More annual reports from Stockland:
2023 ReportPeers and competitors of Stockland:
Morguard Real Estate Investment TrustArtist impression, M_Park, Macquarie Park, NSWAnnual Report30 June 2021stockland.com.au Corporate reporting suiteThe Report is part of our broader corporate reporting suite, including:We believe thereis a better way to liveWelcome to Stockland’s Annual Report (Report).Stockland acknowledges the Traditional Owners and Custodians of the land on which we work and live within Australia. We would also like to pay our respects to their Elders, past, present and emerging, and acknowledge the ongoing connection that Aboriginal and Torres Strait Islander peoples have with Australia’s land and waters.Stockland’s Report is an opportunity for us to demonstrate how we create value for all our stakeholders. It illustrates how we achieve our purpose, ‘we believe there is a better way to live’, as we help shape communities across Australia.The Report is a consolidated summary of Stockland Corporation Limited and its controlled entities, including Stockland Trust and its controlled entities (Stockland or Group) for the year ended 30 June 2021 (FY21). The Report adopts the principles of the International Integrated Reporting Council (IIRC) Integrated Reporting (IR) Framework to communicate how our strategy, operational and financial performance, and approach to environmental, social, and governance matters creates value for stakeholders over the short, medium and long term.In addition to complying with our statutory reporting requirements, the Report includes our response to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) including our approach to governance, strategy, risk management and performance metrics and targets.Annual Report: this report features information about Stockland, our strategy, our integrated financial and non-financial performance, risk management, corporate governance, remuneration and our financial statementsResults Presentations: Stockland’s strategy, financial results, operational performance for the period, including business unit operational performance, portfolio and development pipeline prepared on a six-monthly basis together with quarterly operational updatesProperty Portfolio: details on the assets within the Stockland portfolioESG Reporting Suite: includes (a) ESG Management Approaches, (b) ESG Review (containing the annual performance report and related case studies), and (c) ESG Data Packs.Corporate Governance Statement: features Stockland’s application of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (4th Edition) andModern Slavery Statement: Stockland’s statement on our actions to assess and address modern slavery risks in our supply chain.Throughout the Report are information boxes (see example below) to indicate where more detailed information on specific items can be found. Our corporate reporting suite documents are available for download on the Stockland Investor Centre www.stockland.com.au/investor-centre Stockland Annual Report
Our business
2021 performance
Our COVID-19 response
Chairman and CEO letters
Strategy and performance
Our strategy
Grow our asset returns
Capital management
Operational excellence
Living for the future
Risk management
Remuneration report
Governance
Financial report for the year ended 30 June 2021
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial report
Directors’ declaration
Independent auditor’s report
Securityholder information and key dates
Glossary
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The Directors of Stockland Corporation Limited (ACN 000 181 733) and the
Directors of Stockland Trust Management Limited (ACN 001 900 741, AFSL
241190), the Responsible Entity of Stockland Trust (ARSN 092 897 348),
present their report together with the Financial Report of Stockland and the
Independent Auditor’s Report thereon. The Directors’ Report for FY21 has
been prepared in accordance with the requirements of the Corporations Act
2001 (Cth) including the following information:
• Operating and Financial Review on page 18
• Remuneration Report on page 58
• Information on Directors and the Company Secretary on page 82
• Board and Committee meetings and attendance on page 91
• General information required under the Corporations Act on page 96
• Lead Auditor Independence Declaration on page 100
Our business
A leading creator of communities and spaces for
people to live, work and play
Our strategy
Our purpose, vision and values
Our strategy is to leverage the benefits of our
diversified portfolio and maximise returns by developing
sustainable Communities, owning and managing leading
Retail Town Centres, and growing our Workplace and
Logistics portfolio. We achieve this by focusing on
our four key pillars: grow asset returns, disciplined
capital management, operational excellence and
sustainability leadership.
Stockland is undertaking a strategic review and will provide
a market update late in the calendar year.
Our structure
Stockland is a listed company on the Australian Securities
Exchange (ASX). To optimise value for our securityholders
we are structured as a stapled security. A Stockland
stapled security (ASX:SGP) represents one ordinary share
in Stockland Corporation Limited and one ordinary unit
in Stockland Trust. This allows us to efficiently undertake
property investment, property management and property
development activities.
Our purpose – "we believe there is a better way to live" – is
brought to life by over 1,600 employees who are guided by
Stockland's values of Community, Accountability, Respect
and Excellence (CARE).
This is supporter by our vision is to be a great Australian real
estate company that makes a valuable contribution to our
communities and our country.
Our diverse portfolio
We are one of the largest diversified real estate groups in
Australia, creating communities and whole of life housing
solutions across our residential and retirement living
communities. We also own, manage and develop leading
retail town centres, workplaces and logistics centres.
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Stockland Annual Report 2021
PROPERTIES 50RESIDENTIAL COMMUNITIESPROPERTIES 27RETAIL1PROPERTIES 61RETIREMENT LIVING COMMUNITIESPROPERTIES 4PROPERTIES 35LOGISTICSPROPERTIES 2LAND LEASECOMMUNITIESWORKPLACE1 Excludes WIP and sundry properties$14.8 billion
CASE STUDY
BUILDING THE NEXT GENERATION OF PROPERTY LEADERS
In a year when many companies were scaling back their
graduate programs, we continued to invest in the careers
of entry-level talent, welcoming our largest ever cohort of
twenty two graduates in February 2021.
Echoing the strong foundations of past cohorts and
supporting our commitment to gender diversity, nearly
60 per cent of our 2021 graduates were female. The
strong female representation extended to male-dominated
areas such as development, project management and
technology. We were proud to be externally recognised
for our program, being in the top 20 at the AFR Top
100 Graduate Employer Awards and winning our sector
category as the Most Popular Graduate Employer in the
Property, Infrastructure and Logistics sector.
Image: FY19 graduate cohort
In 2021, we have continued to evolve the program:
• We allocated a significantly higher number of graduate
roles (82 per cent) to rotate throughout different areas
of the business. We believe this will help graduates build
a broader commercial understanding of our business,
develop diversity of thought, and ultimately instil long-
term resilience into their careers through diversity of
skills and experience.
• We repositioned the role of the graduate sponsor to
provide crucial support to graduates as they navigate
their early career decisions, hand-picking leaders who
role model enterprise thinking and who would most
effectively play the role of "career coach".
• We utilised Stockland’s new Capability Masterplan
to redefine what we are looking for in a graduate,
honing our focus on gender-neutral capabilities over
experience and qualifications in a way which helps us
mitigate bias from selection decisions.
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Year ended 30 June 2021
5
2021 performance
Funds from operations1 (FFO)
$788m
Down 4.6% on FY20
Distribution per security (DPS)
24.6c
75% distribution payout ratio
Gearing
21.4%
Improved from 25.4% in FY20
FFO1 per security
33.1c
Down 4.6% on FY20
Statutory profit
$1.1bn
Return on equity2 (ROE)
10.3%
Down 120 bps
Net tangible assets (NTA) per security
$3.98
Up from $3.78 at 30 June 2020
Total real estate assets
$14.8bn
At 30 June 2021
Employee engagement
83%
Above target of 80%
Customer satisfaction3
>80%
Commercial Property emissions
intensity reduction
9.5%
On FY20
Residential liveability score
75%
On target for FY21
1
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Funds from operations (FFO) are determined with reference to the PCA guidelines.
Return on equity accumulates individual business return on assets and adjusts for cash interest paid and average drawn debt for the 12 month period ended 30 June 2021. Excludes
Residential Communities workout projects.
Across Retail shoppper satisfaction, Resident, Retirement Living, Workplace, Logistics and Business Parks.
6
Stockland Annual Report 2021
Strong momentum delivering strategic priorities
Increased our capital allocation to
Logistics, Life Sciences & Technology
Logistic, Life Sciences & Technology assets now represent
25 per cent of the Group's property portfolio. Stockland
having increased its capital allocation to this sector by 60
per cent over the past five years.
Capitalising on our leading Residential
business through increased production and
continued strategic early cycle restocking
Added ~12,000 lots to our residential landbank across
South East Queensland, Melbourne, Sydney and Perth
in FY21.
Aligning our delivery capabilities and
product to meet future capital
partnering opportunities
Several key leasing, planning and construction
milestones reached over FY21 across key commercial
development projects.
Continued to drive performance in the core
Retail Town Centre business
683 leasing deals executed for FY21. Leasing activity has
demonstrated resilience and an ability to return to pre-
pandemic levels despite continuing market volatility.
Fast-tracked climate action
Accelerated our commitment to achieving net zero carbon
by two years with the new date of 2028.
Launched our refreshed 2030 Sustainability Strategy 'Living
for the Future'.
Embedded our integrated systems
Implemented a new integrated core platform across
SAP and Salesforce to drive business improvement and
scalability which has delivered increased integration and
analytics and supported an ongoing compliance focus as
well as enhanced processes.
Creating a market leading land lease
community business
We commenced development of our ~4,000 site land
lease communities pipeline, which has grown by 1,000
sites over the last six months through the acquisition of
additional projects and unlocking incremental yield from
existing projects.
On 19 July 2021, Stockland announced the acquisition
of the Halcyon land lease business in Queensland. This
transaction adds a further 3,800 sites to the existing
portfolio, creating one of the market leaders in the
sector with a total of 7,800 sites as well as further
development opportunity.
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Year ended 30 June 2021
7
Our COVID-19 response
Since the COVID-19 pandemic emerged in March 2020
we have continued to actively manage its impact
across all aspects of our business
Our response to
changing conditions
As the impact of the pandemic on the Australian economy
and our business eased during this financial year, we
assisted retail tenants whose tenancies had been closed
by various lockdowns, to reopen. At all times across our
diversified business we maintained a focus on the safety of
all our stakeholders, providing customers a safe place to
carry out their everyday shopping needs, tenants to access
their premises in accordance with government restrictions
and customers to purchase property and reside safely
in our communities. Our deep experience and lessons
learned in 2020, has led to procedural changes and the
creation of additional contingency plans. This new level of
preparedness is allowing us to respond and rapidly manage
the impact of sporadic lockdowns that continue to occur as
COVID-19 is sought to be brought under control by health
authorities. Some of the ongoing initiatives include:
• hygiene kits which are available to and used by our
• customer safety initiatives and business unit specific
• digital online experiences for residential, retirement
controls across each asset class
frontline teams and offices
living and land lease customers to undertake their end-
to-end sales journey in a safe and convenient manner.
The Commercial Code of Conduct (Code) was introduced
in 2020 by the Federal Government to assist qualifying
tenants (small to medium-sized enterprises (SMEs)) with
rent relief where they were suffering financial stress or
hardship as a result of the COVID-19 pandemic. We
worked within the spirit of the Code on a case by
case basis to apply assistance packages where required.
While the application of the Code expired at the end of
March 2021, we continue to engage with our tenants as
additional restrictions and measures are imposed from
time to time by state governments. On 28 July 2021, the
Victorian Government announced the reintroduction of the
Commercial Tenancies Relief Scheme intended to facilitate
rent relief to retail and commercial tenants that have
experienced a loss in turnover of more than 30 per cent
during the pandemic. As at the date of this report, the
Regulations detailing the eligibility criteria for the Victorian
Scheme has not yet been released.
8
Stockland Annual Report 2021
However, Stockland affirms its commitment to work with its
tenants, and in compliance with applicable legislation, to
provide rent relief and rent deferments to eligible tenants
seeking support.
Our people and how we work
For many years, Stockland has proudly supported a flexible
work environment, so when the pandemic changed how
we worked, we were well equipped. Our "Hub and Home"
model allows our teams and people to work from the office
for a significant part of the week and balance this with
productive work time either from home or a Stockland asset
closer to home. This model has been highly effective during
the ongoing, variable restrictions. Pleasingly, employee
engagement and wellbeing have remained high with
employee engagement at 83 per cent, above the average
of Australian companies, further evidence that our flexible
model is making a difference.
We are proud of the way our people have responded
and adapted to the challenges associated with COVID-19.
Many of the lessons learnt in adapting our business
to trying circumstances have positioned us well for
future disruption.
We are in ongoing communication with our suppliers
assessing supply chains for potential disruption. So far
we have been able to successfully navigate any supply
chain impacts with alternative arrangements and increased
communication with our suppliers, and no material issues
of concern have emerged, particularly because the majority
of our supply chains originate from local services. We
have also maintained oversight of areas of supply where
the pandemic could increase the vulnerability of supply
chain workers providing services under difficult working
conditions. In this regard, we continue to reinforce our
requirement to comply with Stockland's subcontracting
standards and Supplier Code of Conduct.
We have also worked with our Stockland CARE Foundation
and national community partners to help them continue
to deliver community support through mental and
physical health and wellbeing programs across Australia
throughout this pandemic.
Chairman and
CEO letters
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Year ended 30 June 2021
9
Artist impression, Affinity Place, North Sydney, NSWArtist impression, Affinity Place, North Sydney, NSW
Letter from
the Chairman
Dear Securityholders,
As I write to you this year, twelve months after reporting
on a year punctuated by a global pandemic and a deadly
bushfire season, intermittent lockdowns are still occurring
across the country and Australia has not yet emerged
safely from the pandemic or opened its borders. I am
very proud of our people who continue to demonstrate
their remarkable commitment and resilience every day
to protect the wellbeing of our residents, customers and
communities in challenging circumstances. They bring
the best of themselves to work every day. That is the
Stockland way.
Our statutory profit of $1.1 billion is up from $(21) million
in FY20, an increase which was largely due to positive
net revaluations of $432 million1 in Commercial Property,
particularly in the Logistics portfolio, as well as a recovery
in income reflecting better market conditions in the
second half of FY21 as the negative impact of COVID-19
on earnings eased.
The operating results reflect the continuing impacts from
the pandemic over a full 12 month period, particularly
the cost of abatements provided to tenants under the
Commercial Code of Conduct and the effect of various
state government restrictions on movements during the
year. These limited some sales activities in our Residential
business, especially in the higher margin states of NSW
and Victoria, lowering volumes and reducing our operating
margin from 19.9 per cent in FY20 to 18.0 per cent in
FY21. In spite of this impact, we settled 19.8 per cent more
lots than in FY20, with particularly strong contributions
from our Queensland and Western Australian businesses.
Further, the previous financial year included superlot sales
which, when excluded in comparing the two years, results
in underlying FFO increasing 20.5 per cent2 in FY21.
On a group basis, we have produced a solid result with
funds from operations down 4.6 per cent and funds from
operations per security down 4.6 per cent over the year
to 33.1 cents. In the context of the challenging operating
conditions experienced during FY21, this is a very strong
result. These positive factors combined to deliver strong
growth in our net tangible asset backing from $3.78 per
security in FY20 to $3.98 per security, a 5.3 per cent
increase, at 30 June 2021.
Full year distribution per security
24.6c
75% distribution payout ratio
Our full year distribution was 24.6 cents per security, with
a distribution payout ratio of 75 per cent which was within
our target range and fully covered by operating cashflow. In
deciding on the level of distribution this year, we balanced
our future growth capital requirements with the needs
of securityholders for consistent cash returns, so that
our balance sheet remains well positioned for the future.
Stockland has retained its strong A-/A3 credit ratings with
Standard & Poor's and Moody’s and has gearing at the lower
end of its target range at 21.4 per cent.
We have made good progress on delivering our key
strategic priorities. We continued to rebalance our
portfolio to provide future growth and deliver stable
long-term margins. We allocated more capital towards
Workplace and Logistics through new asset development
and acquisitions of income generating assets which
collectively increased our weighting to 32 per cent of
portfolio asset value. Our Workplace and Logistics, Life
Sciences & Technology development pipeline is now
$9.4 billion (forecast value on completion) ensuring this
increase in weighting to these attractive asset classes will
continue. Over the last 24 months our non-core retail asset
disposals have totalled $0.7 billion as we down weighted
our focus on Retail Town Centres to those predominantly
offering everyday needs and non-discretionary retail
categories. We maintained a strong balance sheet and
improved our digital and data capabilities which underpin
an important focus on customer centric innovation and
operational excellence.
Over the last three years we have outperformed the ASX
200 A-REIT Index by circa 39 per cent demonstrating
the resilience of our business model and the successful
long-term delivery of our strategic priorities.
1
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Excludes WIP, sundry properties and stapling adjustment for owner-occupied space.
FY21 FFO includes $12m balance of transaction profits from the sale of The Grove (VIC), FY20 included transaction profits of $107m from The Grove (VIC), Merrylands Court (NSW)
and the capital partnering transaction at Aura (QLD).
10
Stockland Annual Report 2021
Our response to improving
conditions and ongoing impacts
of COVID-19
Since the start of the COVID-19 pandemic in March 2020,
we have been proactive and decisive, responding to these
unprecedented events to both protect our business and
position us well for the future. Our responses have been
measured and focused on optimising outcomes for all our
stakeholders including:
• raising long-term and short-term debt to boost available
liquidity and maintain capital strength through this
period of economic disruption. Available liquidity
increased to circa $2.2 billion, $1 billion above pre-
pandemic levels and was still at these levels at 30 June
2021. As a result of this decisive move, the Group had no
need to raise dilutive equity during FY21;
• continuing to pay a full year distribution of 24.1 cents
per security for FY20 representing a payout ratio of
70 per cent of FFO and fully covered by operating
cashflows. Today we have announced a payment of a
second half distribution of 13.3 cents per security for the
FY21 financial year, bringing the total FY21 distribution
to 24.6 cents per security, a 2.1 per cent increase year
on year;
• the Group did not apply for or receive any funds from the
Federal Government’s JobKeeper scheme;
Aura, QLD
• retaining all our employees in full time, paid
employment. This included not standing any employee
down during the periods of government restrictions; and
• deferring variable remuneration outcomes for the
Stockland Leadership Team for a two year period to
align with the interests of investors.
As the impact of the pandemic on the Australian economy
and on our business changed during the year, we provided
assistance to retail tenants whose tenancies had been
closed by various lockdowns. At all times we maintained
a focus on the safety of all our stakeholders providing
customers a safe place to service their everyday needs.
Towards the end of June 2021 foot traffic, store openings,
rent collection and activity in our retail town centres came
close to pre COVID-19 levels, although sadly, renewed
restrictions caused by the Delta variant are evident at the
time I write this letter and this is likely to affect FY22.
Our experience in 2020 has provided us with the ability
to act fast to manage the impact of these intermittent
lockdowns that will inevitably form part of everyday life
until the Australian vaccination program is completed. We
remain agile as we respond to changing requirements
from government orders, but also remain accessible
to our customers during these times to the maximum
extent possible.
On behalf of the Board I want to congratulate the entire
Stockland team for managing the business over the past
18 months during these challenging conditions and on
achieving such positive outcomes for all our stakeholders.
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Year ended 30 June 2021
11
I want to also acknowledge all of our customers and
thank you for your continuing support of our business.
To our tenants in Retail Town Centres, and in Workplace
and Logistics assets, residents in Stockland Retirement
Living villages and our Residential customers – all of you
affected to varying degrees by these challenging times
- we appreciate your support, understanding and focus in
helping us all deliver mutually beneficial outcomes during
the past 18 months.
New ways of working
Stockland has supported a flexible work environment for
many years, with the pandemic accelerating this trend.
Our ‘Hub and Home’ model seeks to maintain and improve
productivity by ensuring that teams and individuals get
regular face time with their colleagues and stakeholders
in the office for a significant part of the week and then
get productive work time at home or at other Stockland
asset locations closer to home. The development of this
approach during the ongoing, variable restrictions across
Australian jurisdictions is working very well and pleasingly,
employee engagement and wellbeing have remained high
and has been regularly assessed by our ‘pulse’ surveys
undertaken across the country. Employee engagement
remains high at 83 per cent, consistently above the average
of other Australian companies and proof that our long
and established flexibility model is working effectively for
our people.
Governance and leadership
As foreshadowed last year, in June 2021 there was a change
to the Group's leadership, with Managing Director and
Chief Executive Officer, Mark Steinert, retiring from the
company after nine years at the helm. In his role, Mark
oversaw the expansion of Australia’s leading Residential
business, reshaped and expanded our Workplace and
Logistics portfolio and significantly repositioned our Retail
Town Centre portfolio. Mark has fostered a strong executive
team, advanced our development and digital capabilities
and solidified Stockland’s position as a diverse employer
of choice and a global leader in sustainability. His focus on
disciplined capital management and capital allocation has
also produced a balance sheet which positions the Group
for future growth. We thank him for his commitment and his
dedicated and passionate service to Stockland.
We are delighted to welcome Tarun Gupta to the Group
and to the Board as our new Managing Director and Chief
Executive Officer. Tarun previously held a wide range of
senior roles during his 26 years at Lendlease including most
recently as the Group Chief Financial Officer.
Tarun brings with him a breadth of experience across
the property sector including in relation to communities
development, retirement living, commercial property
and investment management. In addition he has deep
commercial experience and a proven track record in
leading and managing large property operations. He is
highly regarded across the property industry and has
a strong reputation among property investors. Tarun’s
experience will allow him to start his tenure at Stockland
quickly by leveraging Stockland’s great potential and focus
on the future with the confidence that he joins a highly
engaged team, a Group with strong underlying earnings
fundamentals, a strong balance sheet to support further
growth and a market leading governance platform. I am
sure you will have an opportunity over coming months to
get to know Tarun as he connects with stakeholders of
the Group.
As part of our ongoing Board renewal process Stockland
welcomed Laurence Brindle and Adam Tindall to the Board
in the last nine months.
Laurence was appointed to the Board on 16 November
2020. He has extensive experience in the acquisition,
development and management of landmark property
assets. His executive career included 21 years with QIC
where he served in various senior positions including
a long-term member of QIC’s Investment Strategy
Committee and Head of Global Real Estate where he was
responsible for a $9 billion portfolio. Laurence is currently
the Chairman of both National Storage REIT and Waypoint
REIT. He is a former chairman of the Shopping Centre
Council of Australia and has previously been a director of
Westfield Retail Trust and Scentre Group.
Adam was appointed to the Board on 1 July 2021. He has
over 30 years’ experience in investment management and
real estate. He was the Chief Executive, AMP Capital from
2015 to 2020 where he led a global leading investment
manager overseeing funds and separate accounts for
clients across a range of asset classes including real
estate, infrastructure, equities, fixed income and multi-
asset capabilities. Adam’s prior roles at AMP Capital
include Director and Chief Investment Officer for Property,
leading a team managing a $19 billion portfolio of real
estate investments on behalf of domestic and international
institutional investors. Prior to 2009 Mr Tindall held senior
leadership roles at Macquarie Capital and Lendlease.
The focus on curating a range of property skills on the
Board is important as in October 2021 we will farewell
our longest serving member of the Board, Mr Barry Neil.
Barry joined the Stockland Board in 2007 after an executive
career in property development and investment including
at Mirvac and Woolworths. His deep industry knowledge
and experience has been invaluable as the organisation
has continued to grow and evolve across multiple asset
classes. We will formally farewell Barry at our Annual
General Meetings in October 2021 but on behalf of the whole
organisation I would like to thank him for his unwavering
focus and commitment to Stockland.
12
Stockland Annual Report 2021
As Chairman, I am pleased to report that these
appointments further strengthen our Board with additional
property capability ensuring it has the collective skills and
diversity of experience necessary to optimise the long-term
financial performance of Stockland and deliver long-term
sustainable returns to securityholders.
Long-term value creation
We have continued to focus on customer-centric
innovation and the benefits that are provided from our
digital transformation strategy. Several new initiatives were
launched during the year by the sales, marketing and
technology team to ensure that the customer journey
with Stockland remains at high levels of satisfaction.
These included:
• Dreamcatcher – a digital inspirational experience in
our Residential business that helps guide customers to
discover their preferred housing style; and
• the first 100 per cent virtual launch of new residential
communities was successfully completed with first
stage sell out results in two projects (Katalia and Haven,
both in Victoria).
Innovation improvements like these are a key area of
interest for the Board and management as Stockland seeks
to maintain its competitive edge and provide each and
every customer with a rewarding and productive Stockland
experience. As Chairman, I sponsor the annual Chairman’s
Innovation Awards which showcase the most innovative
projects and initiatives across our organisation. In recent
years this passion for innovation has contributed around
2 per cent additional income per annum. We remain
committed to maintaining and increasing our rate of growth
in this way.
For over 10 years, Stockland has demonstrated a
commitment to Sustainability – taking a market leading
position on all ESG related issues and matters. ESG is
deeply embedded in the culture of Stockland. Each year we
strive to do better than before, setting realistic achievable
goals to deliver even greater ESG outcomes. We recently
launched our enhanced 2030 sustainability strategy in
which we have set ambitious targets including more carbon
reduction and less water and gas usage. We have brought
forward our net carbon zero plan from 2030 to 2028
and broadened its scope. But we won’t stop there. We
are committed to equitable and fair interactions with the
people in our communities. This month we have released
our second Modern Slavery Statement outlining further
actions to assess and address modern slavery risks so that
we continue to play our part in improving human rights.
To this end, we have again worked with our supply chain
with a particular focus on those sectors with heightened
risk exposure during the pandemic, and we have a detailed
plan to extend our reviews across all suppliers over time.
Tom Pockett, Chairman
Importantly we continue to build the climate resilience of
our portfolio and reduce our emissions profile. I'm pleased
to report that in recognition of our proactive approach to
sustainability we have retained our leadership rankings on
global sustainability investment indices and benchmarks.
