growth in SCP’s
FFOPU over the Tranche
2 performance period
(being from 1 July 2019
to 30 June 2022) above
the Base Point to exceed
a certain level as detailed
below. The FY20 “Base
Point” for measuring the
rate of FFOPU growth is
16.33 cents per unit.
This condition requires
SCP’s total ROE over the
Tranche 3 performance
period (being from 1 July
2019 to 30 June 2022) to
exceed a certain level, as
detailed below.
Position of SCP relative
to S&P/ASX 200 A-REIT
Accumulation Index
% of Tranche 1 LTI rights
that vest
At or below Threshold
Less than or equal to 50th
percentile
0%
Between Threshold and
Maximum
Between 50th percentile
and 75th percentile
Vest on a straight-line basis
between 0% at Threshold
and 100% at Maximum
Maximum
At or above 75th percentile 100%
Growth in FFOPU over
performance period above
Base Point
% of Tranche 2 LTI rights
that vest
At or below Threshold
Less than or
equal to 2.0% p.a.
0%
Between Threshold and
Maximum
Between 2.0% and
5.0% p.a
Vest on a straight-line basis
between 0% at Threshold
and 100% at Maximum
Maximum
At or above 5.0% p.a.
100%
ROE over performance
period
% of Tranche 3 LTI rights
that vest
At or below Threshold
Less than 8.0% p.a.
0%
Between Threshold and
Maximum
Between 8.0% p.a. and
11.5% p.a.
Vest on a straight-line
basis between 0% at
Threshold and 100% at
Maximum
Maximum
At or above 11.5% p.a.
100%
The performance rights can only be exercised if and when the performance
conditions are achieved. The performance period is a three-year period, ending
on the dates specified above. Any rights awarded then vest at the end of a further
one-year deferral period ending on 30 June 2023, unless the Board exercises its
discretion to forfeit the awarded rights under the malus provisions of the SCA
Property Group Executive Incentive Plan Rules. Any rights which do not vest
following testing of the performance conditions are forfeited.
Where a formulaic application of the metrics is likely to produce a material and
perverse remuneration outcome, or where it is in the best interests of Unitholders
for the Board to do so, the Board may exercise its discretion in determining
awards. The purpose of preserving this discretion is to allow the Board to ensure
remuneration amounts and structure are at all times appropriate and to prevent any
unintended vesting of awards that would arise from a purely formulaic application
of the LTI metrics.
48
49
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 Termination/forfeiture
Clawback
If an Executive ceases employment by way of termination by SCP without cause,
redundancy, diminution of responsibility, retirement, death or disability or other
circumstances approved by the Board, the Executive retains unvested incentive
opportunities to encourage Management to secure the long-term future of SCP.
All unvested LTI rights will lapse if the Executive is terminated by SCP for cause.
Consistent with good governance and to reinforce the importance of integrity
and risk management in SCP’s reward framework, each of SCP’s incentive plans
contains broadly framed malus provisions that allow the Board in its sole discretion
to determine that all, or part, of any unvested incentive awards be forfeited in
certain circumstances.
These circumstances include, but are not limited to:
• A material misstatement or omission in the Financial Statements of SCP;
• If actions or inactions seriously damage SCP’s reputation or put SCP at
significant risk;
• If FFO is not maintained; and/or
• A material abnormal occurrence results in an unintended increase in the
award.
Hedging
Participants are prohibited from hedging their unvested performance rights.
3.4
Past financial performance
The tables below set out summary information about the Group’s earnings and FFO, stapled security (“unit”) net
tangible assets (NTA) and ASX price for the last seven complete financial years.
Past Financial Performance
FY20
Results
FY19
Results
FY18
Results
FY17
Results
FY16
Results
FY15
Results
FY14
Results
Statutory profit (after tax)
$85.5m $109.6m $175.2m $319.6m $184.7m $150.5m
$111.6m
Statutory profit (after tax)
cents per unit
FFO
FFO cents per unit
Distributions paid and payable
(cents per unit)
Operational
Net tangible assets per unit
Unit price (as at 30 June)
Management Expense Ratio
(MER) %
8.9
12.6
23.5
43.3
25.4
22.9
17.3
$140.8m
$141.8m
$114.3m $108.4m $100.1m
$84.3m
$80.4m
14.65
12.50
16.33
14.70
15.30
13.90
14.70
13.10
13.75
12.20
12.81
11.40
12.44
11.00
FY20
Results
FY19
Results
FY18
Results
FY17
Results
FY16
Results
FY15
Results
FY14
Results
$2.22
$2.18
0.38%
$2.27
$2.39
0.37%
$2.30
$2.45
$2.20
$2.19
0.43%
0.45%
$1.92
$2.28
0.51%
$1.77
$2.13
$1.64
$1.72
0.55%
0.65%
3.5
LTI grants in FY20
The table below presents the LTI grants to Executives made during FY20 that are due to vest on 1 July 2023,
subject to performance conditions. The maximum total value of the LTI grants is based on the estimated fair value
calculated at the time of the grant and amortised in accordance with the accounting standard requirements.
2020
LTI max as
% of fixed
remuneration
Performance
measure
Number of
performance
rights granted
Fair value per
performance
right ($)
Maximum total
value of grant
($)
LTI Grants in FY20
Anthony Mellowes
100%
Relative TSR
Total
Mark Fleming
Total
Mark Lamb
Total
FFOPU
ROE
70%
Relative TSR
FFOPU
ROE
35%
Relative TSR
FFOPU
ROE
125,843
125,843
125,843
377,528
60,476
60,476
60,476
181,428
27,499
27,499
27,499
82,498
Performance right movements during the year
Type and eligibility
Security
price at
grant
date
Vesting
Conditions1
Grant
date
Testing
date
Vesting
date
STIP (FY20) (Mr Mellowes)
Non-market
$2.61 Aug-19
Jul-20
Jul-22
STIP (FY20) (Mr Fleming)
Non-market
$2.61 Aug-19
Jul-20
Jul-22
1.28
2.59
2.59
1.28
2.59
2.59
1.28
2.59
2.59
161,079
325,933
325,933
812,945
77,409
156,633
156,633
390,675
35,199
71,222
71,222
177,643
Maximum
number of
securities or
maximum
value of
securities to
be issued
Fair value
at grant
date
$482,500 $0.96 per
$1.00
$231,875 $0.96 per
$1.00
LTIP (FY20 - FY22) (Tranche 1)
(Messrs Mellowes, Fleming, Lamb)
Relative
TSR2
$2.61 Aug-19 Sept-22
Jul-23
213,818
LTIP (FY20 - FY22) (Tranche 2)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY20 - FY22) (Tranche 3)
(Messrs Mellowes, Fleming, Lamb)
Non-market
$2.61 Aug-19
Jun-22
Jul-23
213,818
Non-market
$2.61 Aug-19
Jun-22
Jul-23
213,818
$1.28 per
security
$2.59 per
security
$2.59 per
security
1. Service and non-market conditions include financial and non-financial targets along with a deferred vesting period.
2. Relative TSR is Relative Total Securityholder Return measured against the S&P/ASX 200 A-REIT Accumulation Index.
The Group recognises the fair value at the grant date of equity-settled securities above as an employee benefit
expense proportionally over the vesting period with a corresponding increase in equity. Fair value is measured at
grant date using Monte-Carlo simulation and Binomial option pricing models where applicable, performed by an
independent valuer, and models the future unit price of the Group’s stapled units.
Non-market vesting conditions are determined with reference to the underlying financial or non-financial
performance measures to which they relate.
Key inputs to the pricing models include:
Volatility
Dividend yield
Risk-free interest rate
30 June 2020
16%
5.8%
0.7%
50
51
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 3.6
Total remuneration earned in FY20
Equity holdings of Executives
Potential remuneration granted in FY20
Maximum potential
cash STI
Maximum potential
equity STI
Maximum potential
equity LTI
Executive
% of
TFR
% of total
potential
rem
$1
% of
TFR
% of total
potential
rem
$1
% of
TFR
% of total
potential
rem
$3
Anthony Mellowes
50%2 482,500
Mark Fleming
35%2
231,875
Mark Lamb
35% 210,875
18%
16%
22%
50%2 463,200
35%2 222,600
0%
-
17%
15%
0%
100% 812,945
70% 390,675
35% 177,643
30%
27%
19%
Executive
Anthony Mellowes,
CEO
Mark Fleming, CFO
Mark Lamb, GC/CS
Held at
1 July 2019
Vested
during year
Changes
during the
year
785,330
541,501
(400,000)
146,465
170,047
247,544
67,643
(185,230)
(57,361)
3.7
Service agreements for Executive KMP
Held at
30 June
2020
926,831
208,779
180,329
Number of
unvested
rights as at
30 June 2020
Total interest
in SCP units
1,530,276
2,457,107
712,443
242,674
921,222
423,003
1. STI incentives for Mr Mellowes and Mr Fleming are payable 50% in cash and 50% in equity. The difference between the cash and equity components is due to
There were no changes to the service agreements for Executives in FY20.
the fair valuation of the equity granted under AASB 2 Share based payments (AASB2).
2.
In FY20, Mr Mellowes’ STI opportunity was 100% of his TFR and Mr Flemings’ STI opportunity was 70% of his TFR. STI incentives for Mr Mellowes and Mr
Fleming are payable 50% in cash and 50% in equity and the percentage maximum has been equally allocated between cash and equity.
3. For Mr Mellowes the LTI maximum incentive is $965,000, for Mr Fleming is $463,750 and for Mr Lamb is $210.875. All of the LTI awarded in equity and the
dollar values shown here represent the fair value under AASB2 of equity instruments granted.
The following is the actual remuneration paid or accrued during the financial year to 30 June 20201:
Executive
Anthony Mellowes,
CEO
Mark Fleming, CFO
Mark Lamb, GC/CS
Table of Executive remuneration paid or accrued
Salary &
fees2
$
926,250
Cash
bonus3
$
Total
Super
$
$
Long
service
leave
$
Share based
payments4
$
Total
$
-
926,250
25,000
23,012
492,706
1,466,968
885,000
324,290
1,209,290
25,000
20,897
735,514
1,990,701
628,125
-
628,125
25,000
600,000
157,219
757,219
25,000
15,519
14,167
229,203
897,847
338,772
1,135,158
570,000
-
570,000
25,000
14,080
547,500
152,016
699,516
25,000
12,927
51,531
79,024
660,611
816,467
2020
2019
2020
2019
2020
2019
Total
2020
2,124,375
-
2,124,375
75,000
2019
2,032,500
633,525
2,666,025
75,000
52,611
47,991
773,440
3,025,426
1,153,310
3,942,326
1. Amounts recognised above were determined subsequent to the release of the Financial Statements on 10 August 2020. Accordingly, they may differ to the
provisional estimates recognised in Note 25 to the Financial Statements.
2. Salary reviews take effect from 1 October.
3. The amount shown under “Cash bonus” refers to the amount which will be paid to Executives in September 2020 under the STI Plan for performance over
the 2020 financial year.
4. The values for equity-based remuneration have been determined in accordance with AASB 2 and represent the current year amortisation of the fair value of
rights over the vesting period adjusted for service and non-market vesting conditions. The share-based payments are made up of STI equity and LTI equity.
Please refer to the following table for additional details of the share-based payments.
The break-up of the amounts recognised for performance-based compensation relevant for the financial year
ended 30 June 2020, including details of the share-based payments accrued in respect of the current year and
prior-year plans using the valuation of equity in accordance with AASB 2, are presented below:
Performance based component of actual remuneration in 2020
Actual cash STI
Actual equity STI
Actual equity LTI
% of
total rem
% of
total rem
$
% of
total rem
$
0%
0%
0%
193,780
91,962
-
13%
10%
0%
298,926
137,241
51,531
20%
15%
8%
$
-
-
-
Total equity
STI and LTI
$
492,706
229,203
51,531
Executive
Anthony Mellowes, CEO
Mark Fleming, CFO
Mark Lamb, GC/CS
Each Executive has a formal contract, known as a “service agreement”. These agreements are of a continuing
nature and have no set term of service (subject to the termination provisions).
The key terms of the service agreements for the Executive are summarised below:
Executive Director, Chief Executive Officer: Anthony Mellowes
Contract duration
TFR as at 30 June 2020
Review of TFR
Variable remuneration eligibility
Commenced 1 July 2013, open ended
$965,000. Includes salary, superannuation, motor vehicle and other
salary sacrifice employee benefits.
Reviewed annually, effective from 1 October with no obligation to
adjust.
The CEO is eligible to participate in SCP’s plans for performance-based
remuneration, and in FY20 that included:
FY20 STI: Maximum opportunity:
100% of TFR
FY20 LTI: Maximum opportunity:
100% of TFR
Non-compete period
Non-solicitation period
Notice by SCP
Notice by Executive
Up to 12 months
Up to 12 months
9 months
9 months
Termination payments to compensate
for non-solicitation/non-compete
clause in certain circumstances
Maximum benefit from termination payment and payment in
lieu of notice is 12 months based on prior-year fixed and variable
remuneration.
Executive Director, Chief Financial Officer: Mark Fleming
Contract duration
TFR as at 30 June 2020
Review of TFR
Variable remuneration eligibility
Commenced 20 August 2013, open ended
$662,500. Includes salary, superannuation, motor vehicle and other
salary sacrifice employee benefits and other short-term benefits.
Reviewed annually effective from 1 October with no obligation to
adjust.
The CFO is eligible to participate in the SCP’s plans for performance-
based remuneration, and in FY20 that included:
FY20 STI: Maximum opportunity:
70% of TFR
FY20 LTI: Maximum opportunity:
70% of TFR
Non-compete period
Non-solicitation period
Notice by SCP
Notice by Executive
6 months
6 months
6 months
3 months
Termination payments to compensate
for non-solicitation/non-compete
clause in certain circumstances
Maximum benefit from termination payment and payment in lieu of
notice is 6 months based on prior-year fixed and variable remuneration.
52
53
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
General Counsel and Company Secretary: Mark Lamb
Contract duration
TFR as at 30 June 2020
Review of TFR
Variable remuneration eligibility
Commenced 26 September 2012, open ended
$602,500. Includes salary, superannuation, motor vehicle and other
salary sacrifice employee benefits.
Reviewed annually effective from 1 October with no obligation to
adjust.
The GC/CS is eligible to participate in the SCP’s plans for performance-
based remuneration, and in FY20 that included:
FY20 STI: Maximum opportunity:
35% of TFR
FY20 LTI: Maximum opportunity:
35% of TFR
Non-compete period
Non-solicitation period
Notice by SCP
Notice by Executive
Termination payments to compensate
for non-solicitation/non-compete
clause in certain circumstances
Termination provisions
Up to 12 months
Up to 12 months
6 months
3 months
TFR for 6 months
The following illustrates how termination payments will be managed in various termination scenarios.
4. NON-EXECUTIVE DIRECTOR REMUNERATION
4.1
Board remuneration strategy
SCP aims to attract and retain a high calibre of Non-Executive Directors (NEDs) who are equipped with diverse
skills to govern the organisation and oversee Management so as to return value for SCP Unitholders. SCP aims to
fairly remunerate Directors for their responsibilities relative to organisations of similar size and complexity.
The maximum aggregate fee pool available to NEDs has not been increased from the level set when SCP listed in
2012, being $1,300,000 p.a.
A benchmarking review of NED remuneration was undertaken by Egan Associates in 2018. As a consequence of the
review, it was determined that no increase to the base fees paid to NEDs would be applied; however, Committee
fees would be standardised across all Committees from 1 January 2019, with the exception of the Nomination
Committee where no fees apply. Increases of 2.5% were applied to NED base fees from 1 January 2020. There was
no increase applied to Committee fees, with the exception of the Nomination Committee where the fee payable to
the Chair was increased. No fees are paid to members of the Nomination Committee.
Total NED remuneration payable in FY20 was $1,184,027, up from $1,071,103 in FY19.
4.2
Total remuneration for Non-Executive Directors
The schedule of fees for NEDs for calendar years is set out in the table below, and fees are annual fees, unless
otherwise stated.
Non-Executive Director Board and Committee Fees
Board
ARMCC
Remuneration
Investment
Nomination
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
Notice period,
non-compete/
non-solicitation
SCP can elect to make a payment of TFR in lieu of the notice period by SCP or the Executive,
as applicable.
Chair
$333,854 $338,027
$25,000 $25,000 $25,000 $25,000 $25,000 $25,000
$7,500 $15,000
Member
$128,593 $130,200
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
-
-
At the Board’s discretion, an additional termination benefit may be made to acknowledge any
post-termination non-compete/non-solicitation agreements made with the Executive.
The combined total cash benefit arising from these termination payments (excluding
statutory entitlements) is capped at 12 months based on prior-year fixed and variable
remuneration, subject to the provisions of sections 200B–200E of the Corporations Act to
the extent those provisions apply in the relevant circumstances.
STI and LTI
awards
If an Executive ceases employment by way of termination by SCP without cause, redundancy,
diminution of responsibility, retirement, death or disability or other circumstances approved
by the Board, the Executive retains unvested or unpaid incentive opportunities to encourage
Management to secure the long-term future of SCP.
All unvested or unpaid incentive opportunities will lapse if the Executive is terminated by SCP
for cause.
Board discretion
The Board has full discretion to amend any of the above termination arrangements to
acknowledge exceptional circumstances and determine appropriate alternative vesting
outcomes that are consistent, fair and reasonable, and balance multiple stakeholder interests.
Change of control
The Board acknowledges that, consistent with its approach to voluntarily adopt certain
corporate governance obligations not otherwise applicable to SCP given its structure,
Unitholder approval will be sought where termination payments exceed the limits prescribed
by the Corporations Act.
In the event of a change of control in SCP before the vesting date of any equity, the Board
reserves the right to exercise its discretion for early vesting of the equity. In exercising its
discretion, the Board may take account of the extent to which performance conditions have
or have not been met and the portion of the vesting period that has elapsed at the relevant
date.
54
Non-Executive Director
Philip Clark AO
Steven Crane
Dr Kirstin Ferguson
James Hodgkinson OAM
Beth Laughton
Philip Redmond
Belinda Robson
Total
Total remuneration for Non-Executive Directors
Financial
Year
Director fees
$
Superannuation
$
Committee fees
$
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
317,024
314,197
115,434
63,224
115,000
114,914
-
57,866
116,301
63,224
115,434
114,431
115,434
113,909
894,627
841,765
21,003
19,657
14,766
7,238
15,200
13,679
-
6,959
13,899
7,238
14,766
14,162
14,766
14,685
94,400
83,618
-
-
40,000
12,968
45,000
29,080
-
15,390
30,000
12,968
40,000
34,647
40,000
40,667
195,000
145,720
Total
$
338,027
333,854
170,200
83,430
175,200
157,673
-
80,215
160,200
83,430
170,200
163,240
170,200
169,261
1,184,027
1,071,103
4.3 Non-Executive Director unitholding
Non-Executive Director
Held as at 30 June 2019
Changes during the year
Held as at 30 June 2020
Philip Clark AO
Steven Crane
Dr Kirstin Ferguson
Beth Laughton
Philip Redmond
Belinda Robson
76,465
50,000
16,465
4,333
73,965
48,607
124,629
38,888
18,604
13,998
13,888
13,888
201,094
88,888
35,069
18,331
87,853
62,495
55
SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020 5. ADDITIONAL INFORMATION
5.1
Events subsequent
FY21 STI
AFFOPU performance condition – weighting 40% (AFFOPU Tranche)
Subject to satisfaction of the performance conditions, the AFFOPU Tranche will vest on the following basis:
AFFOPU for the year to
30 June 2023
% of Tranche 2 LTI Rights
that vest
% of total LTI Rights that
vest
SCP has set hurdles and metrics for the first half of the FY21 only, given the current uncertainty around the impact
of COVID-19. Hurdles for the second 6 months will be set in December 2020 and January 2021.
At or below Threshold
Less than or
equal to 12.5cpu
0%
0%
The hurdles for first half of FY21 have been set to focus Executives on rental collection and growing AFFOPU. The
hurdles are as follows:
• AFFOPU – performance is rewarded where AFFOPU for the half year exceeds certain levels;
• Rent collection – performance is rewarded where rent collected exceeds specified levels; and
• Personal component – performance is rewarded where the Executive’s performance is assessed as strong to
exceptional against the personal performance targets.
As Directors of SCPRE, units may only be acquired under the incentive plan by Mr Mellowes and Mr Fleming
(instead of their equivalent cash value at the time of vesting) if Unitholders approve the issue. Any units granted to
Mr Mellowes and Mr Fleming will be deferred for one year. In the past, SCP has had a two-year deferral for STI units
granted. This will be reviewed for FY22.
FY21 LTI
The FY21 hurdles and metrics are set out below. The hurdles and metrics set for FY21 have been modified from
those used in FY20 to reflect the change in SCP’s strategic priorities occasioned by COVID-19. Each year the
Board reviews the hurdles in line with strategy and sets the metrics for the forward-looking period. This process
will continue and may involve changes in subsequent years. The ranges below are designed as stretch targets for
strong to exceptional performance. They do not represent Management or the Board’s forecasts, and nor should
they be taken as guidance as to likely or potential future outcomes.
The LTI rights are subject to a four-year vesting period comprising a three-year forward-looking performance
period and a one-year deferral period (together the “vesting period”). Any rights that do not vest following testing
of the performance conditions are forfeited.
The LTI rights that meet the performance hurdles will vest in one instalment on or about 1 July 2024, being four
years from the commencement of the performance period.
The performance conditions for the FY21 LTI are as follows:
Relative TSR performance condition – weighting 60% (Relative TSR Tranche)
Subject to satisfaction of the performance conditions, the Relative TSR Tranche will vest on the following basis:
Position of SCA
Property Group relative
to constituents of the
S&P/ASX 200 A-REIT
Accumulation Index
Less than or equal to 50th
percentile
At or below Threshold
Between Threshold and
Maximum
Between 50th percentile
and 75th percentile
Maximum
At or above 75th
percentile
% of Tranche 1
LTI rights that vest
% of total
LTI rights that vest
0%
0%
Vest on a straight-line
basis between 0% at
Threshold and 100% at
Maximum
Vest on a straight-line
basis between 0% vesting
at Threshold and 60% at
Maximum
100%
60%
Between Threshold and
Maximum
Between 12.5cpu and
13.9cpu
Vest on a straight-line
basis between 0% at
Threshold and 100% at
Maximum
Vest on a straight-line
basis between 0% at
Threshold and 40% at
Maximum
Maximum
At or above 13.9cpu
100%
40%
The Threshold AFFOPU level of 12.5cpu was selected because this is the AFFOPU that was achieved in the FY20
financial year, which included eight months of pre-COVID trading and four months of COVID impacted trading.
While there are more units on issue following the equity raisings in April and May 2020, SCP aims to return to not
less than FY20 AFFOPU by FY23.
Signed pursuant to a resolution of Directors.
Philip Marcus Clark AO
Chairman, SCA Property Group
5.2
Definitions
AFFOPU means Adjusted Funds from Operations
Per Unit
ARMCC means Audit, Risk Management and
Compliance Committee
KPI
LTI
means key performance indicator
means Long-Term Incentive
Cash NOI means cash property net operating income
MER
means Management Expense Ratio
means Chief Executive Officer
NEDs
means Non-Executive Directors
CEO
CFO
CPU
means Chief Financial Officer
means cents per unit
DEPU
means distributable earnings per unit
DRP
FBT
FFO
means Distribution Reinvestment Plan
means Fringe Benefits Tax
means Funds from Operations
FFOPU
means Funds from Operations per Unit
NOI
NTA
ROE
STI
TFR
TRO
TSR
means net operating income
means net tangible assets
means return on equity
means Short-Term Incentive
means total fixed remuneration
means total remuneration opportunity
means total securityholder return
GC/CS
means General Counsel/Company Secretary
VCX NOI means cash net operating income from
VCX shopping centres
KMP
means Key Management Personnel
56
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SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report
to the Stapled Security Holders of Shopping Centres Australasia
Property Group RE Limited as responsible entity for Shopping
Centres Australasia Property Retail Trust and Shopping Centres
Australasia Property Management Trust
We have audited the accompanying remuneration report of Shopping Centres Australasia Property
Group (“SCA Property Group”) comprising Shopping Centres Australasia Property Retail Trust and
Shopping Centres Australasia Property Management Trust and their controlled entities as set out on
pages 32 to 57 of the annual report of SCA Property Group for the year ended 30 June 2020.
In our opinion, the remuneration report of SCA Property Group, for the year ended 30 June 2020,
has been prepared in material respects in accordance with section 300A of the Corporations Act
2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Remuneration Report section of our report. We are independent of the SCA Property Group in
accordance with the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards)
(the “Code”) that are relevant to our audit of the Remuneration Report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the Company, would be in the same terms if given to the directors as
at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Responsibilities of the Board of Directors for the remuneration report
The Directors of Shopping Centres Australasia Property Group RE Limited as responsible entity of
the SCA Property Group (“the Directors”) have voluntarily presented the Remuneration Report
which has been prepared in accordance with section 300A of the Corporations Act 2001.
The Director’s responsibility also includes such internal control as they determine is necessary to
enable the preparation and fair presentation of the Remuneration Report that is free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibilities for the Audit of the remuneration report
Our objectives are to obtain reasonable assurance about whether the remuneration report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with the Australian Auditing Standards will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this remuneration report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the remuneration report, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of SCA Property Group’s internal control.
•
Evaluate the overall presentation, structure and content of the remuneration report,
including the disclosures, and whether the remuneration report represents the underlying
transactions and events in a manner that achieves fair presentation.
We communicate with the Directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
DELOITTE TOUCHE TOHMATSU
Andrew J Coleman
Partner
Chartered Accountants
Sydney, 5 October 2020
58
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SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
DIRECTORS’ AND
FINANCIAL REPORT
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Annual Report 2019SCA Property Group | Annual Report 2020 Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
Directors’ Report
Shopping Centres Australasia Property Group (SCA Property Group (SCP or SCA) or the Group) comprises the stapled securities
in two Trusts, Shopping Centres Australasia Property Management Trust (Management Trust) and Shopping Centres Australasia
Property Retail Trust (Retail Trust) (collectively the Trusts) and their controlled entities.
The Responsible Entity for the Trusts is Shopping Centres Australasia Property Group RE Limited, which presents its report
together with the Trusts’ Financial Reports for the year ended 30 June 2020 and the auditor’s report thereon.
The Directors’ Report is a combined Directors’ Report that covers the Trusts. The financial information for the Group is taken from
the Consolidated Financial Reports and notes.
1. Directors
The Directors of the Responsible Entity at any time during or since the end of the financial year are:
Mr Philip Marcus Clark (appointed 19 September 2012)
Chair and Non-Executive Director
Independent:
Yes.
Other listed
Directorships held in
last 3 years:
Special
responsibilities and
other positions held:
Non-Executive Director of Ingenia Communities Group (June 2012 to December 2017).
Member of Nomination Committee and Audit, Risk Management and Compliance Committee.
Other positions currently held, unrelated to the Group, include member of the JP Morgan Australia
Advisory Council, Council of Charles Sturt University, and Premier’s Science and Innovation Council.
Chair of a number of government and private boards including: NSW Skills Board, Royal Botanic Gardens
& Domain Trust, NSW Public Purpose Fund, and University of Wollongong Early Start Advisory Board.
Director of Food Agility Cooperative Research Centre and Consultant to FTI Consulting.
Other Experience:
Mr Clark was the Managing Partner of the law firm Minter Ellison from 1995 to 2005. Prior to joining Minter
Ellison, Mr Clark was a Director and Head of Corporate with ABN Amro Australia, and prior to that he was
the Managing Partner of the law firm Mallesons Stephen Jaques for 16 years. Mr Clark has been a Director
of several listed AREITs and Chair and Non-Executive Director of Hunter Hall Global Value Limited (July
2013 to December 2015), in addition to the Group.
Mr Clark brings specific skills in the following areas:
•
•
•
•
•
•
•
M & A and capital markets
Audit, risk management and compliance
Corporate governance
Real estate, including property management, portfolio and investment management, asset
management and funds management
Remuneration
Workplace health and safety
Stakeholder engagement
Qualifications:
BA, LLB, and MBA (Columbia University).
Mr Steven Crane (appointed 13 December 2018)
Non-Executive Director and Deputy Chair
Independent:
Yes.
Other listed
Directorships held in
last 3 years:
Chair and Non-Executive Director of nib holdings limited (Non-Executive Director from September 2010
and Chair from October 2011 to current) and Non-Executive Director of APA Group (comprising Australian
Pipeline Trust and APT Investment Trust) (January 2011 to current).
Special
responsibilities and
other positions held:
Other Experience:
Chair of Remuneration Committee, and member of Nomination Committee and Investment Committee.
Other positions currently held unrelated to the Group includes Taronga Conservation Society Australia and
Global Value Technology Limited.
Mr Crane has held a number of other positions unrelated to the Group include Non-Executive Director of
Bank of Queensland (2008-2015), Non-Executive Director of Transfield Services (2008-2015), Non-
Executive Director of APA Ethane Limited (2008-2011), Trustee of Australian Reward Investment Alliance
(2007-2009), Chair of Adelaide Managed Funds Limited (2006-2008), Chair of Investa Property Group
(2006-2007), Non-Executive Director of Adelaide Bank (2005-2007), Non-Executive Director of Foodland
Associated (2003-2005), Deputy Chair of Australian Chamber Orchestra and Director of Sunnyfield
Association.
Mr Crane brings specific skills in the following areas:
•
•
•
•
•
Funds management
Investment banking including M & A and capital markets
Finance and accounting including audit
Remuneration
Stakeholder engagement
Qualifications:
BComm, FAICD, SF Fin.
Dr Kirstin Ferguson (appointed 1 January 2015)
Non-Executive Director
Independent:
Yes.
Other listed
Directorships held in
last 3 years:
Special
responsibilities and
other positions held:
Other experience:
Non-Executive Director of EML Payments Limited (February 2018 to date).
Chair of Nomination Committee and member of Audit, Risk Management and Compliance Committee,
and Remuneration Committee.
Other positions currently held unrelated to the Group include Non-Executive Director (and currently
Deputy Chair) of the Australian Broadcasting Corporation (November 2015 to date), Non-Executive
Director of Hyne & Sons Pty Limited (August 2013 to date), and consultant to Envato Pty Limited.
Dr Ferguson is an experienced Non-Executive Director on ASX100, ASX200, government, not-for-profit
and significant private company boards. Dr Ferguson has a PhD in corporate culture and governance
from QUT Business School where she is also an Adjunct Professor (April 2015 to date). Dr Ferguson
was formerly the global CEO of the workplace health and safety organisation, Sentis Pty Limited, and
Director Corporate Services at Deacons (now Norton Rose Fulbright). Dr Ferguson has listed company
experience including roles as a Non-Executive Director of CIMIC Group Limited (July 2014 to November
2016) and Dart Energy Limited (November 2012 to March 2013), as well as board roles with SunWater
Limited (October 2008 to August 2015), the Queensland Rugby Union (April 2011 to April 2013) and
Queensland Theatre Company (May 2013 to May 2016). Dr Ferguson was also the Independent Chair
of the Thiess Advisory Board (February 2013 to June 2014). Dr Ferguson is also the creator of the
global, online #CelebratingWomen campaign and co-author of Women Kind and was a Non-Executive
Director of the Layne Beachley Aim for the Stars Foundation (2016 to 2019).
Dr Ferguson brings specific skills in the following areas:
•
•
•
•
Remuneration
Organisational culture
Diversity
Risk and compliance
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Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
•
•
•
Workplace health and safety
Stakeholder engagement
Social media
Qualifications:
PhD, LLB (Honours), BA (Honours), FAICD and a member of Chief Executive Women.
Ms Beth Laughton (appointed 13 December 2018)
Non-Executive Director
Independent:
Yes.
Other listed
Directorships held in
last 3 years:
Special
responsibilities and
other positions held:
Other Experience:
Director of JB Hi-Fi Limited (May 2011 to current).
Member of the Audit, Risk Management and Compliance Committee, Remuneration Committee and
Nomination Committee.
Other positions currently held unrelated to the Group include Non-Executive Director of GPT Funds
Management Limited.
Ms Laughton began her career with Peat, Marwick, Mitchell (now KPMG) in audit and then spent 25 years
advising companies in mergers and acquisitions, valuations and equity capital markets. She has worked at
senior levels with Ord Minnett Corporate Finance (now JP Morgan), TMT Partners and Wilson HTM,
advising companies in a range of industries including, property, retail and the information, communication
and media sectors. She has held a number of other positions unrelated to the Group including a Member of
Defence SA’s Advisory Board (2007-2016), Non-Executive Director of the Co-operative Research Centre
for Contamination, Assessment, Remediation of the Environment (2012-2014), Non-Executive Director of
Australand Property Group (2012-2014), and Director of Sydney Ferries (2004-2010).
Ms Laughton brings specific skills in the following areas:
•
•
•
•
•
•
•
Property investment and funds management
M & A and equity capital markets
Finance and accounting
Corporate governance
Retail
Remuneration
Audit and risk management
•
•
•
•
•
Equity placements and entitlement offers
Real estate valuations
Development of strategy and policy for real estate investment funds
Risk management
International real estate investment
Qualifications:
Bachelor of Applied Science (Valuation), Master of Business Administration (AGSM) and MAICD.
Ms Belinda Robson (appointed 27 September 2012)
Non-Executive Director
Independent:
Other listed
Directorships held in
last 3 years:
Special responsibilities
and other positions
held:
Yes.
None.
Chair of the Investment Committee and member of the Remuneration Committee, and Nomination
Committee.
Other positions currently held unrelated to the Group include Non-Executive Director of GPT Funds
Management Limited and Non-Executive Director of several Lendlease Asian Retail Investment Funds.
Other experience:
Ms Robson is an experienced real estate executive and people leader, having previously worked with
Lendlease Group for nearly 30 years in a range of roles including as Fund Manager of Australian Prime
Property Retail Fund (APPF Retail) (APPF Retail is managed by the Lendlease Group).
Ms Robson brings specific skills in the following areas:
•
•
•
•
•
•
Real estate, in particular retail assets, spanning all aspects of real estate including property and
development management, portfolio and investment management, asset management and funds
management
Retail industry, investor and consumer sentiment experience and the way in which retail formats
should and can evolve to capitalise on sector opportunities
M & A and capital markets
Corporate governance
Remuneration
International experience
Qualifications:
BComm (Honours).
Qualifications:
BEcon, FCA and FAICD.
Mr Anthony Mellowes (appointed Executive Director 2 October 2012)
Mr Philip Redmond (appointed 26 September 2012)
Executive Director and CEO
Non-Executive Director
Independent:
Other listed
Directorships held in
last 3 years:
Special responsibilities
and other positions
held:
Other experience:
Yes.
None.
Chair of Audit, Risk Management and Compliance Committee, and member of Nomination Committee and
Investment Committee.
Mr Redmond has over 30 years of experience in the real estate industry including over five years with AMP’s
real estate team and over 12 years with the investment bank UBS in various roles including as Managing
Director - Head of Real Estate Australasia. In addition, Mr Redmond has been a Non-Executive Director for
a number of responsible entities in the listed A-REIT sector including most recently Non-Executive Director
Galileo Funds Management Limited the Responsible Entity for Galileo Japan Trust (2006 to October 2016).
Mr Redmond brings specific skills in the following areas:
•
•
•
Real estate, including property and development management, portfolio and investment
management, asset management and funds management
Investment banking and corporate finance
M&A and capital markets
Independent:
Other listed
Directorships held in
last 3 years:
Special responsibilities
and other positions
held:
Other experience:
No.
None.
In addition to be being an Executive Director and Chief Executive Officer (CEO), Mr Mellowes is a member
of the Investment Committee and is an Executive Director of SCA Unlisted Retail Fund RE Limited.
Other positions currently held unrelated to the Group include Director of Shopping Centre Council of
Australia.
Mr Mellowes is an experienced property executive. Prior to joining SCA Property Group as an Executive
Director, Mr Mellowes worked at Woolworths Limited from 2002 to 2012 and held a number of senior
property related roles including Head of Asset Management and Group Property Operations Manager. Prior
to Woolworths Limited, Mr Mellowes worked for Lendlease Group and Westfield Limited.
Mr Mellowes was appointed Chief Executive Officer of SCA Property Group on 16 May 2013 after previously
acting as interim Chief Executive Officer. Mr Mellowes was a key member of the Woolworths Limited team
which created SCA Property Group.
Mr Mellowes brings specific skills in the following areas:
•
Real estate, in particular retail assets, spanning all aspects of real estate including property and
development management, portfolio and investment management and funds management
3
4
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Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
•
•
•
Retail experience spanning all retail asset classes
M&A and capital markets
Equity placements
Ms Erica Rees (appointed 5 February 2020)
Senior Legal Counsel and Company Secretary
Qualifications:
Bachelor of Financial Administration and completion of Macquarie Graduate School of Management’s
Strategic Management Program.
Experience:
Mr Mark Fleming (appointed CFO 20 August 2013, appointed Executive Director 26 May 2015)
Executive Director and CFO
Independent:
Other listed
Directorships held in
last 3 years:
No.
None.
Special responsibilities
and other positions
held:
In addition to being an Executive Director and CFO, Mr Fleming is a member of the Investment
Committee and an alternative Executive Director of SCA Unlisted Retail Fund RE Limited for Mr
Mellowes.
Other positions currently held unrelated to the Group include Trustee of the Royal Botanical Gardens &
Domain Trust.
Other experience:
Mr Fleming was CFO of Treasury Wine Estates from 2011 to 2013. Mr Fleming worked at Woolworths
Limited from 2003 to 2011, firstly as General Manager Corporate Finance, and then as General Manager
Supermarket Finance. Prior to Woolworths Limited, Mr Fleming worked in investment banking at UBS,
Goldman Sachs and Bankers Trust.
Mr Fleming brings specific skills in the following areas:
•
•
•
•
•
Investment banking, M&A, capital markets, strategy, and corporate finance
Capital management, including debt, derivatives and equity raising
Retail industry expertise across a range of retail categories including supermarkets and
experience in fast moving consumer goods
Real estate expertise, particularly in retail asset classes, including valuations and funds
management
Listed company CFO experience, including treasury, tax, accounting/financial control/audit,
corporate governance/risk management/compliance, stakeholder engagement/investor relations
Qualifications:
LLB, B.Econ (First Class Honours), CPA.
Company Secretaries
Mr Mark Lamb (appointed 26 September 2012)
General Counsel and Company Secretary
Experience:
Mr Lamb is an experienced transactional and corporate lawyer with over 20 years’ experience in private
practice and 10 years as a Partner of Corrs Chambers Westgarth (and subsequently Herbert Geer).
Subsequently Mr Lamb has 12 years experience in the listed sector including as General Counsel and
Company Secretary of ING Real Estate, prior to joining SCA.
Mr Lamb has extensive experience in retail shopping centre developments, acquisitions, sales and major
leasing transactions having acted for various REITs and public companies during his career.
Qualifications:
LLB.
Ms Rees is an experienced funds and property lawyer with over 15 years’ experience in legal practice
including property transactions, property developments, leasing, funds management, corporate and debt.
Ms Rees joined SCA in late 2012 and was previously a Senior Associate in a national law firm. Ms Rees
is also a Company Secretary for the Group and SCA Unlisted Retail Fund RE Limited which is the
Responsible Entity for SCA’s funds management business.
Qualifications:
BA LLB (Hons), AGIA, ACIS.
Directors’ relevant interests
The relevant interest of each Director in ordinary stapled securities in the Group as at the date of signing of this report are shown
below.
Director
P Clark
S Crane
K Ferguson
B Laughton
P Redmond
B Robson
A Mellowes
M Fleming
Number of stapled
securities at 30 June
2019
Net movement
increase / (decrease)
Number of stapled
securities at date of
this report
Number of unvested
performance rights at
date of this report
76,465
50,000
16,465
4,333
73,965
48,607
785,330
146,465
124,629
38,888
18,604
13,998
13,888
13,888
565,847
256,367
201,094
88,888
35,069
18,331
87,853
62,495
1,351,177
402,832
-
-
-
-
-
-
1,151,523
539,237
Directors’ attendance at meetings
The number of Directors’ meetings, including meetings of committees of the Board of Directors, held during the year and the number
of those meetings attended by each of the Directors at the time they held office are shown below.
Number of meetings held
Board of Directors (Board)
Audit, Risk Management and Compliance Committee (ARMCC)
Remuneration Committee (Remuneration)
Nomination Committee (Nomination)
Investment Committee (Investment)
Number
17
5
3
2
6
Director
P Clark
S Crane
K Ferguson
B Laughton
P Redmond
B Robson
A Mellowes
M Fleming
Board
ARMCC
Remuneration
Nomination
Investment
A
17
17
17
17
17
17
17
17
B
17
17
17
17
17
16
16
17
A
B
5
-
5
5
5
-
-
-
5
-
5
5
5
-
-
-
C
-
4
-
-
-
5
5
5
A
B
-
3
3
3
-
3
-
-
-
3
3
3
-
3
-
-
C
3
-
-
-
3
-
3
3
A
B
C
A
B
C
2
2
2
2
2
2
-
-
2
2
2
2
2
2
-
-
-
-
-
-
-
-
2
1
-
6
-
-
6
6
6
6
-
6
-
-
6
5
6
6
3
-
-
1
-
-
-
-
A: Number of meetings held while a member of the Board or a member of the committee during the year.
B: Number of meetings attended while a member of the Board or a member of the committee during the year.
C: Number of meetings attended as a guest.
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Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
2. Principal activities
The principal activity of the Group during the year was investment in, and management of, shopping centres in Australia.
3.
Impact of COVID-19
The events relating to COVID-19 have had a material adverse impact on both the operations and financial performance of the
Group during the period. These impacts have included: volatility in the retail sales performance of our tenants, government-
imposed trading restrictions on some of our tenants, the enactment of legislation in each state and territory implementing the
National Cabinet Mandatory Code of Conduct (“Code of Conduct”) for small and medium sized enterprise tenants, a large increase
in rental arrears compared to prior periods by our speciality tenants directly attributable to the COVID-19 pandemic, an increase in
expenses (for example, extra cleaning and security) and reduction in the valuation of our investment properties.
As these COVID-19 related impacts are ongoing, there is continued uncertainty in relation to the future financial performance of the
Group.
The implications of the above on the Consolidated Financial Statements falls broadly into two areas:
- Recording and collecting of rental income: some rental income that was invoiced during the period has not been received.
A portion of this unpaid rent has been waived or deferred. A portion of the remaining balance of unpaid rent is not
expected to be recovered in a future period and, as such, an expected credit loss provision has been raised for the
amount of the expected cash shortfall relative to contractual lease payments (“ECL” provision). The full ECL provision is
$15.3 million, being $0.9 million that was already recognised as at 30 June 2019 plus an additional $14.4 million that has
now been raised in relation to unpaid rent related to the COVID-19 pandemic.
Fair value of investment properties: this requires assumptions to be made about the future financial performance of the
properties and recent market transactional evidence. There are significant judgements and uncertainties relating to both of
these assumptions. Since 30 June 2019, the value of investment properties has decreased by $87.9 million, of which
$27.4 million is directly related to expected waivers as a result of the COVID-19 pandemic.
-
The accounting treatments and key estimates and significant judgements in each of these areas are set out in note 3 of the
Financial Statements.
4. Property portfolio
significant. In addition, the Group may be entitled to a performance fee in accordance with the investment management agreement
with SURF 1.
6.
Financial review
Financial review
A summary of the Group and Retail Trust’s results for the year is set out below:
SCA Property Group
30 June
2019
30 June
2020
Retail Trust
30 June
2020
30 June
2019
Net profit after tax
Basic earnings per security
(weighted for securities on issue during the year)
Diluted earnings per security
(weighted for securities on issue during the year)
Funds from operations
Funds from operations per security
(weighted for securities on issue during the year)
Distributions paid and payable to security holders
Distributions
Net tangible assets
Weighted average number of securities used as the
denominator in calculating basic earnings per
security
Weighted average number of securities used as the
denominator in calculating diluted earnings per
security
($m)
(cents per security)
(cents per security)
($m)
(cents per security)
($m)
(cents per security)
($ per security)
(millions of securities)
85.5
8.9
8.9
140.8
14.65
123.5
12.5
2.22
960.9
109.6
12.6
12.6
141.8
16.33
135.4
14.7
2.27
868.4
84.8
8.8
8.8
140.1
14.58
123.5
12.5
2.21
960.9
109.1
12.6
12.6
141.3
16.27
135.4
14.7
2.26
868.4
(millions of securities)
964.6
870.8
964.6
870.8
The investment portfolio as at 30 June 2020 consisted of 85 shopping centres (30 June 2019: 85 shopping centres) valued at
$3,138.2 million (30 June 2019: $3,147.0 million). The investment portfolio consists of convenience based neighbourhood and sub-
regional shopping centres with a strong weighting toward non-discretionary retail segments.
The Group reports net profit after tax (statutory) attributable to security holders in accordance with International Financial Reporting
Standards (IFRS). The Responsible Entity considers the non-IFRS measure, Funds from Operations (FFO) an important indicator
of the underlying cash earnings of the Group. Regard is also given to Adjusted Funds from Operations (AFFO).
Funds from Operations and Adjusted Funds from Operations
Acquisitions and developments
During the period one shopping centre was acquired (Warner Marketplace (Queensland)) for $78.4m in December 2019, excluding
transaction costs. The Shell Cove Stage 3 development was completed for $4.8m in December 2019.
Disposal
The Group sold Cowes (Victoria) in February 2020 for $21.5 million.
Revaluations
The total value of investment properties as at 30 June 2020 was $3,138.2 million (30 June 2019: $3,147.0 million). During the year
ended 30 June 2020 independent valuations were obtained for 45 investment properties in addition to all of the investment
properties being internally valued. The weighted average capitalisation rate (cap rate) of the portfolio as at 30 June 2020 was
6.51% (30 June 2019: 6.48%).
The change in value of the investment properties during the year was due primarily to the acquisition of Warner Marketplace and
the completion of the Shell Cove Stage 3 development during the period, offset by the sale of Cowes and the negative like-for-like
valuation movements some of which are either directly or indirectly related to the COVID-19 pandemic. For more information in
relation to the COVID-19 impact on revaluations refer to note 3 of the Financial Statements.
5.
Funds Management
As at 30 June 2020 the Group managed 5 properties valued at $102.6 million for its three SCA unlisted retail funds (30 June 2019:
11 properties valued at $184.3 million). The Group has an investment in each of these funds. During the year the first of these
funds, SCA Unlisted Retail Fund 1 (SURF 1) reached the end of its term and commenced the process of winding up including the
sale of the properties, the repayment of the debt and with the majority of the remaining funds then returned as capital to the
unitholders. The Group has received $9.0 million during the year as a return of capital on its investment in SURF 1. There may be
an additional final return of capital once the fund is finally wound up in financial year 2021. This amount is not expected to be
Net profit after tax (statutory)
Adjustments for non cash items included in statutory profit
Reverse: Straight-lining of rental income and amortisation of incentives
Reverse: Fair value or unrealised adjustments
- Investment properties
- Derivatives
- Foreign exchange
Other Adjustments
Reverse: Other income
Reverse: Net unrealised profit from associates (SURF funds)
Reverse: Swap termination costs
Reverse: Transaction fees
Funds from Operations
Less: Maintenance capital expenditure
Less: Capital leasing incentives and leasing costs
Adjusted Funds from Operations
SCA Property Group
30 June
30 June
2019
2020
$m
$m
Retail Trust
30 June
2020
$m
30 June
2019
$m
85.5
109.6
84.8
109.1
8.1
8.6
8.1
8.6
87.9
(51.4)
8.1
(0.5)
1.6
-
1.5
140.8
(6.0)
(10.5)
124.3
40.5
(66.3)
27.3
-
0.7
17.7
3.7
141.8
(5.6)
(8.8)
127.4
87.9
(51.4)
8.1
(0.5)
1.6
-
1.5
140.1
(6.0)
(10.5)
123.6
40.5
(66.3)
27.3
-
0.7
17.7
3.7
141.3
(5.6)
(8.8)
126.9
68
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Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
7. Contributed equity
Equity placement and Unit purchase plan
The Group completed an institutional placement on 16 April 2020 and a unit purchase plan on 15 May 2020. The institutional
placement raised $250.0 million by issuing 115.7 million securities at $2.16 per security. The unit purchase plan raised $29.3
million by issuing 13.6 million securities at $2.16 per security. The purpose of these equity raisings was to strengthen the Group’s
balance sheet and to provide funding flexibility to continue to deliver on the Group’s strategy of investing in convenience-based
supermarket-anchored centres as opportunities arise. As at 30 June 2020 the proceeds had been used to pay down revolving
bilateral debt facilities and to invest in term deposits.
Distribution reinvestment plan (DRP)
The Group has a DRP under which unitholders may elect to have their distribution entitlements satisfied by the issue of new
securities at the time of the distribution payment rather than being paid in cash. The DRP was in place for the distribution declared
in June 2019 (paid in August 2019) and the distribution declared in December 2019 (paid in January 2020).
The distribution declared in June 2019 resulted in $13.0 million being raised by the DRP through the issue of 5.3 million securities
at $2.48 in August 2019. The distribution declared in December 2019 resulted in $27.9 million being raised by the DRP through the
issue of 10.3 million securities at $2.71 in January 2020. The 10.3 million units included 5.1 million units issued pursuant to an
underwriting agreement.
Other equity issues
Additionally, 959,860 units were issued during the year in respect of executive and staff compensation plans for nil consideration.
8. Significant changes and developments during the year
Investment properties – acquisitions, disposals and developments
During the year one shopping centre was acquired in December 2019 (Warner Marketplace, Queensland) for $78.4 million,
excluding transaction costs. Shell Cove Stage 3 development was completed in December 2019 for $4.8 million. One property
(Cowes, Victoria) also sold in February 2020 for $21.5 million.