Conclusion
This has been a busy and productive year for the Group.
Whilst it was difficult to predict the outcome of FY21 with
certainty at the start of the year, we were committed
to the continuation of our strategy and positioning the
business for the future. As Australia continues to tackle
the impact of the pandemic, we have taken opportunities
to improve our business profitability and resilience. I am
confident in the management and governance structures
we have in place to respond to the ongoing challenges and
balance our response with the long-term interests of our
securityholders and the community. Thank you to my Board
colleagues and the Stockland Leadership Team for their
leadership during these times and to our people for their
commitment to Stockland and our purpose, 'we believe
there is a better way to live'.
Tom Pockett
Chairman
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Year ended 30 June 2021
13
Letter from the
Managing Director
and CEO
Dear Securityholders,
It is a privilege to join such an iconic Australian company
as only the fifth Stockland Managing Director and CEO
in almost 70 years. I was attracted to the opportunity
because of Stockland’s vision, purpose and values and
its strong legacy of creating vibrant communities across
Australia. I was also attracted by the strength of Stockland’s
platform and the exciting opportunities we have to create
lasting value for our investors and the community as
a whole.
Stockland’s vision is to be a great Australian real estate
company that makes a valuable contribution to our
communities and our country. More than ever, as the
world navigates its way through the ongoing challenges of a
global pandemic, this objective remains a vital component
in how we make our contribution to our nation by creating
affordable, connected, safe and vibrant communities
for Australians.
Our purpose at Stockland is that ‘we believe there is a
better way to live’ and this, together with our core values of
community, accountability, respect and excellence, drive
us to deliver value for the benefit of all of our stakeholders.
The commitment to our purpose, vision and values by our
people and how they live these values everyday has stood
out the most in my first two months at Stockland. I have
been incredibly impressed at the quality of our teams, their
customer centricity and the desire and ability to do the right
thing by all our stakeholders. This passion is reflective in
the high level of employee engagement we maintained over
the past year with a score of 83 per cent in our employee
survey, consistently above average in comparison with
other Australian companies.
Across Stockland’s Commercial Property, Residential and
Retirement portfolios, the Group controls over 60 million
square metres of land – equivalent to more than 20 Sydney
CBD’s. Our focus is on maximising the value of every square
metre of our land in line with our purpose and using our
end-to-end real estate skills and the most efficient sources
of capital to do so.
As the impact of COVID-19 continues to be felt across
Australia, we remain focused on the health and wellbeing
of our residents, customers and our teams. We are
particularly proud of how our asset teams are keeping
operations running safely and providing essential everyday
needs in the current state government lockdowns
as well as the commitment and resilience of our
office based employees working under our Hub and
Home arrangements.
FY21 Result
Our full year result for FY21 reflects a strong contribution
from our diversified portfolio and demonstrates the
resilience of our business in the face of COVID-19 lockdowns
and varied government responses across Australia.
In this challenging environment, we delivered statutory
profit of $1.1 billion compared to $(21) million in FY20.
Funds from operations was down 4.6 per cent on FY20,
to $788 million, and our FFO per security was 33.1 cents.
Our earnings were impacted by dilution associated
with non-core investment property disposals and lower
transaction profits from our Residential business. However,
the underlying contribution from our Residential business
(excluding transaction profits) increased by 20.5 per cent1
versus the prior period. Our Retirement Living business
also delivered a greatly improved underlying performance
for the year, with record sales and strong settlement
growth. Our Commercial Property portfolio generated solid
like-for-like FFO growth of 3.9 per cent. This included a
rebound in the performance of our Retail Town Centres,
with a solid improvement in leasing activity, rental spreads
and rent collection rates over the second half of the year.
Importantly, our operating cash flow was strong at
$1.0 billion, and we ended the year with a balance sheet
that provides us with ample flexibility to pursue strategic
opportunities. Gearing ended the period at 21.4 per cent
- toward the bottom end of our 20 per cent to 30 per cent
target range.
We remained focused on our key priorities during FY21
which included creating Australia’s most liveable and
sustainable masterplanned communities, accelerating the
delivery of our Logistics development pipeline, future-
proofing our Retail Town Centres, growing our Land Lease
Communities business and broadening our capital sources.
How well we allocate our capital to take advantage
of market trends is an important part of the
successful delivery of our strategy. In this financial
year, we particularly focused on allocating capital
1
FY21 FFO includes $12m balance of transaction profits from the sale of The Grove (VIC), FY20 included transaction profits of $107m from The Grove (VIC), Merrylands Court (NSW)
and the capital partnering transaction at Aura (QLD).
14
Stockland Annual Report 2021
towards our Workplace and Logistics portfolio as we
continued to deliver projects from our $9.4 billion2
development pipeline.
Resilience of our business
Communities
We are Australia’s leading developer of masterplanned
communities, and this creates unique opportunities for us
across the broader Residential sector. As demonstrated by
the acquisition of the Halcyon Group’s land lease business
announced in July 2021, we are able to leverage our scale,
reach and expertise in masterplanned communities to
create not just additional revenue streams, but higher
quality recurring ones.
Our Residential business delivered a profit result of
$331 million, down 10.9 per cent on FY20. However,
excluding the effect of one of transaction profits in
FY20, our result increased by 20.5 per cent3. Over FY21,
we achieved 6,374 Residential settlements, equating to
growth of 19.8 per cent relative to FY20. The increasing
customer preference for masterplanned communities
witnessed through FY20 has continued as customers seek
larger homes, access to quality community facilities and
an environment which promotes health and wellbeing.
Demand was also driven by government stimulus, much of
which ended in March 2021 as the Australian economy
began its initial recovery from the first wave of the
pandemic. Notwithstanding that, our enquiry and sales
levels remained very strong in the final quarter of the
financial year.
Sales and enquiries throughout this year were very strong
and at record levels in some projects. With 5,620 contracts
on hand at 31 July 2021 we have considerable visibility
of FY22 settlement volumes. With delivery lead times
extending due to these high levels of demand, this
visibility also extends into FY23. With an active focus
on restocking, in the past 12 months we contracted
to acquire 11,900 lots. These acquisitions will support
our continued strong market share in masterplanned
communities across Australia.
Our Retirement Living teams provide safe and connected
community living to over 11,000 residents. Our focus
on customer service has seen us achieve ongoing high
levels of resident 'happiness' over the last five years.
The Retirement Living results reflected the increase in
customer preferences for community based living and
the strength of the broader residential market. FFO was
down 6.9 per cent on FY20, reflecting lower development
settlement volumes. However, settlement volumes for
established units were up by 22.3 per cent versus FY20, and
we achieved a record number of established unit sales over
the period.
Orion, VIC
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Forecast value upon completion
Year ended 30 June 2021
15
Our Land Lease Communities business launched its first
two projects – at Aura on the Sunshine Coast and at
Minta Farm in Melbourne. Our first sales releases from
these projects have exceeded our targets with over
82 contracts secured.
In August 2021, Stockland completed the acquisition of
the Halcyon Group’s land lease communities business for
$620 million. This acquisition is in line with our stated
strategy to grow our Land Lease Communities business
and will increase the size of our portfolio to 7,800 sites,
accelerating our determination to be a leading player in the
land lease sector.
Commercial Property
Commercial Property FFO was up 3.9 per cent to
$587 million as the business stabilised from the impact
of COVID-19. By year end, excluding the impact of periodic
lockdowns experienced from time to time across various
states during the year, many operational metrics having
improved on pre-pandemic levels.
Excluding any impact of the recent reintroduction of
Commercial Code of Conduct provisions, we concluded
close to 100 per cent of tenant negotiations under the now
completed FY20 Commercial Code of Conduct. In addition
to our ongoing engagement with existing tenants, and
despite the challenging environment, during the year we
successfully welcomed 119 new tenants into the portfolio.
Our business contributed significantly to local communities
providing access to essential services like fresh food and
beverages, pharmacies and other services. In response
to new government restrictions and measures early in
FY22, we remain committed to working with tenants and
complying with applicable jurisdictions in the provision
of rent relief and rent deferments to eligible tenants
seeking support.
The Commercial Property portfolio recorded a net
valuation increase of $432 million1, driven in particular
by the Logistics portfolio. Importantly, Retail Town Centre
valuations stabilised during the year, in line with improved
retailer and leasing progress and sentiment. The well-
executed rebasing and remixing of Stockland’s Retail Town
Centre portfolio resulted in FFO of $363 million, up 5.6
per cent on a comparable basis versus FY20. Our retail
remixing strategy was delivering sustainable rent levels for
tenants and a portfolio containing over 75 per cent of retail
sales from non-discretionary everyday needs categories
with occupancy remaining high at more than 99 per cent.
These categories are well-supported by customers seeking
everyday needs in a centre which is well-located, with easy
access, convenient parking and well laid out tenancies.
The Workplace and Logistics portfolios both delivered
comparable FFO growth of 1.0 per cent for the year.
Occupancy remains high across our Logistics portfolio
at 98.0 per cent with a weighted average lease expiry
of 4.6 years by income. Our $9.4 billion2 Workplace and
Logistics, Life Sciences & Technology development pipeline
continues to progress well. The pipeline requires minimal
capital outlay in the near term for those projects in the
early stages of planning including Piccadilly, Sydney CBD
(NSW) and Affinity Place, North Sydney (NSW). The initial
stage at M_Park, Macquarie Park (NSW) has now been 60
per cent pre-leased with agreements for lease signed with
two international organisations and we have commenced
construction work on phase 1 of the project.
Financial management
The Group finished the year in a strong financial position.
We retained our investment grade credit ratings of A-/A3
with stable outlook from S&P and Moody’s respectively.
We have significantly reduced our gearing to 21.4 per cent
which is at the low end of our target range. Strong second
half cash flows from residential and rental collections
contributed to this outcome as well as our demonstrated
ability to scale production quickly to meet demand.
A combination of a strong liquidity position, our access
to short and long term debt markets and ongoing cash
discipline, positions us well to navigate the opportunities
we see across the business and to deliver to expected
demand levels.
Operational excellence
In early August 2020, we launched our end-to-end
enterprise technology platform. Together with digital
customer interfaces and advanced data analytics,
this platform is driving greater customer experience,
efficiency, collaboration and insights across the Group.
By leveraging data-science and virtual technology
our digital transformation is improving the value of
customer experience by optimising sales processes and
tenant remixing.
Dealing with market and economic disruption is never easy
but the success of our focus is demonstrated through
our high customer satisfaction, employee engagement
scores and importantly in the high quality of our services
and developments.
Stockland has prided itself on doing the right thing from
the day it was founded by Ervin Graf in 1952 and we
have built a leading track record in delivering superior
environmental, social and economic outcomes which I am
looking forward to continuing to build on. Sustainability
is a key pillar of our strategy and we continue to develop
assets and communities for leading sustainability and
liveability outcomes with a view to delivering balanced
outcomes across the three critical areas of sustainability
– the environment (conservation of the natural world we
3
1
2
FY21 FFO includes $12m balance of transaction profits from the sale of The Grove (VIC), FY20 included transaction profits of $107m from The Grove (VIC), Merrylands Court (NSW)
and the capital partnering transaction at Aura (QLD).
Excludes WIP, sundry properties and stapling adjustment for owner-occupied space.
Forecast value upon completion
16
Stockland Annual Report 2021
operate in), social (consideration of people we interact with
and relationships we build) and governance (the standards
we set for running the company). Our 2021 ESG Reporting
Suite, published today, demonstrates that we remain a
global leader in these areas, with significant measurable
achievements reported. Our commitment to evolve and
enhance our ESG practices saw us launch our enhanced
2030 Sustainability strategy – Living for the Future and
bring forward our 2030 Net Zero Carbon target by two years
to 2028 and expand it across the entire organisation. We
also took practical steps to identify and address modern
slavery within our supply chain and day to day operations,
with the release of our second Modern Slavery Statement.
Strong platform for growth
While COVID-19 continues to present uncertainty and
challenges, we are in a strong position to respond
and adapt.
We have a strong platform for growth: a diversified portfolio
that is delivering results, a strong culture and leadership in
sustainability. There are numerous opportunities ahead
and the leadership team and I will be focusing on
progressing them over the year ahead.
We are currently undertaking a strategic review of the
Group and will provide a further update to the market prior
to the end of 2021.
As an asset creator with leading capabilities in residential,
logistics and retail, we will invest in building capabilities
across workplace and mixed use to optimise our land bank
and create new products. We will continue to re-weight
our portfolio by increasing capital allocation in residential,
logistics and workplace and decreasing the allocation to
retail and retirement living over time and accelerating third
party capital partnership is a key focus as we expand our
funds management platform and grow recurring earnings.
We will also continue to evolve our ESG approach and
maintain our leadership position by continuing to create
value for all stakeholders.
Operationally, we have seen the strong Residential sales
momentum of FY21 continue into the current financial year,
and we expect demand strength and price growth to be
sustained over the balance of the period. However, supply
bottlenecks are likely to restrict the volume settlements
that we can book this financial year, with approximately
600 lots moving into FY23.
The Retail portfolio delivered a strong 2H performance.
The current restrictions create a somewhat uncertain
trading backdrop for the Retail sector. However, the
performance of our portfolio over 2H21 demonstrated
that once restrictions ease, high quality Retail assets do
rebound fairly rapidly, and we believe that we have made
prudent allowances in our guidance.
3
Forecast value upon completion
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Tarun Gupta, Managing Director and CEO
FY22 estimated FFO per security is forecast in the range of
34.6 to 35.6 cents.
Workplace and Logistics, Life Sciences &
Technology development pipeline
$9.4bn3
Distribution per security forecast to be within our target
payout ratio of 75 per cent to 85 per cent of FFO.
Current market conditions remain challenging with ongoing
lockdowns and community transmission of COVID-19.
All forward looking statements including FY22 earnings
guidance are provided on the basis that the vaccination
roll out continues and COVID-19 restrictions ease towards
the end of CY21 and are underpinned by the following
business assumptions:
• Residential settlements around 6,400 lots
• Residential operating margin ~18 per cent
• Land lease communities delivering 300 sites in FY22
• Recent average rent collection trends returning towards
the end of CY21
I congratulate the Stockland team and our previous
Managing Director and CEO, Mark Steinert for delivering
this year’s impressive result in challenging conditions.
I look forward to leading the Group into the future and
continuing to deliver on our purpose of a better way to live
and on behalf of the Stockland team, I thank you for your
ongoing support.
Tarun Gupta
Managing Director and CEO
Year ended 30 June 2021
17
Strategy and
performance
18
Stockland Annual Report 2021
Elara, NSW Our strategy
Maximise returns by developing sustainable
communities and assets
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Year ended 30 June 2021
19
Grow our
asset returns
Communities
RESIDENTIAL
Our Residential business delivered a solid profit result of
$331 million. While this headline result reflects a year on
year decline of 10.9 per cent, FY20 earnings were boosted
by one-off profits from the sale of The Grove (VIC),
Merrylands Court (NSW) and the capital partnership of
Aura (QLD). Excluding the impact of these transactions
like-for-like profits increased by 20.5 per cent1, in line with
incremental settlement volumes.
We achieved 6,374 residential settlements for the year
reflecting a 19.8 per cent increase on FY20, and a relatively
stable operating profit margin of 18.0 per cent which was
impacted by the earlier than expected disposal of non-core
superlots and higher volumes from lower margin Western
Australia stock.
Net sales of 7,7002 represented a 54.2 per cent
increase on FY20, demonstrating continued strength
in market fundamentals and the Stockland brand as
customers display an ongoing preference for low density
masterplanned community living. This is reflected in
customer enquiries remaining elevated over the fourth
quarter despite the roll-off of the HomeBuilder stimulus,
and we have good earnings visibility with ~4,600 contracts
on hand due to settle in FY22.
Throughout the year we strategically acquired 11,900 lots
early in the recovery cycle following the outbreak of
the pandemic. We have leveraged the strength of the
Stockland brand to successfully acquire in undersupplied
markets which, going forward, we expect to outperform the
established housing market and underpin future margins
for the business.
Underlying demand for masterplanned communities
remains positive and will continue to be supported by low
interest rates, access to credit and customer preferences
towards lower density living. Market fundamentals are
expected to remain strong across the Eastern Seaboard,
supported by limited serviced land availability, which is
expected to support price growth.
The development of our end-to-end digital platform –
including virtual display villages to drive enquiries and sales
conversion – will continue to ease the ongoing impact of
government imposed COVID-19 restrictions, with the entire
customer journey able to be undertaken virtually.
While market fundamentals remain supportive of strong
demand, we will have production capacity constraints due
to statutory approvals required on high volume projects
and ramp up projects, in addition to delays associated with
supply chain pressures and labour shortages.
For FY22 we are targeting around 6,400 settlements and
an operating profit margin of approximately 18.0 per cent.
We will however continue to assess and monitor additional
COVID-19 government restrictions and measures in FY22
and manage any impacts to our residential portfolio.
1
2
FY21 FFO includes $12m balance of transaction profits from the sale of The Grove (VIC), FY20 included transaction profits of $107m from The Grove (VIC), Merrylands Court (NSW)
and the capital partnering transaction at Aura (QLD).
Excludes 79 sales acquired from the acquisition of Providence (QLD).
20
Stockland Annual Report 2021
Residential snapshot
FFO
$331m
Down 10.9% on FY20
Operating profit margin
18.0%
Return on assets
18.9%
Lots settled
6,374
Contracts on hand
4,950
At 30 June 2021
Our competitive advantage
Market leader
Stockland brand built on the quality
of communities created for the last
70 years. Scale allows for buying power
to drive lower development costs and
attract and retain the best people. Our
77,0001 lot landbank is high quality,
Eastern Seaboard focused and difficult
to replicate.
Customer preferences
The impact of COVID-19 has driven a
shift in customer preferences towards
affordable, high quality house and
land packages.
Market drivers
Our affordable, new housing product
continues to benefit from strong credit
availability and low mortgage rates.
Residential market fundamentals
remain strong across the Eastern
Seaboard with further growth in
volumes and pricing expected due to
acute undersupply of available land.
Key priorities
• Increase production and provide
more high quality housing to meet
customer demand
• Broaden customer reach
through incremental medium
density development
• Enhance customer experience with
further improvement in digitising
the customer journey
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1
Includes ~2,000 lots still under due dilligence.
Year ended 30 June 2021
21
LAND LEASE COMMUNITIES
We have made significant progress in accelerating growth
plans for our land lease business. Over FY21, we have
built a dedicated team which is supported by our existing
development and sales teams, and have grown our
development pipeline by ~1,000 sites over the last six
months to around 4,000 sites. Our competitive strength
in masterplanned communities development has resulted
in accessing additional land lease home sites from our
residential communities at Aura, (QLD), Cloverton (VIC)
and Providence (QLD). We have also entered into contracts
to acquire standalone land lease development sites at Coffs
Harbour (NSW) and Armstrong Creek (VIC).
In July 2021, we further demonstrated our commitment
to growing the land lease business with the acquisition of
Halcyon. Based in Queensland, Halcyon is Australia's most
industry awarded land lease operator and developer with
six established communities and seven under development
or in planning. The $620 million transaction increases
Stockland’s land lease portfolio to approximately 7,800
sites combined, including 1,500 occupied sites, 1,600 in
development and 4,700 in planning.
Stockland will fully integrate the Halcyon business,
including all its employees, into the Group’s existing land
lease business. We will seek to leverage the Halcyon
brand and capability nationally across the Stockland land
lease business.
RETIREMENT LIVING
Established retirement living sales of 711 reflected a
20.5 per cent increase on FY20.
FFO for the year was $54 million reflecting a decline
of 6.9 per cent due to lower development settlement
contributions as we continue to shift our development
pipeline towards Land Lease Communities.
We continue to enhance our customer value proposition
with a number of new initiatives which include:
• leveraging partnerships with aged care service providers
• launching a wellbeing pilot that delivers emotional,
physical and cognitive support across the entire
customer journey.
to increase continuum of care options; and
We expect these initiatives to further improve customer
satisfaction and drive future settlements and returns.
22
Stockland Annual Report 2021
As our land lease business grows we will explore
opportunities to introduce third-party capital into the
business to increase growth and build further scale and
diversity in the portfolio.
Why Land Lease?
• Over 50s is the fastest growing
demographic with underserviced
housing options
• Land lease services the lifestyle
demands of the market
• Strong development returns
with high quality long term
annuity income
• Leverages our competitive
strengths in masterplanned
community creation
• Stockland strong starting position
with 4,000 land lease sites pre-
Halcyon acquisition
With the continued increase in customer preferences for
the safety and wellbeing of community based living and a
supportive established housing market, we believe there is
opportunity to attract third party capital in the sector and
reduce our capital weighting to this asset class over time.
Key priorities
• Enhance customer experience
and satisfaction
• Improve returns from
the established retirement
village portfolio
• Opportunity to attract third
party capital
Retirement Living snapshot
FFO
$54m
Down 6.9% on FY20
Total established units settled
690
Up 22.3% on FY20
Established sales of 711
20.5%
Increase on FY20
Established reservations on hand
of 154
6.9%
Increase on FY20
Return on assets
5.4%
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Year ended 30 June 2021
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Commercial Property
The Commercial Property business finished a year that was heavily impacted by COVID-19 in a strong position, with
comparable FFO growth of 3.9 per cent compared to FY20. Independent valuation of 99 per cent of the portfolio1 delivered
a net valuation uplift for the total portfolio of $4322million or 4.4 per cent to 30 June 2021.
We have completed negotiations with impacted Commercial Property tenants under the Federal Government's Commercial
Code of Conduct and in accordance with state based regulations, with that regime concluding in April 2021. We continue to
provide ongoing support to retailers navigating the challenges of COVID-19 including within the framework of recent relief
schemes introduced by State governments. Following the application of committed rental support, rent collection over the
year sits at 973 per cent. This support continues as additional government restrictions and measures emerge in FY22.
WORKPLACE AND LOGISTICS
The quality and resilience of our workplace and logistics
portfolio delivered comparable FFO growth of 1.0 per cent,
despite the uncertain COVID-19 conditions.
logistics development opportunities in Melbourne, secured
off market with a combined end value of approximately
$110 million.
Our capital allocation across the Logistics, Life Sciences &
Technology portfolio continues to grow, increasing from 15
per cent to 25 per cent in the last five years. The acceleration
and growth of businesses to support the e-commerce
sector has resulted in strong logistics demand for quality
assets in prime locations. Portfolio occupancy remains high
at 98.0 per cent, with 310,652 square meters of leasing
completed over the twelve months.
During the year we continued to deliver on the $5.5 billion4
Logistics, Life Sciences & Technology pipeline, completing
53,700 square metres of new logistics developments
with a combined value of $110.5 million. This includes
the completion of two warehouses totalling over 25,500
square meters at Willawong (QLD), a $6 million warehouse
refurbishment at Brooklyn (VIC) and two warehouses with
a combined area of 28,000 square meters at Carole
Park (QLD).
Civil and associated servicing works to create individual
tradable land lots at our Gregory Hills (NSW) industrial
land subdivision project, achieved practical completion
in June 2021. Sales contracts have been exchanged on
35 of the 39 lots ranging from 2,000 to 5,500 square
meters. Subdivision and civil works are also progressing
well at Melbourne Business Park (VIC). Buyer interest is
strong, with 75 per cent of Stage one lots5 under exchanged
contracts of sale.
In December 2020, we announced a logistics capital
partnership with a special purpose vehicle advised by J.P.
Morgan Asset Management. The capital partnership will
focus on logistics assets, with the objective to establish
and actively manage a portfolio of properties with a target
value of $1 billion. The partnership was seeded with two
Construction on Stage 1 of the $600 million4 M_Park
masterplan development in Macquarie Park (NSW) has
commenced with over 60 per cent pre-committed leases
including Johnson & Johnson Medical Pty Ltd, Wise Medical
and a multinational data centre operator.
Workplace tenant demand has been impacted as tenants
continue to review new ways of working and flexible
working arrangements. Leasing activity has been focused
on introducing demolition clauses into development assets
and occupancy has been maintained at 91.7 per cent.
Development planning is progressing well on the
$3.9 billion4 workplace development pipeline. Approval
to submit a planning proposal was obtained from the City
of Sydney on the 105,000 square meter development of
the Piccadilly Complex in Sydney (NSW) and a development
application has been lodged for the 60,000 square
meter Affinity Place building on Walker Street, North
Sydney (NSW).
Key priorities
• Grow and execute our
development pipeline
• Increase investment in workplace
and logistics assets on the
Eastern Seaboard through
capital partnerships
1
2
By value.
Excludes assets held for disposal/disposed and stapling adjustments for owner-occupied space. Includes Stockland's share of revaluation gains relating to property held through
joint venture entities.
3 Net of abatements, at 31 July 2021.
4
Estimated value on completion.
By value
5
24
Stockland Annual Report 2021
CASE STUDY
FUTURE OF WORKPLACE
The pandemic has changed the way we work. The
workplace must therefore respond both physically and
digitally with a focus on people. Integrating the best of
physical space with digital practices, designed flexibly
to deliver environments where people and businesses
thrive. Stockland is embracing this opportunity head on,
delivering this to our workforce of over 1,600 people and
through the design and delivery of our workplace pipeline.
We anticipate the vast majority of the workforce will come
into the office 60 per cent to 70 per cent of the time and
work elsewhere the rest of the time. COVID-19 required
the workforce to be untethered from their usual place
of work, with people experiencing less time commuting,
connecting through technology and rethinking work/life
balance. The resultant structural change to how our office
buildings will now be used is at the heart of design thinking
for our development pipeline and is being reviewed across
all office portfolios to ensure relevance going forward.
Stockland is leading by example with its own "Hub and
Home" workplace focused on wellbeing, social connection,
collaboration and amenity for employees to counter the
work from home challenges of isolation and the loss of a
sense of belonging. While we encourage staff back into the
office, we also respect people's desire to work flexibly in
terms of location and time.
The future of work, the worker and the workplace should
centre on humanising the environment and the experience,
underpinned by a focus on health and wellbeing. The future
is a healthy workplace with access to fresh air, contactless
movement through the building, outdoor spaces and
property manager curated programs to foster a sense
of community in a building and a precinct.
In such an environment there is tremendous scope for high
quality modern assets to stand above the rest.
Workplace and
Logistics snapshot
Logistics FFO
$164m
Comparable growth of 1.0% on FY20
Workplace FFO
$60m
Comparable growth of 1.0% on FY20
Logistics occupancy
98.0%
Workplace occupancy
91.7%
Development pipeline
$9.4bn1
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Estimated value on completion.
Year ended 30 June 2021
25
RETAIL TOWN CENTRES
Our Retail Town Centres continue to focus on being the
hyperlocal shopping experience with diverse customer
experiences, strong community connection and retail
offers which best meet local customer fulfilment. The
portfolio has performed well through the pandemic
recovery period, with comparable FFO growth of 5.6 per
cent, as we supported our retailers and customers through
the challenges of COVID-19 restrictions on operations and
people movement.
We have continued with our pre-pandemic strategy of
rebasing and remixing the town centre offer, resulting
in solid comparable retail sales growth of 2.3 per cent
compared to the pre-pandemic twelve months to February
2020. Specialty sales productivity of $9,799 per square
meter for the comparable portfolio is 8.0 per cent above
the Urbis benchmark1. Essential goods and services retail,
accounting for over 75 per cent of sales across our portfolio,
has performed particularly strong at 6.8 per cent growth for
the year.
683 deals were completed during FY21, with leasing activity
returning to pre-pandemic levels. The number of tenants
on holdover leases materially reduced over the second half
of the year, reflecting increasing retailer confidence. The
reconfiguration of the former H&M stores at Stockland
Townsville (QLD) and Stockland Rockhampton (QLD),
introducing some of the best in category retailer and
experience brands such as TK Maxx, Cotton On, Timezone
and JD Sports, is expected to improve both rental and sales
productivity at these centres.
Stockland is committed to supporting the communities in
which we operate. We continue to engage and partner with
key community service providers such as Gidget House and
Karitane, supporting new and expectant parents, as well as
the Illawarra Women’s Health Centre for domestic violence
and Family Services NSW. Stockland created projects such
as the Social Good Initiative with community groups, which
is designed to provide partner programs and support
services addressing social issues within the regions where
we operate.
During the year we curated an online community hub
offering community support and digital connectivity with
our customers.
In line with our non-core divestment strategy, a total of
$635 million2of non-core retail assets were contracted for
sale in FY21, taking our total retail divestment to in excess
of $850 million2 over the past 24 months. Our exposure to
retail, on a proforma basis, is now 38 per cent of our total
portfolio weighting. A key priority in FY22 is to continue
downweighting our exposure.
We will continue to assess investment in retail
opportunities, leveraging our Communities business
landbank to help establish the retail town centres of the
future. A Stage 1 development application for Aura Town
Centre3 (QLD), a vibrant urban town centre to support a
trade area forecast to grow to 68,000 by 2026, is planned
for submission in late 2021.
COVID-19 community support
Our commercial property assets have remained open
throughout the COVID-19 pandemic, operating in line with
State Government Public Health Orders and directions.
While proudly providing this essential community
service, Stockland continues to prioritise the health
and wellbeing of our customers, tenants and their
staff, contractors and our centre management teams at
all times. This is supported through enhanced centre
cleaning schedules, provision of appropriate personal
protective equipment including hand sanitiser and face
masks, and communicating regular health updates on
exposure venues. All assets continue to promote health
messaging such as social distancing, mask wearing and QR
code check-ins.
Similarly, our logistics assets house some of the
nation’s most critical transport companies supplying
essential goods such as food, medical and other online
fulfilment services.
We continue to work with State health authorities to
support the broader community response, facilitating
temporary COVID-19 testing clinics at our assets
and supporting staff at vaccination clinics in South-
West Sydney.
Key priority
• Continue to reposition our
centres to ensure a quality and
resilient portfolio
• Delivering our digital strategy to
support omnichannel retail
• Continue to downweight our
exposure to retail
1
2
3
Urbis Double DDS Sub-regional Shopping Centre Benchmark.
A put and call option has been entered into relating to the sale of Bundaberg with completion estimated to occur in September 2021.
Aura Town Centre is under a capital arrangement with Capital Property Corporation Pty Ltd.
26
Stockland Annual Report 2021
Retail Town Centre snapshot
FFO
$363m
Comparable growth of 5.6% on FY20
Essential retail1
75%
Total MAT growth2
7.3%
Occupancy
99.1%
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By sales.
Compared to pre COVID-19, 12 months to February 2020.
Year ended 30 June 2021
27
Stockland Birtinya, QLD
Capital
management
Stockland finished the year in a strong financial position with a balance sheet well positioned to drive growth, supported
by investment grade credit ratings of A-/A3 with stable outlook from S&P and Moody’s, respectively, which have been
maintained throughout the year. At 30 June 2021, the Group’s gearing is 21.4 per cent, at the bottom of our target range
of 20 per cent to 30 per cent which reflects the ongoing disciplined approach to capital allocation and our prudent focus
on cashflows.
We continue to actively manage our debt portfolio with a weighted average cost of debt of 3.7 per cent and weighted average
debt maturity of 5.3 years. We undertook the early replacement of long-term debt maturing in the second half of calendar
year 2021 given the strength of the market and attractive rates. We also let much of the short-term bank debt facilities
implemented during the COVID-19 pandemic mature, given the strong cash generation from the development business.
Available liquidity at 30 June 2021 is $2.2 billion. We anticipate retaining higher levels of liquidity than our long-term average
as Australia evolves its response to the pandemic. The combination of our strong liquidity position, access to global debt
capital markets and ongoing discipline around cashflows, has positioned us well to deliver our strategic growth priorities,
while continuing to navigate the ongoing short-term disruptions resulting from the pandemic.
S&P credit rating
A-/Stable
Moody’s credit rating
A3/Stable
Weighted average cost of debt (WACD)
3.7%
Expected 3.5% WACD in FY22
Distribution payout ratio
75%
Within target range of 75-85% of FFO
Gearing
21.4%
Improved from 25.4% in FY20
Weighted average debt maturity
5.3 years
Liquidity
$2.2bn
28
Stockland Annual Report 2021
Net tangible assets
As at
Cash and cash equivalents
30 June 2021
$M
1,162
30 June 2020
$M
443
Real estate assets
• Commercial Property
• Residential
• Land Lease Communities
• Retirement Living
• Other assets
Retirement Living gross up
Other financial assets
Other assets
Total tangible assets
Borrowings
Retirement Living resident obligations
Other financial liabilities
Other liabilities
Total liabilities
Net tangible assets
Number of securities on issue
NTA per security
10,351
3,216
47
1,064
129
2,506
367
386
19,228
4,754
2,512
263
2,192
9,721
9,507
10,140
3,395
-
1,287
130
2,682
749
257
19,083
5,022
2,695
313
2,044
10,074
9,009
2,387,171,662
2,384,351,503
3.98
3.78
Change
%
162.2
2.1
(5.3)
(17.3)
(0.8)
(6.6)
(51.1)
50.3
0.8
(5.4)
(6.8)
(15.8)
7.3
(3.5)
5.3
5.3
Cashflow management
Capital allocation
We ended the year with $1.0 billion in net operating
cashflow, exceeding our full year distribution of
$523 million. This reflects the net impacts of our strong
residential settlements at levels above last year, offset
by the impact of an active restocking program in
our Residential business as we capitalise on current
market opportunities. Following the reduction in overhead
spending in FY20 as the pandemic took hold, costs have
commensurately increased through FY21 to drive growth.
During the year, we made logistics and residential land
acquisition payments of $477 million, most of which relate
to capital efficient transactions which align the payment for
land closer to its delivery to the end customer.
We closely manage our capital to ensure we have the
optimal allocation across our diversified portfolio. We
continue to actively reweight the portfolio with the sale
of $635 million4 of non-core Retail completed in FY21 and
the recycling of this capital to increase our Workplace
and Logistics weighting. Our Workplace and Logistics
development pipeline is now $6.1 billion, which will help
to deliver a more balanced capital allocation across our
Communities, Workplace and Logistics and Retail Town
Centres portfolios.
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Includes a put and call option which has been entered into relating to the sale of Bundaberg with completion estimated to occur in September 2021.
Year ended 30 June 2021
29
Capital allocation30 Jun 20
We are executing on our strategy to bring in capital
partners to invest alongside us to deliver projects
Capital partnering
Distributions
To drive growth in our business and deliver on our strategic
priorities, we are actively progressing joint ventures and
capital partnering opportunities across all sectors.
Following the successful capital partnership entered into
on our residential Aura Project with the Capital Group in
2019 we announced in July 2020, a new capital partnership
in our Residential portfolio with Thailand-based Supalai
Group for a 50 per cent interest in our masterplanned
community, Katalia, in Melbourne’s north. In March
2021 Supalai satisfied the capital partnership condition
precedent for FIRB approval.
Additionally, in December 2020, a capital partnership was
established with a fund managed by J.P. Morgan Asset
Management to invest in more than $1 billion of logistics
assets on the Eastern Seaboard. Stockland will operate and
manage the assets and will receive fees for these services.
Stockland continues to look for opportunities to
capitalise on our strong relationships with third party
capital providers to develop our future pipeline across
our business.
The distribution for the year ended 30 June 2021 is 24.6
cents per security, up 2.1 per cent on FY20. The distribution
payout ratio of 75 per cent is at the lower end of our
target range and fully covered by operating cashflow.This
distribution level helps retain capital, supporting growth
opportunities across the business.
Key priorities
• Strategic capital partnering
• Maintain high investment grade
credit ratings
• 20 to 30 per cent target
gearing range
The Gables, NSW
30
Stockland Annual Report 2021
CASE STUDY
THINKING CUSTOMER FIRST
- LAUNCHING STOCKLAND'S
NEW OVER 50's
LIFESTYLE COMMUNITIES
In FY21, Stockland launched an exciting
new product designed for the ageing
population in Australia. Land lease
communities are attractive and active
gated communities with recreational,
social and sporting facilities that are for the
exclusive use of residents, their families
and friends. They cater to a broad range
of lifestyles and are fast becoming the
preferred choice for Australia’s over 50s.
Guided by Our Customer Promise to
make the experience "Great, Easier and
Better", we started designing the customer
experience by mapping the customer
journey, talking to prospective residents
and understanding what is most important
to them when considering this type
of purchase.
We learned that simplifying the sales
process was key to ensuring prospective
customers had confidence and clarity
when securing the right lot and the right
house. We also learned the importance
of home visualisation, giving would-be
residents the ability to digitally envision
what their home would look like and how
they can personalise it to make it home.
This "Think Customer First" approach
has resulted in a clearly defined
customer value proposition, distinct from
our retirement living proposition. Being
customer led has provided us with a
competitive advantage, a popular product
for this demographic and a differentiated
service offering. In less than 14 months,
we have launched this new offering
in Queensland and Victoria and given
our first customers possession of their
new homes. Growth of our Land Lease
Communities business is an exciting part of
Stockland’s future.
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31
Aura, QLD
Operational
excellence
In FY21 we continued to invest in operational
excellence with a particular focus on customer
centricity, technology, innovation, risk and our people
CUSTOMER CENTRICITY
Customer centricity is a central cultural pillar for Stockland.
It drives our ability to deeply understand, predict and
respond to our customers' changing needs, and our
continuous investment in improving the most valuable
moments of the customer experience. It is critical to our
business results and the ongoing relevance and reputation
of our brand, products and services.
Our approach to driving greater customer centricity
integrates an advanced platform of deep customer
insights, an ongoing program of improving customer
experiences and a focus on creating customer
centric leaders.
Deeper customer insights and
data analytics
Customer centricity starts with empathy and insight.
Over several years we have invested in creating a
leading edge insights capability that blends traditional
customer research, advanced data science and unique
decision making tools that are embedded into critical
business processes.
Enhancement in our customer insights program this year
saw the launch and embedding of a new behavioural based
shopper segmentation tool that provides an asset level
understanding of the value of different shopper segments
with the monthly tracking of movements in spend and
shopper behaviour. This tool has provided a granular
understanding of spending pattern shifts amongst key
customer segments and was invaluable in responding to
changing customer behaviours during COVID-19.
We are now able to quantify the value of customer
experience improvements to movements in customer
spend within individual Retail Town Centres. These deeper
insights have enabled the prioritisation of various customer
experience improvement projects that optimise both
customer and commercial value.
In business-to-business engagement (B2B), we have
developed and implemented a new artificial intelligence
data driven tenant recommendation engine that can
successfully predict the most appropriate retail tenants
for any retail vacancy which supports both tenant success
and overall commercial impact of the centre.
Also launched in FY21 was a neighbourhood mindset tool.
This bespoke tool blends numerous third-party data sets
to enable a unique view into the composition of any
catchment area. It identifies how residents interact and
what they value within a community, including recreational
activities and places of interest. These insights are being
used extensively in new developments, marketing and our
design processes.
32
Stockland Annual Report 2021
Improving customer experiences
using digital
With lockdowns and COVID-19 restrictions continuing
in FY21, we delivered a suite of new innovative digital
customer experiences to empower customers to explore,
personalise their home and virtually interact with our
product offerings online. In our Communities portfolio,
these new or enhanced experiences saw a 350 per cent
increase in conversion which has generated 58,000 new
leads from website traffic volumes. While the quality
of the leads was high, sales conversion was limited
due to product availability in certain markets. Each
experience was carefully designed to support defined
customer goals and included a number of innovative digital
customer experiences and new product offerings such as
Dreamcatcher, a personalised online experience to design
your home (read more on page 35).
Customer centric leadership
This year to further improve enterprise wide customer
governance, we formed a Customer Advocacy Group
which brings together members of Stockland’s Leadership
Team and other senior leaders to review key customer
trends, data and insights, prioritise and accelerate projects
that can demonstrate both improvements in meaningful
customer experiences and also deliver good commercial
returns. There are also corresponding business unit
Customer Championship Groups that help with this
prioritisation and initiative delivery.
This year we also expanded the Stockland Listens program
into a new virtual format. This program regularly invites
various customer groups, including our business tenants
customer groups, into a moderated discussion forum
where they can share their experiences with a large number
of diverse internal Stockland staff. As a result of these
programs, several new insights have been identified, new
ideas generated and improvements made.
The result of customer centricity
is strong customer satisfaction
By staying focused on what matters to customers and
dynamically responding to changing needs, we were able
to maintain high levels of customer satisfaction across the
group against a backdrop of uncertainty and disruption
caused by the pandemic.
1
Customers progressing to a reservation by way of deposit.
Customer satisfaction
Residential communities
resident satisfaction1
82%
Above target of 80%
Retirement living
resident happiness
87%
Above target of 85%
Retail tenant satisfaction
75%
In line with target of 75%
Retail shopper satisfaction
81%
Above target of 80%
Workplace and logistics
tenant satisfaction
87%
Above target of 80%
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33
TECHNOLOGY, DIGITAL AND INNOVATION
Technology
Innovation
Our investments in technology have played a critical role in
supporting our people, driving digital transformation and
enabling new product offerings. This included our large
scale transition to our integrated core platform in August
2020 with SAP and Salesforce.
A key focus in FY21 has been embedding our integrated
systems as a platform for business improvement and
scalability. The platform has delivered enhanced business
processes, automation, analytics and supported our
ongoing compliance focus. For example, our integrated
scalable platforms enabled approximately 7,000 contracts
signed through DocuSign and over $1.5 billion of
settlements managed through Stockland PEXA integration.
Digital customer experiences
During the year Stockland launched several new product
offerings and digital customer experiences in line with our
focus on customer centricity.
We introduced an end-to-end digital customer experience
to enable our customers to virtually undertake the home
buying journey including through the sales process. This
included virtual only launches across our communities
including Katalia and Haven.
We also launched an inspirational online digital experience
"Dreamcatcher" that guides customers to discover their
preferred housing style. Dreamcatcher has proved to be a
highly engaging customer experience with over 55 per cent
of customers returning (read more on page 35).
For our new land lease communities, our virtual home
visualiser enables customers to configure and visualise
their new home options from a range of choices
and inclusions
Our online retail product visualisation program now
has more than 52,000 individual products listed across
130 stores through our local shopping centre websites.
The program enables retailers to list their products on
the Stockland website and customers to browse online.
The outputs of this pilot have helped to inform future
omnichannel customer experiences in the digital roadmap.
Stockland has embraced an innovative way of working and
we have continued to elevate innovation across Stockland
through experimentation, new initiatives and ventures. In
FY21, despite the disruption and challenges caused by
COVID-19, 58 innovation initiatives were entered as part
of our annual Chairman’s Awards, reflecting the strong
focus on creating new value for our customers, and evolving
our products and business models. Reflecting how our
people have embraced innovation, our annual employee
engagement results also showed innovation measures at
five points above the Australian national norm.
In addition to the new digital customer experiences,
innovation successes included the scaling of recycled
asphalt in five communities diverting waste from landfill,
pilot of built-form defect management tools and assessing
a number of opportunities across disruptive innovation.
We have maintained our focus on strategic ventures
through investments in organisations with growth in
disruptive services. In FY21 Stockland took a minority stake
in data analytics company, smrtr, in alignment with our
key strategic priority of enhancing our enterprise data
capability and services.
In a single community, our innovative use of
the Reconophalt recycled asphalt product has
diverted from landfill (read more on page 42):
Plastic bags
2,043,000
Printer cartridges
59,710
34
Stockland Annual Report 2021
CASE STUDY
HELPING DREAMS COME TRUE - STOCKLAND DREAMCATCHER
The Residential business experienced high volumes of
enquiry in FY21. Interestingly, 92 per cent of these
enquiries came through digital channels (up from ~87
per cent 12 months ago), including our newly redesigned
website as well as social media. In addition, Stockland
held its first ever 100 per cent virtual land community
launch at Katalia in Victoria, where 20 lots sold out
in just six hours. This showed that customers are
becoming increasingly comfortable with online, self-
service channels. As such, digitising the customer journey
is an important strategic priority.
To assist customers in the "Dream" phase of the customer
journey, Stockland launched "Dreamcatcher", a home
visualisation tool and styleboard creator designed to
help early in the buying process. Dreamcatcher allows
users to engage with the brand in an emotional and
innovative way while enriching the home buying experience
through a design-led lens. At every stage of the buyer
journey, Dreamcatcher enhances the customer experience
by helping people to unpack, collate and visualise their
thoughts in one place. By providing inspirational home-
based concepts, we are engaging in dialogue with people
who may not have previously considered Stockland. And for
those who may have been in touch, we are engaging earlier
to create that strong, initial connection.
In the six months since the launch of Dreamcatcher, we
have had over 51,000 visitors to the site, driven primarily
by social media influencers, and almost 120,000 pageviews
in total. Pleasingly, thousands of visitors are returning to
the site for additional visits, which shows they are seeing
value in the platform and engaging regularly with it. Overall,
Stockland continues to prioritise and refine the digitisation
of end-to-end customer journeys throughout the business
to respond to rapidly changing customer expectations
and needs.
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35
The Stockland Graduate program, which was recognised
during the year as 19th in the AFR 100 Graduate Employers
and most popular in our sector, continues to be a
talent incubator, attracting and developing high quality
employees to meet the challenges and opportunities of the
future. In FY21, a total of 22 gradates joined Stockland, of
which almost 60 per cent were female.
Health, wellbeing and safety
The health, wellbeing and safety of our people is our key
priority. Throughout the year we have responded with
determination to the challenges presented by extreme
weather events such as flooding and the ongoing COVID-19
pandemic. We have continued to evolve our systems and
processes to ensure a safe working environment and
consistent with previous years, in FY21 we once again
achieved zero fatality and life changing injuries in our
business. We also maintained a low lost time injury
frequency rate (LTIFR) (3.4 in FY21), a reflection of our
continuous focus on injury prevention in line with our LTIFR
improvement plan.
We equipped our employees, at both head office and
across our assets, with techniques to address psychosocial
issues such as dealing with difficult conversations, working
with a specialist psychological consultancy to develop
an online ‘Dealing with Challenging Interactions' training
program for our customer and public facing roles. Our
flexibility and wellbeing initiatives were accelerated during
the onset of the pandemic and continue to be paramount
considerations in our new ways of working. We continue
to offer a multifaceted wellbeing program with a focus on
mental health as well as through our CARE Foundation
partnerships with ReachOut and R U OK?.
PEOPLE AND CULTURE
Stockland has a strong, purpose driven culture, which
supported our people and business through some
significant events in FY21 including COVID-19, our SAP
enterprise systems implementation, and our Managing
Director and CEO transition. Throughout the year we
leveraged our cultural strengths of collaboration, respect
and determination to support our customers, employees
and stakeholders through incredibly challenging times.
The organisation and our people around the country
demonstrated poise and resilience to adapt to the
numerous demands experienced throughout the year. After
transitioning to a regular pulse employee engagement
measure, the organisation maintained an overall score
of 83 per cent across the Group, above the Australian
National Norm1, which was an incredible achievement
in the circumstances. Furthermore, Stockland’s score on
Corporate Responsibility and Sustainability, was above the
global high performing norm. We introduced additional
people measures to provide greater insight into workplace
behaviour, and focused on visible and capable leaders who
were communicating with their teams throughout the year.
This resulted in significant improvement in our pursuit of a
more agile, innovative culture.
Building capability
We introduced our Capability Masterplan which provides
structure and rigor to the development of our people
across job families and asset classes. Leadership capability
also remained a focus in FY21, with a rigorous program
centered around neuro-leadership skills and techniques
helping senior leaders to manage large scale change,
and pragmatic skills-based virtual training programs
supporting managers at all levels with the day-to-day
management of their teams.
New projects and opportunities have been resourced
with talent during the year to deliver on strategic
priorities. Blended learning and development initiatives
have supported our people to ‘learn in the flow of work’
accelerating personal growth and application of new skills
learned. This learning and development strategy placed
Stockland in a strong position to pivot towards a fully
virtual learning program over the year. It was also a highly
inclusive and efficient way to deliver learning across our
national business, with employees at multiple sites, and
those frequently working from home the key beneficiaries.
1
Based on the Willis Towers Watson survey
36
Stockland Annual Report 2021
Diversity and inclusion
People and culture snapshot
Stockland’s commitment to diversity, inclusion and
flexibility emerged as a significant strength for the
company. Stockland maintained the WGEA citation for
gender equality, for the seventh consecutive year. In
the Equileap index of Top 100 gender equal companies,
Stockland was awarded 11th place globally, we achieved
bronze status in the Australian Workplace Equality
Index and our improved Domestic and Family Violence
policy is considered best practice.
Our committed leaders combined with highly active
internal employee action groups delivered significant
progress in Gender Equity, Flexibility, LGBTI+, Wellbeing,
Accessibility & Cultural Inclusion. Our focus on diversity,
inclusion and flexibility enabled the rapid development of
our hybrid 'Hub and Home' work model which supported
high levels of productivity and connectedness across our
employee base during the year. In the year ahead we will be
trialling a 'Touchdown' bookable work space for employees
as part of our broader workplace ecosystem.
Employee engagement
83%
Above target of 80%
Women in management
47.4%
Above target of 40%
Gender pay equity
99%
Target 100%
Equileap's Global Top 100
11th
Gender-equal companies
Lost time injury frequency rate
3.4%
Unchanged from FY20
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37
Living
for the future
We believe there is a better way to live and
sustainability is a fundamental part of delivering
on our vision and strategy
Stockland is a global sustainability leader, recognised for
its holistic approach to sustainability issues both current
and emerging. We have a long, proud history of creating
some of Australia’s most liveable communities, delivered
under world leading environmental, social and governance
standards. Our goal to become more sustainable is
understood and actioned across the business, playing an
important role in helping to deliver our Group Strategy and
associated strategic priorities.
FY21 represented a transition year for our sustainability
strategy as we closely assessed the impact of COVID-19
and its associated disruption to our operations,
customer behaviour and broader stakeholder engagement.
Therefore, we maintained our focus on delivering
environmental and social outcomes consistent with the
previous year and enhanced those targets during FY21 by
releasing our 2030 Sustainability Strategy when the worst of
the initial COVID-19 restrictions had passed.
In May 2021, we launched our enhanced 2030 Sustainability
Strategy – Living for the future. The strategy is purpose-
led and responds to the global and industry megatrends
that are impacting our business and stakeholders today
and into the future. These trends include climate
change, resource scarcity, growing inequality, changing
demographics, market disruptors and incremental
recovery from COVID-19.
Recognising there are challenges ahead, we have
developed a strategy that takes meaningful steps forward
to realise a better, more sustainable, way to live.