Capital management - debt
During the year the bilateral debt facilities were increased in facility limit by $200.0 million and extended in maturity. As a result, the
total bilateral facilities are now $600.0 million (30 June 2019: $400.0 million). This includes $400.0 million of revolving bilateral debt
facilities (30 June 2019: $250.0 million).
As at 30 June 2020 the Group had undrawn debt facilities and cash and cash equivalents of $622.8 million (30 June 2019: $180.2
million).
The next debt expiry is the A$ MTN $225.0 million in April 2021. Under the terms of this MTN it can be repaid (with appropriate
notice) from October 2020 with no make whole obligation. The current intention is that the MTN will be repaid from cash and cash
equivalents and undrawn debt.
The average debt facility maturity of the Group at 30 June 2020 was 5.1 years (30 June 2019: 6.1 years). At 30 June 2020 91.1%
of the Group’s debt was fixed or hedged (30 June 2019: 70.4%).
Gearing
The Group maintains a prudent approach to managing the balance sheet with gearing of 25.6% as at 30 June 2020 (30 June 2019:
32.8%). The Group’s target gearing range is 30% to 40%, however the Group has a preference for gearing to remain below 35% at
this point in the cycle. Gearing is below the target range following an institutional placement of 115.7 million securities on 16 April
2020 at $2.16 a security and a unit holder purchase plan on 15 May 2020 under which 13.6 million units were issued at $2.16 per
security. The purpose of these equity raisings was to strengthen the Group’s balance sheet and to provide funding flexibility to
continue to deliver on the Group’s strategy of investing in convenience-based supermarket-anchored centres as opportunities
arise.
9. Major business risk profile
The Board is ultimately responsible for the risk management process and the systems of internal control. Senior management is
responsible for identifying risks and implementing appropriate mitigation processes and controls. The Audit, Risk Management and
Compliance Committee, is responsible for establishing, reviewing and monitoring the process of risk management, and presents
this to the Board for the Board’s approval.
The table below summarises the key business risks as set out in the Group’s risk register.
Key Risks
STRATEGIC
Cause(s)
Effect
Mitigation
Economic slowdown leading to
subdued retail sales
Macroeconomic
environment, eg.
COVID-19 pandemic
Reduced rental income and
reduced investment property
valuations
Online retailing reduces foot traffic
through SCA centres
Increased online sales
result in reduced in
store sales
Reduced rental income and
reduced investment property
valuations
Anchor tenant closes stores
Reduced productivity in
large format stores
Reduced rental income and
reduced investment property
valuations
High proportion of income from
supermarket anchor tenants
with long leases, a diverse mix
of specialty tenants with a bias
towards non-discretionary
categories
Encourage supermarket “click
‘n collect”, tenancy mix towards
online-resilient specialty
categories
Reduce exposure to poorer
performing discount department
stores over time, long term
leases with anchor tenants
Increase diversification of
supermarket anchors over time
Supermarket anchor tenant
becomes insolvent
New categories of business are
entered into without appropriate due
diligence or analysis
Major structural
change to the
supermarket sector or
capital structure failure
Inadequate due
diligence or analysis
Reduced rental income and
reduced investment property
valuations
SCA suffers loss of capital
or loses upside
opportunities
Appropriate resources and
senior management oversight,
Investment Committee to
review major initiatives
Property acquisition rate is below
expectations
Investment hurdles
cannot be achieved
Lack of earnings growth
Closely monitor all potential
acquisitions, and regularly
review investment hurdles
FINANCIAL
Breach of debt covenants / debt
default
Cost of debt increases
Value of assets declines
LVR: debt increases
or value of assets
declines
ICR: cost of debt
increases or earnings
decreases
Market base rates or
margins increase, or
SCA credit rating is
downgraded
Increase in market
capitalisation / discount
rates, decrease in net
operating income or
expected future cash
flows
Constrained acquisition
growth and potential
insolvency
Increased interest expense
leads to lower earnings
Decrease in NTA and
increase in LVR ratio
Conservative level of gearing,
more than 50% of fixed rate
debt, relative liquidity of
neighbourhood assets,
maintain strong and diversified
banking relationships
Conservative level of gearing,
more than 50% fixed rate debt,
maintain strong and diversified
banking relationships
Conservative level of gearing,
geographic diversification, long
dated lease agreements, credit
quality of anchor tenants
70
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Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
Key Risks
Cause(s)
Effect
Mitigation
OPERATIONAL
Injury or illness to employees,
contractors, tenants or customers
that was reasonably foreseeable
and within the influence or control of
SCA
An incident that is as a
result of an act, or
failure to act, by SCA
or where SCA can
reasonably influence
the outcome
Death, serious injury or
adverse health outcomes for
SCA employees,
contractors, tenants or
customers
Conservative safety strategy,
safety reporting to the Board,
ongoing safety training for
employees and contractors,
encouragement of continuous
challenge and improvement on
safety achievements,
outsourced property and
facilities management with
safety KPI’s, appropriate
workers’ compensation, public
liability and property insurance
Outsourced service provider does
not perform in accordance with
service level agreements
Inadequate supervision
of SCP’s outsourced
functions and/or
unsatisfactory quality
control
Unsatisfactory quality control
resulting in loss to
unitholders, breach of
financial services law, or
loss of reputation
Appropriate policies,
procedures and operational
practices adopted, reviewed
and maintained, training,
insurance
PEOPLE & CULTURE
Inability to attract or retain
appropriate talent
Inadequate resourcing,
development or training
Loss of knowledge,
experience, engagement
and productivity
Appropriate HR resourcing,
processes and procedures,
senior management
engagement, remuneration
committee oversight
Culture does not align with strategy
Inadequate
development of culture
strategy, failure of
leadership, training or
engagement
Target culture is not
embedded in the business
Develop and continuously
improve culture strategy
alignment, cultural reviews, staff
training and coaching
LEGAL & COMPLIANCE
Material breach of law or regulation
Potential loss of AFSL,
litigation, financial loss or
reputational damage
Not maintaining an
adequate risk
management system,
compliance plan,
policies, procedures,
reporting, monitoring
and training
Risk management framework
and compliance plan are in
place, regularly reviewed and
embedded in the business.
Appropriate policies,
procedures and training.
Engagement of senior
management and oversight by
ARMCC committee and the
Board
10. Business strategies and prospects for future financial years
The Group’s core strategy is to invest in, manage and develop a geographically diverse portfolio of quality neighbourhood and sub-
regional retail assets, anchored by long-term leases to quality tenants with a bias towards the non-discretionary retail sector.
The Group is focused on achieving growing and resilient cash flows by investing in properties that have tenants who operate primarily
in non-discretionary and defensive retailing sectors. This is to support secure and growing distributions to the Group’s security
holders. It intends to achieve this by:
- Maximising the net operating income from its existing properties. This may include increasing the average rent per square metre
from specialty tenants over time and controlling the growth in expenses.
-
-
Pursuing selected property refurbishment, development and acquisition opportunities, consistent with its core strategy.
Diversifying and developing other sustainable income streams including funds management.
- Maintaining an appropriate capital structure to balance cost of capital and risk profile.
While the Group’s strategy has not changed, its current operational and financial performance has been impacted by the COVID-19
pandemic and these impacts are expected to continue into financial year 2021 and possibly beyond. If the events relating to
COVID-19 are more material or prolonged than anticipated, this will have a greater impact that may include a further reduction in
rent collected and further reduction in property values.
For more information in relation to the impact for COVID-19 on the Group, refer to note 3 to the Financial Statements.
It is also noted that movements in the fair value of derivative financial instruments and in foreign exchange, availability of funding
and changes in interest rates may have a material impact on the Group’s results in future years, however, these cannot be reliably
measured at the date of this report.
11. Environmental regulations
The Directors of the Responsible Entity are satisfied that adequate systems are in place for the management of the Group’s
environmental responsibility and compliance with various licence requirements and regulations. Further, the Directors of the
Responsible Entity are not aware of any material breaches of these requirements and, to the best of their knowledge, all activities
have been undertaken in compliance with environmental requirements.
12.
Indemnification and insurance of Directors, Officers, RE and Auditor
The Directors’ have been provided with a Deed of Indemnity which is intended, to the extent allowed by law, to indemnify the
Directors against all losses or liabilities incurred by the person acting in their capacity as a Director.
Additionally, the Group has acquired Directors’ and Officers’ liability insurance. In accordance with usual commercial practice, the
insurance contract prohibits disclosure of details relating to the nature of the liabilities covered by the insurance, the limit of
indemnity and the amount of the premiums paid under the policy.
The Trusts’ constitutions provide that, subject to the Corporations Act 2001, the Responsible Entity has a right of indemnity out of
the assets of the Trusts on a full indemnity basis in respect of any liability incurred by the Responsible Entity in properly performing
any of its powers or duties in relation to the Trusts.
The auditor of the Group is not indemnified out of the assets of the Group.
13. Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page
75.
72
73
11
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Shopping Centres Australasia Property Group
Directors’ Report
For the year ended 30 June 2020
14. Audit and non-audit fees
Details of the amounts paid or payable to the auditor (Deloitte Touche Tohmatsu) for audit and non-audit services provided are
detailed in note 30 of the Financial Statements.
There were no non-audit services during the year. The Directors are satisfied that the general standard of independence for
auditors imposed by the Corporations Act 2001 has been satisfied.
The Directors are of the opinion that the services disclosed in note 30 of the Financial Report do not compromise the external
auditor’s independence, based on that none of the non audit services provided (to the extent that any services were provided)
undermine the general principles relating to auditor independence as set out in APES 110 ‘Code of Ethics for Professional
Accountants’ issued by the Accounting Professional & Ethics Standards Board, including reviewing or auditing the auditor’s own
work, acting in a management or decision-making capacity for the Group, acting as advocate for the Group or jointly sharing risks
and rewards.
15. Going concern
The Financial Statements are prepared on the going concern basis. The impact of COVID-19 pandemic has resulted in a portion of
the tenants of the Group experiencing challenging and uncertain times. Whilst the situation is evolving, the Group remains
confident that it will be able to continue as a going concern. In reaching this position, it has been considered that the Group and
Retail Trust are in a net current asset deficiency position of $91.5 million. At 30 June 2020 the Group and Retail Trust have the
ability to drawdown sufficient funds to pay the current liabilities and the capital commitments (refer to note 23 of the Financial
Statements), having available cash and cash equivalents and undrawn debt facilities of $622.8 million. For more information refer
to note 2 of the Financial Statements.
16. Subsequent events
At the date these Financial Statements are authorised for issue, no further adjustments in respect of the impact of COVID-19 have
been made. However, the COVID-19 situation continues to evolve. Recently the Victorian Government announced Stage 4
restrictions for the Melbourne metropolitan area and Stage 3 restrictions for regional Victoria. Stage 4 restrictions result in the
closure of most retail stores with limited exceptions including supermarkets, food stores, liquor stores and pharmacies. The Group
owns 14 shopping centres in Victoria (including 8 in metropolitan Melbourne) representing approximately 18% of the Group’s gross
property income. The full consequences on the Group’s future financial performance and the value of the Group’s investment
properties continues to be uncertain.
In July 2020 the Group exchanged conditional contracts to purchase a retail neighbourhood shopping centre, Bakewell, in the
Northern Territory for $33.0 million (excluding transaction costs). This property is expected to settle by September 2020.
Since the end of the year, the Directors of the Responsible Entity are not aware of any other matter or circumstance not otherwise
dealt with in this report or the Consolidated Financial Statements that has 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 future financial periods.
17. Rounding of amounts
In accordance with Legislative Instrument 2016/191 issued by the Australian Securities and Investments Commission relating to the
rounding off of amounts in the financial statements, amounts in the financial statements have been rounded to the nearest hundred
thousand dollars in accordance with that Legislative Instrument, unless otherwise indicated.
This report is made in accordance with a resolution of the Directors.
Chair
Sydney
10 August 2020
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 Gerge Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
The Board of Directors
Shopping Centres Australasia Property Group RE Limited as Responsible Entity for
Shopping Centres Australasia Property Management Trust and
Shopping Centres Australasia Property Retail Trust
Level 5, 50 Pitt Street
Sydney NSW 2000
10 August 2020
Dear Directors
Shopping Centres Australasia Property Management Trust and Shopping Centres
Australasia Property Retail Trust
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Shopping Centres Australasia Property Group RE
Limited as Responsible Entity for Shopping Centres Australasia Property Management Trust and
Shopping Centres Australasia Property Retail Trust.
As lead audit partner for the audit of the financial statements of Shopping Centres Australasia
Property Management Trust and Shopping Centres Australasia Property Retail Trust for the year
ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Andrew J Coleman
Partner
Chartered Accountants
13
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
14
74
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Shopping Centres Australasia Property Group
Consolidated Statements of Comprehensive Income
For the year ended 30 June 2020
SCA Property Group
Retail Trust
Notes
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
Revenue
Rental income
Recoveries and recharge revenue
Fund management revenue
Distribution income CQR
Expenses
Property expenses
Corporate costs
11
254.8
34.2
1.7
1.7
292.4
(108.6)
(13.8)
170.0
Unrealised (loss)/gain including change in fair
value through profit or loss
- Investment properties
(87.9)
- Derivatives
51.4
- Foreign exchange
(8.1)
- Share of net profit from associates (SURF
-
13
14
funds)
Transaction costs
Earnings before interest and tax (EBIT)
Interest income
Finance costs
Net profit before tax
Taxation
Net profit after tax
Other comprehensive income
Items that will not be reclassified subsequently
to profit or loss
Movement on revaluation of Investment - fair
value through other comprehensive income
Total comprehensive income
7
8
9
11
Net profit after tax attributable to security holders of:
SCA Property Management Trust
SCA Property Retail Trust (non-controlling interest)
Net profit after tax
Total comprehensive income for the period
attributable to unitholders of:
SCA Property Management Trust
SCA Property Retail Trust (non-controlling
interest)
Total comprehensive income
Distributions per stapled security (cents)
5
Weighted average number of securities used as
the denominator in calculating basic earnings
per security below
Basic earnings per stapled security (cents)
Weighted average number of securities used as
the denominator in calculating diluted earnings
per stapled security below
Diluted earnings per stapled security (cents)
Basic earnings per security (cents)
SCA Property Management Trust
Diluted earnings per security of (cents)
SCA Property Management Trust
6
6
6
6
(1.5)
123.9
0.3
(38.2)
86.0
(0.5)
85.5
(6.9)
78.6
0.7
84.8
85.5
0.7
77.9
78.6
12.5
960.9
8.9
964.6
8.9
0.1
0.1
254.8
34.2
-
1.7
290.7
(108.6)
(13.3)
168.8
(87.9)
51.4
(8.1)
-
(1.5)
122.7
0.3
(38.2)
84.8
-
84.8
233.4
30.4
-
4.4
268.2
(84.2)
(12.4)
171.6
(40.5)
66.3
(27.3)
1.2
(3.7)
167.6
0.4
(58.9)
109.1
-
109.1
(6.9)
77.9
4.0
113.1
12.5
960.9
8.8
964.6
14.7
868.4
12.6
870.8
8.8
12.6
233.4
30.4
1.8
4.4
270.0
(84.2)
(13.1)
172.7
(40.5)
66.3
(27.3)
1.2
(3.7)
168.7
0.4
(58.9)
110.2
(0.6)
109.6
4.0
113.6
0.5
109.1
109.6
0.5
113.1
113.6
14.7
868.4
12.6
870.8
12.6
-
-
Shopping Centres Australasia Property Group
Consolidated Balance Sheets
As at 30 June 2020
SCA Property Group
Retail Trust
Notes
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
Current assets
Cash and cash equivalents
Receivables
Derivative financial instruments
Investment in CQR
Other assets
Total current assets
Non-current assets
Investment properties
Derivative financial instruments
Investment in associates (SURF funds)
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Distribution payable
Derivative financial instruments
Provisions
Interest bearing liabilities
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Derivative financial instruments
Provisions
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated profit/(loss)
Non-controlling interest
Total equity
4
10
17
11
12
13
17
14
12
15
5
17
16
16
17
12
18
19
20
183.8
34.2
6.1
22.7
2.8
249.6
3,138.2
177.7
15.9
8.3
3,340.1
3,589.7
58.3
53.6
2.5
1.7
225.0
341.1
858.6
7.7
0.2
8.1
874.6
1,215.7
4.2
28.3
3.2
29.6
2.3
67.6
3,147.0
122.0
26.5
9.1
3,304.6
3,372.2
47.4
69.0
1.1
2.8
-
120.3
1,137.5
1.9
0.2
8.4
1,148.0
1,268.3
182.7
34.2
6.1
22.7
2.3
248.0
3.1
28.1
3.2
29.6
1.9
65.9
3,138.2
177.7
15.9
5.9
3,337.7
3,585.7
3,147.0
122.0
26.5
5.9
3,301.4
3,367.3
68.5
53.6
2.5
56.4
69.0
1.1
-
-
225.0
349.6
-
126.5
858.6
7.7
1,137.5
1.9
-
-
6.3
872.6
1,222.2
6.1
1,145.5
1,272.0
2,374.0
2,103.9
2,363.5
2,095.3
10.2
-
0.3
2,363.5
2,374.0
9.0
-
(0.4)
2,095.3
2,103.9
1,962.6
3.0
397.9
-
2,363.5
1,649.7
9.0
436.6
-
2,095.3
The above Consolidated Balance Sheets should be read in conjunction with the accompanying notes.
The above Consolidated Statements of Comprehensive Income should be read in conjunction with the accompanying notes.
15
16
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Annual Report 2019Annual Report 2019SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Shopping Centres Australasia Property Group
Consolidated Statements of Changes in Equity
For the year ended 30 June 2020
Balance at 1 July 2019
Net profit after tax for the period
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Transactions with unitholders in their capacity as equity
holders:
Equity issued
Costs associated with equity raising
Employee share based payments
Distributions paid and payable
Balance at 30 June 2020
Balance at 1 July 2018
Net profit after tax for the period
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Transactions with unitholders in their capacity as equity
holders:
Equity issued
Costs associated with equity raising
Employee share based payments
Distributions paid and payable
Balance at 30 June 2019
Notes
19
18
18
19
5
19
18
18
19
5
Balance at 1 July 2019
Net profit after tax for the period
Other comprehensive loss for the period, net of tax
Total comprehensive income/ (loss) for the period
Transactions with unitholders in their capacity as
equity holders:
Equity issued
Costs associated with equity raising
Employee share based payments
Distributions paid and payable
Balance at 30 June 2020
Balance at 1 July 2018
Net profit after tax for the period
Other comprehensive income for the period, net of tax
Total comprehensive income/ (loss) for the period
Transactions with unitholders in their capacity as
equity holders:
Equity issued
Costs associated with equity raising
Employee share based payments
Distributions paid and payable
Balance at 30 June 2019
Notes
19
18
18
19
5
19
18
18
19
5
Contributed
equity
Accumulated
profit/(loss)
$m
9.0
-
-
-
$m
(0.4)
0.7
-
0.7
SCA Property Group
Attributable to
owners of
parent
$m
8.6
0.7
-
0.7
Non-
controlling
interest
$m
2,095.3
84.8
(6.9)
77.9
1.2
-
-
-
1.2
10.2
-
-
-
-
-
0.3
1.2
-
-
-
1.2
10.5
319.0
(6.1)
0.9
(123.5)
190.3
2,363.5
7.5
-
-
-
1.5
-
-
-
1.5
9.0
(0.9)
0.5
-
0.5
-
-
-
-
-
(0.4)
6.6
0.5
-
0.5
1.5
-
-
-
1.5
8.6
1,714.4
109.1
4.0
113.1
407.9
(6.2)
1.5
(135.4)
267.8
2,095.3
Contributed
equity
$m
1,649.7
-
-
-
Retail Trust
Reserves
Investment in
CQR
$m
3.6
-
(6.9)
(6.9)
Share based
payments
$m
5.4
-
-
-
Accumulated
profit
$m
436.6
84.8
-
84.8
319.0
(6.1)
-
-
312.9
1,962.6
-
-
-
-
-
(3.3)
-
-
0.9
-
0.9
6.3
-
-
-
(123.5)
(123.5)
397.9
1,248.0
-
-
-
407.9
(6.2)
-
-
401.7
1,649.7
(0.4)
-
4.0
4.0
-
-
-
-
-
3.6
3.9
-
-
-
-
-
1.5
-
1.5
5.4
462.9
109.1
-
109.1
-
-
-
(135.4)
(135.4)
436.6
The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.
Total
$m
2,103.9
85.5
(6.9)
78.6
320.2
(6.1)
0.9
(123.5)
191.5
2,374.0
1,721.0
109.6
4.0
113.6
409.4
(6.2)
1.5
(135.4)
269.3
2,103.9
Total
$m
2,095.3
84.8
(6.9)
77.9
319.0
(6.1)
0.9
(123.5)
190.3
2,363.5
1,714.4
109.1
4.0
113.1
407.9
(6.2)
1.5
(135.4)
267.8
2,095.3
Shopping Centres Australasia Property Group
Consolidated Statements of Cash Flows
For the year ended 30 June 2020
SCA Property Group
Retail Trust
Note
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
Cash flows from operating activities
Property and other income received (inclusive of GST)
Property expenses paid (inclusive of GST)
Distribution received from associate (SURF funds)
Distribution received from investment in CQR
Corporate costs paid (inclusive of GST)
14
11
Interest received
Finance costs paid
Transaction costs (inclusive of GST)
Taxes paid including GST
314.6
(105.1)
1.4
3.2
(13.2)
0.1
(38.5)
(1.7)
(13.5)
Net cash flow from operating activities
21
147.3
293.0
(89.3)
1.7
5.0
(12.0)
0.4
(58.0)
(4.0)
(16.5)
120.3
313.8
(105.1)
1.4
3.2
(12.4)
0.1
(38.5)
(1.7)
(13.5)
147.3
291.2
(89.3)
1.7
5.0
(10.1)
0.4
(58.0)
(4.0)
(16.5)
120.4
13
13
11
4
14
14
18
18
16
16
5
Cash flows from investing activities
Payments for investment properties purchased and
capital expenditure
Net proceeds from investment properties sold
Proceeds from the disposal of investment in CQR
Payment for term deposits
Additions to investments in associates
Return of capital from investment in associates
Net cash flow from investing activities
Cash flow from financing activities
Proceeds from equity raising
Costs associated with equity raising
Net proceeds from borrowings
Repayment of borrowings
Distributions paid
Net cash flow from financing activities
Net change in cash held
Cash at the beginning of the year
Cash at the end of the year
Term deposits
Cash and cash equivalents
4
(111.4)
(754.6)
(111.4)
(754.6)
21.5
-
(180.0)
-
9.0
60.3
57.8
-
(9.2)
-
21.5
-
(180.0)
-
9.0
60.3
57.8
-
(9.2)
-
(260.9)
(645.7)
(260.9)
(645.7)
320.2
(6.1)
178.0
(240.0)
(138.9)
113.2
(0.4)
4.2
3.8
180.0
183.8
409.4
(6.2)
968.3
(726.0)
(119.6)
525.9
0.5
3.7
4.2
-
4.2
320.2
(6.1)
178.0
(240.0)
(138.9)
113.2
(0.4)
3.1
2.7
180.0
182.7
409.4
(6.2)
968.3
(726.0)
(119.6)
525.9
0.6
2.5
3.1
-
3.1
The above Consolidated Statements of Cash Flows should be read in conjunction with the accompanying notes.
78
79
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Annual Report 2019Annual Report 2019SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
1.
Corporate information
(b)
Statement of compliance
Shopping Centres Australasia Property Group (the Group) comprises the stapling of the securities in two Australian managed
investment schemes, Shopping Centres Australasia Property Management Trust (Management Trust) (ARSN 160 612 626) and
Shopping Centres Australasia Property Retail Trust (Retail Trust) (ARSN 160 612 788) (collectively the Trusts).
The Responsible Entity of both Trusts is Shopping Centres Australasia Property Group RE Limited (ABN 47 158 809 851; AFSL
426603) (Responsible Entity).
The Financial Statements of the Group comprise the consolidated Financial Statements of the Management Trust and its controlled
entities including the Retail Trust and its controlled entities. The Financial Statements of the Retail Trust comprise the Consolidated
Financial Statements of the Retail Trust and its controlled entities. The Directors of the Responsible Entity have authorised the
Financial Report for issue on 10 August 2020.
2.
(a)
Significant accounting policies
Basis of preparation
In accordance with AASB 3 Business Combinations, the stapling arrangement discussed above is regarded as a business
combination and Shopping Centres Australasia Management Trust has been identified as the Parent for preparing Consolidated
Financial Statements.
These Financial Statements are combined financial statements and accompanying notes of both Shopping Centres Australasia
Property Group and the Shopping Centres Australasia Property Retail Trust Group. The Financial Statements have been presented
in Australian dollars unless otherwise stated.