Our 2030 Sustainability Strategy has been developed
with clear 2030 goals supported by medium-term targets
(FY22-24) and clear implementation plans that are
measurable. This allows us to reset periodically, adapting
to changing environments and incorporating key lessons,
as we pursue world leading environmental, social and
economic outcomes. Refer to our FY21 ESG Review for more
detail on our strategy and targets.
38
Stockland Annual Report 2021
EVOLVING LEADERSHIP
Launched refreshed
Sustainability Strategy to
2030
Advanced our net zero carbon
target to
2028
GLOBAL CREDENTIALS
World Dow Jones Sustainability
Index (DJSI) - real estate ranking
3rd
Top five for ten years
GRESB (Global Real Estate
Sustainability Benchmark)
Green
Star
Top quintile for seven years
MSCI ESG rating
AAA
rating
'Leader' rating for over 10 years
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39
Amberton Beach, WA
Climate action
Towards net zero carbon
Getting to net zero carbon emissions does more than
contribute to global climate objectives. It also enhances
our operational efficiency, aligns with the ambitions of our
customers, and futureproofs our communities.
In February 2021, we brought forward our commitment to
achieving net zero carbon by two years, with the new date
of 2028. We also expanded the reach of our commitment
which now covers scope 1 and 2 emissions across all of
our business activities, extending to all of our workplace,
logistics, retail and community assets and projects across
Australia. We will achieve this target by relying on three
emissions reduction strategies:
1. increasing our investment in on- and off-site
renewable energy;
2. continuing our focus on energy efficient design and
operations and the electrification of the portfolio; and
3. pioneering a number of innovations and technology to
reduce our overall carbon footprint.
Renewable energy
In FY21 we built on our commitment to powering our
assets with renewable energy sources. In our Commercial
Property portfolio, we installed further solar PV capacity
and completed detailed designs for four additional assets,
equating to a potential capacity of 2 megawatts. This takes
our total operational solar PV capacity to 18.7 megawatts,
with an annual estimated generation of 24 gigawatt hours,
which represents an investment of over $32 million.
In our Communities business we are also rolling out
solar-powered lighting throughout the public space within
our developments such as sporting fields and parks. Our
Land Lease Communities offer energy packages to our
future residents and we are piloting solar and battery
packages in Residential. The introduction of mandatory
design requirements and other uptake schemes means that
our Communities customers will play an important role in
the real estate sector’s transition to net zero.
Energy efficiency
Since the beginning of our focus on climate change and
energy efficiency in 2006, we have reduced the emissions
intensity of our Commercial Property portfolio by 69 per
cent. This has resulted in $138 million of savings, with more
than half passed on to tenants, demonstrating that we can
grow our business while simultaneously reducing energy
and emissions and delivering positive financial outcomes.
We continued to obtain NABERS Energy ratings in FY21 to
benchmark the performance of our assets and measure
the effectiveness of our energy efficiency initiatives. The
area weighted portfolio average for NABERS Energy for our
Retail Town Centres and Workplace portfolios improved
to 4.8 stars and 4.9 stars respectively. Our Business Parks
portfolio decreased marginally to 4.7 stars.
To further advance our performance, we participated in
trial NABERS ratings at two retirement living villages as
an advisory panel member of NABERS Accelerate. This
program was established to help new sectors speed up the
development and adoption of energy and water ratings.
This is an important step forward for the retirement
living sector, as improved efficiency delivers a sustainable
lifestyle for our residents.
Resilient communities and assets
Asset level climate resilience plans have been established
for 48 per cent of our portfolio detailing the future local
impacts of climate change and the most appropriate
responses to improve resilience to physical risks over time.
In FY21, we also focused on building resilience across our
communities including the development of ‘shadeways’
linking key areas of the community, enabling residents to
more easily exercise and commute during heat events and
implementing cool roof covenants to mitigate urban heat
around residences and public spaces.
As part of Green Star developments certification we
conduct Climate Change Adaptation Design Workshops
which allows us to ‘design out’ inherent vulnerabilities to
future climate impacts.
Water management
In order to transition to a more climate resilient portfolio we
also focus on water management across the portfolio. We
have continued to extend our comprehensive sub-metering
network which has contributed to reductions in our average
water intensities across our Commercial Property portfolio
and our average NABERS ratings.
In our Communities business, we focused mainly on the
performance of our medium density and retirement living
products in FY21 delivering a 12 per cent improvement on
water benchmarks; an annual saving of 7 megalitres when
compared to homes built to regulations.
40
Stockland Annual Report 2021
CASE STUDY
Designing the homes of the future
We have designed a range of new housing products
to demonstrate the viability and affordability of these
products so that Australia’s residential builders are
encouraged to build high quality, comfortable and low
emission homes in a cost-effective manner.
Our first Zero Net Carbon Home was released in our
masterplanned, medium density community, Orion in
Braybrook, Melbourne in September 2020. The home was
developed in collaboration with Sustainability Victoria
under the Victorian Government’s Zero Net Carbon
Homes pilot program. The home achieved a 7-star
Nationwide House Energy Rating Scheme (NatHERS) rating
by combining a solar PV system with an energy efficient
building design and fixed appliances.
Modelling indicates the design will reduce energy bills
by approximately 50 per cent (approximately a $1,000
per year saving), produce no net emissions from energy
use, and reduces gas emissions by 4.7 tonnes per year.
The home will also provide residents with greater indoor
comfort by optimising orientation and using draught-
proofing, insulation and an automatic ventilation system.
efficient and powered by renewables)
Our next generation home at our Waterlea community in
Victoria will be one of the first Green Star Homes to receive a
rating in Australia. The tool aims to drive delivery of homes
that are:
• Climate positive (i.e. fully electric, draught sealed,
• Healthy (i.e. ventilated, comfortable with eco-friendly
• Resilient (i.e. water efficient and climate change ready)
As part of our 2030 Sustainability Strategy – Living
for the Future - we have committed to building our
capabilities and working with our partners, such as the
Clean Energy Finance Corporation, the Green Building
Council and Sustainability Victoria to help transition the
housing industry to net zero.
building materials and fixtures)
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Artist impression, Zero Net Carbon Home, Orion, VIC
balance developable land with retention and activation
of biodiversity to enhance the long-term success of
our communities.
In FY21, all four of our new masterplanned communities for
FY21 achieved net positive results using our industry leading
biodiversity calculator.
Waste and materials
We are committed to enabling more circular systems by
closing material loops and recognising that waste has
value. In FY21, our national contract with Waste Options was
fully embedded across our Commercial Property portfolio
and a number of Retirement Living communities to improve
our waste diversion rates. This year also marked the
first time we completed NABERS Waste ratings for our
Workplace and Business Parks portfolio.
In FY21 the use of recycled materials in construction
had a significant impact on waste rates and the overall
environmental impact of our developments. This also
reduced the need for large quantities of materials to
be transported off-site and disposed in landfill, which
helps reduce our carbon footprint and transport and
disposal costs.
Circular systems
Green Star rated portfolio
We use Green Star ratings, a rating system for buildings
and communities, administered by the Green Building
Council of Australia (GBCA), to assess the attributes of our
project by focusing on a broad mix of sustainability impact
categories, such as waste, indoor environment quality,
materials and land use.
This year also saw the continuation of important asset-
level initiatives. We continued our work on delivering
Stockland’s first net zero carbon emissions building at
M_Park (NSW). This is targeting a 6 Star Green Star rating,
representing world leadership in sustainable design. In
order to achieve this, the building will have to utilise highly
energy efficient services, be fully electric and 100 per cent
powered by renewables. The learnings from this project
will inform the design process of the later stages of this
development. Willawong Distribution Centre Stage 2 (QLD),
is also under development and targeting a 5 Star Green
Star Design & As Built rating. Our Communities business has
continued working with the GBCA as a development partner
of its Green Star Homes pilot initiative.
Biodiversity
We are very focused on ensuring that we consider
carefully how our developments interact with local
bushland habitat, ecological communities and protected
or significant species. We have a unique opportunity to
provide people with green space, amenity and connection
to nature. We therefore seek to
Rolling out ‘Reconophalt’
After last year's successful innovation trial of
‘Reconophalt’, a recycled asphalt pavement that uses
recycled plastics, toners, glass and reclaimed road
surfaces, we are rolling out the product nationally with
a target to have 30 per cent of all residential projects
using the product by 2024. Our Minta community (VIC),
became home to Australia’s longest recycled road. At our
Katalia development (VIC), we will roll out over 25,000m2
of Reconophalt.
42
Stockland Annual Report 2021
Healthy and connected communities
Our research clearly indicates that for a community to
thrive it needs a focus on health and wellbeing, community
connection and education.
Partnering to
strengthen communities
Liveability and resident wellbeing
Our annual Liveability Index Survey measures what matters
to our residents, so we can include what is important
to our customers into our community designs. The
Liveability Index Survey invites feedback on all aspects
of the community – from quality of built and natural
environments, to how its design supports mental and
physical wellbeing. Years of listening and responding to
feedback from our residents has helped us shape some of
Australia’s most liveable communities.
In FY21, we achieved our Liveability target by scoring 75
per cent. This year’s performance was driven by a range
of improvements across several communities, namely
those in NSW following the delivery of new amenities,
infrastructure and transport links. Additionally, we have
seen an improvement in the proportion of residents
who agreed that Stockland has delivered or exceeded
expectations in terms of customer satisfaction.
Our Liveability Index will play an increasingly important
role at Stockland over the next few years as our residents
continue to navigate the challenges presented by the
COVID-19 pandemic.
across our residential communities
HEALTHY AND CONNECTED OUTCOMES
• Liveability Index – 75 per cent Liveability score
• Personal wellbeing index – Retirement Living and
Residential resident Personal Wellbeing Index score
of 79.4 per cent and 84.4 per cent, well above the
Australian national average
• Stockland CARE Grants – 285 grass roots
community groups received grants totalling
$285,000 focused on wellbeing, education and
community connection
Despite the challenges of the past year, Stockland remains
committed to generating a positive and lasting impact on
the communities in which we operate. The contributions
we make to these communities are coordinated through
community partnerships and programs, giving and
volunteering, asset based projects and initiatives, and our
Stockland CARE Foundation.
In FY21 we continued to support activities spanning our
three key priorities – health and wellbeing, education, and
community connection, contributing over $5.7 million to
programs across Australia.
We have worked with our partners to deliver on these
priorities and navigate the balance between physical
and online activations as COVID-19 continues to disrupt
community activities. Some of the partnership outcomes
from FY21 are listed below. Read more in our FY21
ESG Review.
• Live Life Get Active provides free community fitness
classes to local Stockland residents. Residential
communities reported close to 38,000 on-demand
videos accessed during the year in addition to the
in-person community classes.
• R U OK? provides public education to support suicide
prevention. In FY21 it launched the 'Your Natter Matters'
campaign in Stockland Retirement Living Villages urging
residents to 'give the gift of conversation' and use their
life experience to support each other.
• National Theatre for Children provide a student
sustainability education program and as part of their
2021 Big Battery Rescue National Schools Challenge 18
public schools participated with over 785 kilograms of
batteries diverted from landfill, the equivalent of over
35,000 AAA batteries.
The Stockland CARE Foundation is a collaborative
partnership between our three charity partners ReachOut,
Redkite and R U OK?. This partnership has been
timely to raise awareness for mental health programs
to assist communities navigate the impact of the
COVID-19 pandemic.
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Supply chain management and human rights
Responsible supply
chain management
We recognise that having a sustainable supply chain
is fundamental to having a sustainable business. Our
commitment to continuously improving our supply chain
management resulted in the implementation of our policy
‘What Stockland Expects from its Suppliers’. This policy
details key considerations for our suppliers – such as health
and safety, materials and resource use, human rights
and local employment – organised according to the core
themes of our supply chain framework.
We reinforced the communication of this policy in
FY21 through various mediums including webinars
with suppliers, embedding the policy requirements
in our contracting precedents, and supplier on-
boarding practices.
Where potential issues are identified, we engage with the
supplier to learn more about the issue and implement
mitigation and monitoring strategies through corrective
action plans. We provide the necessary support and
encouragement to those suppliers who have a plan and
a commitment to demonstrate continuous improvement.
There were no supplier agreements terminated in FY21 due
to actual and potential negative environmental, social, or
labour practice-related impacts.
We continue to engage on initiatives such as our Sights on
Safety initiative, aimed at reducing safety incidents on site,
as well as modern slavery risk. In FY21, we commenced our
internal due diligence process to map our practices against
ISO 20400 – Sustainable Procurement.
Modern slavery
Forced, bonded and compulsory labour are serious human
rights violations. It is incumbent upon us, as one of
Australia’s largest listed real estate groups, to use our
leverage to prevent these forms of abuse.
In FY21, we made good progress increasing the modern
slavery awareness of all Stockland employees by
mandating training. We also introduced a Modern Slavery
clause in all new contracts regarding compliance with the
Modern Slavery Act and engagement in modern slavery. The
precedent clause also includes audit rights with suppliers
and the right to audit a supplier's direct subcontractors.
We continued to work in partnership with our suppliers
to increase transparency across areas such as sub-
contracting and building material traceability.
In FY21, we assessed all of our Category A (high risk,
high spend) suppliers using the Property Council of
Australia self-assessment tool. Pleasingly, these higher
risk suppliers improved their awareness and action across
all key question areas. We also extended our assessment to
our Category B suppliers (high risk, low spend). Within this
group we found that while our Category B suppliers have a
relatively high understanding of the Modern Slavery Act and
the modern slavery issues there is an opportunity to engage
with these suppliers to encourage risk assessments,
improve awareness of subcontracting practices, and assist
them with access to training and resources.
The commercial cleaning and security industries continue
to be recognised as high-risk for modern slavery in
Australia. We continue to adapt our procurement and
specialised due diligence with a third party assessor to
understand if contractors are meeting our expectations
around the fair treatment of their employees.
We undertook follow-up assessments on a select number
of contractors, conducted a nation-wide assessment of
additional cleaning contractors, and extended our program
to security contractors across our Retail Town Centre,
Workplace and Logistics portfolio. This enhanced level of
due diligence plays an important role in our commitment
to deliver safe and fair workplaces. For more information
please read our FY21 Modern Slavery Statement.
44
Stockland Annual Report 2021
Reconciliation
At Stockland, we are committed to
working with employees, customers,
partners and tenants to enhance the
understanding and appreciation of the
value that First Nations people bring to
our business and the unique cultural
contribution they make to Australia. This
commitment includes strengthening our
relationships with Aboriginal and Torres
Strait Islander peoples and requires us
to continually reflect on learnings and
nurture these connections to ensure
shared and cooperative success over the
long term.
In FY21, we developed the Stockland First
Nations Engagement Framework which
articulates our model for engagement with
First Nations communities. The Framework
builds on our existing practices and
provides our employees with guidance
and tools for project-level activities in the
areas of community consultation, cultural
heritage, procurement and employment.
Third Reconcilation Action
Plan (RAP)
Launched in February 2021, our 'Innovate'
RAP builds on the momentum from our
prior achievements and focuses on three
key pillars – Relationships, Respect and
Opportunities. It will continue to set
the foundation for the delivery of new
strategies and actions that will create
opportunities for First Nations people and
communities across our projects.
Our Innovate Reconciliation Action Plan –
December 2020 to November 2022 – is
available on our website.
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45
Sustainability priorities and progress overview
FY21 PRIORITIES AND PROGRESS
FOCUS
AREA
Climate
resilience
PRIORITY
STATUS
PROGRESS
Conduct a climate resilience assessment on all new
Retail Town Centres, Workplace and Logistics assets,
Masterplanned Residential ommunities and Retirement
Living developments, including acquisitions.
Achieved
48% of our portfolio has now been assessed at an asset
level for climate resilience.
Carbon and
energy
Launch Stockland Net Zero Commitment for
entire business.
Continue to work towards further improving carbon
reduction intensity target for Retail Town Centre,
Workplace and Business Parks assets by FY25 against the
FY06 baseline.
Achieved
Accelerated our net zero carbon commitment by two
years, with the new date of 2028, and extended the
commitment across all our business activities.
Achieved
69% carbon emissions intensity reduction of
Commercial Property portfolio, FY06 baseline.
Exceed relevant minimum energy related compliance
standards by 15% within our medium density
Residential communities.
Achieved
Biodiversity All new eligible masterplanned community
Achieved
developments to make an aggregated net positive
contribution to biodiversity value.
Modelling was completed for 10 medium density
developments during FY21 with 50% reduction in energy-
related standards compared to minimum building
code compliance.
Net positive Biodiversity Index Score across four new
residential projects.
Waste
management
Divert 90% of Residential development waste
from landfill.
Achieved
Average of 98% achieved across our
masterplanned communities.
Achieve a minimum of 45% waste diversion for Retail
Town Centres and Workplace and Business Parks.
Partially
achieved
Achieved a waste diversion rate of 80% for Workplace
and Business Parks and 37% for Retail Town Centres.
Water
management
and quality
Liveability
Retail Town Centres, Workplace and Business Parks to
maintain water intensity reduction.
Achieved
9% reduction in Retail Town Centre portfolio;
31% reduction in Workplace and Business Parks
water intensity.
Stockland Communities (Residential and Retirement
Living) to score above the Australian average national
Wellbeing Index average range of 74.2–76.7%.
Achieve consistent Stockland national Liveability Index
score of 75% across Residential communities.
Achieved
Retirement living resident Personal Wellbeing Index
score of 84.7% and 79.4% for residential communities.
Achieved
75% Liveability Index score.
Community
engagement
Make a meaningful contribution to community health
and wellbeing, community connection and education in
partnership with community groups supported directly
by the Stockland CARE Foundation.
Achieved
Invested $5.7 million through our community
development and investment programs and the
Stockland CARE Foundation.
Supply
chain
management
Collaborate with our partners to raise
awareness of sustainability issues and encourage
sustainable procurement.
Launched our procurement management system that
includes an increase in sustainability objectives for
suppliers (part of our integrated core platform).
Indigenous spend of $10 million in FY21, outperforming
target of $4 million by FY22.
Human
rights
Release Third Reconciliation Action Plan.
Achieved
Launched our third RAP in February 2021.
Improve accessibility across our portfolio.
Achieved
We continued the rollout of wayfinding apps for
the vision impaired in our Retail Town Centres. We
delivered three new inclusive playspaces at our Retail
Town Centres.
ESG Reporting Suite
We provide comprehensive annual environmental, social and governance (ESG) reporting on our website
ESG Management Approaches - how we respond to, manage and evaluate our material ESG matters
ESG Review - our annual ESG performance report on our material ESG matters including achievements, targets, progress, future priorities
and case studies
ESG Data Pack - comprehensive ESG data sets and GRI, SASB and UN Sustainable Development Goals references
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Stockland Annual Report 2021
Risk
management
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Yennora Distribution Centre, NSW
Our approach to
risk management
Stockland adopts a rigorous approach to understanding
and proactively managing the material risks and
opportunities we face in our business. We recognise
that making business decisions which involve calculated
risks and managing these risks within sensible tolerances
is fundamental to creating long-term value for
securityholders as well as meeting the expectations of
all Stockland’s stakeholders.
Stockland’s risk appetite is the degree to which we are
prepared to accept risk in pursuit of our strategic priorities.
We continuously engage with our stakeholders and use
these views, together with research and evidence, to
maintain a register of the material risks and opportunities
that influence our ability to deliver on our vision and
purpose. The Board adopts a balanced risk profile to
maintain a sustainable business and ensure we remain an
attractive investment proposition over the long term.
Three lines of defence
We also recognise the importance of building and fostering
a risk aware culture so that every individual takes
responsibility for risks and controls in their area of
authority. We have a Stockland Code of Conduct that
applies to all employees and provides clear guidance on
how we expect our people to accept, engage and respond
to each other and our stakeholders. The performance
scorecard for our employees, including our Managing
Director and CEO and the Stockland Leadership Team also
contains key performance indicators linked to effective risk
management. The Board provides oversight of Stockland’s
risk management which is underpinned by our risk
management framework and Three Lines of Defence
model. Our governance framework is provided on page 88.
48
Stockland Annual Report 2021
Our materiality process
Stockland has adopted the materiality definition from the
International Integrated Reporting Framework to disclose
information about matters (risks) that may substantively
affect the organisation’s ability to create value over the
short, medium, and long term. The Stockland Leadership
Team and Board regularly review these key risks and
disclose them on a bi-annual basis.
We identify material matters using the following process:
2. Evaluate and prioritise
Members of our leadership team and senior management
participated in structured workshops to evaluate the
material matters, assess them in terms of greatest
significance and prioritise them based on their ability to
affect and impact on value creation over the short, medium
and long term.
1. Identify
3. Review and disclose
Each year we conduct an operational and strategic
risk assessment and identify draft material matters by
capturing internal and external perspectives in line with the
principles of Integrated Reporting and the Global Reporting
Initiative (GRI) Standards.
Stakeholder perspectives included:
• Investor research and engagement
• Customer feedback and insights
• Employee surveys
• Political and regulatory developments
• Industry engagement and advocacy
• Social and mainstream media.
Risks and opportunities
The following risks and opportunities are considered
the most relevant current material matters which are
developed and mapped over time; (S) short, (M) medium,
and (L) long term. There are a number of material matters
which have an enduring impact across the time horizon
which may require a phased response.
These have been reviewed and approved by Stockland’s
Leadership Team and Board. The process and associated
disclosures have been assured by Ernst & Young (EY).
Due to the complex nature of these risks and the ongoing
impact of COVID-19 many of the risks and opportunities
detailed below have the potential to impact our business
and stakeholders over the short, medium and long term.
Our ability to adapt to new ways of working and maintain a strong corporate culture
The ability to attract, engage and retain our employees is critical to our ongoing success. The COVID-19 pandemic has readjusted
business and personal priorities and changed how we work and accelerated the adoption of new technology enabling greater
workplace flexibility and new ways of working.
We believe we have a strong culture, and we will use this to mitigate compliance risk and the challenges posed by the new ways
of working. Our culture will continue to be a strong mitigant for compliance risk.
We continue to focus on how we support employees by:
location). This allows all employees to work flexibly, be productive, collaborative and supports their wellbeing;
• maintaining a focus on fostering a strong and constructive culture to deliver value to all stakeholders;
• adopting a ‘Hub and Home’ model, a mix of working in a hub (asset, office or local workplace) as well as at home (or remote
• training our senior leaders to be more agile and resilient through Stockland leadership programs;
• enhancing our communication approach to all our people across Stockland;
• continuing to invest in new ways of working to drive efficiency and improve our practices to increase accountability and build
• supporting Employee Advocacy Groups focused on enhancing diversity, inclusion, flexibility and wellbeing.
on core strengths; and
To support the smooth transition of our new Managing Director and CEO, we have heightened our focus on visible leadership
from our executives and senior leaders, collaboration and regular communication as they steer the business through COVID-19
and execute our strategic priorities.
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Our ability to provide environments that support the health, safety, and wellbeing of our employees, tenants, residents,
customers and suppliers
The health and wellbeing of our people, suppliers and customers has always been and continues to be our priority. Health and
safety incidents, including security threats can have long-term impacts on our stakeholders.
We are committed to delivering communities and assets where our employees, tenants, residents, customers and
suppliers always feel safe. We will continue to:
maintaining their wellbeing;
• foster a culture where health, safety and wellbeing are core values and continuous improvement of our safety performance
• reinforce safe operations, including best practice safety management, hygiene standards and COVIDSafe Plans, and
is part of our normal business practice;
messages to our employees, tenants, residents, customers and suppliers as we continue to focus on suppressing the
transmission of COVID-19;
• trial ‘future of work’ initiatives such as our Wellness Studio in our Sydney Head Office to support employees in achieving and
• extend our focus on mental health and wellbeing including through our CARE Foundation collaborative partnerships with
• evolve our ‘Sights on Safety’ engagement with contractors, consultants and suppliers which has assisted in reducing incidents
• train our employees and increase their risk awareness including undertaking regular scenario testing relevant to our business
• deliver liveable communities for our residents, customers, and tenants, with a focus on embedding health safety and
in key focus areas on our projects;
ReachOut and R U OK?;
and operations; and
wellbeing into the design and operation of our assets.
Our ability to respond to global political conditions that lead to economic uncertainty or volatility
Global political conditions that impact the global economy have led to and may continue to result in extended periods of
increased political and economic uncertainty and volatility in the global financial markets, which could adversely affect our
business. This includes uncertainty surrounding policy decisions regarding the COVID-19 pandemic (including cross-border
people movement, migration and export controls), trade tensions, climate change and technology and data.
We will continue to closely monitor political and economic risks and opportunities and continue enhancing our
enterprise resilience.
We adopt a Group-wide strategic approach to managing our procurement and supply chain activities. Our Supply Chain
Framework continues to support us in managing our suppliers and addressing supply chain risks as they arise.
Climate change may have adverse effects on our business
Physical and transitional climate change risks have the potential to damage our assets, disrupt operations and impact the health
and wellbeing of our customers and communities.
We are committed to creating climate resilient assets that operate with minimal disruption in the event of increased climate
events, as well as building strong communities that are equipped to adapt to long-term climate change risks and opportunities.
To do this, we will continue to:
• assess our portfolio for climate and community resilience and implement action plans;
• embed climate resilience within our standard asset risk assessment;
• invest in asset upgrades and adapt community designs;
• work with our communities to build awareness of climate risks including cyclone and bushfire risk to provide safe
• assess and implement wholesale energy strategies and renewable energy installations, to provide alternative sources of
• actively manage our corporate insurance program to provide adequate protection against insurable risks; and
• continue to incorporate scenario analysis into our climate risk process to understand how physical and transition
environments for people in and around our assets;
energy to mitigate the risk of price shocks;
climate-related risks and opportunities may evolve over time.
Our revised 2030 Sustainability Strategy features our goal to advance climate actions that continue to address our impact on
the climate and develops resilience to a changing environment. To do this we have prioritised achieving net zero carbon by
2028, embedding asset and community scale resilience of our portfolio and working toward a net zero water future. We have
brought forward our net zero carbon commitment by two years to 2028 and expanded its coverage to include our whole portfolio
(including residential development emissions).
Information and technology system continuity and cybersecurity breaches impact our business
Our business leverages IT systems, networks, and data to operate efficiently. Managing potential IT system failures and
cybersecurity breaches is a focus area to ensure we manage the risk of loss of sensitive information, operational disruption,
reputational damage, fines and penalties. We also use technology and data to create a leading edge and differentiated customer
offering through innovation and partnerships.
Technology and data security are integral to our overall working environment and there are measures in place in order to protect
our business and employees from cyber security related threats, including:
• providing employees with a digitally safe working environment in the office and remotely;
• protecting systems, networks and end-point devices;
• embedding policies to safely control, access and manage data and privacy, for both employees and third parties;
• mandatory training for all employees to identify and manage potential threats; and
• vulnerability testing of key systems and simulated cyber-attacks to identify potential gaps and improvement areas.
50
Stockland Annual Report 2021
Housing affordability continues to impact the dynamics of the Australian housing market
To help address affordability we will continue to:
construction sector;
• partner with government and industry to drive solutions including innovative construction processes to lower costs;
• proactively engage with industry bodies and governments in implementing support measures for the housing and
• provide a broad mix of value for money, quality housing options including house and land packages, completed housing,
• balance the demand from owner occupiers and investors so that our residential communities remain attractive to
medium density, and apartments; and
future buyers.
Differences between community and customer expectations or beliefs and our current or planned actions could harm our
reputation and business
Standards for interaction with customers and the community have been under intense scrutiny in Australia for some time. It is
important that we engage with our customers in an ethical and considered manner. We have developed a framework to guide
our people in making ethical decisions.
At Stockland, we have prioritised our focus on customer engagement including regular customer surveys, extra training for our
customer-facing employees, and introduction of the ‘Stockland Listens’ initiative which connects our people to our customers to
listen and learn from their experience. In addition, we have implemented a customer feedback framework with reporting through
to our Board and Committees. There are consequences for behaviours that do not reflect Stockland’s values including potential
remuneration and employment impacts.
Our ability to anticipate and respond to changing consumer preferences for our products and services
We will continue to:
stakeholder preferences;
research, Stockland Exchange (our online research community) and other data sources;
• foster a culture of innovation to identify and take advantage of opportunities to leverage movements in
• evolve our market-leading product innovation and deepen our customer insights using our proprietary Liveability Index
• create sustainable and liveable communities and assets, resilient to changes in climate;
• enhance our design excellence, providing greater functionality and value for money that meet the demands of Australia’s
• continue to optimise our portfolio to meet changing conditions and customer and stakeholder preferences.
changing socio-demographics, including an ageing population and more socially conscious millennials; and
Regulatory and policy changes impact our business and customers
Failure to anticipate and respond to regulatory and policy change could have an adverse effect on our ability to conduct business.
During COVID-19, we continue to see rapid and widespread regulatory changes that we have navigated.
We will continue to:
• proactively engage with industry bodies and government to implement effective COVID-19 management strategies to enable
• implement forward-looking practices to remain well positioned for regulatory change – In FY21 we have focused on enhancing
the continued safe operation of our properties within government guidelines;
and updating a number of key policy and governance matters including our compliance framework, conflict of interest policy,
fraud, bribery and corruption prevention policy, and delegation of authority framework;
• engage with industry and government on policy areas including taxation and planning reform;
• focus our development activity in areas where governments support growth; and
• carry out mandatory training for all employees in relation to the compliance areas and obligations relevant to our business.
Our ability to deliver on strategic priorities in challenging market conditions
We remain cautious about the shape and speed of the recovery of the market after the COVID-19 pandemic. We will continue to
monitor the impact of COVID-19 and its implications for our strategy and business.
We will continue to carefully assess market conditions in the delivery of our strategic priorities. In addition, we will:
• maintain the appropriate strategic asset weighting to drive resilience and enduring growth;
• increase access to capital via partnerships to improve growth;
• reposition our core Retail Town Centre portfolio and execute Workplace developments to create the workspaces of the future;
• leverage our strong foundations in Communities and accelerate Land Lease;
• accelerate and scale innovative digital and data customer offerings to drive growth; and
• invest in and deepen our peoples’ capabilities.
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Change within the retail sector impacts portfolio allocation
The retail landscape continues to experience significant structural change as seen in the convergence of technological advances,
e-commerce, and changes in underlying consumer behaviour. The COVID-19 pandemic has placed significant pressure on the
retail sector with an associated impact on our rental income.
We have been proactive in our retail strategy and will continue to:
and good hygiene practices;
• rebase rents to sustainable levels;
• evolve our pandemic response plans and operations at our centres to manage and promote controls such as social distancing
• remix our tenancies with a focus on non-discretionary and service based offerings;
• apply our placemaking strategy across our assets to create convenient, curated communities that form the social hub;
• leverage deep customer insights and analytics to inform our tenant remixing; and
• dispose non-core retail assets and reinvest capital into our Workplace and Logistics development pipeline.
Capital market volatility impacts our ability to transact and access suitable capital
We will continue to drive growth in our business and deliver on our strategic priorities by:
• allocating capital strategically across our diversified portfolio in response to changing markets;
• progressing capital partnering opportunities across all sectors;
• acquiring new assets on capital efficient terms;
• retain a strong balance sheet at appropriate levels of gearing within our target range of between 20 per cent to 30 per cent;
• access diverse funding sources across global capital markets on competitive terms and tenors;
• maintain our disciplined and prudent capital management approach;
• retain investment grade ratings across multiple credit agencies to demonstrate our strong credit value proposition; and
• engage with existing and potential debt and equity investors to regularly update them about the business.
52
Stockland Annual Report 2021
Climate-related risks
We understand that extreme weather and other physical
climate risks impact our assets and communities now and
will continue to do so into the future. We also acknowledge
the potential for financial impacts resulting from carbon
emissions regulation, particularly in the context of
Australia’s ratification of the 2015 Paris Agreement to limit
global temperature increases to below 2ºC. We manage
these climate risks and opportunities by developing and
operating energy-efficient, climate resilient assets and
communities; and our transition to lower-carbon energy
sources at our assets.
This is Stockland’s fourth full-year disclosure of
climate change issues management in line with the
recommendations of the Financial Stability Board’s Task
Force on Climate-related Financial Disclosures (TCFD).
GOVERNANCE
The Board and Risk Committee provide oversight of our
risk management framework. The Risk Committee meets at
least four times per year and receives quarterly reports on
our enterprise risk register, which includes climate change
as a material risk.
All Directors of the Board are members of the Sustainability
Committee, which meets at least twice per year and
considers our approach to carbon mitigation (including
emissions reduction targets), our methods for building
climate and community resilience, and emerging climate
regulation. More details on our corporate governance is set
out in the section of this report entitled ‘Governance’ on
page 81.
The Stockland Leadership Team has specific
responsibilities relating to our sustainability performance,
including targets and objectives related to climate
change risks and opportunities. Our Chief Financial Officer
STRATEGY
chairs our internal sustainability steering committee,
which is composed of senior managers from various
departments including Strategy, Investor Relations,
Stakeholder Relations, Project Management, People
and Culture, Legal, Risk, Operations, Development and
Sustainability. The committee meets at least two times per
year and its key responsibilities include:
• informing our sustainability strategy and supporting the
delivery of sustainability targets, including those related
to climate change mitigation and adaptation;
• investigating and reporting on environmental, social,
and governance risks and opportunities across our
current and planned operations; and
• guiding compliance with, and monitoring of, our
environmental and social policies, guidelines, and
agreed initiatives, including those related to carbon
emissions reduction.
As a global leader in sustainability Stockland has been
identifying risks and opportunities related to both the
physical impacts of climate change (physical risk) and
a global transition to lower-carbon energy sources
(transition risk) as part of its public disclosures for 15
years. Our response to these risks and opportunities
has been guided by our Sustainability Strategy, our
detailed Climate Adaptation Strategy, and our business
unit sustainability strategies.
We recognise that climate-related risks will persist
for the foreseeable future and, likely, into the long
term. The precise nature of these risks, however, is
uncertain as it depends on complex factors such as policy
change, technology development, market forces, and the
links between these factors and climatic conditions. To
accommodate this uncertainty, we incorporate scenario
analysis into our climate risk assessment process to
understand how climate-related risks and opportunities
may evolve and impact the business over time. The
outcomes of this scenario analysis highlight specific
climate-related issues that could have a material impact on
Stockland, relating to both physical and transition risks.
STOCKLAND'S 2030 SUSTAINABILITY STRATEGY 'LIVING FOR THE FUTURE'
Our enhanced Sustainability Strategy features our goal to advance climate actions that continue to address our impact
on the climate and develops resilience to a changing environment. To do this we have prioritised achieving net zero
carbon by 2028, embedding asset and community scale resilience of our portfolio and working toward a net zero
water future.
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STOCKLAND’S CLIMATE SCENARIO ANALYSIS INFORMS OUR CLIMATE STRATEGY
The Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment report (AR5) published in 2014, outlines a range of Representative
Concentration Pathways (RCP) designed to be ‘representative’ of possible future emissions and greenhouse gas (GHG) concentration scenarios
to the year 2100. The pathways are based on global research and existing literature and comprise four scenarios: RCP8.5, RCP6.0, RCP4.5 and
RCP2.6. Each RCP reflects a different concentration of global GHG emissions reached by 2100, based on assumptions of different combinations
of possible future economic, technological, demographic, policy, and institutional trajectories.
RCP 8.5 Scenario
RCP 2.6 Scenario
This scenario is broadly considered the ‘business-as-usual’ scenario
in which emissions remain high and global temperatures rise 3.2
– 5.4°C by the end of the century. RCP 8.5 is characterised by
increasing GHG emissions driven by a lack of policy changes to
reduce emissions.
Stockland uses RCP 8.5 for physical risks to inform our
scenario analysis.
This scenario is most closely aligned with delivering the Paris
Agreement targets. It assumes a drastic reduction of global emissions
as result of sweeping policy and technology change that results in
a global temperature change of approximately 0.9 – 2.3°C by the
end of the century, minimising (but not eliminating) physical risks of
climate change.
Stockland uses RCP 2.6 for transition risks to inform our
scenario analysis.
Physical risks
As a real estate asset owner, manager, and developer, we
acknowledge that physical risks associated with climate
change can result in negative financial impacts, such as
increased maintenance costs or decreased revenues from
disrupted operations.
Our scenario analysis identified key physical risks
which include:
• Extreme heat – impacting the health and wellbeing of
residents and the community and resulting in issues
such as increased requirements for cooling and areas
of respite, increasing demand on HVAC systems, energy
and water supplies, and increased heat stress events
amongst the community creating a higher demand for
refuge indoors;
• Extreme rainfall – resulting in issues such as increasing
local flood events, erosion of playing fields and
grounds, roof and gutter leakages and inundation of
building and carparks creating property damage and
business interruption;
• Sea level rise – an increase in saltwater intrusion from
storm surge resulting in the inundation and degradation
of property structures and accessibility;
• Cyclones and storms – resulting in issues such as
decreased roof structure integrity and security of roof
mounted equipment creating property damage and
business interruptions, and increase in demand for
properties to be used as evacuation shelters during
cyclone events; and
• Bushfires – resulting in issues such as fire
damage to property, disruption to business activities,
accumulation of ash, and smoke penetration into the
building envelope resulting in reduced indoor air quality
and respiratory system issues amongst customers,
tenants, and residents.
We have also assessed water scarcity across Australia and
the adaptive capacity of Australian water utilities, including
the resilience of water supply and water infrastructure.
Our strategy response to physical risks
In recognition of these potential impacts, our strategy
focuses on a commitment to creating climate resilient
assets and communities with a greater ability to endure
severe weather impacts and operate with minimal
disruption. Implementing this strategy involves our entire
value chain, from our development and supply chain
through to operations. We use climate and community
resilience assessments to understand how to minimise
negative impacts and create opportunities from building
and maintaining resilient assets for the long term, including
community preparedness.
Opportunities associated with prioritising the development
of resilient assets include decreased operational costs (e.g.
maintenance, insurance premiums, exposure to litigation)
and increased revenues from increasing consumer
preferences for climate-resilient products.
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Stockland Annual Report 2021
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Transition risk
Regarding transition risk, Australia has agreed to the
objective of limiting global warming to below two degrees
celsius. Pursuing this objective implies a general movement
away from fossil fuel energy and increased deployment
of low/zero carbon energy sources and energy-efficient
technology. Our scenario analysis process informs the
business on transition risks and how they may evolve over
time, including:
• Policy changes impacting development and building
– including changes in zoning and density requirements,
policies promoting more sustainable land use and
changes to the National Construction Code;
• Liability – including changes to the insurability of
assets and commercial liability regarding disclosure
of transition and physical risks;
• Technology – broad scale changes to the energy
and power network including generation, transmission,
and distribution in the transition to renewable
energy sources;
• Investment – lending institutions only supporting
borrowers who manage their climate risk and create
low carbon solution; and
• Reputation – prioritisation of the transition to a low
carbon economy by early adopters.
Our strategy response to transition risk
In recognition of our capacity to contribute to a low-carbon
future and to mitigate impacts associated with transition
NET ZERO CARBON BY 2028
risks, our business has been guided by emission intensity
reduction targets and strategy since 2006. Executing
this strategy prioritises the delivery of energy efficiency
enhancements and renewable energy installations across
our portfolio. It also involves engaging our customers,
employees, and industry stakeholders to educate and
advocate for a transition to a low carbon future. Examples
of our strategy response to transition risk include our
industry leading investment in renewables across our
commercial office portfolio since 2015, the development
of our Natural Solar Customer Offer providing residents
with the opportunity to purchase solar and batteries at a
discounted rate, and our active long-term participation in
industry forums including the Property Council of Australia
(PCA) and the GBCA.
Opportunities related with this strategy include:
• potential increased value of existing land
holdings resulting from the changing zoning/
density requirements;
incentives by the insurance industry;
• increased premium discounts and the introduction of
• the transition of the grid to renewable energy sources
and the opportunity to partner with energy producers to
support technological innovation; and
• enhanced brand and reputation by educating
consumers, and the ability to attract capital from
organisations seeking to invest in companies helping
the transition to a low carbon economy.
In February 2021, we advanced our climate action, bringing forward our target to achieve net zero carbon emissions
to 2028 – two years earlier than previously committed - and extending the commitment across all business activities.
The target covers close to 170 active assets and projects across Australia, including residential development emissions.
The target will be achieved through continuing the successful rollout of renewable energy, portfolio electrification and
pioneering innovative technologies that support carbon reduction.
The Net Zero Carbon program is also supported by a partnership with the Clean Energy Finance Corporation (CEFC),
which in 2020 provided a $75 million debt facility which funds key initiatives including Net Zero Carbon for our Retirement
Living and Industrial portfolios and for our Corporate Head Offices.
Year ended 30 June 2021
55
RISK MANAGEMENT
Our risk management approach is detailed on page 47 of
this Report. Part of this approach includes leaders from
across the business participating in annual risk workshops
and ongoing risk discussions to assess and consolidate our
views on key and emerging risks, including climate risks.
Business units analyse, evaluate, and consolidate these
risks and findings into a profile for each business unit and
these are then incorporated into our assessment for the
Group. This process is complemented by climate-related
risk and opportunity assessments.
Climate-related risks and opportunities that may impact
assets are prioritised for action based on:
• impact on communities and the environment in which
• overall potential impact on asset performance; and
• financial impact to the business in managing the risk
the asset is operating;
or opportunity.
significant loss;
Across our portfolio, climate-related risks and
opportunities are prioritised for action based on:
• geographical areas of highest risk;
• lessons learned and perceived likelihood of
• design attributes of the asset which affect
• climate change scenarios;
• overall impact on business-wide emissions reductions;
• impact on local communities and environment (relative
to where we operate); and
• overall risk to value and revenue.
climate resilience;
Managing our physical risks and opportunities
We include climate and community resilience assessments
in the asset-level risk management process. These
assessments focus on the capacity of assets and associated
communities to withstand severe weather impacts and
minimise any disruption, while providing support for the
local community. When considering strategies to improve
the resilience of an asset, we use an opportunities matrix
which looks beyond the traditional risk matrices based
on likelihood and consequence ratings. For example,
we use the opportunities matrix to identify the value
of discretionary climate resilience initiatives such as
shade sails in carparks and cool roof covenants in
residential communities.
For assets under development, the management of
climate-related risks and opportunities is integrated into
our project development lifecycle, known as D-Life. Each
stage of the D-Life process requires the delivery of specific
sustainability objectives, including climate-related risk
assessments at defined approval gates.
Managing our transition risks
and opportunities
Our Government Relations, Group Legal and Risk, and
Sustainability teams keep the Stockland Leadership Team
and Board informed on existing or emerging climate
regulation that may impact on the business.
In response to regulatory and market risks relating to
energy supply and demand, Stockland is committed to
promoting efficient operation of our assets and increasing
our renewable energy capacity.
Managing climate-related transition risks and
opportunities also involves participation in industry-wide
collaborations such as with the PCA and the GBCA, that
focus on how the property industry can lead a transition to
a low carbon economy.
56
Stockland Annual Report 2021
METRICS AND TARGETS
FY21 marked the end of our sustainability targets cycle. We have achieved our climate commitments delivering the
following outcomes;
Transition to net zero
69% emission intensity reduction across Commercial Property
portfolio since 2006; $136 million in savings with over 50% passed on
to tenants
18.7MW solar capacity across Commercial Property portfolio;
generating close to 40% of retail portfolio electricity consumption
4.8 star average NABERS Energy Retail Town Centre rating
4.7 Star average NABERS Energy Workplace and Business Park rating
Net zero homes delivered in three communities and national solar and
battery offer for residential community customers
Medium density product at 10 communities exceeded relevant minimum
energy related residential performance design compliance standards
by 50%
Climate resilience
Entire portfolio mapped for physical climate risk
48% portfolio assessed for climate resilience at asset level including all
‘higher climate risk’ assets
Our climate metrics and target are provided on Page 46 (with sustainability update in this Report) and in detail within our
ESG Performance and Data Pack. These metrics demonstrate our progress and commitment to support the transition to a
low carbon economy and ongoing assessment of climate risk across our portfolio.
Our targets and metrics are incorporated into annual asset-level business planning and reporting procedures as well as key
performance indicators which include climate-related risks and opportunities where relevant. Performance against these
indicators is included in individual employee remuneration evaluations.
We commence FY22 with the launch of our 2030 Sustainability Strategy – Living for the future – and an enduring focus on
advancing climate action detailed on page 40 (with sustainability update in this Report).
Our full set of targets and metrics is provided in our annual ESG Reporting Suite, available online at stockland.com.au/about-stockland/
sustainability/downloads
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Year ended 30 June 2021
57
Remuneration report
58
Stockland Annual Report 2021
Artist impression, Piccadilly Complex, NSW Message from the Chair of the
People & Culture Committee
On behalf of the Board, I am pleased to present the
Remuneration Report for FY21
For Stockland, FY21 has been a year of transition,
punctuated by ongoing COVID-19 disruptions and a
change of Managing Director and CEO. The Board
continues to be immensely proud of our people who have
demonstrated great resilience in focusing on the task
at hand and delivering on our strategic priorities while
protecting the wellbeing of our residents, customers, the
broader community and each other. We appreciate their
exceptional effort and commitment to our purpose and
values during another challenging year.
Remuneration outcomes
The Board takes a robust approach to determining
executive remuneration outcomes, using judgement and
oversight to consider a range of quantitative and qualitative
factors. The remuneration outcomes for FY21 reflect:
• Stockland’s performance against a range of measures of
financial performance and financial value-drivers in our
Short Term Incentive (STI) Corporate Scorecard;
• the quality of Stockland’s performance in the context
of the operating environment, peer performance and
feedback from our stakeholders;
• the importance of retaining our people and the talent
required to deliver our strategy and purpose; and
• how well we have managed risk, compliance and issues
that impact our reputation.
In determining the overall STI pool and individual STI
awards for the former Managing Director and CEO and
other members of the Stockland Leadership Team (SLT),
the Board has taken care to balance the expectations of
our stakeholders and the wider community. In doing so,
the Board applied discretion to take into consideration the
following factors:
Our financial result and returns to securityholders
reflects a strong contribution across our diversified
businesses and demonstrates resilience in the face
of COVID-19:
• despite headwinds from COVID-19, our key financial
measure of Funds From Operations (FFO) finished only
moderately down on FY20 performance and at the top
end of our guidance range. Stockland did not apply for
any relief under the JobKeeper scheme;
• our total securityholder return (TSR) for the year was
more than 15 per cent higher than the S&P/ASX200
A-REIT Accumulation Index;
• we increased our full year distribution per security from
24.1 cents to 24.6 cents fully covered by operating
cash flows;
• our balance sheet is well-positioned to drive growth,
supported by investment grade credit ratings; and
• our net tangible assets per security increased from $3.78
to $3.98.
We have remained focused on our key priorities during
a year of transition:
• creating Australia’s most liveable and sustainable
master planned communities and capitalising on
more favourable trading conditions, driven in part
by government stimulus, by increasing production,
restocking our residential landbank and developing a
digital sales channel;
• creating a market leading Land Lease Communities
business, strengthened by the recent acquisition of
the Halcyon Group, a leading Queensland based land
lease operator;
• accelerating the delivery of our Logistics development
pipeline with our Workplace development pipeline
progressing well; and
• future-proofing our Retail Town Centres through a
proactive remixing and rebasing strategy.
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Year ended 30 June 2021
59
Our people and culture
Our people are one of our most valuable assets and the
Board is proud of the way in which they embody our purpose
and vision and live our values each day. Throughout the
year, we leveraged our cultural strengths and values to
support our customers, tenants, residents, partners and
each other through another challenging year.
In particular, we are proud of the following achievements:
• we introduced a ‘Hub and Home’ working model which
has been highly effective in maintaining productivity,
collaboration and personal wellbeing during the
ongoing COVID-19 restrictions. The model allows our
people to balance their work from the office with quality
work time either from home or at a Stockland asset
closer to home;
• our employee engagement score remains high at 83%
placing us above the average of other Australian
companies. We have also placed a significant focus
on the wellbeing of our people and have regularly
monitored this during the pandemic;
• we introduced our Capability Masterplan to map out key
skills and experiences our people require for different
roles and stages of their career;
for the seventh consecutive year; and
• Stockland maintained WGEA citation for gender equality
• planning is underway for our FY22 graduate intake which
will be our biggest ever with 43 positions to be offered.
More details on how our people and culture supports
Stockland strategy and performance is included in the
People and Culture update on page 36 of the Annual Report.
Maintaining an engaged and
focused executive team during a
year of transition
In June 2020, we announced the intention of our Managing
Director and CEO, Mark Steinert, to retire after nine years at
the helm and welcomed Tarun Gupta as our new Managing
Director and CEO on 1 June 2021. During this year of
transition, Mark continued to lead the organisation through
COVID-19 disruptions with a strong focus on our strategic
priorities. We thank Mark for his sustained energy and
focus during the year. Mark’s entitlements on retirement
are set out in section 4.6 of this Remuneration Report and
are in accordance with his contractual entitlements and
the normal operation of our incentive plan rules in the
circumstances of retirement.
We have continued to prioritise the safety and long-
term wellbeing of our tenants, customers, residents
and contractors:
• concluded tenant negotiations within the spirit of the
Commercial Code of Conduct on a case-by-case basis to
apply assistance packages where required;
• at all times across our diversified portfolios, we
maintained a focus on the safety of all of our
stakeholders, providing customers with a safe place
to shop, tenants with access to their premises in
accordance with government restrictions and enabling
customers to purchase property and reside safely in our
communities; and
• with the pandemic escalating across the country,
we have undertaken a number of initiatives with
government authorities, including partnering with
Western Sydney Local Health District to establish a
temporary COVID-19 testing clinic at Stockland Wetherill
Park dedicated to the testing of centre employees,
retailers and ancillary service provider staff.
Following a review across Stockland’s workforce,
we identified potential historical wage and salary
underpayments for a cohort of employees whose roles
result in frequent variations in weekly hours worked and
rates earned, including intermittent overtime. We have
notified the Fair Work Ombudsman and are working
to address the issues with the assistance of a major
accounting firm and a priority around engaging with
impacted employees to address these matters. To date, the
amounts of potential underpayments are not material to
the financial statements and will be reported following the
completion of the review.
After careful consideration of all other relevant factors and
competing expectations, the Board determined that there
would be a Group wide STI pool of $29.6 million for FY21,
an increase from $23.4 million last year. The STI award
approved for the former Managing Director and CEO was
67 per cent of his STI opportunity, pro-rated for the portion
of the year in service and awards to Other Executive Key
Management Personnel (KMP) in the range of 67 per cent to
73 per cent.