Historical cost convention
The Financial Statements have been prepared on the basis of historical cost, except for certain non-current assets and financial
instruments that are measured at fair value.
Going concern
These Consolidated Financial Statements are prepared on the going concern basis. The impact of COVID-19 pandemic has
resulted in a portion of the tenants of the Group experiencing challenging and uncertain times. Whilst the situation is evolving, the
Group remains confident that it will be able to continue as a going concern. In reaching this position, it has been considered that the
Group and Retail Trust are in a net current asset deficiency position of $91.5 million. At 30 June 2020 the Group and Retail Trust
have the ability to drawdown sufficient funds to pay the current liabilities and the capital commitments (refer note 23), having
available, cash and cash equivalents and undrawn debt facilities of $622.8 million.
The Group has prepared an assessment of its ability to continue as a going concern, taking into account information available.
Whilst the COVID-19 situation is evolving, the Group remains confident that it will be able to continue as a going concern. This
assumes the Group will be able to continue trading, realise assets and discharge liabilities in the ordinary course of business for at
least 12 months from the date of the financial statements. In reaching this position, the following factors have been considered:
•
•
•
The Group has cash and cash equivalents and undrawn facilities totalling of $622.8 million
The Group’s major tenants continue to trade strongly and pay rent in a timely manner
The Group has debt facility expiries of $275.0 million (made up of $225.0 million with respect to an A$ Medium Term Note
which expires in April 2021 and a $50.0 million facility which is currently unused which expires in April 2022) in the next 24
months and $622.8 million of cash and undrawn facilities (including the $50.0 million unused facility referred to above)
The Group is well within its gearing and interest cover ratio for the purposes of its debt covenants
•
• Stress testing of the covenants results in adequate levels of headroom from both a gearing and interest cover ratio
perspective
On the basis of these factors, the Directors of the Responsible Entity believe that the going concern basis of preparation is
appropriate and that the Group will be able to pay its debts as and when they fall due. In the event that the Group cannot continue
as a going concern, it may not realise its assets and settle its liabilities in the normal course of operations for the amounts stated in
its Financial Statements. No allowance for such circumstances has been made in the Financial Statements.
The Financial Report is a general purpose financial report that has been prepared in accordance with Australian Accounting
Standards, Australian Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (the Board
or AASB) and the Corporations Act 2001.
The Financial Report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
For the purposes of preparing the financial statements, the Group is a for-profit entity.
Application of new and revised Accounting Standards
The accounting policies adopted by the Group and the Retail Trust are consistent with those of the previous financial year and
include the adoption of AASB 9, AASB 15, the early adoption of AASB 16, and other new and amended standards and
interpretations commencing 1 July 2018 which have been adopted where applicable from 1 July 2018. The Group and the Retail
Trust early adopted AASB 16 Leases (AASB 16) in the Financial Statements for the year ended 30 June 2019 to coincide with the
signing of a lease during the period by the Group over its premises in Sydney.
(c)
Basis of consolidation
The consolidated Financial Statements of Shopping Centres Australasia Property Group incorporate the assets and liabilities of
Shopping Centres Australasia Property Management Trust (the Parent) and all of its subsidiaries, including Shopping Centres
Australasia Property Retail Trust and its subsidiaries. Shopping Centres Australasia Property Management Trust has been
identified as the parent entity in relation to the stapling. The results and equity of Shopping Centres Australasia Property Retail
Trust (which is not directly owned by Shopping Centres Australasia Property Management Trust) have been treated and disclosed
as a non-controlling interest. Whilst the results and equity of Shopping Centres Australasia Property Retail Trust are disclosed as a
non-controlling interest, the security holders of Shopping Centres Australasia Management Trust are the same as the security
holders of Shopping Centres Australasia Property Retail Trust.
These Financial Statements also include a separate column representing the Financial Statements of Shopping Centres
Australasia Property Retail Trust, incorporating the assets and liabilities of Shopping Centres Australasia Property Retail Trust and
all of its subsidiaries.
Subsidiaries are all entities over which the Group has control. Control is defined as having rights to variable returns from
involvement in the investee and having the ability to affect those returns through its power over the investee.
Where an entity began or ceased to be a controlled entity during the reporting year, the assets, liabilities and results are
consolidated only from the date control commenced or up to the date control ceased.
In preparing the Consolidated Financial Statements, all intra-group transactions and balances, including unrealised profits arising
thereon, have been eliminated in full.
Investments in associates
Associates are entities over which the Group has significant influence but not control. Investments in associates are accounted for
in the consolidated Balance Sheet by using the equity method of accounting after initially being recognised at cost. Under the
equity accounting method, the Group’s share of the associates’ post acquisition net profit after income tax expense is recognised in
the Consolidated Statement of Comprehensive Income. Distributions received or receivable from associates are recognised in the
consolidated financial report as a reduction of the carrying amount of the investment.
(d)
Revenue recognition
Rental income from investment properties is accounted for on a straight line basis over the lease term. If not received at the
balance sheet date, revenue is reflected in the balance sheet as receivable and carried at its recoverable value. Recoveries and
recharges from tenants are recognised as income in the year the applicable costs are accrued.
Certain tenant allowances that are classified as lease incentives are recorded as part of investment properties and amortised over
the term of the lease. The amortisation is recorded against property income.
Waivers granted to tenants proportionate to the decrease in their sales during the pandemic period are recognised as loss on
derecognition of the lease receivable immediately. These waivers linked to the tenant’s turnover are variable in nature and
therefore straight lining income is not revised. Where a waiver of future rent has been agreed before the reporting date, this has
resulted in a lease modification in line with AASB 16.
19
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Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
All other revenues are recognised when control of the underlying goods or services is transferred to the customer over time or at a
point in time. Revenue is recognised over time if:
(g)
Goods and services tax (GST)
-
-
-
The customer simultaneously receives and consumes the benefits;
The customer controls the assets as the entity creates or enhances it; or
The Group’s performance does not create an asset for which the Group has an alternative use and there is a right to payment
for performance to date.
Where the above criteria is not met, revenue is recognised at a point in time.
Type of revenue
Description
Recoveries revenue
Recharge revenue
The Group and Retail Trust recovers the costs associated with general building
and tenancy operation from lessees in accordance with specific clauses within
lease agreements. These are invoiced periodically (typically monthly) based on
an annual estimate. The consideration is due shortly after invoice date
(typically 30 days). Should any adjustment be required based on actual costs
incurred this is recognised in the statement of profit and loss within that
reporting period and billed annually. Recoveries revenue will only be recorded
to the extent that it is highly probable that a significant reversal of revenue will
not occur.
The Group and Retail Trust recoveries costs for any additional specific
services requested by the lessee under the lease agreement. These costs are
recovered in accordance with specific clauses within the lease agreements.
Revenue from recharges is recognised as the services are provided. The
lessee is typically invoiced on a monthly basis as the services are provided.
The lessee is invoiced periodically or upon completion where applicable.
Consideration is due shortly after the invoice date.
Previous revenue
recognition policy
Revenue recognition
policy under AASB 15
Accruals basis
Over time as the customer
simultaneously receives
and consumes the benefit
of the service
Revenue is
recognised when the
costs are incurred
Over time as the customer
simultaneously receives
and consumes the benefit
of the service
Funds management revenue –
asset management fees
The Group provides funds management services to SCA Unlisted Retail Funds
in accordance with their Constitutions and Investment Management
Agreement. These services are utilised on an ongoing basis and revenue is
calculated and billed periodically.
Accruals basis
Funds management revenue –
performance fees
The Group provides funds management services to SCA Unlisted Retail
Funds. In accordance with the Investment Management Agreement a
performance fee may be payable in certain circumstances.
Revenue is
recognised when can
be reliably estimated
and probability of
amount being paid is
probable
Over time as the customer
simultaneously receives
and consumes the benefit
of the service
Over time subject to the
constraints within AASB
15 for variable
consideration
Refer to note 3 for the COVID-19 impact on revenue.
(e)
Finance costs
Finance costs include interest payable on bank overdrafts and short-term and long-term borrowings, payments on derivatives and
amortisation of ancillary costs incurred in connection with arrangement of borrowings.
Finance costs are expensed as incurred except to the extent that they are directly attributable to the acquisition, construction or
production of a qualifying asset.
In these circumstances, borrowing costs are capitalised to the cost of the assets until the assets are ready for their intended use or
sale. Total interest capitalised within the Group must not exceed the net interest expense of the Group in any year, and project
values, including all capitalised interest attributable to projects, must continue to be recoverable. In the event that a development is
suspended for an extended period of time, the capitalisation of borrowing costs is also suspended.
(f)
Tax
The Group comprises of taxable and non-taxable entities. A liability for current and deferred taxation is only recognised in respect
of taxable entities that are subject to income tax and potential capital gains tax as detailed below.
The Retail Trust is the property owning trust and is treated as a trust for Australian tax purposes. Under current Australian income
tax legislation, the Retail Trust is not liable to Australian income tax, including capital gains tax, provided that members are
presently entitled to the income of the Trust as determined in accordance with the Trust’s constitution. Management Trust is treated
as a company for Australian tax purposes which means it is subject to income tax.
Deferred tax is provided on all temporary differences on the difference between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.
Revenues, expenses and assets are recognised net of the amount of GST (or equivalent tax in overseas locations) except where
the GST incurred on purchases of goods and services is not recoverable from the tax authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable.
Receivables and payables are stated with the amounts of GST included. The net amount of GST receivable from, or payable to, the
taxation authority is included as part of receivables or payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and
financing activities which is recoverable from, or payable to, the taxation authority is classified within operating cash flows.
(h)
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short term time deposits to meet short term commitments. Investments in
term deposits which are short term in nature are also included in cash and cash equivalents. Term deposits included in cash and
cash equivalents are deposits that are subject to an insignificant risk of changes in value. All term deposits are to meet short term
financial commitments.
(i)
Trade and other receivables
Trade and other receivables are carried at original invoice amount, less Expected Credit Loss, and are usually due within 30 days.
Collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts that are determined to be
uncollectable are written off when identified.
The Group uses the specific ECL model for the credit loss allowance whereby the outstanding balance is analysed, and the
provision is determined by applying default percentages adjusted for other current observable data. The group also recognises loss
allowances at an amount equal to lifetime ECL on trade and other receivables. Loss allowances for financial assets measured at
amortised cost are deducted from the gross carrying amount of the asset. Refer to note 3 for COVID-19 impact on ECL.
(j)
Investment properties
Investment properties comprise investment interest in land and buildings (including integral plant and equipment) held for the
purpose of letting to produce rental income, including properties that are under construction for future use as investment properties.
Initially, investment properties are measured at cost including transaction costs. Subsequent to initial recognition, the investment
properties are stated at fair value. Fair value of investment properties is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. The best evidence of fair value is
given by current prices in an active market suitable for similar property in the same location and condition. Gains and losses arising
from changes in the fair values of investment properties are recognised in Consolidated Statement of Comprehensive Income in the
period in which they arise.
At each reporting date, the carrying values of the investment properties are assessed by the Directors and where the carrying value
differs from the Directors’ assessment of fair value, an adjustment to the carrying value is recorded as appropriate.
The Directors’ assessment of fair value of each investment property takes into account latest independent valuations, with updates
taking into account any changes in estimated yield, underlying income and valuations of comparable properties. In determining the
fair value, the capitalisation of net income method and / or the discounting of future net cash flows to their present value have been
used, which are based upon assumptions and judgements in relation to future rental income, property cap rate or estimated yield
and consideration of market evidence of transaction prices for similar properties.
Investment properties under development are classified as investment property and stated at fair value at each reporting date. Fair
value is assessed with reference to reliable estimates of future cash flows, status of the development and the associated risk
profile.
Land and buildings are considered as having the function of an investment and therefore are regarded as a composite asset, the
overall value of which is influenced by many factors, the most prominent being income yield, rather than by the reduction in value of
the building content due to the passing of time. Accordingly, the buildings and all components thereof, including integral plant and
equipment for the building, are not depreciated.
Incentives such as cash, rent-free periods, lessee or lessor owned fit outs may be provided to lessees to enter into an operating
lease. Leasing fees may also be paid for the negotiation of leases. These incentives and lease fees are capitalised to the
investment property and are amortised on a straight-line basis over the lesser of the term of the lease and the useful life of the fit
out, as a reduction of rental income. The carrying amounts of the lease incentives and leasing fees are reflected in the fair value of
investment properties. Refer to note 3 for COVID-19 impact on investment property valuations.
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Annual Report 2019Annual Report 2019SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
(k)
Recoverable amount of assets
(r)
Segment reporting
At each reporting date, an assessment is made as to whether there is any indication that an asset may be impaired. Where an
indicator of impairment exists, the recoverable amount is estimated and if the carrying amount of that asset exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.
Segment information is presented on the same basis as that used for internal reporting purposes. The segment is reported in a
manner that is consistent with internal reporting provided to the chief operating decision maker. The chief operating decision maker
has been identified as the Board of Directors of the Responsible Entity.
(l)
Payables
(s)
Investments at fair value through other comprehensive income
Trade and other payables are carried at amortised cost and due to their short term nature, they are not discounted.
Distribution
Distributions payable are recognised in the reporting period in which they are declared, determined or publicly recommended by the
Directors. Where such distributions have not been paid at reporting date they are recognised as a distribution payable.
All distributions are paid out of accumulated profits / accumulated losses, whether they are capital or income in nature from a tax
perspective.
(m)
Employee benefits
Equity based compensation arrangements
Equity based payments to employees are measured at the fair value of the equity instrument at the grant date. The fair value
determined at the grant date is expensed on a straight line basis over the vesting period, based on the Group’s estimate of equity
instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises
its estimate of the number of equity instruments expected to vest and adjusts for non-market vesting conditions. The impact of the
revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the equity settled employee benefits reserve.
(n)
Interest bearing liabilities
Borrowings are initially recognised at fair value, net of transaction costs incurred, and subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit and loss over the
period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are deferred and
expensed over the term of the respective agreement.
Investments that are fair valued through other comprehensive income include investments in non-monetary securities. These
investments are initially measured at cost at date of acquisition, which represents fair value, and include transaction costs.
Subsequent to initial recognition, they are carried at fair value.
Unrealised gains and losses arising from changes in fair value are recognised in other comprehensive income.
When securities are sold or impaired, the accumulated fair value adjustments remains in other comprehensive income and is not
reclassified to profit or loss.
(t)
Assets classified as held for sale
Non-current assets are classified as held for sale, if their carrying amount will be recovered principally through a sale transaction
rather than through continuing use and a sale is considered highly probable. Such assets are disclosed separately and are
disclosed as current assets if it is expected they will be sold less than one year from the balance sheet date. Held for sale assets
are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets classified as held for sale
are also presented separately from other assets in the balance sheet.
(u)
Leases
For leases where the Group is the lessee, a separate right-of-use asset and lease liability is recognised in the Consolidated
Balance Sheets. Measurement of the lease liability is the present value of the lease payments that are not paid at the date of
transition, discounted using an appropriate discount rate. The right of use asset is presented within the Consolidated Balance
Sheets within Other assets and the lease liability within Other liabilities respectively.
The right of use asset is amortised over the remaining lease term (including the period covered by the extension option), and the
lease liability is measured on an effective interest basis.
(o)
Derivative and other financial instruments
(v)
Use of estimates and judgements
The Group holds derivative financial instruments to hedge foreign currency and interest rate risk exposures arising from
operational, financing and investing activities.
The Group has set defined policies and has implemented a comprehensive hedging program to manage interest and exchange
rate risk. Derivative financial instruments are transacted to achieve the economic outcomes in line with the Group’s treasury policy.
Derivative instruments are not transacted for speculative purposes. Derivative financial instruments are recognised initially at cost
and remeasured at fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the
derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends
on the nature of the hedge relationship. The Group does not designate any derivative financial instrument as hedging instruments.
Where applicable, the fair value of currency and interest rate options and cross currency interest rate swaps are calculated by
reference to relevant market rates for contracts with similar maturity profiles. The fair value of interest rate swaps are determined by
reference to applicable market yield curves and include counterparty risk.
Changes in fair value of derivatives is recognised in the Consolidated Statements of Comprehensive Income.
Distributions from these investments are recognised in profit or loss when the Group’s right to receive payments is established.
(p)
Contributed equity
Issued and paid up capital is recognised at the fair value of the consideration received. Any transaction costs arising on the issue of
ordinary securities are recognised in equity as a reduction of the proceeds received.
(q)
Earnings per security
The preparation of Consolidated Financial Statements requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised and in any future periods affected.
The significant judgements and estimates used in the preparation of these financial statements are outlined below.
Judgement – Classification and carrying value of investments
The SCA Property Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. Critical judgements are made in
assessing whether an investee entity is controlled or subject to significant influence or joint control. These judgements include an
assessment of the nature, extent and financial effects of the Group’s interest in joint arrangements and associates, including the
nature and effects of its contractual relationship with the entity or with other investors. Associates are entities over which the Group
has significant influence but not control.
Judgement - Selection of parent entity
In determining the parent entity of the Shopping Centre Australasia Property Group, the Directors considered various factors
including asset ownership, debt obligation, management and day to day responsibilities. The Directors concluded that management
activities were more relevant in determining the parent.
Shopping Centres Australasia Property Management Trust has been determined as the parent of the Shopping Centres Australasia
Property Group.
Basic earnings per security is calculated as profit after tax attributable to unit or security holders divided by the weighted average
number of ordinary securities issued.
Estimate - Valuation of investment properties
Diluted earnings per security is calculated as profit after tax attributable to unit or security holders divided by the weighted average
number of ordinary securities and dilutive potential ordinary securities.
Critical judgements are made by the Directors in respect of the fair value of investment properties including properties under
construction and those that are classified as assets held for sale. The fair value of these investments are reviewed regularly by
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Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
management with reference to independent property valuations, recent transactions and market conditions existing at reporting
date, using generally accepted market practices.
The accounting treatment, and key estimates and significant judgements in relation to each of the above categories are set out
below.
The major critical assumptions underlying estimates of fair values are those relating to the capitalisation of income and the discount
rate. Other assumptions of lesser importance include consideration of the property type, location and tenancy profile together with
market sales and other matters such market rents, current rents including possible rent reversion, capital expenditure, lease expiry
profile including vacancy, type of tenants, capital expenditure and sales growth of the centre. If there is any change in these
assumptions or economic conditions, the fair value of the investment properties may differ. See further disclosure regarding
assumptions used in valuation of investment properties in note 13 and COVID-19 impact in note 3.
Estimate - Valuation of financial instruments
The fair value of derivatives assets and liabilities are based on assumptions of future events and involve significant estimates. The
basis of valuation for the Group’s derivatives are set out in note 17. The value of derivatives may differ in future reporting periods
due to the passing of time and / or changes in market rates including interest rates, foreign exchange rates and market volatility.
Estimate – Expected credit loss (ECL)
The ECL is based on management estimates of probability of recoverability rent invoiced. The basis of these estimates is set out in
the note 3. Should the actual results differ the actual credit loss will change and the difference will be included in the financial year
2021 result or following year(s).
3.
Impact of COVID-19 pandemic
The events relating to COVID-19 have had a material adverse impact on both the operations and financial performance of the
Group during the period. These impacts have included: volatility in the retail sales performance of our tenants, government-
imposed trading restrictions on some of our tenants, the enactment of legislation in each state and territory implementing the
National Cabinet Mandatory Code of Conduct (“Code of Conduct”) for small and medium sized enterprise tenants, a large increase
in rental arrears (compared to prior periods) by our speciality tenants directly attributable to the COVID-19 pandemic, an increase in
expenses (for example, extra cleaning and security) and reduction in the valuation of our investment properties.
As these COVID-19 related impacts are ongoing, there is continued uncertainty in relation to the future financial performance of the
Group.
The implications of the above on the Consolidated Financial Statements falls broadly into two areas:
- Recording and collecting of rental income: some rental income invoiced during the period has not been received. A
-
portion of this unpaid rent has been waived or deferred. A portion of the remaining balance of unpaid rent is not expected
to be recovered in a future period and, as such, an expected credit loss provision has been raised for the amount of the
expected cash shortfall relative to contractual lease payments (“ECL” provision).
Fair value of investment properties: this requires assumptions to be made about the future financial performance of the
properties and recent market transactional evidence. There are significant judgements and uncertainties relating to both of
these assumptions. Since 30 June 2019, the value of investment properties has decreased by $87.9 million, of which
$27.4 million is directly related to expected waivers as a result of the COVID-19 pandemic.
The accounting treatments, key estimates and significant judgements in each of these areas is set out below.
Recording and collecting of rental income
Pursuant to the Code of Conduct, the Group is obligated to give rental relief to tenants who are small and medium-sized entities
(defined as having annual revenue of less than $50 million) and who qualify for the JobKeeper Payment Scheme (SME tenants).
That rental relief is required to be proportional to the decrease in the tenant’s sales for the relevant period, and is to be granted as a
permanent rent waiver of at least 50% of the relief given, with the balance of the rental relief as a rent deferral. The rent deferral
component is to be repaid by the tenants over the remaining lease term, but not less than 24 months (in some jurisdictions), once
the COVID-19 pandemic has ended. In addition, some tenants who do not qualify for the Code of Conduct relief (“National tenants”)
have also requested that their rent be waived in whole or in part. The Group is considering these requests on a case-by-case basis.
At 30 June 2020, the Group experienced a shortfall in cash rental income received vs invoiced rental income of $26.8 million. Of
this amount:
-
-
$4.5 million has been waived (including $4.2 million relating to SME tenants under the Code of Conduct and $0.3 million
relating to National tenants);
$22.3 million is the remaining balance of unpaid rent (including $4.3 million of deferred rental income relating to SME
tenants under the Code of Conduct), of which $7.0 million is expected to be recovered in future periods and $15.3 million
is not expected to be recovered in future periods.
Waivers & deferrals
Waivers granted to tenants proportionate to the decrease in their sales during the pandemic period are recognised as loss on
derecognition of the lease receivable immediately. These waivers linked to the tenant’s turnover are variable in nature and
therefore straight lining income is not revised. Where a waiver of future rent has been agreed before the reporting date, this has
resulted in a lease modification in line with AASB 16. This means that none of the $4.5 million of waived rent has been recognised
as rental income, and no receivable has been raised.
Deferrals granted in the current period without a change in the lease term do not change straight lining income receivable. This
means that the full $4.3 million of deferred rent has been recognised as rental income, and a corresponding receivable has also
been raised.
Unpaid rent / expected credit loss
The unpaid rent balance of $22.3 million has been recognised as rental income, and a corresponding receivable has also been
raised.
However, for the portion of this unpaid rent that is not expected to be recovered in a future period an equivalent “expected credit
loss” provision (“ECL”) of $15.3 million has been raised in line with AASB 9. As the opening ECL balance at 30 June 2019 was $0.9
million, the incremental ECL allowance of $14.4 million has been presented in the Financial Statements as a property expense.
This does not mean that the Group will not attempt to recover the unpaid rent, and any amounts that are successfully recovered in
future periods will result in the release of the ECL provision in that period. In determining which portion of the unpaid rent is not
expected to be recovered in future periods, the following estimates have been made:
- Deferred rent: $4.3 million of the unpaid rent has been granted as deferrals to SME tenants under the Code of Conduct.
The Group is not permitted to recover deferred rent during the COVID-19 period, and thereafter can only recover these
amounts over the remaining lease term (subject to a minimum period of 24 months in some jurisdictions). Due to these
restrictions, the Group has formed the view that the recovery of the deferred rent is unlikely, and as such an ECL provision
has been raised for 100% of the deferred rent amount of $4.3 million.
Aged debt >120 days: $4.1 million of the unpaid rent relates to the pre-COVID-19 period (before March 2020) and as such
is more than 120 days overdue. Of this $0.5 million relates to anchor tenants which the Group expects to recover. Due to
the age of the debt, the Group has formed the view that the recovery of the non-anchor component is unlikely, and as
such an ECL provision has been raised for 100% of the remaining amount of $3.6 million.
-
-
- Current to 120 days: $13.9 million of the unpaid rent relates to the COVID-19 period of March 2020 to June 2020. Some
tenants have performed strongly during this period, while others have suffered a significant reduction in sales revenue.
The Group has categorised the tenants into retail segments and has based it’s judgement on the sales performance of
those retail segments during the COVID-19 period. Overall, the Group has estimated that based on the expected cash
collection 58% of this amount is unlikely to be recovered, resulting in an ECL provision of $8.1 million.
Further loss allowances: in addition to the expected credit losses above, the loss allowances of $1.3 million for all trade
and other receivables are based on assumptions about risk of default and expected loss rates. The Group uses judgement
in making these assumptions based on the Group’s past history and existing market conditions at the end of each
reporting period.
Bank guarantees: Most tenants have bank guarantees in place that the Group can draw upon for non-payment of rent.