With the exception of the STI award to the former Managing
Director and CEO which will be made in cash in accordance
with his employment contract in the circumstance of
retirement, two-thirds of the STI award made to each KMP
will be in cash, with the remaining one-third in deferred
equity as per the normal operation of the STI plan. Further
details of these awards are included in section 2.2.
60
Stockland Annual Report 2021
In recognising the importance of retaining an engaged and
focused executive team during a year of transition, the
Board took a number of actions for members of the SLT:
• following a benchmarking exercise against market
peers, targeted increases to Fixed Pay were made to
some SLT members, being the first Fixed Pay increase
in more than three years or since commencement for
these executives;
• as part of the consideration for these Fixed Pay
increases, the contractual notice period was increased
from three months to six months;
• a one-off retention benefit in Stockland securities was
made to Andrew Whitson, CEO Communities, in January
2021 to the value of $800,000 subject to a three year
vesting period; and
• a one-off retention benefit in Stockland securities was
made to Louise Mason, CEO Commercial Property, in
July 2021 to the value of $600,000 subject to a two year
vesting period.
We wish to acknowledge the contribution of Tiernan
O’Rourke, Chief Financial Officer, who will step down in
late 2021. A search to fill this position is well advanced.
We also welcomed two new Board members, Laurence
Brindle who was appointed in November 2020 and Adam
Tindall who was appointed on 1 July 2021 with both new
directors complementing and strengthening the Board’s
existing experience and expertise.
Looking ahead
The Board continues to give careful thought to how our
remuneration framework supports the execution of our
business strategy. Given the challenges in setting long-
term financial targets in a COVID-19 impacted environment,
we made the decision to remove growth in FFO as a
performance measure for FY21 long-term incentives (LTI)
awards, with relative TSR being the single measure.
The ongoing lockdown in Greater Sydney, as well as rolling
short-term lockdowns in regional areas and cities in other
states, means setting long-term financial targets remain
challenging and we will therefore retain relative TSR as
the single performance measure for FY22 LTI grants. The
Managing Director and CEO is currently undertaking a
strategic review of the business with the SLT and the
findings from this review will help inform any changes to
the remuneration framework for FY23, noting that our key
principles of simplicity and securityholder alignment will
continue to guide our design.
While not directly applicable to Stockland, we have given
consideration to the APRA draft Prudential Standard CPS
511 Remuneration, designed to promote the effective
management of both financial and non-financial risks,
sustainable performance and long-term soundness. We
recognise that best practice in this area continues to evolve
and will continue to monitor this as we review and evolve
our design.
Thank you for your support. We look forward to
your feedback.
Melinda Conrad
Chair, People & Culture Committee
This report forms part of the Directors’ Report and has
been audited in accordance with section 308(3C) of the
Corporations Act 2001. The Remuneration Report covers
Stockland and the Trust.
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61
Remuneration Report
Contents
1 Remuneration framework at a glance
2 Performance and remuneration outcomes
3 Remuneration governance
4 Executive remuneration in detail
5 Executive KMP remuneration tables
6 Non-Executive Director remuneration
page 63
page 64
page 68
page 70
page 76
page 79
Key Management Personnel
Individuals who were KMP at any time during the financial year were as follows:
Name
Non-Executive Directors1
Mr Tom Pockett
Mr Laurence Brindle
Ms Melinda Conrad
Ms Kate McKenzie
Mr Barry Neil
Mr Stephen Newton
Ms Christine O’Reilly
Mr Andrew Stevens
Executive Director
Mr Tarun Gupta
Other Executive KMP
Ms Katherine Grace
Ms Louise Mason
Mr Tiernan O’Rourke
Mr Andrew Whitson
Former Executive Director
Joined 16 November 2020
Managing Director and Chief Executive Officer (Joined 1 June 2021)
Group Executive and General Counsel and Company Secretary
Group Executive and CEO Commercial Property
Group Executive and Chief Financial Officer
Group Executive and CEO Communities
Mr Mark Steinert
Managing Director and Chief Executive Officer (Retired 28 May 2021)
1 Mr Adam Tindall was appointed to the Board on 1 July 2021 and is therefore not a KMP for FY21.
62
Stockland Annual Report 2021
1. Remuneration framework at a glance
Our remuneration framework is designed to support Stockland’s strategy to maximise returns by developing sustainable
Communities, owning and managing leading Retail Town Centres, and growing our Workplace and Logistics portfolio.
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Year ended 30 June 2021
63
Remuneration principles Performance rights to Stockland securities subject to a three-year performance period and continued service conditions over three and four yearsUnderpinned by our CARE values and prudent risk and capital managementOur PurposeWe believe there is a better way to liveOur vision is to be a great Australian real estate company that makes a valuable contribution to our communities and our countryOur VisionStrategic pillarsGROWING CUSTOMERS AND ASSET RETURNSCAPITAL MANAGEMENTOPERATIONAL EXCELLENCESUSTAINABILITY LEADERSHIPFair and market competitiveLinked to our strategic prioritiesAligned to our stakeholdersPURPOSE & LINK TO STRATEGYTo attract and retain the executives capable of leading and delivering the strategyRewards the achievementof annual targets alignedto the delivery of sustainable stakeholder outcomesA mix of financial outcome measures such as FFO and ROE balanced with measures of financial value drivers consisting of customer, people and our key business prioritiesFor FY20, the Board applied discretion to make STI awards fully in deferred securities to maintain full alignment of the award with securityholders through the COVID-19 recovery period and to support the retention of an engaged and focused executive teamFor FY21, we will revert to our normal practice to deliver STI awards as a mix of cash and deferred securitiesBenchmarked against A-REIT and ASX100 peersBase salary, statutory superannuation and other benefitsPERFORMANCE MEASURESDELIVERYSustainableSimple and transparentAligns executive outcomes with long-term securityholder returns building a senseof business ownershipStockland's Total SecurityHolder Return versus a composite index of A-REIT 200 peersLong-term incentives (LTI)Application of the remuneration framework for FY21Fixed Pay (FP)Short-term incentives (STI)
2. Performance and remuneration outcomes
2.1. STI CORPORATE SCORECARD ASSESSMENT
The Board takes a robust approach to determining the STI pool and executive remuneration outcomes using judgement and
oversight to consider a range of quantitative and qualitative factors. As a first step, an assessment is made of performance
against the STI Corporate Scorecard shown below.
Priority KPI
Commentary
Overall rating
BUSINESS AND FINANCIAL PERFORMANCE (60%)
Financial
Drive Group Financial Performance through
• Funds from Operations (FFO) per security
• FFO ($m)
• Return on Equity (ROE)
FINANCIAL VALUE DRIVERS (40%)
Key Business Priorities
Delivering on our Key Business Priorities
and Logistics
Residential business
to supplement our growth aspirations
• Increase capital allocation to Workplace
• Increase access to capital via partnerships
• Leverage our strong foundations in our
• Drive performance in the Retail Town
• Create a market leading Land Lease
• Embed our integrated system to drive
• Fast-track climate action
• Manage the impact of COVID-19 on
business improvement and scalability
Communities business
Centre business
the business
Customer & Stakeholder
Find, create and capture customer value
by enhancing and embedding a customer-
centric culture
People & Leadership
Position Stockland as an employer of choice by
providing leadership in attracting, integrating
and retaining talent and continuing to drive an
inclusive and diverse workplace.
guidance range
• FFO (cents per security) was 33.1, at the top of our
• FFO was $788 million
• ROE1 was 9.9%
Within
expectations
• Acquired over $200 million of new Logistics sites; Workplace
• Increased production to meet customer demand by adding
development pipeline of $2.6 billion progressing well
approximately 14,000 lots to our Residential landbank and
achieved a significant increase in residential and retirement
settlements net sales through a rapidly developed digital
sales channel
• Executed 683 leasing deals with leasing activity returning to
• Commenced development in our Land Lease Communities
pre-pandemic levels
business and on 19 July 2021, we announced the aquisition of
the Halcyon land lease business adding a further 3,800 sites
to the existing portfolio of 4,000 sites
• Accelerated our commitment to achieving net zero carbon
from 2030 to 2028 and launched our refreshed 2030
Sustainability Strategy
• While maintaining focus on the safety of all of our
stakeholders, we have focused on improving our business
resilience and minimising the impact of COVID-19 on our
business activities and financial performance
• Our focus on driving a customer centric culture is
• Based on customer feedback, Stockland met or exceeded 7
progressing well
out of 8 customer experience metrics relating to satisfaction,
wellbeing, liveability, and happiness. The exception being
for prospective residents who were impacted by reduced
product availability caused by high demand
• The results from the Our Voice employee survey specifically
measuring customer focus indicated positive results
compared to the Australian norm benchmark
• Our employee engagement score measured through the Our
Voice employee survey has remained high with a score of 83%
reflecting a positive view of our culture, vision and values
• We introduced a ‘Hub and Home’ model which has allowed
our people to work from the office for a significant part of
the week and balance this with quality work time either from
home or at Stockland assets closer to home
• We have continued to progress our gender diversity in senior
roles with the proportion of women in senior leadership
increasing by 1% to 38.5% for the year
Mostly within
expectations
with some above
Overall within
expectations
Within
expectations
64
Including Residential work out projects. ROE was 10.3% excluding these projects.
1
Stockland Annual Report 2021
To ensure the STI outcomes appropriately reflect overall performance and the expectations and competing interests of our
various stakeholders, the Board then applies judgement and discretion to consider any other relevant factors not included
in the scorecard.
Factors considered by the Board in determining the STI pool included the quality of our results in the context of the operating
environment and peer performance, feedback from our stakeholders (including but not limited to our securityholders,
customers, tenants, partners and people), how well we have managed risk, compliance and reputational issues and the
extent to which we have met our sustainability and operational excellence objectives.
Taking all relevant factors into account, the Board approved an STI pool for all eligible employees funded at 95% of
target opportunity.
2.2. EXECUTIVE KMP STI OUTCOMES
The table below sets out the STI awards for FY21. STI incentives are awarded in both cash and Stockland securities with
deferred vesting. For the former Managing Director and CEO, the STI award in his year of retirement will be fully paid in cash
in accordance with his employment contract. In accordance with the normal operation of the STI plan, two-thirds of the STI
award for Other Executive KMP will be paid in cash with the remaining one-third in deferred securities. Half of the deferred STI
securities will vest 12 months after the award, with the remaining half vesting 24 months after the award, subject to service
conditions and clawback provisions.
In determining individual STI awards, the Board took into account the overall performance of the Group as well as
performance of the individual in meeting business unit / functional and personal objectives, including risk behaviours
and conduct.
Target
STI
(as % of
Fixed
Pay)
Maximum
STI
(as % of
Fixed
Pay)
STI
awarded
(as % of
Target)
STI
Awarded
(as % of
Maximum
STI)
STI
awarded
for FY21
STI paid in cash1
%
$
STI deferred into
equity2
%
$
DSTI
securities
to be
granted3
%
n/a
80
90
90
90
%
n/a
120
135
135
135
%
-
105
109
100
109
%
-
70
73
67
73
$
-
-
532,635
760,604
845,853
760,604
355,090
507,070
563,902
507,070
-
67
67
67
67
-
177,545
253,534
281,951
253,534
-
33
33
33
33
-
-
38,711
55,279
61,475
55,279
-
Executive Director
Tarun Gupta4
Other Executive KMP
Katherine Grace
Louise Mason
Tiernan O'Rourke
Andrew Whitson
Former
Executive Director
Mark Steinert
100
150
100
67
1,360,973 1,360,973
100
-
The portion of STI awarded for the FY21 performance year which is paid as cash.
The portion of STI awarded for the FY21 performance year that is deferred into Stockland securities which will vest over the next two years.
The number of securities granted for deferred STI is based on the Volume Weighted Average Price for the ten business days after 30 June 2021. This price was $4.5865.
1
2
3
4 The new Managing Director and CEO was not eligible for a FY21 STI award.
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65
2.3. PERFORMANCE AGAINST LTI MEASURES
The table below shows Stockland’s performance against the respective FFO and TSR performance hurdles for the three
years to 30 June 2021. As a result of this performance, 48.4 per cent of LTI awards from FY19 will vest subject to further
service conditions.
Hurdle
FFO per security for FY19 – FY21
Target/
benchmark
performance
Actual
performance
Out/(Under)
performance
% vesting
Weight
Vesting
outcome
Compound average growth rate1
4.25%
(2.4%)
(6.7%)
0.0%
50%
0.0%
TSR for FY19 – FY21
Relative TSR FY19 – FY212
Vesting
28.6%
38.0%
9.4%
96.8%
50%
48.4%
48.4%
For LTI awards made in FY19, the performance benchmark is growth in FFO per security.
1
2 Benchmark based on ASX A-REIT 200 Index excluding Stockland. For LTI awards made in FY19, the TSR performance benchmark is a tailored A-REIT 200 index comprising the largest
six companies forming 80% and a number of smaller companies forming 20%.
2.4. REALISED REMUNERATION TABLE (NON-IFRS DISCLOSURE)
The table below outlines the cash remuneration that was received in relation to FY21 which includes Fixed Pay and the
non-deferred portion of any FY21 STI. The table also includes the value of deferred STI awards from FY19 and FY20 which
vested during FY21, LTI awards from FY19 which vested during FY21 and the cash termination payment made to the former
Managing Director and CEO on retirement.
This information differs from that provided in the remuneration table for executives set out in section 5.1 which was calculated
in accordance with statutory rules and applicable Accounting Standards.
$
Executive Director
Tarun Gupta
Other Executive KMP
Katherine Grace
Louise Mason
Tiernan O'Rourke
Andrew Whitson
STI
awarded
and
received as
cash2
Previous
years’ DSTI
which were
realised3
Previous
years’ LTI
which were
realised3
Total
Remuneration
(received
and/or
realised)
Awards which
lapsed or were
forfeited5
Termination
Benefits4
Fixed Pay1
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
123,288
–
637,123
583,607
773,562
729,508
942,192
851,093
773,562
729,508
–
–
–
–
–
–
355,090
–
507,070
–
563,902
–
507,070
–
353,396
123,175
474,714
195,115
545,206
160,432
507,003
226,801
200,483
106,254
250,601
–
292,368
169,038
250,601
144,892
–
–
–
–
–
–
–
–
–
–
123,288
–
1,546,092
813,036
2,005,947
924,623
2,343,668
1,180,563
2,038,236
1,101,201
–
–
427,462
557,801
534,330
–
623,387
813,459
534,330
697,252
Former Executive Director
Mark Steinert
2021
2020
1,364,384
1,459,016
1,360,973
–
1,105,394
508,873
810,155
482,969
750,000
–
5,390,906
2,450,858
3,418,734
2,324,169
1
2
Fixed Pay includes cash salary, superannuation and packaged benefits (and associated taxes). During FY21, Fixed Pay increases were made to Katherine Grace (8.3%), Louise Mason
(6.7%), Tiernan O'Rourke (8.7%) and Andrew Whitson (6.7%). During FY20, the executive team took a temporary 20 per cent voluntary reduction in fixed salaries in May 2020 and
June 2020.
FY21 STI awards are shown in section 2.2. For Other Executive KMP, the cash / equity splt was two-thirds / one-third and for the former Managing Director and CEO was 100% in cash
in accordance with his employment contract. For FY20, STI awards were made fully in equity with no cash component to maintain full alignment with securityholders and support
the retention of an engaged and focused executive team during a CEO transition.
This represents the value of all prior years’ deferred STI and LTI which vested during FY21 using the 30 June 2021 closing security price of $4.66 (FY20 : $3.31).
3
4 Contractual termination payment equal to six months' Fixed Pay.
5
The value shown represents the value of any previous years’ equity awards which lapsed or were forfeited during the financial year. The FY21 values are based on the closing 30 June
2021 security price of $4.66 (FY20: $3.31).
66
Stockland Annual Report 2021
2.5. FINANCIAL PERFORMANCE OVER THE PAST FIVE YEARS
The remuneration outcomes for our executives vary with short-term and long-term performance outcomes. The table below
summarises Stockland's performance for the past five years and shows the link to incentive outcomes.
FY17
FY18
FY19
FY20
FY21
Financial performance
FFO ($m)1
Statutory profit ($m)2
FFO per security (cents)
Statutory EPS (cents)2
Returns to securityholders
Security price as at 30 June ($)
Distribution per security (cents)
Stockland TSR – 1 year (%)
Tailored index TSR3
Incentive outcomes
Cash STI ($m)4
DSTI ($m)
Company-wide STI pool ($m)
Managing Director and CEO STI (% of target)
LTI vested (% of grant)5
Managing Director and CEO total
incentive outcome
(% of opportunity)6
802
1,195
33.4
49.8
4.38
25.5
7.1
0.0
28.4
9.5
37.9
132.0
50.0
65.7
863
1,025
35.6
42.3
3.97
26.5
(7.0)
7.2
26.6
6.6
33.2
94.0
35.1
46.6
897
311
37.4
13.0
4.17
27.6
13.9
27.0
22.1
6.6
28.7
80.0
47.1
49.8
825
(21)
34.7
(0.9)
3.31
24.1
(15.8)
(21.3)
16.0
7.4
23.4
76.6
0.0
21.9
788
1,105
33.1
46.4
4.66
24.6
48.5
19.9
24.2
5.4
29.6
100.0
48.4
56.2
1
FFO is a non-IFRS measure which replaced underlying profit as Stockland’s primary reporting measure from FY17. This change recognises the importance of FFO in managing our
business and the use of FFO as a comparable performance measurement tool in the Australian property industry. The reconciliation of FFO to statutory profit after tax is presented
in note 2A of the Financial Report.
2 Comparative information for FY20 has been restated for IFRIC agenda decision, "Configuration or Customisation Costs in a Cloud Computing Arrangement (IAS 38 Intangible Assets)".
Refer to note 36C of the Financial Report for details.
Tailored A-REIT 200 index comprised six large companies forming 80% and a number of smaller companies forming 20% as detailed in Section 4.5. Used since FY17 as a LTI hurdle.
3
4 Includes applicable superannuation.
5 Represents the achievement of performance hurdles tested during the year.
6 Applies to the former Managing Director and CEO, Mark Steinert. The new Managing Director and CEO was not eligible to receive an STI or LTI award for FY21.
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3. Remuneration governance
3.1. GOVERNANCE FRAMEWORK
Stockland has a robust remuneration governance framework overseen by the Board. This ensures remuneration
arrangements are appropriately managed and the agreed frameworks and policies are applied across Stockland.
3.2. THE ROLE OF THE PEOPLE & CULTURE COMMITTEE
The People & Culture Committee is responsible for reviewing, monitoring and making recommendations in relation to the
appointment, performance and remuneration of the Managing Director and CEO and senior executives. Where decisions
are being made on the variable remuneration outcomes of executives, the executives being discussed are not present at
the meeting.
The Committee also oversees all employment and remuneration policies, at all levels in the organisation to seek fairness and
balance between reward, cost and value to Stockland, whilst also reflecting risk and compliance performance using input
from the Audit Committee and Risk Committee.
The Committee approves the remuneration framework for all employees, including risk and financial control personnel and
employees whose total remuneration includes a significant variable component.
68
Stockland Annual Report 2021
BOARDThe Board is responsible for setting executive remuneration policy, monitoring theStockland Leadership Team’s performance and approving the performance objectivesand remuneration of the Managing Director and CEO and his or her direct reportsPEOPLE & CULTURE COMMITTEEMANAGEMENTIs the main governing body for key people and remuneration items across StocklandThe roles and responsibilities of the Committee are outlined in the Committee's charter which is summarised below and available on Stockland's website at:www.stockland.com.au/about-stockland/corporate-governancewww.stockland.com.au/about-stockland/corporate-governanceProvide recommendations on remuneration designand outcomes to the People and Culture CommitteeFrom time to time management seek itsown advice and information on remuneration matters from external advisorsAUDIT COMMITTEEReviews earnings figures that are considered for STI and LTI outcomesRISK COMMITTEEProvides advice to the People and Culture Committee relating to material risk issues, behaviours and/or compliance breaches which are considered when determining remuneration outcomesProvide input and feedback through consultation and Governance RoadshowsSTAKEHOLDERS & SECURITYHOLDERSProvide independent information and guidance on remuneration for executives, facilitate discussion, conduct benchmarking and commentary on a number of remuneration issuesEXTERNAL ADVISORS
3.3. THE USE OF EXTERNAL ADVISORS
Remuneration consultants are engaged from time to time to provide independent information and guidance on remuneration
for executives, facilitate discussion, conduct benchmarking and provide commentary on a number of remuneration issues.
Any advice provided by external advisors is used as a guide and is not a substitute for the considerations and procedures of
the Board and People & Culture Committee.
During the year, the People & Culture Committee retained KPMG as its primary remuneration advisor on executive
remuneration matters. KPMG provided market practice, remuneration data, trends and assistance with stakeholder
engagement matters. Stockland also subscribes to a number of independent salary and remuneration surveys, including
property sector specific surveys run by AON Hewitt, Avdiev and PwC.
During FY21, no recommendations in relation to the remuneration of KMP were provided as part of these engagements.
3.4. OTHER GOVERNANCE PRACTICES
Managing risk
Stockland’s remuneration structure is underpinned by our CARE values and prudent risk management. The way executives
manage risk and conduct themselves are key considerations of the Board in determining incentive outcomes. Specific
practices include:
• a joint meeting of the People & Culture Committee and Risk Committee is held to discuss input from the Group Risk
Officer on material risk issues, behaviours and / or compliance breaches which are considered when determining
remuneration outcomes;
value drivers aligned to Stockland’s long-term strategic priorities;
• incentive plans that balance both short and long-term performance against a range of financial metrics and financial
• the deferral of a significant portion of the STI award in Stockland securities which vests over an extended time frame;
• plan rules which provide the Board with discretion to take other factors not included in the corporate scorecard into
• the use of a clawback (malus) provision.
account when determining incentive outcomes; and
Use of discretion
The Board retains the right to apply discretion over remuneration decisions to ensure outcomes for executives appropriately
reflect the performance of the individuals and Stockland, and reflect the expectations and experience of stakeholders. In
this regard, Stockland has established an indicative framework for applying discretion to adjust remuneration outcomes
upwards or downwards, including to zero, where appropriate.
Change in control A change in control is defined in the plan rules governing Stockland’s incentive plans as a circumstance where any person
together with their associates acquire Stockland securities which when aggregated with securities already held by that
person and their associates, comprises more than 50% of the issued securities of Stockland. The Board will not accelerate
the vesting of unvested incentives in the event of a change in control, except to the extent that applicable performance
conditions (determined as at the date of the change of control) have been satisfied.
Minimum
securityholding
The Managing Director and CEO is required to build and maintain a minimum holding of Stockland securities equivalent to
at least two times fixed pay (one times fixed pay for Other Executive KMP) for any securities granted after 1 July 2010. This
aligns the interests of executives to those of securityholders and encourages a mindset of business ownership.
Securities Trading
Policy
The Stockland Securities Trading Policy prohibits employees from dealing in Stockland securities while in possession of
price-sensitive information that is not generally available to the public.
Clawback
The Managing Director and CEO and senior executives may otherwise only deal in Stockland securities during permitted
trading windows after first obtaining consent of the Chairman of the Board.
The policy also prohibits employees entering into any derivative or margin lending arrangements over Stockland securities
at any time.
The Board may in its absolute discretion determine that some or all of an employee’s unvested STI and/or LTI awards
be forfeited if, in the Board’s reasonable opinion, adverse circumstances affecting the performance or reputation of the
company have come to the Board’s attention which had they known at the time when the incentive award was being made,
would have caused the Board to make a different decision. Clawback may apply both while the employee is employed or
after termination of employment.
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69
4. Executive remuneration in detail
4.1. REMUNERATION DELIVERY
To deliver our strategy, we must ensure our executive remuneration framework reflects Stockland’s desire to attract
and retain the best people. Stockland’s executive remuneration framework is structured so that a substantial portion of
remuneration is delivered as Stockland securities through STI and LTI. This section sets out our approach in FY21.
70
Stockland Annual Report 2021
Base salary, superannuation and packaged benefitsA mix of financial outcome measures balanced with measures of financial value driversPerformance rights to Stockland securities subject to a three-year performance period and continued service conditions over three and four yearsYear 0Year 1Year 2Year 3Year 4CashDeferred securities that vest over one and two yearsFixedSTILTI 4.2. REMUNERATION MIX
Generally, Stockland’s executives have a greater proportion of remuneration at risk than their counterparts in comparable
companies. We believe this provides strong alignment between executive outcomes and performance.
4.3. FIXED PAY
Fixed Pay comprises cash salary, superannuation contributions and packaged benefits (including associated taxes).
Packaged benefits may include novated leases on vehicles and parking. Fixed Pay is delivered in accordance with terms and
conditions of employment.
We review Fixed Pay for the Managing Director and CEO and SLT members each year against independently provided external
data sources and market benchmarks from a group of ASX100 companies and larger property firms, ensuring that our Fixed
Pay remains competitive with companies of comparable size and complexity in our industry.
With regards to Other Executive KMP, during the year, Fixed Pay increases between 6.7 per cent and 8.6 per cent were made
to Katherine Grace, Louise Mason, Tiernan O’Rourke and Andrew Whitson. In each case, it was their first Fixed Pay increase
in more than three years and was made in consideration of benchmarking against market peers and to ensure the ongoing
stability of the executive team during a CEO transition. As part of the consideration for these Fixed Pay increases, the notice
period for each executive was increased from three to six months.