The right to draw on these guarantees is usually only exercised when tenants’ leases expire or are terminated. In addition,
under the Code of Conduct, the Group is not permitted to draw on bank guarantees for SME tenants during the COVID-19
pandemic period and for a reasonable period thereafter. It’s assumed that the Group will draw on bank guarantees for
tenants with remaining lease terms of 12 months or less, but not for tenants that have remaining lease terms of more than
12 months. This has resulted in a reduction of the ECL provision of ($2.0) million.
-
Investment properties fair value
In determining the fair value of investment properties it is necessary to form a view as to the future financial performance of the
investment properties (particularly forecast earnings and cash flows), and also to consider market transactional evidence as to the
capitalisation rates and the discount rates investors are willing to pay for those earnings and cash flows. As a result of the COVID-
19 pandemic, assessing fair value as at the reporting date involves uncertainties around these underlying assumptions:
-
Future financial performance: It is unclear how long the COVID-19 pandemic will continue and what the future impact will
be on the operational and financial performance of our investment properties
- Market transaction evidence: since the start of the COVID-19 pandemic to 30 June 2020 there had been limited relevant
transactional evidence.
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Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
As such, independent valuers have included a statement within their valuation reports highlighting a “material valuation
uncertainty”. This statement serves as a precaution and does not invalidate the valuation and does not mean that the valuation
cannot be relied upon. Rather, it is intended to highlight that due to the current extraordinary circumstances, less certainty can be
attached to the valuation than would otherwise be the case.
The value of the Group’s investment properties has decreased by $94.6 million, from $3,232.8 million as at 31 December 2019 to
$3,138.2 million as at 30 June 2020. Of this, $27.4 million is directly related to the COVID-19 pandemic in the form of reduced net
operating income over the next 12 months due to forecast increased expenses, rent deferrals and waivers built into the valuations.
The remaining $67.2 million can be attributed to other assumption changes, being:
Valuation net operating income decrease of $2.5 million (or 1.2%) between December 2019 and June 2020;
- Capitalisation rate softening of 5bps from 6.46% at 31 December 2019 to 6.51% as 30 June 2020;
-
- Discount rates tightening from 7.18% to 7.08%; and
- Discounted cash flow valuations adopting more conservative let-up assumptions and lower market rent growth.
While some of these assumption changes may be partially and indirectly attributable to the expected future impact of the COVID-19
pandemic, it is not possible to specifically assume this cause, and there may be other factors behind these movements including a
general softening in economic conditions (that had already started prior to the COVID-19 pandemic period), changing consumer
behaviours (for example the rise of online shopping), rising unemployment, decline in consumer confidence and changes in the
cost of capital.
In light of the above, the fair value assessment of the Group’s investment property portfolio as at the reporting date is a best
estimate of the impacts of the COVID-19 pandemic using information available as the time of preparation of the Consolidated
Financial Statements about conditions existing at the reporting date and includes forward looking assumptions. In the event the
COVID-19 pandemic impacts are more severe or prolonged than anticipated, this may have a further adverse impact on the fair
value of the Group’s investment property portfolio.
4. Cash and cash equivalents
Cash at bank
Term deposits
SCA Property Group
Retail Trust
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
3.8
180.0
183.8
4.2
-
4.2
2.7
180.0
182.7
3.1
-
3.1
At 30 June 2020 the Group had $180.0 million (30 June 2019: nil) in investment in term deposits. The term deposits are held with
major Australian and international banks with a credit rating of Moody’s A1 or Standard & Poor’s A or stronger. They are short term
and for fixed terms with less than 45 days remaining to maturity at 30 June 2020. All term deposits are intended to be used to assist
with the funding of the distribution (expected to be paid on or about 31 August 2020) and the repayment of the A$ MTN that expires
in April 2021 but can be repaid (with appropriate notice) from October 2020 with no make whole obligation. Refer note 5 and 16.
5. Distributions paid and payable
2020 SCA Property Group & Retail Trust
Interim distribution1
Final distribution2
2019 SCA Property Group & Retail Trust
Interim distribution
Final distribution
Cents per unit
Total amount
$m
Date of payment or expected
date of payment
7.50
5.00
12.50
7.25
7.45
14.70
69.9
53.6
123.5
66.4
69.0
135.4
29 January 2020
31 August 2020
29 January 2019
30 August 2019
2 The 2020 final distribution of 5.00 cents per security was declared on 23 June 2020 and is expected to be paid on or about 31 August 2020.
The Management Trust has not declared or paid any distributions. The Group has a Distribution Reinvestment Plan (DRP) in place.
The DRP was in place for the distribution declared in December 2019 (paid in January 2020). The equity raised through the DRP
on 30 August 2019 was $13.0 million by the issue of 5.3 million securities at a price of $2.48. The distribution declared in December
2019 resulted in $27.9 million being raised by the DRP through the issue of 10.3 million securities at $2.71 in January 2020.
Further, the DRP is in place for the distribution declared in June 2020 (expected to be paid on or about 31 August 2020).
Under the DRP Plan Rules, the DRP issue price was determined at a discount of 1.0% to the arithmetic average of the daily volume
weighted average market price of securities traded on the ASX during the 10 business days commencing on the business day after
the record date.
6.
Earnings per security
Per stapled security
Net profit after tax for the period
($ million)
Weighted average number of
securities used as the denominator in
calculating basic earnings per security
below
Basic earnings per security for net
profit after tax (cents)
Weighted average number of
securities used as the denominator in
calculating diluted earnings per
security below
Diluted earnings per security for net
profit after tax (cents)
7. Transaction costs
Transaction costs
SCA Property Group
Retail Trust
Management Trust
30 June
2020
30 June
2019
30 June
2020
30 June
2019
30 June
2020
30 June
2019
85.5
109.6
84.8
109.1
0.7
0.5
960,944,215
868,375,096
960,944,215
868,375,096
960,944,215
868,375,096
8.9
12.6
8.8
12.6
0.1
-
964,578,722
870,844,450
964,578,722
870,844,450
964,578,722
870,844,450
8.9
12.6
8.8
12.6
0.1
-
SCA Property Group & Retail Trust
30 June 2020
$m
30 June 2019
$m
1.5
1.5
3.7
3.7
Transaction costs in the current year relate mainly to other costs associated with the institutional placement on 16 April 2020. Refer
note 18. Transactions costs in the prior year related mainly to other costs associated but not capitalised with the acquisition of
properties during that year.
8. Finance costs
Interest expense
Swap termination costs
SCA Property Group & Retail Trust
30 June 2020
$m
30 June 2019
$m
38.2
-
38.2
41.2
17.7
58.9
1 The interim distribution of 7.50 cents per security was declared on 12 December 2019 and was paid on 29 January 2020.
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Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Interest expense is made up of interest payments for borrowings (including amortisation of borrowing costs) of $25.0 million and
$13.2 million in respect of payments for derivatives including cross currency interest rate swaps (30 June 2019: $30.5 million and
$10.7 million respectively).
Swap termination costs in the prior year consists of restructuring the interest rate swap book by terminating swaps in that year.
9. Taxation
Profit before income tax
Prima facie tax (expense) at 30%
Tax effect of income that is not assessable/deductible
in determining taxable profit
SCA Property Group
Retail Trust
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
86.0
86.0
(25.8)
25.3
(0.5)
110.2
110.2
(33.1)
32.5
(0.6)
84.8
84.8
(25.4)
25.4
-
109.1
109.1
(32.7)
32.7
-
10.
Receivables
Current
Rental receivable
Allowance for expected credit loss
Other receivables1
Total receivables
SCA Property Group
Retail Trust
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
22.3
(15.3)
7.0
27.2
34.2
5.0
(0.9)
4.1
24.2
28.3
22.3
(15.3)
7.0
27.2
34.2
5.0
(0.9)
4.1
24.0
28.1
1 The majority of the balance of other receivables relates to rent received by property managers prior to being remitted to SCA Property Group and
Retail Trust respectively.
Ageing of rental receivable and other receivables1
Current
30 days
60 days
90 days
120 days
Rental receivable and other receivables1
SCA Property Group
Retail Trust
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
32.7
6.1
4.6
2.0
4.1
49.5
26.7
1.0
0.6
0.3
0.6
29.2
32.7
6.1
4.6
2.0
4.1
49.5
26.5
1.0
0.6
0.3
0.6
29.0
1 Rental and other amounts due are receivable within 30 days.
The Group writes off a rental receivable when there is information indicating that the debtor is in severe financial difficulty and there
is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy
proceedings, or when the trade receivables are over 120 days due, whichever occurs earlier. The Group has identified loss patterns
for different tenant groups ranging from 50% to 100%. The allowance for expected credit loss has increased significantly due to
COVID-19, refer to note 3 for further details. The following tables detail the risk profile of trade receivables based on the Group’s
provision matrix.
Expected credit loss rate
Estimated total gross carrying amount at default
Lifetime ECL
SCA Property Group & Retail Trust
30 June 2020
< 120 days
57%
> 120 days
88%
Total
13.2
1.2
14.4
30 June 2019
< 120 days
2%
> 120 days
100%
Opening balance
Change in credit risk parameters
Closing balance
SCA Property Group & Retail Trust
30 June 2020
$m
30 June 2019
$m
0.8
13.2
14.0
Total
-
0.1
0.1
0.8
-
0.8
The following table shows the movement in lifetime ECL that has been recognised for trade receivables in accordance with the
simplified approach set out in AASB 9.
Opening balance
Change in credit risk parameters
Closing balance
SCA Property Group & Retail Trust
30 June 2020
$m
30 June 2019
$m
0.1
1.2
1.3
-
0.1
0.1
There is no interest charged on any receivables. All receivables are current other than the rental receivables included in ageing
above. The historic loss rate is 5.9% on that part which is the rental receivable. Other receivables historical loss rate is $nil given it
is made up of mostly rent received by property managers prior to being remitted to SCA Property Group and Retail Trust
respectively. Refer to note 3 for COVID-19 impact on expected credit loss. The following table is the total of the provisional matrix
and lifetime ECL.
Opening balance
Change in credit risk parameters
Closing balance
11.
Investment in CQR
SCA Property Group & Retail Trust
30 June 2020
$m
30 June 2019
$m
0.9
14.4
15.3
0.8
0.1
0.9
Investment in CQR relates to the Group and the Retail Trust’s 1.2% interest in Charter Hall Retail Trust (ASX: CQR) (30 June 2019:
1.5%). This interest is made up of 6.78 million units (30 June 2019: 6.78 million units) which cost an average of $4.21 per unit. No
units were sold during the year ended 30 June 2020 (30 June 2019: 13.1 million units were sold).
As at 30 June 2020 this interest was valued at $3.35 per unit (30 June 2019 $4.37). The value was based on the ASX closing price
on the last trading day of the respective year.
The difference between the valuation of the units at 30 June 2020 and 30 June 2019 of $6.9 million loss (30 June 2019: $1.0 million
revaluation gain) is recorded in other comprehensive income.
The Investment – fair value through other comprehensive income is classified as a level 1 fair value measurement financial asset
being derived from inputs based on quoted prices that are observable. Refer also to the fair value hierarchy at note 17.
This investment is classified as current as it is the intention of the Group and the Retail Trust to sell the remaining interest within the
next twelve months.
On 24 June 2020 the Responsible Entity of CQR declared an estimated distribution of 10.00 cents per unit to be paid in August
2020. As the Group and the Retail Trust hold 6.78 million units in CQR as at the record date for this distribution this is equivalent to
$0.7 million and has been included in the Group’s and Retail Trust’s Consolidated Statements of Comprehensive Income as
Distribution income (30 June 2019: 14.48 cents per unit and $2.2 million respectively). The Group also received a distribution on its
investment of 14.52 cents per unit or $1.0 million declared in December 2019 (December 2018: 14.28 cents per unit and $2.2
million respectively). Therefore, the total distribution income for the Group and the Retail Trust on their investment in CQR is $1.7
million for the year 30 June 2020 (30 June 2019: $4.4 million).
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12.
Other assets
Current other assets
Non-current other assets
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
SCA Property Group
Retail Trust
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
2.8
8.3
11.1
2.3
9.1
11.4
2.3
5.9
8.2
1.9
5.9
7.8
Current other assets are prepayments.
Non-current other assets includes right to use assets for the investment property at Lane Cove $5.9 million (30 June 2019: $5.9
million) and lease of office space $1.7 million (30 June 2019: $2.2 million) and other assets $0.7 million (30 June 2019: $1.0
million). The corresponding leasing liability of $8.1 million (30 June 2019: $8.4 million) is presented in non-current liabilities.
13. Investment properties
Movement in total investment properties
Opening balance
Acquisitions (including transaction costs)
Disposals
Development expenditure
Net capital expenditure and straight lining net of amortisation
Unrealised movement recognised in Total Comprehensive Income on property
valuations
Closing balance
SCA Property Group & Retail Trust
30 June 2020
$m
30 June 2019
$m
3,147.0
83.4
(21.5)
6.8
10.4
2,453.8
714.8
(2.4)
13.4
7.9
(87.9)
(40.5)
3,138.2 3,147.0
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Investment properties
Property
State
Property Type
Book value
cap rate1
30 June 2020
Book value
discount rate
30 June 2020
Book value
30 June 2020
$m
Book value
30 June 2019
$m
Sub-Regional
Lilydale
Pakenham
Central Highlands
Mt Gambier
Murray Bridge
Kwinana Marketplace
Warnbro
Lavington Square
Sturt Mall
West End Plaza
Total Sub-Regional
Neighbourhood
Belmont
Berala
Cabarita
Cardiff
Clemton Park
Goonellabah
Greystanes
Griffin Plaza
Lane Cove4
Leura
Lismore
Macksville
Merimbula
Morisset
Muswellbrook
North Orange
Northgate
Ulladulla
West Dubbo
Shell Cove3
Albury
Ballarat
Cowes
Drouin
Epping North
Highett
Langwarrin
Ocean Grove
Warrnambool East
Wonthaggi
Wyndham Vale
Bentons Square
The Gateway
Annandale
Ayr
Brookwater Village
Carrara
Chancellor Park Marketplace
Collingwood Park
Coorparoo
VIC
VIC
QLD
SA
SA
WA
WA
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
QLD
QLD
QLD
QLD
QLD
QLD
QLD
Sub-Regional
Sub-Regional
Sub-Regional
Sub-Regional
Sub-Regional
Sub-Regional
Sub-Regional
Sub-Regional
Sub-Regional
Sub-Regional
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
6.25%
6.50%
7.75%
6.50%
7.50%
7.00%
7.00%
7.50%
6.50%
6.50%
7.03%
5.50%
6.25%
6.25%
6.00%
6.75%
5.75%
6.75%
5.75%
5.75%
7.50%
6.00%
6.50%
6.75%
6.50%
6.25%
6.50%
6.00%
6.25%
6.00%
6.50%
7.00%
-
5.75%
5.75%
5.50%
5.75%
6.25%
6.25%
7.25%
5.75%
6.25%
6.75%
7.50%
7.00%
6.25%
6.50%
6.00%
6.50%
5.75%
6.75%
6.50%
8.00%
7.40%
7.75%
7.50%
7.75%
7.50%
7.25%
7.25%
8.02%
6.50%
7.00%
6.75%
6.50%
7.00%
6.75%
7.25%
6.50%
6.50%
7.50%
7.00%
6.75%
7.00%
7.25%
7.25%
7.25%
7.00%
6.75%
6.50%
7.00%
7.00%
-
6.00%
6.25%
6.25%
6.25%
6.75%
6.25%
7.25%
6.00%
7.25%
7.00%
7.50%
7.50%
7.00%
6.75%
6.50%
7.00%
6.50%
110.0
83.7
60.0
71.3
60.0
130.6
90.9
57.4
72.3
67.7
803.9
29.0
28.6
22.0
25.3
51.3
20.0
59.6
25.8
57.5
18.5
28.1
14.3
18.2
18.5
31.9
34.0
17.5
24.7
19.0
34.0
23.5
17.2
-
16.2
30.0
30.1
23.9
37.1
15.7
40.0
23.4
82.6
51.7
26.1
19.0
35.1
17.1
45.9
11.8
36.9
116.0
89.6
63.4
72.7
64.9
140.0
93.1
52.3
73.1
65.9
831.0
32.5
28.1
22.5
25.8
51.2
20.5
60.7
26.6
59.5
19.0
31.9
14.2
19.7
18.4
31.9
33.3
16.8
25.0
19.2
24.1
24.0
18.1
19.6
16.9
31.1
31.5
25.5
38.7
16.0
45.5
23.6
77.6
50.2
29.1
18.7
36.8
18.0
46.7
12.0
38.0
92
93
31
32
Annual Report 2019Annual Report 2019SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Investment properties (continued)
Property
State
Property Type
Book value
cap rate1
30 June 2020
Book value
discount rate
30 June 2020
Book value
30 June 2020
$m
Book value
30 June 2019
$m
Neighbourhood
Gladstone
Greenbank
Jimboomba
Lillybrook
Mackay
Marian Town Centre
Mission Beach
Mt Warren Park
Mudgeeraba
Sugarworld Shopping Centre
The Markets
Whitsunday
Worongary
Bushland Beach
Miami One
North Shore Village
Oxenford
Warner Marketplace2
Blakes Crossing
Walkerville
Busselton
Treendale
Currambine Central4
Kalamunda Central
Stirlings Central
Burnie
Claremont Plaza
Glenorchy Central
Greenpoint
Kingston
Meadow Mews
New Town Plaza
Prospect Vale
Riverside
Shoreline
Sorell
Total Neighbourhood
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
SA
SA
WA
WA
WA
WA
WA
TAS
TAS
TAS
TAS
TAS
TAS
TAS
TAS
TAS
TAS
TAS
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
Neighbourhood
7.00%
6.25%
6.50%
6.00%
6.75%
7.00%
6.50%
6.00%
6.25%
6.75%
7.25%
7.50%
6.00%
6.75%
6.50%
6.00%
6.00%
5.75%
6.75%
6.00%
6.00%
6.50%
7.00%
6.00%
7.00%
7.50%
6.50%
6.75%
7.00%
6.30%
6.50%
6.50%
6.75%
10.00%
6.25%
6.25%
7.25%
6.75%
6.75%
7.25%
7.25%
7.50%
7.00%
6.50%
7.00%
7.25%
7.25%
7.75%
6.75%
7.00%
7.25%
7.25%
7.00%
6.75%
7.50%
6.75%
6.25%
7.00%
7.50%
7.00%
7.50%
7.50%
7.25%
7.25%
7.25%
7.03%
7.00%
7.25%
7.25%
10.00%
7.00%
7.50%
24.5
21.8
27.8
28.7
25.5
32.5
11.6
17.8
33.7
25.4
29.4
33.8
46.8
22.5
30.7
27.3
33.4
76.2
22.2
26.0
26.7
30.5
90.4
41.8
40.6
22.5
38.5
27.1
17.5
31.0
63.5
43.6
29.2
5.2
37.6
29.9
2,334.3
25.1
22.9
28.7
30.2
25.7
32.3
12.7
17.6
35.0
25.2
29.9
37.0
47.9
23.6
32.1
27.5
33.1
-
21.7
25.6
27.0
32.7
91.1
41.6
44.0
22.5
38.2
27.5
16.7
30.3
62.7
42.9
29.0
8.7
38.7
30.1
2,316.0
Total investment properties
3,138.2
3,147.0
1 Cap rate is an approximation of the ratio between the net operating income produced by a property and its fair value.
2 Property acquired during the year ended 30 June 2020 being Warner Marketplace for $78.4 million (excluding transaction costs).
The internal valuations are reviewed by management who recommends each property’s valuation to the Audit, Risk Management
and Compliance Committee and the Board in accordance with the Group’s internal valuation protocol. Due to market uncertainty
brought on by COVID-19, the internal valuations have been reviewed by an independent external valuer. Refer to note 3 for
additional information on the impact of COVID-19 on valuations.
The Retail Trust’s Compliance Plan requires that each property in the portfolio is valued by an independent valuer at least every
three years and the independent valuer is expected to change after three years. In practice, properties may be independently
valued more frequently than every three years primarily as a result of:
-
-
-
-
A significant variation between the last book value and internal valuation
A major development project
A period where there is significant market movement
A significant change in circumstances at the property including a significant change in the trading of the location
Independent valuations are performed by independent external valuers who hold a recognised relevant professional qualification
and have specialised expertise in the types of investment properties valued.
Fair value measurement, valuation technique and inputs
The key inputs used to measure fair values of investment properties are disclosed below along with their sensitivity to an increase
or decrease.
30 June 2020
Category
Fair value
hierarchy
Book value
30 June 2020
$m
Valuation
technique
Key inputs used to
measure fair value
Range of unobservable
key inputs
Investment Properties
Level 3
3,138.2
Income capitalisation
and DCF
Cap rate
Discount rate
5.50% - 10.00%
6.00% - 10.00%
30 June 2019
Category
Fair value
hierarchy
Book value
30 June 2019
Valuation technique
Key inputs used to
measure fair value
Range of unobservable
key inputs
$m
Investment Properties
Level 3
3,147.0
Income capitalisation
and DCF
Cap rate
Discount rate
5.50% - 7.75%
6.00% - 8.50%
The investment properties fair values presented are based on market values, which are derived using the income capitalisation
method and the DCF methods. The Group’s preferred method is the income capitalisation method.
Income capitalisation method – cap rate
Income capitalisation method for the purpose of this report is an approximation of the ratio between the net operating income
produced by an investment property to derive its fair value. The net operating income is determined considering the estimated
gross passing income after adjustment for anticipated operating costs, potential future income from existing vacancies and an
ongoing vacancy and bad debt allowance. This produces a net income on a fully leased basis which is capitalised in perpetuity
from the valuation date at an appropriate investment yield. The adopted investment yield reflects the cap rate and includes
consideration of the property type, location and tenancy profile together with market sales and other matters such as market rents,
current rents including possible rent reversion, capital expenditure, lease expiry profile including vacancy, type of tenants, capital
expenditure and sales growth of the centre.
3 Property developed during the year 30 June 2020 including Shell Cove Stage 3 for $4.8 million.
DCF method – discount rate
4 The titles to Lane Cove and Currambine are leasehold. The expiries of the respective leaseholds are in 2059 (with a 49 year option) and in 2094.
All properties are internally valued every June and December and a number are selected for external independent valuation at
each balance sheet date. The properties selected for external valuation are chosen based on consideration of properties with
significant change (such as a significant difference between book value and internal valuation, a development project or a
significant change in the circumstances at the property including a significant change in the trading of the location) and ensuring the
sample is representative. The internal valuations are performed on a basis consistent with the methodology of the most recent
external valuations. This includes using appropriate rates for the capitalisation of income (cap rate), discount rates including
terminal yields, based on comparable market evidence and recent external valuation parameters to produce a capitalisation based
valuation and a discounted cash flow (DCF) valuation.
Under the DCF method, a property’s fair value is estimated using explicit assumptions regarding the cash flows associated with the
ownership of a property (including income and capital and transaction costs (including disposal costs)) over the property’s life
including an exit or terminal value. The DCF method involves the projection of a series of cash flows on a real property interest. To
this projected cash flow series, an appropriate discount rate is applied to establish the present value of the income stream
associated with the real property. The discount rate is the rate of return used to convert a monetary sum, payable or receivable in
the future, into a present value. The rate is determined with regard to market evidence.
Investment properties under development are classified as investment property and stated at fair value at each reporting date. Fair
value is assessed with reference to reliable estimates of future cash flows, status of the development and the associated risk
profile.
33
34
94
95
Annual Report 2019Annual Report 2019SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
All property investments are categorised as level 3 in the fair value hierarchy (refer note 17(c) for additional information in relation
to the fair value hierarchy). There were no transfers between hierarchies.
Sensitivity analysis – Valuation cap rate
Sensitivity information
The key inputs to measure fair value of investment properties are disclosed below along with sensitivity to a significant increase or
decrease. The following sensitivity to significant inputs applies to investment properties (refer note 2(j)).
Fair value measurement sensitivity to significant
increase in input
Fair value measurement sensitivity to significant
decrease in input
Decrease
Increase
Decrease
Increase
Decrease
Increase
Significant inputs
Cap rate
Net operating income
Discount rate
Sensitivity analysis
When calculating the income capitalisation approach, the net market rent has a strong interrelationship with the adopted cap rate
given the methodology involves assessing the total net market income receivable from the property and capitalising this in
perpetuity to derive a capital value. The impact on the fair value of an increase in the net market rent could potentially offset the
impact of an increase (softening) in the adopted cap rate. The same can be said for a decrease in the net market rent and a
decrease (firming) in the adopted cap rate. A directionally opposite change in the net market rent and the adopted cap rate would
magnify the impact to the fair value.
When assessing a DCF, the adopted discount rate and adopted terminal yield have a strong interrelationship in deriving a fair value
given the discount rate will determine the rate at which the terminal value is discounted to the present value. The impact on the fair
value of an increase (softening) in the adopted discount rate could potentially offset the impact of a decrease (firming) in the
adopted terminal yield. The same can be said for a decrease (firming) in the discount rate and an increase (softening) in the
adopted terminal yield. A directionally similar change in the adopted discount rate and the adopted terminal yield would magnify the
impact to the fair value.
Other inputs or factors also impact a valuation. These factors are many and include: consideration of the property type, location and
tenancy profile together with market sales and other matters such market rents, current rents including possible rent reversion,
capital expenditure, lease expiry profile including vacancy, type of tenants, capital expenditure and sales growth of the centre.
The Group has considered these factors and believes the most significant input to fair value of investment properties at balance
sheet date is the cap rate as the cap rate is in line with the Group’s understanding of the market practice at which the price is
determined for similar properties. Notwithstanding the Group’s view that cap rate is the most significant input, movements in one or
more of other factors above may change the valuation.
Sensitivity analysis – cap rate and net operating income
A sensitivity analysis of the impact on the investment property valuations of movements in the cap rate is disclosed below as the
cap rate method is the primary method for conducting the valuation. While other factors do also impact a valuation, at the current
time, the Group considers that the valuations are most sensitive to movements in the cap rate and net operating income.
The following sensitivity analysis from the investment properties shows the effect on profit/loss after tax and on equity of a 25 basis
points (bps) increase/decrease in cap rates and a 5% increase/decrease in property net operating income respectively at balance
sheet date with all other variables held constant. It is noted that changes in net operating income may be caused by a number of
factors including changes in vacancy or rent paid or payable.
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Profit/(loss) after tax
25 bps
increase
$m
25 bps
decrease
$m
Equity
25 bps
increase
$m
25 bps
decrease
$m
(116.1)
125.3
(116.1)
125.3
(116.9)
126.3
(116.9)
126.3
30 June 2020
SCA Property Group & Retail Trust
Investment properties
30 June 2019
SCA Property Group & Retail Trust
Investment properties
Sensitivity analysis – Valuation net operating income
Profit/(loss) after tax
Equity
30 June 2020
SCA Property Group & Retail Trust
Investment properties
30 June 2019
SCA Property Group & Retail Trust
Investment properties
5% increase
5% decrease
5% increase
5% decrease
$m
$m
$m
$m
156.9
(156.9)
156.9
(156.9)
157.4
(157.4)
157.4
(157.4)
Refer to note 3 for additional COVID-19 disclosures regarding investment property valuations.
14.
Investment in associates (SCA Unlisted Retail Fund (SURF))
The Group and Retail Trust’s investment in associates comprises of:
-
-
-
SURF 1: 7,959,000 units at $1.00 each acquired on 1 October 2015. The total units on issue of SURF 1 are 32,600,000.
SURF 2: 8,447,000 units at $1.00 each acquired on 2 June 2017. The total units on issue of SURF 2 are 29,500,000.
SURF 3: 9,161,000 units at $1.00 each acquired on 10 July 2018. The total units on issue of SURF 3 are 35,000,000.
SURF 1, SURF 2 and SURF 3 are unlisted closed end property funds. The Group recognises its 24.4% interest in SURF 1, 28.6%
interest in SURF 2 and 26.2% interest in SURF 3 as investment in associates using the equity method of accounting.
As at 30 June 2020 the Group managed 5 properties valued at $102.6 million for its unlisted retail funds (30 June 2019: 11
properties valued at $184.3 million). During the year SURF 1 reached the end of its term and commenced the process of winding
up including the sale of the properties, the repayment of the debt and with the majority of the remaining funds then returned as
capital to the unitholders. The Group has received $9.0 million during the year as a return of capital on its investment in SURF 1.
There may be an additional final return of capital once SURF 1 is finally wound up. This amount is not expected to be significant. In
addition, the Group may be entitled to a performance fee in accordance with the investment management agreement for SURF 1.
Consistent with prior periods no amount has been recognised for this performance fee for the year ended 30 June 2020.
Movement in investment in associates
Opening balance
Additions to equity accounted investment
Share of profits after income tax
Return of capital
Distributions received or receivable
Closing balance
SCA Property Group & Retail Trust
30 June 2020
30 June 2019
$m
$m
26.5
-
-
(9.0)
(1.6)
15.9
35
36
The Group is not a guarantor to the debt facilities or other liabilities of SURF 1, SURF 2 or SURF 3.
96
18.0
9.2
1.2
-
(1.9)
26.5
97
Annual Report 2019Annual Report 2019SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
15.
Trade and other payables
Bank and syndicated facilities - unsecured
Current
Trade payables and other creditors1
Income tax payable
Payables to related parties (note 27)
SCA Property Group
Retail Trust
30 June 2020
30 June 2019
30 June 2020
30 June 2019
$m
$m
$m
$m
57.7
0.6
-
58.3
46.8
0.6
-
47.4
58.3
-
10.2
68.5
47.4
-
9.0
56.4
1 Trade payables other creditors are generally payable within 30 days. Other significant amounts included in trade payables and other creditors
includes rent received in advance, provision for deferred income and trade payables including accrued expenses.
16.
Interest bearing liabilities
Interest bearing liabilities
Current
Non-current
Total interest bearing liabilities
The detail of the interest bearing liabilities are below.
Unsecured Bank revolving bilateral facilities
- A$ denominated
Unsecured Bank and syndicated non revolving facilities
- A$ denominated
Unsecured A$ Medium term note (A$ MTN)
- A$ denominated
Unsecured US Notes
- A$ denominated
- US$ denominated (converted to A$)
Total unsecured debt outstanding
- Less: unamortised establishment fees and unamortised MTN discount and premium
Interest bearing liabilities
SCA Property Group & Retail Trust
30 June 2020
$m
30 June 2019
$m
225.0
858.6
1,083.6
-
1,137.5
1,137.5
SCA Property Group & Retail Trust
30 June 2020
$m
30 June 2019
$m
-
150.0
450.0
50.0
435.3
1,085.3
(1.7)
1,083.6
62.0
150.0
450.0
50.0
427.2
1,139.2
(1.7)
1,137.5
Financing facilities and financing resources
The financing capacity available to the Group is under the Bank revolving bilateral facilities as the other debt facilities are fully drawn
and non revolving. Debt facilities are carried at amortised cost. Additional details of these debt facilities are below.
To reduce liquidity risk, the Group has in place debt sourced from several sources including bank and syndicated facilities with
multiple banks. The terms have been negotiated to achieve a balance between capital availability and the cost of debt including
unused debt. The facilities include revolving bilateral facilities. All bank and syndicated facilities are unsecured, and the revolving
facilities can be used interchangeably.
One of the bilateral facilities is used to support bank guarantees. As at 30 June 2020, in addition to the bilateral facilities drawn
above, $11.0 million of a bilateral facility available was used to support bank guarantees (30 June 2019: $12.0 million). The bank
guarantees assists with the Group’s obligations under the Australian Financial Services Licences granted to the Group.
During the year the bank or bilateral debt facilities were increased in facility limit by $200.0 million and extended in maturity. As a
result the total bilateral facilities are now $600.0 million (30 June 2019: $400.0 million). The bank and syndicated debt facilities of
$600.0 million are made up of:
-
-
-
$400.0 million of revolving bilateral debt facilities which are undrawn (30 June 2019: $250.0 million revolving bilateral
facilities of which $62.0 million was drawn).
$150.0 million of bank and syndicated non revolving facilities fully drawn which include financial costs if repaid more than
two years prior to expiry. The earliest of these facilities expires in June 2024. These facilities were in place prior to 30 June
2019 and were fully drawn at 30 June 2019.
$50.0 million facility which is currently undrawn but available to assist with the refinancing of the A$ MTN with a face value
of $225.0 million which expires in April 2021. Once drawn this facility is non revolving. Refer below for details of the A$
MTN which expires in April 2021. This facility was also put in place during the year ended 30 June 2020.
The financing capacity available to the Group under the bank and syndicated facilities, including cash and cash equivalents, is in
the following table.
Financing facilities and financing resources
Bilateral bank facilities
Committed bank and syndicated financing facilities available
Less: amounts drawn down
Less: amounts utilised for bank guarantee
Net Bilateral facilities available
Add: cash and cash equivalents
Financing resources available
SCA Property Group & Retail Trust
30 June 2020
$m
30 June 2019
$m
600.0
(150.0)
(11.0)
439.0
183.8
622.8
400.0
(212.0)
(12.0)
176.0
4.2
180.2
As at 30 June 2020 the Group had undrawn debt facilities and cash and cash equivalents of $622.8 million (30 June 2019: $180.2
million).
A$ medium term notes (A$ MTN) - unsecured
The Group has issued A$ MTN with a face value of $450.0 million. These are unsecured. Details of these notes are below.
A$ MTN
Tranche
Issue date
Maturity
Series 1
Series 2
Tranche 1
Tranche 2
Tranche 1
Tranche 2
Apr-15
Jul-16
Jun-17
Apr-19
Apr-21
Apr-21
Jun-24
Jun-24
Tenor at
issue
(years)
6.0
4.8
7.0
5.2
Coupon
Face
value
Issue
consideration
3.75%
3.75%
3.90%
3.90%
$m
175.0
50.0
175.0
50.0
450.0
$m
174.8
50.6
174.5
51.3
Discount /
(premium) on
issue
$m
0.2
(0.6)
0.5
(1.3)
(1.2)
The discount or premium with respect to each Tranche is amortised from the issue date to the maturity.
98
99
37
38
Annual Report 2019Annual Report 2019SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
The next debt expiry is the A$ MTN $225.0 million in April 2021. Under the terms of this A$ MTN it can be repaid (with appropriate
notice) from October 2020 with no make whole obligation. The current intention is that the A$ MTN $225.0 million will be repaid
from existing cash and cash equivalents and undrawn debt from October 2020.
US Notes – unsecured
The Group has issued US Notes with a face value of US$300.0 million and A$50.0 million. The US Notes are unsecured. The
principal and coupon obligations of the US dollar denominated notes have been fully economically swapped back to Australian
dollars (floating interest rates) such that the Group has no exposure to any currency risk. Details of these notes and their
economically swapped values are below.
US Notes
Issue date - US$
denominated notes
August 2014
September 2018
August 2014
September 2018
September 2018
AUD notes
Maturity
US$ value
August 2027
September 2028
August 2029
September 2031
September 2033
100.0
30.0
50.0
70.0
50.0
300.0
Economic
hedged FX
rate
AU$
economically
hedged value
30 June 2020
FX rate
30 June 2020
Book value
0.9387
0.7604
0.9387
0.7604
0.7604
0.6891
0.6891
0.6891
0.6891
0.6891
106.5
39.4
53.3
92.1
65.8
357.1
50.0
407.1
145.1
43.5
72.6
101.5
72.6
435.3
50.0
485.3
Details of these notes and their economically swapped values at 30 June 2019 are below.
US Notes
Issue date - US$
denominated notes
August 2014
September 2018
August 2014
September 2018
September 2018
AUD notes
Debt covenants
Maturity
August 2027
September 2028
August 2029
September 2031
September 2033
US$
value
100.0
30.0
50.0
70.0
50.0
300.0
Economic
hedged FX
rate
AU$
economically
hedged value
30 June 2019
FX rate
30 June 2019
Book value
0.9387
0.7604
0.9387
0.7604
0.7604
0.7022
0.7022
0.7022
0.7022
0.7022
106.5
39.4
53.3
92.1
65.8
357.1
50.0
407.1
142.4
42.7
71.2
99.7
71.2
427.2
50.0
477.2
The Group is required to comply with certain financial covenants or obligations in respect of the interest bearing liabilities. The
major financial covenants or obligations which are common across all types of interest bearing liabilities are summarised as follows:
(a) Interest cover ratio (EBITDA to net interest expense) is more than 2.00 times;
(b) Gearing ratio (finance debt net of cash and cash equivalents and cross currency interest rate swaps divided by total
tangible assets net of cash and cash equivalents and derivatives) does not exceed 50%;
(c) Priority indebtedness ratio (priority debt to total tangible assets) does not exceed 10%; and
(d) Aggregate of the total tangible assets held by the Obligors represents not less than 90% of the total tangible assets of the
Group.
The Group was in compliance with all of the financial covenants and obligations for the period ended and as at 30 June 2020. The
Group’s gearing for the debt covenant using the common definition in the debt and facility agreements was 23.0%. The Group’s
gearing for management was 25.6% (refer also below). The main reason for the difference in the gearing for covenant and
management purposes is that debt covenant definition of gearing uses the value of finance debt from the financial statements
(which values the US Notes using the 30 June 2020 FX rate) less the value of the cross currency interest rate swaps. At 30 June
2020 the value of the cross currency interest rate swaps increased significantly due to the decline in US interest rates relative to the
change in the FX rate.
Capital Management – management gearing
The Group manages its capital, including its debt, by having regard to a number of factors including the gearing of the Group. The
Group’s definition of gearing for management purposes is:
- Net finance debt, where the US notes US$ denominated debt is recorded as the A$ amount received and economically
hedged in A$, net of cash and cash equivalents, divided by
- Net total assets, being total assets net of cash and cash equivalents and derivatives.
As the US notes USD denominated debt has been fully economically hedged, for the purpose of the management determination of
gearing US$ denominated debt is recorded at its economically hedged value. This also results in management gearing being based
on a constant currency basis.
The Group’s management gearing was 25.6% as at 30 June 2020 (30 June 2019: 32.8%). The Group’s target gearing range is
30% to 40%, however the Group has a preference for gearing to remain below 35% at this point in the cycle. Following the equity
raising in April 2020 and May 2020 the gearing of the Group is below that range. The Group’s gearing calculation is below.
Gearing (management)
Bilateral, Syndicated and A$ MTN notes – unsecured
Bank bilateral revolving facilities drawn
Bank and syndicated non revolving facilities drawn
Unsecured A$ MTN
US Notes - unsecured
US$ denominated notes - USD face value
Economically hedged exchange rate
US$ denominated notes - AUD equivalent
US A$ denominated notes
Total US notes
Total debt used and drawn AU$ equivalent
Less: cash and cash equivalents
Net finance debt for gearing
Total assets
Less: cash and cash equivalents
Less: derivative value included in total assets
Net total assets for gearing
Gearing (management)1
30 June 2020
$m
30 June 2019
$m
-
150.0
450.0
600.0
300.0
0.8402
357.1
50.0
407.1
1,007.1
(183.8)
823.3
3,589.7
(183.8)
(183.8)
3,222.1
25.6%
62.0
150.0
450.0
662.0
300.0
0.8402
357.1
50.0
407.1
1,069.1
(4.2)
1,064.9
3,372.2
(4.2)
(125.2)
3,242.8
32.8%
1 As noted above, the Group also has $11.0 million (30 June 2019: $12.0 million) used to support bank guarantees. The bank guarantees assists
with the Group’s obligations under its Australian Financial Services Licences. The value of these guarantees has been excluded from
management’s net finance debt used for gearing which is consistent with the approach taken by the Group’s credit rating agency to determine net
debt.
17.
Financial instruments
(a)
Capital management
The Group’s objective when managing capital is to safeguard the ability to continue as a going concern, whilst providing returns for
security holders and benefits for other stakeholders and maintaining a capital structure that will support a competitive overall cost of
capital for the Group. The capital structure of the Group consists of cash and cash equivalents, interest bearing liabilities (including
bilateral debt facilities with several banks and notes issued in the debt capital markets) and equity of the Group (comprising
contributed equity, reserves and accumulated profit/loss). The Group assesses the adequacy of its capital requirements, cost of
capital and gearing (i.e. debt/equity mix) as part of its broader strategic plan. The Group continuously reviews its capital structure to
ensure:
-
Sufficient funds and financing facilities, on a cost effective basis, are available to assist the Group’s property investment
and management business
100
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Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Sufficient liquid buffer is maintained
-
- Distributions to security holders are in line with the stated distribution policy.
The Group can alter its capital structure by issuing new stapled securities, adjusting the amount of distributions paid to security
holders, returning capital to security holders, buying back securities, selling assets to reduce debt, adjusting the timing of capital
expenditure and through the operation of a distribution reinvestment plan. Additionally, the Group can alter its capital structure by
the use of debt facilities including repaying debt and issuing debt via debt capital markets and derivative financial instruments.
The Group’s debt financial covenants are detailed in note 16.
Management monitors the capital structure by the gearing ratio. The gearing ratio is calculated in line with the debt covenants as:
-
-
finance debt net of cash and cash equivalents and excluding derivatives; divided by,
total tangible assets net of cash and cash equivalents and excluding derivatives.
Receivables relate to tenant and managing agent receivables. Receivables are reviewed regularly throughout the year. The
expected credit loss allowance is made where collection is deemed uncertain. Part of the Group’s policy is to hold collateral as
security for tenants via bank guarantees (or less frequently collateral such as deposits or cash and personal guarantees). Refer to
note 3 and note 10 for further details on tenants that were past due at 30 June 2020.
(b)(ii)
Financial risk management - liquidity
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity
risk by having flexibility in funding including by keeping sufficient cash and/or committed credit lines available whilst maintaining a
low cost of holding these facilities. Management prepares and monitors rolling forecasts of liquidity requirements on the basis of
expected cash flow.
The Group manages liquidity risk through monitoring its net expected funding needs including the maturity of its debt portfolio. The
Group also manages liquidity risk by maintaining a liquidity buffer of cash and undrawn debt facilities.
The Group’s target gearing range is 30% to 40%, however the Group has a preference for gearing to remain below 35% at this
point in the cycle.
The debt facilities are made up of bank bilateral and syndicated facilities, A$ MTN and US notes. Details of these debt facilities,
including finance facilities available, included in note 16.
The Group’s gearing at 30 June 2020 was 25.6% (30 June 2019: 32.8%). Refer note 16 for additional information.
(b)
Financial risk management
The Group’s activities expose it to a variety of financial risk, including:
(i) credit risk
(ii)
(iii) market risk (foreign exchange and interest rate)
liquidity risk
The Group seeks to minimise the effects of these risks by using derivative financial instruments to hedge or economically hedge
certain risk exposures. The use of financial derivatives is governed by the Group’s policies as approved by the Board. The Group
does not enter or trade financial instruments including derivative financial instruments for speculative purposes.
(b)(i)
Financial risk management - credit
Credit risk is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group
has exposure to credit risk on its financial assets included in its Consolidated Balance Sheets. This includes cash and cash
equivalents, derivative financial instruments (hedging) as well as credit receivables due from tenants and managing agents.
For financial investments or market risk hedging the Group manages this risk by investing and transacting derivatives with multiple
counterparties to minimise the Group’s exposure to any one counterparty. Wherever possible, for financial investments and
economic hedging the Group only deals with investment grade counterparties.
Exposure to customer credit risk is also monitored. A significant share of the Group’s revenue for the current and prior year is from
Woolworths Limited and Coles Limited (and its affiliates) which has a BBB or BBB+ Standard and Poor’s credit rating respectively.
The Group reviews the aggregate exposure of tenancies across its portfolio on a regular basis. Derivative counterparties and term
deposits are currently limited to financial institutions with an appropriate credit rating.
The Group and Retail Trust’s exposure to credit risk is in the table below.
Cash and cash equivalents
Receivables
Derivative financial instruments
SCA Property Group
Retail Trust
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
183.8
34.2
183.8
401.8
4.2
28.3
125.2
157.7
182.7
34.2
183.8
400.7
3.1
28.1
125.2
156.4
The maximum exposure of the Group to credit risk as at 30 June 2020 is the carrying amount of the financial assets in the
Consolidated Balance Sheets.
Term deposits are held with major Australian and international banks with a credit rating of Moody’s A1 or Standard & Poor’s A or
stronger.
Refinancing risk, also part of liquidity risk, is the risk that the maturity profile of the debt makes it difficult to refinance maturing debt,
and/or that the cost of refinancing exposes the Group to potentially unfavourable market conditions at any given time. The Group is
exposed to refinancing risks arising from the availability of finance as well as the interest rates and credit margins at which
financing is available. The Group manages this risk, where appropriate, by refinancing borrowings in advance of the maturity of the
borrowing and by securing longer term facilities.
Non-derivative financial instruments
The contractual maturities of the Group’s and Retail Trust’s non-derivative financial liabilities at reporting date are reflected in the
following table. It shows the undiscounted contractual cash flows required to discharge the liabilities including principal, interest,
margin, line fees and foreign exchange rates as at the reporting date. Foreign currencies have been converted at exchange rates at
the reporting date. Interest rates are based on the interest rates as at the reporting date.
1 year or less
$m
2 - 3 years
$m
4 - 5 years
$m
More than 5 years
$m
Total
$m
30 June 2020
SCA Property Group
Trade and other payables
Distribution payable
Interest bearing liabilities
Retail Trust
Trade and other payables
Distribution payable
Interest bearing liabilities
30 June 2019
SCA Property Group
Trade and other payables
Distribution payable
Interest bearing liabilities
Retail Trust
Trade and other payables
Distribution payable
Interest bearing liabilities
58.3
53.6
267.0
378.9
68.5
53.6
267.0
389.1
47.4
69.0
45.0
161.4
56.4
69.0
45.0
170.4
-
-
67.1
67.1
-
-
67.1
67.1
-
-
305.1
305.1
-
-
305.1
305.1
-
-
332.5
332.5
-
-
332.5
332.5
-
-
406.8
406.8
-
-
406.8
406.8
-
-
698.9
698.9
-
-
698.9
698.9
-
-
700.7
700.7
-
-
700.7
700.7
58.3
53.6
1,365.5
1,477.4
68.5
53.6
1,365.5
1,487.6
47.4
69.0
1,457.6
1,574.0
56.4
69.0
1,457.6
1,583.0
102
103
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Annual Report 2019Annual Report 2019SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Derivative financial instruments
The following tables show the undiscounted cash flows required to discharge the Group’s and Retail Trust’s derivative financial
instruments in place at 30 June 2020 at the rates as at the reporting date. Foreign currencies have been converted at exchange
rates at the reporting date.
1 year or less
$m
2 - 3 years
$m
4 - 5 years
$m
More than 5 years
$m
Total
$m
30 June 2020
SCA Property Group & Retail Trust
Interest rate swaps - net
Cross currency interest rate swaps - net
30 June 2019
SCA Property Group & Retail Trust
Interest rate swaps - net
Cross currency interest rate swaps - net
(1.7)
36.0
34.3
0.5
25.9
26.4
(2.9)
23.1
20.2
0.5
17.3
17.8
(1.3)
20.9
19.6
2.2
15.2
17.4
5.7
92.7
98.4
8.6
83.6
92.2
(0.2)
172.7
172.5
11.8
142.0
153.8
(b)(iii) Financial risk management – market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s
financial performance or the value of its holdings of financial instruments. The objective of market risk management is to manage
and control market risk within acceptable parameters, while optimising the return.
Foreign exchange risk
Foreign exchange risk arises when anticipated transactions or recognised assets and liabilities are denominated in a currency that
is not the Group’s presentation currency, being Australian dollars. The Group has currency exposure to the United States dollar
(USD).
Foreign exchange risk - United States Dollar
The Group’s and the Retail Trust’s exposure to the United States dollar is through borrowing in USD denominated debt via the US
notes issued during the year ended 30 June 2015 and 30 June 2019.
The principal and coupon obligations have been fully swapped back to Australian dollars (floating interest rates). Refer below and
note 16.
Cross currency interest rate swap contracts
The Group has reduced its future exposure to the foreign exchange risk inherent in the carrying value of its US dollar borrowings
(refer above and note 16) by using cross currency interest rate swaps.
30 June 2020
Buy US dollar - interest
Amount (AUD)
Exchange rate
Amount (USD)
Buy US dollar - Principal
Amount (AUD)
Exchange Rate
Amount (USD)
30 June 2019
Buy US dollar - interest
Amount (AUD)
Exchange rate
Amount (USD)
Buy US dollar - Principal
Amount (AUD)
Exchange Rate
Amount (USD)
1 year or less
$m
15.8
0.8354
13.2
-
-
-
15.8
0.8354
13.2
-
-
-
SCA Property Group & Retail Trust
4 - 5 years
$m
More than 5 years
$m
2 - 3 years
$m
31.6
0.8354
26.4
-
-
-
31.6
0.8354
26.4
-
-
-
31.6
0.8354
26.4
-
-
-
31.6
0.8354
26.4
-
-
-
76.1
0.8042
61.2
357.1
0.8401
300.0
91.8
0.8094
74.3
357.1
0.8401
300.0
Total
$m
155.1
0.8201
127.2
357.1
0.8401
300.0
170.8
0.8214
140.3
357.1
0.8401
300.0
Sensitivity analysis – foreign exchange risk
The following sensitivity analysis shows the effect on profit/(loss) after tax and on equity if the Australian dollar had increased
(strengthened) by 10% or decreased (weakened) by 10% at the balance sheet date with all other variables held constant.
Profit/(loss) after tax
Equity
Effect of 10%
strengthening
in A$ exchange
rate
$m
Effect of 10%
depreciation in
A$ exchange
rate
$m
Effect of 10%
strengthening
in A$ exchange
rate
$m
Effect of 10%
depreciation in
A$ exchange
rate
$m
30 June 2020
SCA Property Group & Retail Trust
A$ equivalent of foreign exchange balances denominated in
USD
30 June 2019
SCA Property Group & Retail Trust
A$ equivalent of foreign exchange balances denominated in
USD
(12.9)
17.8
(12.9)
17.8
(9.6)
11.7
(9.6)
11.7
Under cross currency interest rate swap contracts, the Group agrees to exchange specified principal and interest foreign currency
amounts at agreed future dates at a specified exchange rate. Such contracts enable the Group to mitigate the risk of adverse
movements in foreign exchange rates in relation to principal and interest payments arising under the US dollar note issue.