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71
Managing Director and CEOOther Executive KMPFixed Pay 25%Fixed Pay 32%Target STI 25%Target STI 29%Cash 12.5%Cash 19%Deferred12.5%Deferred 10%Relative TSR 50%Relative TSR 39%LTI at face value 50%LTI at face value 39%Performance basedPerformance basedFormer Managing Director and CEOFixed Pay 50%Cash 50%Target STI 50%Performance basedFor FY21, the new Managing Director and CEO was not eligible to receive an STI or LTI award. The figure shown above represents at-target remuneration mix for FY22. No LTI award was made to the former Managing Director and CEO for FY21. In accordance with his contractual arrangements on retirement, his FY21 STI will be delivered in cash.
4.4. SHORT-TERM INCENTIVES
Feature
Purpose
Value
Description
To reward the achievement of annual targets aligned to the delivery of sustainable stakeholder outcomes
% of Fixed Pay
Managing Director and CEO
Target
100%
Other Executive KMP
80% - 90%
Maximum
150%
120% - 135%
Individual STI awards are dependent on Group, business unit and individual performance measures based on the STI
Corporate Scorecard approach which the Board uses to set Key Performance Indicators (KPIs) that are aligned to overall
business strategy and key priorities. The performance measures in the STI Corporate Scorecard in FY21 are shown below:
Performance measures
Financial outcomes
(60%)
Financial value-drivers
(40%)
• Funds from operations
• Return on equity
• Key business priorities
• Customer and stakeholder
• People and leadership
Reason for choosing this measure
strategy to grow asset returns
• Key measures of progress against our
• Reflects how well Stockland is using
• Drives focus on the delivery of
capital to generate earnings
important initiatives aligned to our
strategic priorities
• A measure of how well we are meeting
the expectations of our customers and
external stakeholders
• Recognises that organisations with
a diverse, inclusive and engaged
workforce deliver superior returns
Performance
assessment
The Board takes a robust approach to determining executive remuneration outcomes, using judgement and oversight to
consider a range of quantitative and qualitative factors
As a first step, a bottom-up assessment of the STI Corporate Scorecard is conducted to provide an initial view of the
potential pool. A discretionary overlay is then applied to allow for other factors affecting performance that were not
reflected in the scorecard.
Individual awards are proposed by the Managing Director and CEO, endorsed by the People & Culture Committee and
approved by the Board. For the Managing Director and CEO, the People & Culture Committee proposes the STI award for
Board approval.
Delivery of awards FY20 STI awards made in August 2020 to the Managing Director and CEO and SLT members were delivered in the form
of deferred securities with no cash component. This was to maintain full alignment of the STI award with securityholders
and the performance of Stockland while navigating COVID-19 and to support the retention of an engaged and focused
executive team.
FY21 STI awards will be delivered in accordance with the normal operation of the STI plan as follows:
contract on retirement;
• 100% of the award to the former Managing Director and CEO will be made in cash in accordance with his employment
• two-thirds of awards to Other KMP Executives will be made in cash; and
• one-third of awards to Other KMP Executives will be made in deferred securities that may vest in two equal tranches
after one and two years, subject to continued service and malus provisions.
Leaver provisions On voluntary termination or termination for cause or due to poor performance, all awards are forfeited. In the
circumstances of death, disability, retirement, redundancy or mutually agreed separation, the Board has discretion to
retain deferred awards.
72
Stockland Annual Report 2021
4.5. LONG-TERM INCENTIVES
Feature
Purpose
Instrument
Description
To align executive outcomes with long-term securityholder returns to build business accountability and ownership.
LTI awards are made in the form of performance rights to Stockland securities granted under the Stockland Performance
Rights Plan. A performance right is a right to acquire, at no cost to the executive, one fully-paid Stockland security subject
to certain performance and service conditions.
No distributions are paid on performance rights.
Value
The maximum LTI opportunity for awards made to Other Executive KMP in FY21 was 120% of Fixed Pay.
No FY21 LTI award was made to the former Managing Director and CEO given his pending retirement.
Performance
period
Performance
conditions
Stockland uses a ‘face-value’ methodology for allocating performance rights, being the volume weighted average price of
Stockland securities for the 10 trading days post 30 June. For the FY21 award, this price was $3.3767.
The performance period for FY21 awards is 1 July 2020 to 30 June 2023.
In previous years, vesting of LTI awards has been subject to two equally weighted performance conditions, being growth in
FFO and relative TSR. Given the challenges in setting long term financial targets in a COVID-19 impacted environment, growth
in FFO was removed as a performance condition for FY21 awards with relative TSR being the sole measure.
Performance
measure
Description
Total
Securityholder
Return
TSR measures the growth in the price of securities
plus cash distributions notionally reinvested
in securities.
Reason for choosing this measure
Aligns to our to strategic objective to deliver
securityholder returns above the A-REIT 200 Index.
In order for the TSR grant to vest, Stockland’s
TSR must be greater than the growth in the
applicable TSR hurdle. The TSR hurdle is a
weighted, composite TSR benchmark for a peer
group comprising the 14 companies in the A-
REIT 200 Index other than Charter Hall Group
and Goodman Group (as their revenues are
significantly driven by funds management fees),
Cromwell Property Group and Unibail-Rodamco-
Westfield (as their assets are predominantly
outside of Australia), Waypoint (due to portfolio
misalignment) and Stockland.
Each of the five largest capitalised companies
from the peer group has been allocated a 16%
weighting, while each of the other nine smaller
capitalised companies has been allocated a
2.2% weighting.
Vesting
conditions
The vesting schedule for FY21 awards is as follows:
TSR of Stockland compared to
Index growth
≤ TSR Index
> TSR Index
Up to 10% greater than TSR Index
10% or more greater than TSR Index
Proportion of TSR grant vesting
0%
>50%
Pro-rata 50% - 100%
100%
Performance rights that meet the performance conditions at the end of the performance period are converted to Stockland
securities and vest in two tranches, subject to service conditions and clawback provisions.
Tranche
Vesting date
Proportion of eligible performance rights to vest
1
2
30 June 2023
30 June 2024
50%
50%
Leaver
provisions
Reason for termination
Treatment of unvested performance rights
In the circumstances of death,
disability, retirement, redundancy
or mutually agreed separation.
At the discretion of the Board, a pro-rata number of performance rights may be
retained with vesting determined in accordance with the original performance
conditions and clawback provisions.
All other circumstances
Forfeited
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73
4.6. EMPLOYMENT TERMS
The Managing Director and CEO and Other Executive KMP are on rolling contracts until notice of termination is given by
either Stockland or the senior executive. The notice period for the Managing Director and CEO is twelve months and six
months for Other Executive KMP. In appropriate circumstances, payment may be made in lieu of notice. Where Stockland
initiates termination, including mutually agreed resignation, the executive would receive a termination payment of up to
twelve months’ Fixed Pay (including applicable notice) and be considered for a cash pro-rata payment in respect of STI in
the year of termination, subject to the Board’s assessment of performance against KPIs.
Where the termination occurs as a result of misconduct or a serious or persistent breach of contract (termination
for cause), Stockland may terminate employment immediately without notice, payment in lieu of notice or any other
termination payment.
In cases of termination for cause or resignation, all unvested employee securities or rights lapse. In other circumstances,
the Board has the discretion to adjust the vesting conditions. Typically, this discretion is applied as outlined below.
Death or total and
permanent disablement
For termination other than for
cause or resignation
Full vesting of any unvested equity awards.
For unvested DSTI, full vesting in the year of termination, other than for the Managing DIrector and CEO,
whereby unvested DSTI is retained and vests in accordance with the terms of the STI plan and original
vesting schedule.
For LTI, unvested rights are vested prorated based on service to the date of termination. Any applicable
prorated hurdled rights remain subject to the applicable performance hurdles over the full performance
period. Any applicable restricted rights vest on 30 June in the year of termination. Other unvested LTI
awards are forfeited.
Entitlements to the former Managing Director and CEO on retirement
On 28 May 2021, Mark Steinert retired following a six month notice period.
by the Board;
his notice period;
Mr Steinert received his contractual entitlements and those which applied in the usual operation of Stockland’s incentive
plans in the circumstances of retirement. These included:
• a cash payment of $750,000 (gross), being his twelve month termination payment less the six months’ Fixed Pay during
• a cash payment of $1,360,973 (gross), being the pro-rata STI payment for the portion of FY21 worked and as determined
• accrued annual leave and long-service leave entitlements;
• unvested deferred STI securities held at the time of retirement were retained and may vest (or not vest) in accordance
• a pro-rata number of unvested LTI performance rights from awards made in 2018 and 2019 were retained with vesting
• no LTI award was made to Mr Steinert for FY21.
The above payments are in accordance with the Termination Benefits Framework approved by securityholders at the 2020
Annual General Meeting and those previously disclosed in the 2020 Remuneration Report.
subject to the original performance and vesting conditions in accordance with the terms of the LTI plan; and
with the terms of the STI plan and the original vesting schedule;
74
Stockland Annual Report 2021
Additional entitlements to the current Managing Director and CEO
Tarun Gupta commenced as Managing Director and CEO on 1 June 2021. A summary of his key employment arrangements
was disclosed on 26 November 2020.
The following benefits were made to Mr Gupta on commencement as compensation for incentives forfeited on ceasing
employment with his previous employer to join Stockland. The approach taken in determining the value of these benefits was
to apply a discount of approximately 38 per cent to the $6.0 million face value of forfeited incentives from Mr Gupta’s previous
employment to take into account the likelihood of the incentives vesting. The form and vesting schedule of the additional
benefits is also consistent with the forfeited incentives and is as follows:
1. A cash payment of $650,000 (inclusive of tax and superannuation) payable in the first available pay run following
1 September 2021.
2. A grant of 346,414 deferred Stockland securities to the value of $1,650,000 were awarded on 21 June 2021, with vesting
subject to service conditions on the following dates:
• For 21% of the grant, 1 September 2022
• For 24% of the grant, 1 September 2023
• For 24% of the grant, 1 September 2024
• For 21% of the grant, 1 September 2025
• For 10% of the grant, 1 September 2026
3. A grant of 305,244 performance rights to the value of $1,400,000 will be made with effect on 1 July 2021, with vesting
subject to the satisfaction of a relative TSR performance hurdle measured over a two-year performance period from 1 July
2021 to 30 June 2023 and service conditions on the following dates:
• For 25% of the grant, 1 September 2023
• For 25% of the grant, 1 September 2024
• For 25% of the grant, 1 September 2025
• For 25% of the grant, 1 September 2025
No performance rights will vest if Stockland's TSR over the performance period is less than the TSR Index described in
section 4.5. 50 per cent of performance rights may vest if Stockland's TSR exceeds the TSR Index, increasing to 100 per
cent vesting if Stockland's TSR exceeds the TSR Index by 5 per cent or more.
All awards listed above are subject to the terms of the relevant incentive plan rules including malus and clawback provisions.
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76
Stockland Annual Report 2021
5.2. PERFORMANCE RIGHTS MOVEMENTS
LTI awards are made in the form of performance rights which are subject to performance conditions as detailed in section
4.5. The number of performance rights held during the year are set out below.
Granted during year
Vested and exercised
Balance at
1 July 2020
Number
Value
$1
Number
Value
$1
Exercised into
securities &
remain
unvested
Forfeited /
Lapsed
Balance at
30 June
20212
Executive Director
Tarun Gupta
Other Executive KMP
-
-
-
Katherine Grace
507,267
230,995
625,996
Louise Mason
423,434
284,302
770,458
Tiernan O'Rourke
739,764
337,608
914,918
Andrew Whitson
634,084
284,302
770,458
Former Executive Director
Mark Steinert
2,113,610
-
-
1
2
The value as at the grant date calculated in accordance with AASB 2 Share-based Payment.
The balance shown for Mark Steinert is as at 28 May 2021, being his date of retirement.
5.3. EXECUTIVE SECURITYHOLDINGS
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(168,520)
569,742
-
707,736
(245,758)
831,614
(210,650)
707,736
(1,111,443)
1,002,167
The table below details movements during the year in the number of Stockland securities held by executives, including their
personally related parties. These include one off grants of 346,414 securities awarded to Tarun Gupta as compensation for
incentives forfeited on ceasing employment with his previous employer to join Stockland (refer to section 4.6) and 188,569
securities to the value of $800,000 awarded to Andrew Whitson as a one off retention award. The award to Mr Whitson is
subject to a three year vesting period that requires his ongoing employment with Stockland as at 31 December 2023.
Balance at 1 July
2020
DSTI granted1
Special grants
LTI
performance
rights exercised
Purchased /
(Sold)
Balance at
30 June 20212
Executive Director
Tarun Gupta
Other Executive KMP
Katherine Grace
Louise Mason3
Tiernan O'Rourke
Andrew Whitson
Former Executive Director
-
-
346,414
310,703
117,894
583,283
340,569
117,986
159,920
188,905
171,914
-
-
-
188,569
Mark Steinert
3,679,537
340,274
-
1 Deferred STI securities granted in respect of FY20 STI awards.
2
3 Does not include 130,819 retention securities granted to Louise Mason as this award was made after 30 June 2021.
The balance shown for Mark Steinert is as at 28 May 2021, being his date of retirement.
-
-
-
-
-
-
-
346,414
(111,361)
-
-
(112,294)
317,328
277,814
772,188
588,758
-
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Year ended 30 June 2021
77
5.4. UNVESTED EQUITY HOLDINGS
The table below details unvested Stockland securities and performance rights granted to executives as part of their
remuneration in the previous, current or future reporting periods.
Instrument Grant date
Performance
period
start date
Unvested
equity at
30 June
2021
Maximum
value of
award to
vest $
Fair value per
instrument2
FFO
TSR DSTI
Vesting
date1
Executive Director
Tarun Gupta
Grant
Special Grant
Tranche 1
Special Grant
Tranche 2
Special Grant
Tranche 3
Special Grant
Tranche 4
Special Grant
Tranche 5
Other Executive KMP
Securities
21-Jun-21
1-Jun-21
1-Sep-22
72,747
346,501
Securities
21-Jun-21
1-Jun-21
1-Sep-23
83,140
396,004
Securities
21-Jun-21
1-Jun-21
1-Sep-24
83,140
396,004
Securities
21-Jun-21
1-Jun-21
1-Sep-25
72,747
346,501
Securities
21-Jun-21
1-Jun-21
1-Sep-26
34,640
164,994
Katherine Grace
Louise Mason
Tiernan O'Rourke
Andrew Whitson
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
FY20 LTI Tranche 1
FY20 LTI Tranche 2
FY21 LTI Tranche 1
FY21 LTI Tranche 2
DSTI FY20 Tranche 2 Securities
FY20 LTI Tranche 1
FY20 LTI Tranche 2
FY21 LTI Tranche 1
FY21 LTI Tranche 2
DSTI FY20 Tranche 2 Securities
FY20 LTI Tranche 1
FY20 LTI Tranche 2
FY21 LTI Tranche 1
FY21 LTI Tranche 2
DSTI FY20 Tranche 2 Securities
FY20 LTI Tranche 1
FY20 LTI Tranche 2
FY21 LTI Tranche 1
FY21 LTI Tranche 2
DSTI FY20 Tranche 2 Securities
Securities
Retention Grant
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
21-Oct-19
21-Oct-19
1-Jul-20
1-Jul-20
1-Jul-20
21-Oct-19
21-Oct-19
1-Jul-20
1-Jul-20
1-Jul-20
21-Oct-19
21-Oct-19
1-Jul-20
1-Jul-20
1-Jul-20
21-Oct-19
21-Oct-19
1-Jul-20
1-Jul-20
1-Jul-20
1-Feb-21
1-Jul-19
1-Jul-19
1-Jul-20
1-Jul-20
1-Jul-19
1-Jul-19
1-Jul-19
1-Jul-20
1-Jul-20
1-Jul-19
1-Jul-19
1-Jul-19
1-Jul-20
1-Jul-20
1-Jul-19
1-Jul-19
1-Jul-19
1-Jul-20
1-Jul-20
1-Jul-19
1-Jan-21
30-Jun-22
30-Jun-23
30-Jun-23
30-Jun-24
30-Jun-22
30-Jun-22
30-Jun-23
30-Jun-23
30-Jun-24
30-Jun-22
30-Jun-22
30-Jun-23
30-Jun-23
30-Jun-24
30-Jun-22
30-Jun-22
30-Jun-23
30-Jun-23
30-Jun-24
30-Jun-22
31-Dec-23
80,487
80,486
115,498
115,497
58,993
100,609
100,608
142,151
142,151
79,960
117,377
117,376
168,804
168,804
94,452
100,609
100,608
142,151
142,151
85,957
188,569
3.50
3.50
n/a
n/a
3.50
3.50
n/a
n/a
3.50
3.50
n/a
n/a
3.50
3.50
n/a
n/a
1.71
1.71
2.71
2.71
1.71
1.71
2.71
2.71
1.71
1.71
2.71
2.71
1.71
1.71
2.71
2.71
209,669
209,666
313,000
312,997
199,202
262,086
262,084
385,229
385,229
270,001
305,767
305,764
457,459
457,459
318,936
262,086
262,084
385,229
385,229
290,251
800,004
Former Executive Director
Mark Steinert
FY20 LTI Tranche 1
FY20 LTI Tranche 2
FY20 DSTI Tranche 2 Securities
Rights
Rights
29-Oct-19
29-Oct-19
1-Jul-20
1-Jul-19
1-Jul-19
1-Jul-19
30-Jun-22
30-Jun-23
30-Jun-22
213,467
160,100
170,137
722,586
541,939
574,502
4.15
4.15
2.62
2.62
4.76
4.76
4.76
4.76
4.76
3.38
3.38
3.38
3.38
4.24
3.38
1
2
For LTI grants, vesting date refers to the date at which the performance and service conditions are met. The rights convert to securities subject to the three-year performance period.
Any rights that convert to securities then vest at the dates shown. The securities remain under a holding lock until the 10th anniversary of the grant date except at Board discretion.
The rights issued have an expiry date that is the later of the date of announcement of the full-year results following the end of the performance period or 31 August of that year.
The fair value of performance rights at the grant date is determined using appropriate models including Monte Carlo simulations, depending on the vesting conditions. The value
of each performance right is recognised evenly over the service period ending at the vesting date. The fair value of DSTI securities is determined as the Volume Weighted Average
Price of Stockland securities over the 10 trading days after 30 June in the year of the award. In the case of Special Grants, the fair value of DSTI securities is determined as the Volume
Weighted Average Price of Stockland securities over the 10 trading days from and inclusive of the effective grant date of the award.
78
Stockland Annual Report 2021
6. Non-Executive Director remuneration
6.1. POLICY AND APPROACH
Stockland’s remuneration policy for Non-Executive Directors aims to ensure the Group can attract and retain suitably
skilled, experienced and committed individuals to serve on the Board and remunerate them appropriately for their time and
expertise and for their responsibilities and liabilities as public company directors.
The People & Culture Committee is responsible for reviewing and recommending to the Board any changes to Board and
committee remuneration, taking into account the size and scope of Stockland’s activities, the responsibilities and liabilities
of Directors and the demands placed upon them. In developing its recommendations, the People & Culture Committee may
take advice from external consultants.
With the exception of the Chairman, Non-Executive Directors receive additional fees for their work on Board committees.
Where a special purpose Board committee is established by the Board, committee members may receive a fee in line with
those paid for existing Board committees. Non-Executive Directors do not receive performance-related remuneration or
termination benefits other than accumulated superannuation.
In FY21, there were no changes in the base fees for the Chairman, Non-Executive Directors or any of the Board committees.
In FY22, in line with our considered approach to remuneration, there will be no changes in the base fees for the Chairman
and Non-Executive Directors or for Board committee fees.
Stockland Board
Chairman
Non-Executive Director
Stockland Board Committees
Audit
Risk
People & Culture
SCPL Board
Chairman
Non-Executive Director
Independent Non-Executive Director1
SCPL Board Committees
Audit and Risk
FY22
FY21
$500,000
$500,000
$175,000
$175,000
$40,000
$20,000
$35,000
$17,500
$35,000
$17,500
$32,700
$32,700
$30,000
$15,260
$8,720
$40,000
$20,000
$35,000
$17,500
$35,000
$17,500
$32,700
$32,700
$30,000
$15,260
$8,720
Chair
Member
Chair
Member
Chair
Member
Chair
Member
1
Independent Non-Executive Directors of SCPL are not on the Stockland Board.
Total remuneration available to Non-Executive Directors is approved by securityholders and is currently $2,500,000
(including superannuation payments) as approved at the 2007 Annual General Meeting. No increase in the total fee pool is
proposed for FY22.
Total fees of $1,975,035 (79 per cent of the approved limit) were paid to Non-Executive Directors in FY21. This amount was
12 per cent higher than the total fees paid in FY20 primarily due to the addition of a new Non-Executive Director from
November 2020 and the fact that FY20 fees included a voluntary two month 20 per cent reduction applied to fees in response
to COVID-19.
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Year ended 30 June 2021
79
6.2. REMUNERATION DETAILS FOR NON-EXECUTIVE DIRECTORS
The nature and amount of each element of remuneration for each Non-Executive Director is detailed below.
Year
Board and Committee Fees Non-monetary benefits
Superannuation contributions
Total1
Short-term
Post-employment
Non-Executive Directors
Tom Pockett
Laurence Brindle
Melinda Conrad
Kate McKenzie
Barry Neil
Stephen Newton
Christine O'Reilly
Andrew Stevens
Consolidated
remuneration
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
20202
478,306
462,239
115,531
–
191,781
185,353
195,000
105,482
207,945
200,976
269,613
250,116
210,046
203,006
191,781
179,620
1,860,002
1,586,792
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21,694
21,003
6,344
–
18,219
17,609
–
1,379
19,755
19,093
10,847
21,003
19,954
19,286
18,219
17,064
500,000
483,242
121,875
–
210,000
202,962
195,000
106,861
227,700
220,069
280,460
271,119
230,000
222,292
210,000
196,684
115,033
1,975,035
116,437
1,703,229
1
2
The fees for each Director are paid on a total cost basis which includes any applicable compulsory superannuation (the amount of superannuation included in the total fees will
vary depending on the timing of payments and in line with applicable legislation).
The 2020 totals above ($1,703,229) are not the same as those disclosed in the 2020 Remuneration Report ($1,767,712) because of changes in Directors.
6.3 NON-EXECUTIVE DIRECTOR SECURITYHOLDINGS
To align the personal financial interests of Non-Executive Directors with securityholder interests, the Board believes that
Non-Executive Directors should hold a meaningful number of Stockland securities. Each Non-Executive Director is required
to acquire 40,000 securities within three years of commencing as a Non-Executive Director. The relevant interest of each
Non-Executive Director in Stockland securities at the date of this Report are as follows:
Balance at 1 July 2020
Purchased / (Sold)
Balance at 30 June 2021
Non-Executive Directors1
Tom Pockett
Laurence Brindle
Melinda Conrad
Kate McKenzie
Barry Neil
Stephen Newton
Christine O'Reilly
Andrew Stevens
50,000
-
60,000
20,000
76,718
40,000
50,000
40,000
-
-
-
-
-
-
-
-
50,000
-
60,000
20,000
76,718
40,000
50,000
40,000
1 No Stockland securities were held by Adam Tindall at the time this report was published.
80
Stockland Annual Report 2021
Governance
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Year ended 30 June 2021
81
Newport, QLD
Board of Directors
Chief Executive Officer, Property Australia, Group Head of
Investment Management, Chief Investment Officer, Asia
Pacific, Fund Manager, Australian Prime Property Funds
and most recently Group Chief Financial Officer.
Mr Gupta is a member of the Sustainability Committee and
a Director of the Stockland CARE Foundation Board and
Stockland Capital Partners Limited.
Qualifications and Age
BA (Econ) (Hons), MBA, GAICD, 51
Directorships of listed entities in last three years
None
Melinda Conrad
Non-Executive Director
Melinda Conrad was appointed to the Board on 18 May 2018.
Ms Conrad has more than 25 years of expertise in consumer-
related industries, including as a retail entrepreneur
and CEO, and roles at Colgate-Palmolive and Harvard
Business School.
Ms Conrad is currently a Director of ASX Limited and Ampol
Limited (formerly named Caltex Australia Limited). She is
also a Non-Executive Director of The George Institute for
Global Health, The Centre for Independent Studies, and is
a member of the ASIC Director Advisory Panel and the AICD
Corporate Governance Committee.
Ms Conrad is Chair of the People & Culture Committee and
a member of the Sustainability Committee.
Qualifications and Age
BA, MBA, FAICD, 52
Directorships of listed entities in last three years
OFX Group Limited (19 September 2013 to 28 September
2018), ASX Limited (1 August 2018 to present), Ampol
Limited (1 March 2017 to present)
Tom Pockett
Chairman
Tom Pockett was appointed to the Board on
1 September 2014 and became Non-Executive Chairman
on 26 October 2016.