Interest rate risk
As a result of issuing the US notes denominated in USD the Group has entered into cross currency interest rate swaps which have
fully economically hedged the USD principal and interest to a fixed amount of AUD and floating AUD interest respectively. The
following table details the swap contracts principal and interest payments over various durations at balance sheet date.
Interest rate risk is the risk that the fair value or cash flows of financial instruments will fluctuate due to changes in market interest
rates.
The Group is exposed to interest rate risk as it can borrow funds at both fixed and floating interest rates. This risk is managed by
maintaining an appropriate mix between fixed and floating rate borrowings and through the use of interest rate swap contracts.
Hedging activities are evaluated regularly.
The Group’s exposures to interest rates on financial liabilities are detailed in the liquidity risk management section of this note.
Exposure to cash and cash equivalents is $183.8 million (30 June 2019: $4.2 million).
104
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Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Interest rate swap contracts
The Group’s interest rate risk arises from borrowings and cash holdings. Interest rate swaps have the economic effect of converting
borrowings from floating rates to fixed rates or from fixed to floating. Under the interest rate swaps, the Group agrees with other
parties to exchange, at specified intervals, the difference between fixed contract rates and floating-rate interest amounts (or vice
versa) calculated by reference to an agreed notional principal amount.
The Group’s bilateral borrowings are generally at floating rates. Borrowings with floating rates expose the Group to cash flow
interest rate risk. The Group’s preference is to be protected from interest rate movements predominantly in the two to five year term
through appropriate risk management techniques. These techniques include using floating to fixed interest rate swaps. Such
interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates.
Additionally the Group has fixed rate borrowings in the form of A$ and US$ US notes and the A$ MTN.
The requirements under Australian accounting standards in respect of documentation, designation and effectiveness for hedge
accounting cannot be met in all circumstances. As a result the Group does not apply hedge accounting for any derivatives as at 30
June 2020 (30 June 2019: not applicable).
The fair value of interest rate swaps at the reporting date is determined by discounting the future cash flows using the forward
market interest rate curve at the reporting date.
The Group’s exposure to interest rate risk and the effective interest rates on financial assets and liabilities at reporting date are in
the following table.
Interest rate
Floating
interest rate
SCA Property Group
Fixed interest rate
Less than 1
year
1 - 5 years
More than 5
years
Total
(%p.a.)
$m
$m
$m
$m
$m
0.0%
0.7%
1.8%
3.8%
6.0%
4.4%
3.8
-
3.8
(150.0)
-
-
-
(150.0)
(146.2)
-
180.0
180.0
-
(225.0)
-
-
(225.0)
(45.0)
-
-
-
-
(225.0)
-
-
(225.0)
(225.0)
-
-
-
3.8
180.0
183.8
-
-
(50.0)
(435.3)
(485.3)
(485.3)
(150.0)
(450.0)
(50.0)
(435.3)
(1,085.3)
(901.5)
30 June 2020
Financial assets
Cash at bank
Term deposits
Total financial assets
Financial liabilities
Interest bearing liabilities
Denominated in AUD - floating
Denominated in AUD - fixed (MTN)
Denominated in AUD - fixed (USPP)
Denominated in USD - fixed (USPP)
Total financial liabilities
Total net financial liabilities
The Retail Trust’s exposure to interest rate risk and the effective interest rates on financial assets and liabilities at reporting date are
in the table below.
Interest rate
Floating
interest rate
(%p.a.)
$m
Retail Trust
Fixed interest rate
Less than 1
year
$m
1 - 5 years
$m
More than 5
years
$m
Total
$m
0.0%
0.7%
1.8%
3.8%
6.0%
4.4%
2.7
-
2.7
(150.0)
-
-
-
(150.0)
(147.3)
-
180.0
180.0
-
(225.0)
-
-
(225.0)
(45.0)
-
-
-
-
(225.0)
-
-
(225.0)
(225.0)
-
-
-
2.7
180.0
182.7
-
-
(50.0)
(435.3)
(485.3)
(485.3)
(150.0)
(450.0)
(50.0)
(435.3)
(1,085.3)
(902.6)
30 June 2020
Financial assets
Cash at bank
Term deposits
Total financial assets
Financial liabilities
Interest bearing liabilities
Denominated in AUD - floating
Denominated in AUD - fixed
Denominated in AUD - fixed (USPP)
Denominated in USD - fixed (USPP)
Total financial liabilities
Total net financial liabilities
The maturity profile and the weighted average interest rate of the fixed and floating derivatives (notional principal) held at reporting
date by both the Group and the Retail Trust can be summarised below.
June 2020
$m
June 2021
$m
June 2022
$m
June 2023
$m
June 2024
$m
June 2025
$m
Denominated in AU$
Interest rate swaps (fixed)
Average fixed rate
Interest rate swaps (floating)
300.0
1.46%
50.0
300.0
1.46%
50.0
300.0
1.46%
50.0
300.0
1.46%
50.0
300.0
1.46%
50.0
300.0
1.46%
50.0
The Group’s exposure to interest rate risk and the effective interest rates on financial assets and liabilities at 30 June 2019 are in the
following table.
Interest rate
Floating
interest rate
SCA Property Group
Fixed interest rate
Less than 1
year
1 - 5 years
More than 5
years
Total
(%p.a.)
$m
$m
$m
$m
$m
1.0%
4.2
2.7%
3.8%
6.0%
4.4%
(212.0)
-
-
-
(212.0)
(207.8)
-
-
-
-
-
-
-
-
-
4.2
-
(450.0)
-
-
(450.0)
(450.0)
-
-
(50.0)
(427.2)
(477.2)
(477.2)
(212.0)
(450.0)
(50.0)
(427.2)
(1,139.2)
(1,135.0)
30 June 2019
Financial assets
Cash at bank
Financial liabilities
Interest bearing liabilities
Denominated in AUD - floating
Denominated in AUD - fixed (MTN)
Denominated in AUD - fixed (USPP)
Denominated in USD - fixed (USPP)
Total financial liabilities
Total net financial liabilities
The Retail Trust’s exposure to interest rate risk and the effective interest rates on financial assets and liabilities at 30 June 2019 are
in the table below.
106
107
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Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Interest rate
Floating
interest rate
(%p.a.)
$m
Retail Trust
Fixed interest rate
Less than 1
year
$m
1 - 5 years
$m
More than 5
years
$m
Total
$m
1.0%
2.7%
3.8%
6.0%
4.4%
3.1
(212.0)
-
-
-
(212.0)
(208.9)
-
-
-
-
-
-
-
-
-
3.1
-
(450.0)
-
-
(450.0)
(450.0)
-
-
(50.0)
(427.2)
(477.2)
(477.2)
(212.0)
(450.0)
(50.0)
(427.2)
(1,139.2)
(1,136.1)
30 June 2019
Financial assets
Cash at bank
Financial liabilities
Interest bearing liabilities
Denominated in AUD - floating
Denominated in AUD - fixed
Denominated in AUD - fixed (USPP)
Denominated in USD - fixed (USPP)
Total financial liabilities
Total net financial liabilities
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
(c) Accounting classifications and fair values
The fair value of interest rate derivatives is determined using a generally accepted pricing model based on a discounted cash flow
analysis using assumptions supported by observing market rates.
Except as disclosed below, the carrying amounts of other financial assets and financial liabilities, which are recognised at amortised
cost in the Consolidated Balance Sheets, approximates their fair values except the US notes and the A$ MTN.
The amortised cost of the US notes, converted to AUD at the prevailing foreign exchange rate at 30 June 2020 (which was AUD
1.00 = USD 0.6891 (30 June 2019: 0.7022), is $485.3 million (30 June 2019: $477.2 million).
The amortised cost of the A$ MTN, is $450.0 million (30 June 2019: $450.0 million) (refer note 16).
The fair value of the US notes and A$ MTN can be different to the carrying value.
The fair value, additionally, takes into account movements in the underlying base interest rates and credit spreads for similar
financial instruments including extrapolated yield curves over the tenor of the notes.
On this basis the estimated fair value of the US notes is $528.9 million and the A$ MTN $466.6 million (30 June 2019: $515.7
million and $467.6 million respectively).
The maturity profile and the weighted average interest rate of the fixed and floating derivatives (notional principal) held at 30 June
2019 by both the Group and the Retail Trust can be summarised below.
Fair value hierarchy
June 2019
$m
June 2020
$m
June 2021
$m
June 2022
$m
June 2023
$m
June 2024
$m
Denominated in AU$
Interest rate swaps (fixed)
Average fixed rate
Interest rate swaps (floating)
300.0
1.46%
50.0
300.0
1.46%
50.0
300.0
1.46%
50.0
300.0
1.46%
50.0
300.0
1.46%
50.0
300.0
1.46%
50.0
Sensitivity analysis – interest rate risk
The following sensitivity analysis shows the effect on profit/(loss) after tax and equity if market interest rates at balance sheet date
had been 50 basis points (bps) higher/lower with all other variables held constant.
Profit/loss after tax1
Equity
50bps higher
50bps lower
50bps higher
50bps lower
$m
$m
$m
$m
30 June 2020
SCA Property Group & Retail Trust
Effect of market interest rate movement
(16.1)
16.2
(16.1)
16.2
30 June 2019
SCA Property Group & Retail Trust
Effect of market interest rate movement
(14.8)
14.9
(14.8)
14.9
1 The aim of the Group’s interest rate hedging strategy is to reduce the impact on Funds from Operations (cash) of movements in interest rates.
Changes in interest rates include changes to the non-cash mark-to-market valuations of the swaps which flow through the Group’s AASB profit and
loss but which are excluded from Funds from Operations.
The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as
follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
There were no transfers between levels during the year.
30 June 2020
Financial assets carried at fair value
Investment in CQR
Interest rate swaps
Cross currency interest rate swaps
Financial liabilities carried at fair value
Interest rate swaps
30 June 2019
Financial assets carried at fair value
Investment in CQR
Interest rate swaps
Cross currency interest rate swaps
Financial liabilities carried at fair value
Interest rate swaps
SCA Property Group & Retail Trust
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
22.7
-
-
22.7
-
29.6
-
-
29.6
-
-
9.7
174.1
183.8
10.2
-
13.1
112.1
125.2
3.0
-
-
-
-
-
-
-
-
-
-
-
22.7
9.7
174.1
206.5
10.2
29.6
13.1
112.1
154.8
3.0
For financial instruments not quoted in active markets, the Group uses valuation techniques such as present value, comparison to
similar instruments for which market observable prices exist and other relevant models used by market participants. These
valuation techniques use both observable and unobservable market inputs.
Interest rate derivatives are financial instruments that use valuation techniques with only observable market inputs and are included
in Level 2 above.
108
109
47
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Annual Report 2019Annual Report 2019SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
18.
Contributed equity
Equity Raising
Equity
Issue costs
Opening balance
Equity raised through Distribution Reinvestment Plan - August 2018
Equity raised through Institutional Placement - October 2018
Equity raised through Unit Purchase Plan - November 2018
Equity raised through Distribution Reinvestment Plan - January 2019
Equity raised through Distribution Reinvestment Plan – August 2019
Equity raised through Distribution Reinvestment Plan - January 2020
Equity raised through Institutional Placement – April 2020
Equity raised through Unit Purchase Plan – May 2020
Equity raising costs
Closing balance
Balance at the end of the period is attributable to unit holders
of:
Shopping Centres Australasia Property Management Trust
Shopping Centres Australasia Property Retail Trust
SCA Property Group
Retail Trust
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
2,013.5
(40.7)
1,972.8
1,693.3
(34.6)
1,658.7
2,003.2
(40.6)
1,962.6
1,684.2
(34.5)
1,649.7
Management Trust
Retail Trust
9.0
-
-
-
-
-
0.1
1.0
0.1
-
10.2
7.5
-
1.0
0.4
0.1
-
-
-
-
-
9.0
1,649.7
-
-
-
-
13.0
27.8
249.0
29.2
(6.1)
1,962.6
1,248.0
9.2
261.4
110.7
26.6
-
-
-
-
(6.2)
1,649.7
10.2
1,962.6
1,972.8
9.0
1,649.7
1,658.7
Securities on Issue
Opening balance
Equity issued for executive security-based compensation arrangements - 9 August 2018
Equity raised through Distribution Reinvestment Plan - 30 August 2018
Equity raised through Institutional Placement - 10 October 2018
Equity raised through Unit Purchase Plan - 23 November 2018
Equity issued for staff security-based compensation arrangements - 20 December 2018
Equity raised through Distribution Reinvestment Plan - 29 January 2019
Equity issued for executive security-based compensation arrangements - 8 August 2019
Equity raised through Distribution Reinvestment Plan - 30 August 2019
Equity issued for staff security-based compensation arrangements - 23 December 2019
Equity raised through Distribution Reinvestment Plan - 29 January 2020
Equity raised through Institutional Placement - 16 April 2020
Equity raised through Unit Purchase Plan - 15 May 2020
Closing balance
SCA Property Group & Retail Trust
30 June 2020
30 June 2019
No. of securities
No. of securities
925,582,982
-
-
-
-
-
-
946,504
5,253,037
13,356
10,309,664
115,740,741
13,570,066
1,071,416,350
749,154,435
1,116,553
3,723,512
113,086,444
47,907,805
10,444
10,583,789
-
-
-
-
-
-
925,582,982
As long as Shopping Centres Australasia Property Group remains jointly quoted, the number of units in each of the Trusts are
equal and the unitholders identical. Holders of stapled securities are entitled to receive distributions as declared from time to time.
SCA Property Group holds concurrent meetings of the Retail Trust and Management Trust. Subject to any voting restrictions
imposed on a security holder under the Corporations Act 2001 and the Australian Securities Exchange at a meeting of members,
on a show of hands, each member has one vote. On a poll, each member has one vote for each dollar of the value of the total
interest that they have in the relevant underlying Retail Trust or Management Trust respectively.
946,504 securities were issued during the year ended 30 June 2020 in respect of executive compensation plans and 13,356
securities were issued in respect of staff compensation and incentive plans for nil consideration.
The Group completed an institutional placement on 16 April 2020 and a unit purchase plan on 15 May 2020. The institutional
placement raised $250.0 million by issuing 115.7 million securities at $2.16 per security. The unit purchase plan raised $29.3 million
by issuing 13.6 million securities at $2.16 per security. The purpose of these equity raisings was to strengthen the Group’s balance
sheet and to provide funding flexibility to continue to deliver on the Group’s strategy of investing in convenience-based
supermarket-anchored centres as opportunities arise. As at 30 June 2020 the proceeds had been used to pay down revolving
bilateral debt facilities and to invest in term deposits.
Issue of securities from distribution reinvestment plan (DRP)
The DRP was in place for the distribution declared in June 2019 (paid in August 2019), for the distribution declared in December
2019 (and paid in January 2020), and for the distribution declared in June 2020 (expected to be paid on or about 31 August 2020).
Under the DRP Plan Rules the DRP issue price was set by the Board at a discount of 1.0% to the arithmetic average of the daily
volume weighted average market price of security traded on the ASX during the 10 business days commencing on the business
day after the record date. The equity raised through the DRP on 30 August 2019 was $13.0 million by the issue of 5.3 million
securities at a price of $2.48. The distribution declared in December 2019 resulted in $27.9 million being raised by the DRP through
the issue of 10.3 million securities at $2.71 in January 2020.
19.
Reserves (net of income tax)
Retail Trust
30 June 2020
$m
30 June 2019
$m
Share based payment reserve
Investment fair value through other comprehensive income (FVTOCI)
Movements in reserves
Share based payment reserve
Balance at the beginning of the year
Employee share based payments
Closing balance
FVTOCI reserve
Opening balance
Revaluation of investment FVTOCI
Closing balance
Share based payment reserve: Refer note 26.
FVTOCI: Refer note 11.
20.
Accumulated profit and loss
6.3
(3.3)
3.0
5.4
0.9
6.3
3.6
(6.9)
(3.3)
5.4
3.6
9.0
3.9
1.5
5.4
(0.4)
4.0
3.6
SCA Property Group
Retail Trust
30 June
2020
$m
30 June
2019
$m
30 June
2020
$m
30 June
2019
$m
Opening balance
Net profit for the year
Distributions paid and payable (note 5)
Closing balance
Balance at the end of the year is attributable to security holders of:
Shopping Centres Australasia Property Management Trust
Shopping Centres Australasia Property Retail Trust
436.2
85.5
(123.5)
398.2
0.3
397.9
398.2
462.0
109.6
(135.4)
436.2
(0.4)
436.6
436.2
436.6
84.8
(123.5)
397.9
462.9
109.1
(135.4)
436.6
110
111
49
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Annual Report 2019Annual Report 2019SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
21.
Cash flow information
(a) Notes to statements of cash flows
Reconciliation of net profit after tax to net cash flow from operating activities is below.
Net profit after tax
Net unrealised (gain) / loss on change in fair value of investment
properties
Net unrealised (gain) / loss on change in fair value of derivatives
Net unrealised (gain) / loss on change in foreign exchange
Straight-lining of rental income and amortisation of incentives
(Decrease) / increase in payables
Non-cash financing expenses
Other non-cash items and movements in other assets
(Increase) / decrease in receivables
Net cash flow from operating activities
SCA Property Group
Retail Trust
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
85.5
87.9
(51.4)
8.1
8.1
13.9
0.5
0.6
(5.9)
147.3
109.6
40.5
(66.3)
27.3
8.6
4.2
0.8
0.3
(4.7)
120.3
84.8
87.9
(51.4)
8.1
8.1
15.5
0.5
(0.1)
(6.1)
147.3
109.1
40.5
(66.3)
27.3
8.6
4.8
0.8
0.3
(4.7)
120.4
(b) Net debt reconciliation
Reconciliation of net debt movements during the financial year is below.
SCA Property Group
Net debt as at 30 June 2019
Net proceeds from borrowings
Repayment of borrowings
Foreign exchange adjustments
Net debt as at 30 June 2020
Net debt as at 30 June 2019
Net proceeds from borrowings
Repayment of borrowings
Foreign exchange adjustments
Net debt as at 30 June 2020
Net debt as at 30 June 2018
Net proceeds from borrowings
Repayment of borrowings
Foreign exchange adjustments
Net debt as at 30 June 2019
Cash at bank
Due within
$m
4.2
-
(0.4)
-
3.8
1 year $m
-
-
-
-
-
Retail Trust
Cash at bank
Due within
$m
3.1
-
(0.4)
-
2.7
1 year $m
-
-
-
-
-
Due after
1 year $m
(1,139.2)
(178.0)
240.0
(8.1)
1,085.3
Due after
1 year $m
(1,139.2)
(178.0)
240.0
(8.1)
1,085.3
Total
$m
(1,135.0)
(178.0)
239.6
(8.1)
(1,081.5)
Total
$m
(1,136.1)
(178.0)
239.6
(8.1)
(1,082.6)
SCA Property Group
Cash at bank
Due within
$m
3.7
-
0.5
-
4.2
1 year $m
-
-
-
-
Due after
1 year $m
(869.6)
(968.3)
726.0
(27.3)
(1,139.2)
Total
$m
(865.9)
(968.3)
726.5
(27.3)
(1,135.0)
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Retail Trust
Cash at bank
Due within
$m
2.5
-
0.6
-
3.1
1 year $m
-
-
-
-
-
Due after
1 year $m
(869.6)
(968.3)
726.0
(27.3)
(1,139.2)
Total
$m
(867.1)
(968.3)
726.6
(27.3)
(1,136.1)
Net debt as at 30 June 2018
Net proceeds from borrowings
Repayment of borrowings
Foreign exchange adjustments
Net debt as at 30 June 2019
22.
Operating leases
All the investment properties (refer note 13) are subject to operating leases.
The investment properties are leased to tenants under long term operating leases with rentals payable monthly. Significant types of
tenants include supermarkets, discount department stores, liquor stores and specialty stores. Lease terms can vary for each lease.
For supermarkets and discount department stores, lease terms for new leases are commonly from 10 to 20 years and are typically
followed by a number of optional lease extensions exercisable by the tenant. The lease for these tenants also generally includes
provision for additional rent in the form of sales turnover rent. Where sales turnover rent applies, it is payable annually in arrears
where the sum of the initial rent and the turnover rent percentage amount for a year exceeds the amount of the base rent.
Additionally the base rent for some of these tenants is subject to fixed periodic increases of up to 5% at the rent review date. The
rent review date is typically every 5 years from the lease start or renewal.
For other tenants lease terms would commonly be for shorter periods such as five years with provisions for annual reviews which
typically comprise either fixed percentage increases, CPI based increases or market reviews. Optional lease extensions
exercisable by the tenant are also possible. Specialty leases incorporate provisions for reporting of sales turnover and may include
payment of turnover rent percentage rental if appropriate.
Minimum lease payments receivable under non-cancellable operating leases of investment are as follows.
Within one year
Between one and five years
After five years
SCA Property Group & Retail Trust
30 June 2020
$m
30 June 2019
$m
241.8
720.4
762.1
1,724.3
239.1
716.4
839.0
1,794.5
There was $3.3 million of percentage or turnover rent recognised as income in the current year (30 June 2019: $2.3 million).
23.
Capital and lease commitments
Estimated capital expenditure committed at balance sheet date but not provided for:
SCA Property Group & Retail Trust
30 June 2020
$m
30 June 2019
$m
Capital commitments
10.0
10.0
112
113
51
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Annual Report 2019Annual Report 2019SCA Property Group | Annual Report 2020SCA Property Group | Annual Report 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
The 30 June 2020 balance relates to:
- Greenbank (QLD) ($10.0 million): During the year ended 30 June 2016 the Group entered into a conditional agreement
to acquire Greenbank neighbourhood shopping centre for $23.0 million (excluding transaction costs). This transaction
settled in January 2016. This acquisition includes a call option for the Group to acquire ten hectares of adjacent
development land for $10.0 million exercisable at any time within 5 years from the date of acquisition. This exercise
amount has been treated as an estimated capital expenditure within one year as the vendor has a put option which is
exercisable in December 2020 (if the call option for the Group is not exercised by that time) (30 June 2019: $10.0 million).
Additionally, the Group leases its office space for $0.7 million per annum. This lease expires in August 2023.
24.
Segment reporting
The Group and Retail Trust invest in shopping centres located in Australia operates only within one segment, Australia.
For the purposes of segment reporting $90.9 million in rental income (30 June 2019: $86.4 million) was from Woolworths Limited
and its affiliates. Further, $32.1 million in rental income (30 June 2019: $28.8 million) was from Coles Limited and its affiliates. Due
to the 2018 Coles Limited demerger, 30 June 2019 have been restated in line with the comparable group.
25.
Key management personnel compensation
The aggregate compensation made to the Directors and other key management personnel of the Group is set out below.
30 June 2020
30 June 2019
$
3,847,532
169,400
773,441
52,611
4,842,984
$
3,413,573
158,619
1,229,800
47,991
4,849,983
Short term benefits
Post-employment benefits
Share-based payment
Long term benefits
The key management personnel during the year were:
- Directors
- Mr Lamb (Company Secretary and General Counsel)
26.
Share based payments
During 2013 the Group established a Group Executive Incentive Plan that entitles key management personnel, subject to criteria, to
become entitled to acquire stapled securities at nil cost to the employee. The Group Executive Incentive Plan was approved at the
Group’s Annual General Meeting in November 2013.
Rights pursuant to the Group Executive Incentive Plan have been issued for:
-
-
-
Special Performance Rights (SPRs)
Short Term Incentive Plan Rights (STIP)
Long Term Incentive Plan Rights (LTIP)
Under the Group Executive Incentive Plan grants of rights have been made to the following key management personnel:
- Mr Mellowes (Director and Chief Executive Officer)
- Mr Fleming (Director and Chief Financial Officer)
- Mr Lamb (Company Secretary and General Counsel)
In addition, certain non-key management personnel have also been granted 312,972 rights during the year (30 June 2019:
268,664).
The table below summarises the rights issued to key management personnel. These rights have a nil exercise price and awards
are subject to meeting performance criteria. Where the performance criteria are met, details of the stapled securities that may be
issued are below. Under the Group Executive Incentive Plan during the year ended 30 June 2020 stapled securities were issued
and vested to Mr Mellowes 541,501 (number of securities) (30 June 2019: 692,535 ), Mr Fleming 247,544 (number of securities)
(30 June 2019: 255,061) and Mr Lamb 67,643 (number of securities) (30 June 2019: 72,516).
Type and eligibility
Vesting
conditions1
Security
price at
grant date
Grant
date
Testing
date
Vesting
date
Maximum number of
stapled securities or
maximum value of
securities to be issued
Fair value at
grant date
STIP (FY20) (Mr Mellowes)
Non-market
$2.61
Aug-19
Jul-20
Jul-22
$482,500
STIP (FY20) (Mr Fleming)
Non-market
$2.61
Aug-19
Jul-20
Jul-22
$231,875
LTIP (FY20 - FY22) (tranche 1)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY20 - FY22) (tranche 2)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY20 - FY22) (tranche 3)
(Messrs Mellowes, Fleming, Lamb)
Relative
TSR2
$2.61
Aug-19
Sep-22
Jul-23
Non-market
$2.61
Aug-19
Jun-22
Jul-23
Non-market
$2.61
Aug-19
Jun-22
Jul-23
213,818
213,818
213,818
STIP (FY19) (Mr Mellowes)
Non-market
$2.40
Aug-18
Jul-19
Jul-21
$386,750
STIP (FY19) (Mr Fleming)
Non-market
$2.40
Aug-18
Jul-19
Jul-21
$187,500
LTIP (FY19 - FY21) (tranche 1)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY19 - FY21) (tranche 2)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY19 - FY21) (tranche 3)
(Messrs Mellowes, Fleming, Lamb)
Relative
TSR2
$2.40
Aug-18
Sep-21
Jul-22
Non-market
$2.40
Aug-18
Jun-21
Jul-22
Non-market
$2.40
Aug-18
Jun-21
Jul-22
182,455
182,455
182,455
STIP (FY18) (Mr Mellowes)
Non-market
$2.23
Aug-17
Jul-18
Jul-20
$341,250
STIP (FY18) (Mr Fleming)
Non-market
$2.23
Aug-17
Jul-18
Jul-20
$156,250
LTIP (FY18 - FY20) (tranche 1)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY18 - FY20) (tranche 2)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY18 - FY20) (tranche 3)
(Messrs Mellowes, Fleming, Lamb)
Relative
TSR2
$2.23
Aug-17
Sep-20
Jul-21
Non-market
$2.23
Aug-17
Jun-20
Jul-21
Non-market
$2.23
Aug-17
Jun-20
Jul-21
168,973
168,973
168,973
STIP (FY17)(Mr Mellowes)
Non-market
$2.31
Aug-16
Jul-17
Jul-19
$334,688
STIP (FY17)(Mr Fleming)
Non-market
$2.31
Aug-16
Jun-17
Jul-19
$153,000
LTIP (FY17 - FY19) (tranche 1)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY17 - FY19) (tranche 2)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY17 - FY19) (tranche 3)
(Messrs Mellowes, Fleming, Lamb)
Relative
TSR2
$2.31
Aug-16
Sep-19
Jul-20
Non-market
$2.31
Aug-16
Jun-19
Jul-20
Non-market
$2.31
Aug-16
Jun-19
Jul-20
159,351
159,351
159,351
STIP (FY16)(Mr Mellowes)
Non-market
$2.00
Oct-15
Jul-16
Jul-18
$328,125
STIP (FY16)(Mr Fleming)
Non-market
$2.00
Oct-15
Jul-16
Jul-18
$150,000
LTIP (FY16 - FY18) (tranche 1)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY16 - FY18) (tranche 2)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY16 - FY18) (tranche 3)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY15 - FY17) (tranche 1)
(Messrs Mellowes, Fleming)
LTIP (FY15 - FY17) (tranche 1)
(Mr Lamb)
LTIP (FY15 - FY17) (tranche 2)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY15 - FY17) (tranche 2)
(Mr Lamb)
LTIP (FY15 - FY17) (tranche 3)
(Messrs Mellowes, Fleming, Lamb)
LTIP (FY15 - FY17) (tranche 3)
(Mr Lamb)
Relative
TSR2
$2.00
Oct-15
Sep-18
Jul-19
Non-market
$2.00
Oct-15
Jun-18
Jul-19
Non-market
$2.00
Oct-15
Jun-18
Jul-19
Relative
TSR2
Relative
TSR2
$1.70
Sep-14
Sep-17
Jul-18
$1.83
Sep-14
Sep-17
Jul-18
181,307
181,307
181,307
201,042
19,245
Non-market
$1.70
Sep-14
Jul-17
Jul-18
201,042
Non-market
$1.83
Sep-14
Jul-17
Jul-18
19,245
Non-market
$1.70
Sep-14
Jul-17
Jul-18
201,042
Non-market
$1.83
Sep-14
Jul-17
Jul-18
19,245
1 Service and non-market conditions include financial and non-financial targets along with a deferred vesting period.
2 TSR is Total Shareholder Return measured against a comparator group.
$0.96 per
$1.00
$0.96 per
$1.00
$1.28 per
security
$2.59 per
security
$2.59 per
security
$0.97 per
$1.00
$0.97 per
$1.00
$1.22 per
security
$2.40 per
security
$2.40 per
security
$0.98 per
$1.00
$0.98 per
$1.00
$1.10 per
security
$2.23 per
security
$2.23 per
security
$0.99 per
$1.00
$0.99 per
$1.00
$1.18 per
security
$2.31 per
security
$2.31 per
security
$1.00 per
$1.00
$1.00 per
$1.00
$1.00 per
security
$2.00 per
security
$2.00 per
security
$0.75 per
security
$0.80 per
security
$1.44 per
security
$1.54 per
security
$1.44 per
security
$1.54 per
security
114
115
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Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Shopping Centres Australasia Property Group
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
The Group recognises the fair value at the grant date of equity settled securities below as an employee benefit expense
proportionally over the vesting period with a corresponding increase in equity. Fair value is measured at grant date using Monte-
Carlo simulation and Black Scholes option pricing models where applicable, performed by an independent valuer, and models the
future security price of the Group’s securities.
29.
Subsidiaries
Name of subsidiaries
Non-market vesting conditions are determined with reference to the underlying financial or non-financial performance measures to
which they relate.
The total expense recognised during the year in relation to those eligible for equity settled share-based payments was $1.0 million
(30 June 2019: $1.0 million). Key inputs to the pricing models include:
Subsidiaries of Shopping Centres Australasia Property Management Trust
Shopping Centres Australasia Property Operations Pty Ltd
Shopping Centres Australasia Property Holdings Pty Ltd
Shopping Centres Australasia Property Group RE Ltd
SCA Unlisted Retail Fund RE Ltd
Place of
incorporation
and operation
Ownership interest
30 June 2020
30 June 2019
Australia
Australia
Australia
Australia
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
30 June 2020
30 June 2019
30 June 2018
30 June 2017
30 June 2016
Volatility
Dividend yield
Risk-free interest rate
16%
5.8%
0.7%
17%
6.1%
1.99%
16%
6.2%
1.97% - 2.12%
18%
5.4%
1.45% – 1.50%
20%
6.0%
1.79% - 1.94%
27.
Other related party disclosures
The Retail Trust has a current payable of $10.2 million to the Management Trust (30 June 2019: $9.0 million). This is non-interest
bearing and repayable at call. Additionally, Shopping Centres Australasia Property Group RE Limited (the Company), the
Responsible Entity of the Retail Trust and a wholly owned subsidiary of Management Trust, makes payments on behalf of the
Retail Trust from time to time. These payments are incurred by the Company in properly performing or exercising its powers or
duties in relation to the Retail Trust. The Company has a right of indemnity from the Retail Trust, for any liability incurred by the
Company in properly performing or exercising any of its powers or duties in relation to the Retail Trust. The amount reimbursed or
reimbursable during the year under this agreement was $13.3 million (30 June 2019: $12.4 million).
The Group received $1.7 million (30 June 2019: $1.8 million) of funds management revenue from SURF 1, SURF 2 and SURF 3
(Retail Trust: $nil).
The Group and Retail Trust has an investment in SURF1, SURF 2 and SURF 3. Refer note 14.
28.
Parent entity
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Reserves
Accumulated profit
Total equity
Net profit after tax
Other comprehensive (loss) / income
Total comprehensive income
Commitments for the acquisition of property by the parent
Management Trust1
Retail Trust1, 2
30 June 2020
$m
30 June 2019
$m
30 June 2020
$m
30 June 2019
$m
-
-
-
-
-
-
10.2
-
-
10.2
-
-
-
-
-
-
-
-
-
-
9.0
-
-
9.0
-
-
-
-
248.0
3,337.7
3,585.7
349.6
872.6
1,222.2
1,962.6
3.0
397.9
2,363.5
84.8
(6.9)
77.9
10.0
65.9
3,301.4
3,367.3
126.5
1,145.5
1,272.0
1,649.7
9.0
436.6
2,095.3
109.1
4.0
113.1
10.0
1
2
Head Trusts only.
The Retail Trust financial statements have been prepared on a going concern basis. In preparing the Retail Trust financial statements the
Directors note that the Retail Trust has a net current asset deficiency position as it is the policy of the Group and Retail Trust to use surplus cash
to repay revolving debt. At 30 June 2020 the Group and Retail Trust have the ability to drawdown funds to pay the distribution on or about 31
August 2020, having sufficient excess cash and cash equivalents and undrawn financing facilities (refer note 16).
Additionally Shopping Centres Australasia Property Retail Trust is considered for financial reporting purposes a subsidiary of
Shopping Centres Australasia Property Management Trust due to stapling even though there is no ownership or shareholding interest.
30.
Auditors’ remuneration
Audit of the financial statements
Statutory assurance services required by legislation to be provided by the
auditor
Non audit services
SCA Property Group & Retail Trust
30 June 2020
$'000
30 June 2019
$'000
292.5
50.3
-
342.8
315.4
44.6
22.0
382.0
The auditor of the Group is Deloitte Touche Tohmatsu. The auditor’s remuneration includes audit of the Financial Reports,
subsidiary Financial Reports, the Group’s AFSL and the Group’s Compliance Plans. In the prior year Deloitte Touche Tohmatsu
also performed non-audit services on market risk indicators for $22,000.
31.
Subsequent events
At the date these Financial Statements are authorised for issue, no further adjustments in respect of the impact of COVID-19 have
been made. However, the COVID-19 situation continues to evolve. Recently the Victorian Government announced Stage 4
restrictions for the Melbourne metropolitan area and Stage 3 restrictions for regional Victoria. Stage 4 restrictions result in the
closure of most retail stores with limited exceptions including supermarkets, food stores, liquor stores and pharmacies. The Group
owns 14 shopping centres in Victoria (including 8 in metropolitan Melbourne) representing approximately 18% of the Group’s gross
property income. The full consequences on the Group’s future financial performance and the value of the Group’s investment
properties continues to be uncertain.
In July 2020 the Group exchanged conditional contracts to purchase a retail neighbourhood shopping centre, Bakewell, in the
Northern Territory for $33.0 million (excluding transaction costs). This property is expected to settle by September 2020.
Since the end of the year, the Directors of the Responsible Entity are not aware of any other matter or circumstance not otherwise
dealt with in this report or the Consolidated Financial Statements that has 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 future financial periods.
* * *
116
117
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Shopping Centres Australasia Property Group
Directors Declaration
For the year ended 30 June 2020
In the opinion of the Directors of Shopping Centres Australasia Property Group RE Limited, the Responsible Entity of Shopping
Centres Australasia Property Management Trust and Shopping Centres Australasia Property Retail Trust (the “Retail Trust”):
(a)
The Financial Statements and Notes, of Shopping Centres Australasia Property Management Trust and its controlled entities,
including Shopping Centres Australasia Property Retail Trust and its controlled entities, (the “Group”), set out on pages 76 to
117 are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s and the Retail Trust’s financial position as at 30 June 2020 and of their
performance, for the year ended 30 June 2020; and
complying with Australian Accounting Standards (including Australian Accounting Interpretations) and the
Corporations Regulations 2001;
(ii)
(b)
there are reasonable grounds to believe that both the Group and the Retail Trust will be able to pay their debts as and when
they become due and payable.
Note 2 confirms that the Financial Statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The Directors have been given the declaration required by Section 295A of the Corporations Act 2001 from the Chief Executive
Officer and Chief Financial Officer for the year ended 30 June 2020.
Signed in accordance with a resolution of the Directors.
Chair
Sydney
10 August 2020
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report
to the Stapled Security Holders of Shopping Centres
Australasia Property Management Trust and Shopping
Centres Australasia Property Retail Trust
Opinion
We have audited the financial report of:
•
•
Shopping Centres Australasia Property Management Trust (“SCA Property Management
Trust”) and its controlled entities (“SCA Property Group” or “the Group”) which comprises
the consolidated balance sheet as at 30 June 2020, the consolidated statement of
comprehensive income, the consolidated statement of cash flows, the consolidated
statement of changes in equity for the year then ended and notes to the financial
statements, including a summary of significant accounting policies and the directors’
declaration; and
Shopping Centres Australasia Property Retail Trust and its controlled entities (“SCA Property
Retail Trust”) comprising the consolidated balance sheet as at 30 June 2020, the
consolidated statement of comprehensive income, the consolidated statement of cash flows,
the consolidated statement of changes in equity for the year then ended and notes to the
financial statements including a summary of significant accounting policies and the
directors’ declaration.
In our opinion, the accompanying financial report of SCA Property Group and SCA Property Retail
Trust is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of SCA Property Group’s and SCA Property Retail Trust’s financial
positions as at 30 June 2020 and of their financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of SCA Property Group and SCA Property Retail
Trust in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110
Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of Shopping Centres Australasia Property Group RE Limited (the
“Responsible Entity”), would be in the same terms if given to the directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
57
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Organisation.
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Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report for the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Investment property valuation
Our procedures included, but were not limited to:
•
•
•
•
•
•
•
As at 30 June 2020, SCA Property Group
recognised investment properties valued at
$3,138.2m as disclosed in Note 13.
The fair value of investment property is
calculated in accordance with the valuation
policy set out in Note 2 (j) and Note 13 which
outline the two valuation methodologies used
by SCA Property Group.
Note 3 and Note 13 disclose the significant
judgements and estimates made by SCA
Property Group in estimating the fair values.
These include the following assumptions:
•
•
•
forecast cash flows: including market
rental income, market growth rates,
rent relief provided and letting up
assumptions. There is increase in
judgement being applied as a result
of the uncertainty of future rental
income and leasing activity as a
result of COVID-19
capitalisation rates: since the start of
COVID-19 there has been limited
relevant transaction evidence
discount rates: are subjectivity due
to
the
and
individual
of
characteristics
investment properties.
specific
nature
In addition, Note 3 highlights the uncertainty
created by COVID-19 and as a result the
valuers have included a material valuation
uncertainty statement in their valuation
reports as at 30 June 2020. This clause
indicates
and
less
consequently a higher degree of caution
should be attached to the valuations as a
result of COVID-19.
certainty,
that
The sensitivity to changes associated with
the greater levels of estimation uncertainty
being applied in respect of these assumptions
are disclosed in Note 13.
Assessing management’s process
over
property valuations and the oversight applied
by the directors are consistent with accounting
standards and SCA Property Group’s valuation
policy
Assessing the independence, competence and
objectivity of the internal and external valuers
Performing an analytical review and risk
assessment of the portfolio, analysing the key
inputs and assumptions
Benchmarking the capitalisation rates and
discount rates with reference to external
market
and
challenging
assumptions where
appropriate
transactions
trends
those
and
Performing procedures over the specific
assumptions and judgements made around
the impact of COVID-19 on the valuation
models
income,
including market rental
market growth rates, rent relief provided and
letting up assumptions
Holding discussions with management and the
external valuers to obtain an understanding of
portfolio movements and their assessment of
the impact of COVID-19 on the valuations,
including the material uncertainty statement
included in their reports
Testing on a sample basis of externally and
internally valued properties, the following:
o
o
the integrity of the information in the
valuation models by agreeing key
inputs such as net operating income to
underlying
source
evidence
records
and
the forecasts used in the valuation
models with reference to current
financial results such as revenues and
expenditure
capital
expenses,
requirements, vacancy
rates and
lease renewals
o
the mathematical accuracy of the
valuation models.
• We also assessed the appropriateness of the
disclosures included in Note 3 and 13 to the
financial statements.
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Expected credit loss recorded as a result
of COVID-19
As disclosed in Note 3, COVID-19 has had a
significant adverse impact on the collection
of rental income during the financial year and
consequently
loss
(“ECL”) on the operating lease receivable at
30 June 2020.
the expected credit
key
and
estimates
significant
The
judgements applied
in determining the
expected credit loss of $15.3m at 30 June
2020 after taking into account waivers are
described in Note 3 with a reconciliation
provided in Note 10.
Our procedures included, but were not limited to
•
•
•
•
Understanding the Group’s processes and
controls over the assessment of the impact of
COVID-19 on the ECL at 30 June 2020
Performing an analytical review and risk
assessment of the operating lease receivable,
analysing the key judgements and
assumptions including:
o
o
o
the impact of COVID-19 on the sales
performance across a range of tenant
categories
the probability of collection of
amounts owed at 30 June 2020
the ability and intention of the Group
to draw on the bank guarantees
provided by the tenants
Testing on a sample basis, the integrity of the
information used in the calculations of the ECL
by agreeing key inputs such as lease income,
lease terms and bank guarantees on a sample
basis to underlying records and source
evidence
Assessing the collection of rental amounts
owed in the period after 30 June 2020
• We also assessed the appropriateness of the
disclosures included in Note 3 and 10 to the
financial statements.
Other Information
The directors of the Responsible Entity (“the Directors”) are responsible for the other information.
The other information comprises the Directors’ Report, which we obtained prior to the date of this
auditor’s report and also includes the following information which will be included in the Group’s
annual report (but does not include the financial report and our auditor’s report thereon):
Performance Highlights, Message from the Chairman, Message from the CEO, Financial Highlights,
Security Analysis and additional ASX disclosures, which is expected to be made available to us after
that date.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed on the other information that we obtained prior
to the date of this auditor’s report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
When we read the Performance Highlights, Message from the Chairman, Message from the CEO,
Financial Highlights, Security Analysis and additional ASX disclosures in the Annual Report which we
have not yet received, if we conclude that there is a material misstatement therein, we are required
to communicate the matter to the directors and use our professional judgement to determine the
appropriate action.
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We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
DELOITTE TOUCHE TOHMATSU
Andrew J Coleman
Partner
Chartered Accountants
Sydney, 10 August 2020
Responsibilities of the Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing SCA Property Group’s
and SCA Property Retail Trust’s ability to continue as going concerns, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate SCA Property Group and/or SCA Property Retail Trust or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of SCA Property Group’s and/or SCA Property Retail Trust’s
internal control.
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on SCA Property Group’s
and/or SCA Property Retail Trust’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial report or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause SCA Property Group and/or
SCA Property Retail Trust to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within SCA Property Group to express an opinion on the
financial report. We are responsible for the direction, supervision and performance of SCA
Property Group’s audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
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SECURITY ANALYSIS
SUBSTANTIAL SECURITYHOLDER NOTICES AS AT 24 SEPTEMBER 2020
DISTRIBUTION OF EQUITY SECURITIES AS AT 24 SEPTEMBER 2020
Number of securities held by securityholders
No. of holders
Ordinary securities held
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and Over
Total
38,191
9,569
5,738
5,516
131
59,145
15,497,122
24,546,468
41,864,972
120,465,403
874,198,049
% of issued
securities
1.44%
2.28%
3.89%
11.19%
81.20%
Ordinary securities
The Vanguard Group, Inc
Franklin Resources, Inc
Blackrock Group
Mondrian Investment Partners Limited
Date of change
Securities held
%
9/12/2019
31/7/2020
93,195,570
10.002%
66,491,038
31/1/2018
45,232,852
13/3/2020
50,421,633
7.01%
6.06%
5.35%
VOTING RIGHTS AS AT 24 SEPTEMBER 2020
The voting rights attaching to ordinary stapled securities (being the only class of equity securities SCP has on
issue) are:
1,076,572,014
100.00%
• On a show of hands, each member of a registered scheme has one vote; and
SCP only has ordinary stapled securities on issue and as at 24 September 2020 there were a total of 59,145 holders.
• On a poll, each member of the scheme has one vote for each dollar of the value of the total interests they have
The total number of securityholders with less than a marketable parcel of (using the closing price for SCP securities
on 23 September 2020) securities is 4,831 holders and they hold 433,650 securities.
TOP 20 REGISTERED EQUITY SECURITYHOLDERS AS AT 24 SEPTEMBER 2020
in the scheme.
ON MARKET BUY-BACK
There is no current on-market buy-back.
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
NETWEALTH INVESTMENTS LIMITED
AMP LIFE LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NULIS NOMINEES (AUSTRALIA) LIMITED
AVANTEOS INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS(NZ) LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
NAVIGATOR AUSTRALIA LTD
MR ANTHONY MICHAEL GRAINGER MELLOWES
WOODROSS NOMINEES PTY LTD
AVANTEOS INVESTMENTS LIMITED
Total
Balance of register
Grand total
Units
% of units
383,827,819
177,861,905
119,744,325
61,313,750
39,321,273
25,442,386
13,376,797
5,412,800
4,185,164
2,520,307
2,317,579
2,224,065
2,072,106
1,951,036
1,635,464
1,586,502
1,527,891
1,351,177
1,282,126
1,148,146
850,102,618
226,469,396
1,076,572,014
35.65
16.52
11.12
5.70
3.65
2.36
1.24
0.50
0.39
0.23
0.22
0.21
0.19
0.18
0.15
0.15
0.14
0.13
0.12
0.11
78.96
21.04
100.00
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Notes:
Notes:
DIRECTORY
Shopping Centres Australasia Property Management Trust
ARSN 160 612 626
Shopping Centres Australasia Property Retail Trust
ARSN 160 612 788
RESPONSIBLE ENTITY
Shopping Centres Australasia Property Group RE Limited
ABN 47 158 809 851
AFSL 426603
REGISTERED OFFICE/PRINCIPAL OFFICE
SCA Property Group
Level 5, 50 Pitt Street
Sydney NSW 2000
Australia
Phone + 61 2 8243 4900
SECURITIES EXCHANGE LISTING
SCA Property Group (SCP or the Group) was listed on the
ASX on 26 November 2012 and commenced trading on
19 December 2012 on a normal settlement basis.
ASX code: SCP
DIRECTORS
Philip Marcus Clark AO (Chairman)
Steven Crane (Deputy Chair)
Dr Kirstin Ferguson
Beth Laughton
Philip Redmond*
Belinda Robson
Anthony Mellowes
Mark Fleming
* Philip Redmond retired as a Director of SCP on
30 September 2020
COMPANY SECRETARIES
Mark Lamb
Erica Rees
AUDITOR
Deloitte Touche Tohmatsu
Level 9, Grosvenor Place
225 George Street
Sydney NSW 2000
Australia
CORPORATE GOVERNANCE
SCP’s 2020 Corporate Governance Statement outlines
the governance systems in effect in the Reporting Period
by reference to the 3rd Edition of the ASX Corporate
Governance Principles and Recommendations and it can
be found on SCP’s website at:
www.scaproperty.com.au/about/governance.
COMPANY WEBSITE
All Unitholders can access important information on the
Group’s website at www.scaproperty.com.au. It includes
all presentations, webcasts, market updates and ASX
announcements and links to the online registry, as well as
this annual report.
SCP only sends printed copies of the annual report to
Unitholders that have elected to receive a hard copy.
In the interests of sustainability and reducing paper
consumption, we strongly encourage Unitholders to
download the electronic version of this report.
ANNUAL TAXATION STATEMENT
SCP sends an annual taxation statement to Unitholders in
August each year. This statement provides a breakdown
of the tax components of the Group’s distribution of
the preceding financial year. It also contains important
information for completing Unitholder taxation returns,
and Unitholders should retain this as part of their taxation
records.
CONTACT THE REGISTRY
Unitholders seeking information about their holding or
distribution payments can contact the registry.
1300 318 976 (toll free within Australia)
+ 61 1300 318 976 (outside of Australia)
The Registrar
Link Market Services
Locked Bag A14
Sydney South NSW 1235
Australia
COMPLAINTS
In accordance with SCP’s complaints handling procedure,
if you wish to make a complaint, please forward your
correspondence to:
Compliance Officer
SCA Property Group
Level 5, 50 Pitt Street
Sydney NSW 2000
Australia
Or by email at: admin@scaproperty.com.au
UNITHOLDER REGISTER DETAILS
You can visit the register at
https://investorcentre.linkmarketservices.com.au/Login/
Login to view your holdings, access information and make
changes. Log on using your SRN or HIN and the postcode
of your registered address.
SCP encourages Unitholders to update their personal
details on the register, including providing a tax file
number (TFN) or Australian business number (ABN), and
an email address to receive electronic communication. We
will make all future distribution payments by direct credit,
so we also ask that Unitholders provide their banking
details.
On the online register, you can:
• Check your current balance
• Choose your preferred annual report options
• Update your address details
• Provide your email address
• Provide or update your banking instructions
• Register your TFN or ABN
• Check transaction and distribution history
• Download a variety of instruction forms
• Subscribe to email announcements
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Shopping Centres Australasia Property Group RE Limited ABN 47 158 809 851