Mr Pockett has extensive experience in both the property
and financial sectors having held a number of senior
executive positions including Chief Financial Officer and
Executive Director of Woolworths Limited, Deputy Chief
Financial Officer at the Commonwealth Bank of Australia
and several senior finance roles at Lendlease. He is the
Chairman of Autosports Group Limited and a Director of
Insurance Australia Group Limited. In addition to his role
as the Chair of the Stockland Board, Mr Pockett is Chair of
the Sustainability Committee and a member of the People
& Culture Committee. Mr Pockett is also Chairman of the
Stockland CARE Foundation Board.
Qualifications and Age
BComm, FCA, 63
Directorships of listed entities in last three years
Autosports Group Limited (29 August 2016 to present),
Insurance Australia Group Limited (1 January 2015
to present)
Tarun Gupta
Managing Director and Chief Executive Officer
Tarun Gupta was appointed Managing Director and Chief
Executive Officer of Stockland on 1 June 2021. Mr Gupta
was also appointed to the Board of Directors on 1 June
2021. Mr Gupta has over 25 years’ experience in the
property industry and has held a number of senior roles
at a large listed Australian property company including
82
Stockland Annual Report 2021
Kate McKenzie
Non-Executive Director
Kate McKenzie was appointed to the Board on
2 December 2019.
Ms McKenzie’s executive career included over 30 years’
experience in the telecommunication and government
sectors in Australia, New Zealand and Hong Kong. She
was most recently the chief executive officer of Chorus,
New Zealand’s largest provider of telecommunications
infrastructure, a top 50 New Zealand Stock Exchange
listed company.
Prior to this, Ms McKenzie held several senior roles
at Telstra from 2004 – 2016, including Chief Operating
Officer, where she oversaw the group’s extensive property
portfolio, and seven years in senior roles in NSW
Government, including the Department of Commerce and
Department of Industrial Relations.
Ms McKenzie is currently a Director of NBN Co Limited,
Healius Limited and AMP Limited.
Ms McKenzie is a member of the Audit Committee and
Sustainability Committee.
Qualifications and Age
BA, LLB, 60
Directorships of listed entities in last three years
AMP Limited (18 November 2020 to present), Healius
Limited (25 February 2021 to present)
Barry Neil
Non-Executive Director
Barry Neil was appointed to the Board on 23 October 2007.
Mr Neil has over 40 years’ experience in all aspects of
property development, both in Australia and overseas.
Mr Neil’s executive career included senior property
and investment roles at both Mirvac and Woolworths
Limited and has included the acquisition, development
and operation of landmark developments in multiple
asset classes.
Mr Neil is Chairman of Keneco Pty Limited and Bitumen
Importers Australia Pty Limited and a Director of Terrace
Tower Group Pty Ltd.
Mr Neil is Chair of Stockland Capital Partners Limited
Board, the Responsible Entity for Stockland’s unlisted
funds and a member of the Audit Committee and
Sustainability Committee.
Qualifications and Age
BE (Civil), 73
Directorships of listed entities in last three years
None
Stephen Newton
Non-Executive Director
Stephen Newton was appointed to the Board on
20 June 2016.
Mr Newton has extensive experience across real
estate investment, development and management and
infrastructure investment and management. Mr Newton
is a Principal of Arcadia Funds Management Limited, a
real estate investment management and capital advisory
business and prior to this, he was the Chief Executive
Officer- Asia/Pacific for the real estate investment
management arm of Lendlease.
Mr Newton is Chair of the Audit Committee and a member
of the Risk Committee and Sustainability Committee. He
is a director of Stockland’s Capital Partners Limited, the
Responsible Entity for Stockland’s unlisted funds and
Chair of the Stockland Capital Partners Limited Audit and
Risk Committee.
Qualifications and Age
BA (Ec and Acc), M.Com, MICAA, MAICD, 68
Directorships of listed entities in last three years
Gateway Lifestyle Group (28 April 2015 to 10 October 2018),
Viva Energy REIT Group (10 July 2016 to present)
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Year ended 30 June 2021
83
Mr Stevens is Chairman of the Board of Industry
Innovation and Science Australia and the Chairman of
the Data Standards Body for the Consumer Data Right
implementation in Australia. Mr Stevens also serves as a
Director of Ooh Media and Western Sydney Football Club.
Mr Stevens is a member of the Champions of Change.
Mr Stevens is a member of the Risk Committee, People and
Culture Committee and the Sustainability Committee.
Qualifications and Age
BComm, MComm, FCA, 61
Directorships of listed entities in last three years
Thorn Group Limited (1 June 2015 to 4 December 2019),
MYOB Group Limited (30 March 2015 to 8 May 2019)
Laurence Brindle
Non-Executive Director
Mr Brindle was appointed to the Board on
16 November 2020.
Mr Brindle has extensive experience in the acquisition,
development and management of landmark property
assets. His executive career included 21 years with QIC
where he served in various senior positions including
a long-term member of QIC’s Investment Strategy
Committee and Head of Global Real Estate where he was
responsible for a $9 billion portfolio.
Mr Brindle is currently the Chairman of both National
Storage REIT and Waypoint REIT. He is a former chairman
of the Shopping Centre Council of Australia and has
previously been a director of Westfield Retail Trust
and Scentre Group. Mr Brindle holds a Bachelor of
Engineering (Honours), Bachelor of Commerce and Master
of Business Administration.
Mr Brindle is a member of the Audit Committee and
Sustainability Committee. As required by the Stockland
Constitution, Mr Brindle will offer himself for election by
securityholders at the 2021 Annual General Meetings.
Qualifications and Age
BE, BComm, MBA, 63
Directorships of listed entities in last three years
National Storage REIT (19 December 2013 to present),
Waypoint REIT (10 July 2016 to present)
Christine O’Reilly
Non-Executive Director
Christine O’Reilly was appointed to the Board on
23 August 2018.
Ms O’Reilly’s executive career included 30 years’
experience in both financial and operational entities both
domestically and offshore. Following an early career in
chartered accounting and investment banking, she has
held a number of senior executive roles in diverse industries
including CEO and Director of the GasNet Australia Group
and Co-Head of Unlisted Infrastructure Investments at
Colonial First State Global Asset Management.
Ms O’Reilly is currently a Director of BHP Group
Limited, Medibank Private Limited and Baker Heart and
Diabetes Institute.
Ms O’Reilly is the Chair of the Risk Committee and a member
of the Audit Committee and Sustainability Committee.
Qualifications and Age
BBus, 60
Directorships of listed entities in last three years
CSL Limited (16 February 2011 to 14 October 2020),
Transurban Limited (12 April 2012 to 8 October 2020),
Medibank Private Limited (31 March 2014 to present), BHP
Group Limited (12 October 2020 to present)
Andrew Stevens
Non-Executive Director
Andrew Stevens was appointed to the Board on 1 July 2017.
Mr Stevens’ executive career at Price Waterhouse,
PricewaterhouseCoopers and IBM, has provided him with
experience in change management and in business and
ICT program design and risk evaluation, governance and
delivery, and in business transformation and regional/
global expansion.
84
Stockland Annual Report 2021
Adam Tindall
Non-Executive Director
Mr Tindall was appointed to the Board on 1 July 2021.
Mr Tindall has over 30 years’ experience in investment
management and real estate. Mr Tindall was the Chief
Executive, AMP Capital from 2015 to 2020 where he led
a global leading investment manager overseeing funds
and separate accounts for clients across a range of asset
classes including real estate, infrastructure, equities, fixed
income and multi-asset capabilities. Mr Tindall's prior
roles at AMP Capital include Director and Chief Investment
Officer for Property, leading a team managing a $19 billion
portfolio of real estate investments of behalf of domestic
and international institutional investors. Prior to 2009 Mr
Tindall held senior leadership roles at Macquarie Capital
and Lendlease.
Mr Tindall holds a Bachelor of Engineering (Civil)
(Honours) and is a Fellow of the Australian Institute of
Company Directors.
Mr Tindall is a member of the Audit Committee and the
Sustainability Committee. As required by the Stockland
Constitution, Mr Tindall will offer himself for election by
securityholders at the 2021 Annual General Meetings.
Qualifications and Age
BE (Hons), 56
Directorships of listed entities in last three years
None
Former Managing Director and Chief
Executive Officer
Mark Steinert
Mark Steinert, who retired on 28 May 2021, has over 27 years’
experience in property and financial services including
eight years in direct property primarily with Jones Lang
LaSalle and ten years in listed real estate with UBS where he
held numerous senior roles including Head of Australasian
Equities Global, Head of Research and Global Head of
Product Development and Management for Global Asset
Management, a $559 billion Global Fund Manager.
Mr Steinert is a past President and Director of the Property
Council of Australia, a past member of the Champions of
Change and a former Director of the Green Building Council
of Australia.
Mr Steinert was a member of the Sustainability Committee
and a Director of Stockland Capital Partners Limited, the
Responsible Entity for Stockland’s unlisted property funds.
Mr Steinert was also a Director of the Stockland CARE
Foundation Board.
Qualifications and Age
BAppSc, G Dip App Fin & Inv (Sec Inst), F Fin, AAPI, 54
Directorships of listed entities in last three years
None
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Year ended 30 June 2021
85
The Stockland
Leadership Team
Tarun Gupta
Managing Director and Chief Executive Officer
Refer to biography on page 82.
Katherine Grace
General Counsel and Company Secretary
Katherine Grace was appointed General Counsel and
Company Secretary on 21 August 2014 and has
responsibility for Stockland’s legal and risk functions. As
the Company Secretary Ms Grace is directly accountable
to the Board, through the Chairman for all matters relating
to governance and the proper functioning of the Board.
Ms Grace has practised as a solicitor for over 20 years
with extensive experience in corporate, property, debt and
capital markets transactions working with a wide range
of stakeholders including listed board directors, equity
investors, regulators, media and financiers.
Prior to joining Stockland, Ms Grace held roles as General
Counsel and Company Secretary for Westfield Retail Trust
and Valad Property Group.
Ms Grace is a key management person for the purposes of
the Remuneration Report.
Qualifications
BA (Hons), LLB (Hons), MPP, GAICD
Louise Mason
Group Executive & CEO Commercial Property
Louise Mason was appointed Group Executive & CEO
Commercial Property on 18 May 2018. Ms Mason has more
than 30 years’ experience in real estate and is responsible
for all aspects of Stockland’s extensive Commercial
Property portfolio of Retail Town Centres, Workplace and
Logistics assets with a combined value of $10 billion as at
30 June 2021.
Prior to joining Stockland, Ms Mason was Chief Operating
Officer of AMP Capital Real Estate. She has also held several
senior executive operational and development roles at AMP
in retail, office, and industrial, as well as retail management
positions at Lendlease.
Ms Mason is a past President of the NSW Division of the
Property Council of Australia.
Ms Mason is a key management person for the purposes of
the Remuneration Report.
Qualifications
BA, LLB (Hons), GAICD
Tiernan O’Rourke
Chief Financial Officer
Tiernan O’Rourke was appointed Chief Financial Officer
on 8 October 2013. Mr O’Rourke has more than 25 years’
experience in senior financial, commercial and planning
roles across a range of industry sectors and throughout
the Asia Pacific Region, predominantly focused on Australia
and New Zealand.
He was previously Chief Executive of Transfield Services
Middle East and Asia Region. Before that he was the
Chief Financial Officer at Transfield Services Limited, with
responsibility for financial strategy and policy, financial
and management reporting, treasury and taxation. Prior
to his role at Transfield, Mr O’Rourke was Chief Financial
Officer of Australand Holdings Limited where he played
a key role partnering with the business to transform the
strategy and structure of the group. He has also held senior
finance positions at AGL, Westfield, CSR and Brambles. At
Westfield Holdings Limited he held the position of Group
Controller – Trusts, responsible for public reporting of
Westfield’s trust vehicles including Westfield America Trust
and Westfield Trust.
Mr O'Rourke is a key management person for the purpose of
the Remuneration Report.
Qualifications
Comm (Hons), MBA, FCA, GAICD
Andrew Whitson
Group Executive & CEO Communities
Andrew Whitson was appointed Group Executive &
CEO Communities on 1 July 2013. Mr Whitson oversees
Stockland’s 50 residential communities with a portfolio
of over 75,000 lots and an approximate end value of
$20.9 billion. At as 30 June 2021, Mr Whitson is also
responsible for Stockland’s 61 retirement living villages
with a development pipeline of 740 units in addition to
two land lease communities with a development pipeline of
approximately 4,000 lots.
Mr Whitson joined Stockland in early 2008 as Regional
Manager for Greater Brisbane and Far North Queensland.
He was appointed General Manager Residential, Victoria
in July 2009 and in November 2012, his role expanded
to include NSW. He was Group Executive and CEO of the
Residential business in 2013 before his role was expanded to
lead both the Residential and Retirement Living businesses
as the combined Communities function in August 2018.
Andrew is the former Chair of the Residential
Development Council of Australia and a Director of the
Green Building Council of Australia.
86
Stockland Annual Report 2021
Mr Whitson is a key management person for the purposes
of the Remuneration Report.
Qualifications
BE (Civil)
Karen Lonergan
Group Executive, People and Culture
Karen Lonergan joined Stockland as Group Executive,
People and Culture on 11 March 2019. Ms Lonergan has
over 25 years’ experience working in senior roles in
HR strategy development, organisational development
and transformation and change leadership in the
Transportation, FMCG, and Retail sectors across Australia,
Asia, USA and Europe.
She was previously the Chief People Officer at David Jones
and Country Road Group, after being a People Director at
Woolworths Group Limited. Prior to her role at Woolworths,
Ms Lonergan was the Executive Manager, Human Resources
for Qantas International, responsible for the organisation’s
global Human Resources function.
Qualifications
BBus, MMgt, GAICD, FAHRI
Sharmila Tsourdalakis
Chief Innovation, Marketing and
Technology Officer
Sharmila Tsourdalakis was appointed Chief Innovation,
Marketing and Technology Officer on 27 April 2020
and leads our Innovation, Marketing, Technology and
Customer teams. She has over 20 years’ experience
working in senior roles in technology, innovation, customer
and digital transformation for ASX-listed companies.
She was previously the Executive General Manager for
Suncorp’s Banking and Wealth Technology responsible
for the strategic direction and operational leadership of
technology. Prior to Suncorp, Ms Tsourdalakis was Chief
Information Officer at The GPT Group.
Qualifications
BComm, LLB, GAICD
Former executive
Darren Rehn
Group Executive & Chief Investment Officer
Darren Rehn was Stockland’s Chief Investment Officer from
30 September 2013 to 27 May 2021.
Stockland Gladstone, QLD
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87
Our approach to
corporate governance
The Board places a high importance on its corporate governance
responsibilities and in FY21 was in compliance with all of the
recommendations in the ASX Corporate Governance Principles
and Recommendations
The Board recognises the importance of building and fostering a risk aware culture, so that every individual takes
responsibility for risks and controls in their area of authority. Stockland also has a Code of Conduct that applies to all
employees and provides clear guidance on how we expect our people to act, engage and respond to each other and
our stakeholders.
CORPORATE GOVERNANCE FRAMEWORK
The roles, responsibilities and accountabilities of the Board, Board Committees and Stockland Leadership Team are set out
in the Board and Board Committee charters, which have been summarised below.
88
Stockland Annual Report 2021
THE BOARD
As set out in the Board Charter, the Board is responsible for:
• Overseeing the development and implementation of Stockland’s corporate strategy, operational performance objectives
• Overseeing the development and implementation of Stockland’s overall framework of governance, risk management,
internal control and compliance which underpins the integrity of management information systems, financial reporting
and fosters high ethical standards throughout Stockland;
and management policies with a view to creating sustainable long-term value for securityholders;
• Appointing the Directors (subject to Stockland’s constitution), appointing the Managing Director, approving the
appointment of the Company Secretary and Stockland Leadership Team members reporting to the Managing Director and
determining the level of authority delegated to the Managing Director;
• Setting Executive remuneration policy, monitoring Stockland Leadership Team members’ performance and approving the
performance objectives and remuneration of the Managing Director and his or her direct reports and reviewing Executive
and Board succession planning and Board performance;
reporting and major capital expenditure, acquisitions and divestitures;
• Approving and monitoring the annual budget, business plans, financial statements, financial policies and financial
• Determining and adopting dividend and distribution policies;
• Overseeing compliance with applicable laws and regulations; and
• Appointing and monitoring the independence of Stockland’s external auditors.
A copy of the Board Charter can be found on our website www.stockland.com.au/about-stockland/corporate-
governance.
The Board has delegated certain responsibilities to standing Committees which operate in accordance with the Committee
Charters approved by the Board.
Day to day management of the business is delegated to the Stockland Leadership Team through the Managing Director and
Chief Financial Officer subject to approved authority limits and Board reserved matters.
The Board actively engages with management in overseeing the operations of the Group. In addition to Board and Committee
meetings held across Stockland offices, the Board meets with employees at operational sites and undertakes asset tours
across the portfolio on a regular basis. While COVID-19 restrictions have impacted the ability to undertake asset tours over
the past 12 months, in FY21 a number of asset tours were conducted by members of the Board and Stockland Leadership Team
including to development and operational assets in Melbourne, Sydney and the Sunshine Coast.
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Year ended 30 June 2021
89
BOARD COMMITTEES
Four permanent Board Committees covering Audit, Risk, People & Culture and Sustainability have been established to assist
in the execution of the Board’s responsibilities.
The Board’s policy is that a majority of the members of each Board Committee are independent Directors. The Audit
Committee, People & Culture Committee and Risk Committee comprise only independent Directors and the Sustainability
Committee is chaired by an independent Director and has a majority of independent Directors.
The Board reviews the composition of each Board Committee periodically, balancing the benefits of rotation with those of
maintaining continuity of experience and knowledge, and to ensure Board Committee members have skills appropriate to
their roles. Committee Chairs provide reports to the Board on key matters and Committee memberships provide for overlap
of membership between the Audit Committee and Risk Committee as well as between the Risk Committee and People &
Culture Committee.
Current members of the Board Committees
Audit Committee
Stephen Newton
Barry Neil
Christine O’Reilly
Kate McKenzie
Laurence Brindle
Adam Tindall
People & Culture
Committee
Melinda Conrad
Tom Pockett
Andrew Stevens
The Audit Committee is responsible for the oversight of the integrity of Stockland’s consolidated financial statements and
disclosures, and the maintenance of a sound financial control environment. The purpose of the Audit Committee is to assist
the Board to discharge its responsibilities for:
• The integrity of Stockland’s financial reports and external audit
• The appropriateness of Stockland’s accounting policies and processes
• The effectiveness of Stockland’s financial reporting controls and procedures
• The effectiveness of Stockland’s internal control environment
• Compliance with Stockland’s Australian Financial Services Licences and Compliance Plans
• Compliance with relevant laws and regulations including any prudential supervision procedures.
The People & Culture Committee incorporates the functions of two board committees recommended by the ASX Corporate
Governance Principles and Recommendations: a Nominations Committee and a Remuneration Committee. The purpose
of the People & Culture Committee is to consider and make recommendations to the Board on:
• The size, composition and desired competencies of the Board
• Director independence, performance, remuneration and succession arrangements
• The content of the annual remuneration report and remuneration details contained
• Stockland’s policies for employment, performance planning and assessment,
within other statutory reports, including financial statements
training and development, promotion and people management.
Risk Committee
Christine O’Reilly
Stephen Newton
Andrew Stevens
The purpose of the Risk Committee is to assist the Board to discharge its responsibilities in relation to:
• Assessing the effectiveness of Stockland’s overall risk management framework
• Supporting a prudent and risk aware approach to business decisions across Stockland.
In FY21 the Risk Committee was involved in discussions and reviews relating to a variety of policies relating to Stockland's
risk management framework, conflicts of interest, fraud, bribery and corruption prevention, compliance and employee
purchases of property. The Risk Committee also undertook a review of the Modern Slavery Statement prior to its
consideration by the Board.
Sustainability
Committee
All Directors
The purpose of the Sustainability Committee is to:
ethical impacts
• Consider the sustainability impacts of Stockland’s business activities including social, environmental and
• Consider major corporate responsibility and sustainability initiatives and changes in policy
• Approve specific external stakeholder communications
• Approve external sustainability policies
• Approve publicly disclosed targets and policies.
Further information about our Board Committees can be found in the Committee Charters, which are available on our website
www.stockland.com.au/about-stockland/corporate-governance.
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Stockland Annual Report 2021
BOARD COMMITTEES MEETINGS
The number of Board and standing Board Committee meetings held during the financial year that each Director was eligible
to attend, and the number of meetings attended by each Director is set out in the table below. In addition to the meetings
below, in FY21 the Board continued to hold ad hoc meetings to receive briefings and recommendations from management
in relation to COVID-19, as required.
Scheduled
Board
Audit
Committee
People and
Culture Committee
Sustainability
Committee
Risk
Committee
Director
Mr T Pockett
Mr L Brindle1
Ms M Conrad
Mr T Gupta2
Ms K McKenzie
Mr B Neil
Mr S Newton
Ms C O’Reilly
Mr A Stevens
Former Director
Mr M Steinert3
A
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9
12
3
12
12
12
12
12
9
B
12
9
12
3
12
12
12
12
12
9
A
B
A
B
A
B
A
B
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3
-
-
6
6
6
6
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-
–
3
-
-
6
6
6
6
-
-
5
–
5
–
–
-
–
-
5
-
5
–
5
–
–
-
–
-
5
-
2
2
2
1
2
1
2
2
2
1
2
2
2
1
2
2
2
2
2
1
–
–
-
5
5
1
5
5
5
-
–
–
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5
5
1
5
5
5
-
A - Meetings attended / B - Meetings eligible to attend
1 Mr Brindle joined the board on 16 November 2020. Mr Brindle joined the Audit Committee on 24 November 2020.
2 Mr Gupta joined the Board on 1 June 2021.
3 Mr Steinert retired from the Board at the conclusion of 28 May 2021.
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Board effectiveness
Stockland is committed to having a Board whose members have the
capacity to act independently of management, and have the collective
skills and diversity of experience necessary to optimise the long-term
financial performance of Stockland to deliver long-term sustainable
returns to securityholders
BOARD COMPOSITION
The Board currently comprises one Executive Director and nine Non-Executive Directors. The membership of the Board is
reviewed periodically having regard to the ongoing and evolving needs of Stockland. The Board considers a number of factors
when filling a vacancy including:
Qualifications, skills and experience
The right mix of skills and experience to enable it to
deal with current and emerging risks and opportunities,
and to effectively review and challenge the effectiveness
of management.
Independence
The Board will comprise a majority of Non-Executive
Independent Directors and the Chair of the Board must
be an independent director in accordance with the
Board Charter.
Tenure
The Board balances longer-serving directors with a deep
knowledge of Stockland’s business, policies and history,
and newer directors with fresh perspectives and different
but complementary experience.
INDEPENDENCE CRITERIA
The Board regularly assesses the independence of
each director in light of the interests that they
have disclosed and such other factors as the Board
determines are appropriate and in FY21 each Non-Executive
Director satisfied the requirements for independence.
The criteria applied to determine whether a director
is independent is set out in the Board Charter
available on our website www.stockland.com.au/about-
stockland/corporate-governance.
Diversity
The Board recognises the benefits of diversity both across
the organisation as well as in relation to Board composition.
Female Non-Executive Directors
33.3%
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Stockland Annual Report 2021
BOARD SKILLS MATRIX
The Board has identified a range of core skills and
experience that will assist the Board collectively to fulfil its
oversight role effectively.
These include:
• Experience with property investment and management
• Property and community development
• Construction and project management
• Retailing and consumer marketing
• Technology and digital innovation
• Data analytics and insights
• Industrial supply chain logistics
• Funds management
• Banking and finance
• Government and regulatory relations
• Environmental, social and governance matters
• Strategy development
• Significant senior executive experience
TENURE
As at 30 June 2021, the tenure profile of the Board is shown
in the below diagram.
Tenure profile 1
22.2% 0-1 year =2 Directors
44.4%1-4 years =4 Directors
22.2% 5-10 years =2 Directors
11% 10+ =1 Director
1 Does not include Adam Tindall, who was appointed to the Board on 1 July 2021.
The Board believes that it is important to maintain a range of
director tenures to facilitate orderly Board renewal
while maintaining valuable continuity and corporate
knowledge among directors. In FY21, Mr Mark Steinert
stepped down from the Board after more than eight years
of service and Mr Tarun Gupta was appointed to the
Board on 1 June 2021. In addition, Mr Laurence Brindle
was appointed to the Board as a Non-Executive Director on
16 November 2020 and Mr Adam Tindall was appointed to
the Board as a Non-Executive Director on 1 July 2021.
It is also advantageous for some Directors to have
experience in the audit and risk management field,
capital management, mergers and acquisitions, people
management and executive remuneration. During FY21 the
Board received various presentations and briefings on a
range of topics tailored for professional development, key
thematics for Stockland and the ongoing responsibilities of
the Board.
The Board believes that it has the right experience and skills
to oversee the high standard of corporate governance,
integrity and accountability required of a professional and
ethical organisation as shown in the diagram below.
The Board has a process for regularly evaluating
its performance. In FY21, the Board undertook an internal
review of performance with feedback from individual
directors provided to the Chairman and discussed with
the Board.
The Group has an induction program for new Directors
including detailed briefings from management, meetings
with external advisors and asset tours. This complements
the existing program of asset tours, topic deep dives,
portfolio and strategy briefings presented to the Board
under an annual program agreed with the Chairman. In FY21
deep dive presentations to the Board included innovation
initiatives across the Group, the future of Retail, acquisition
strategies for Logistics and Residential and new business
initiatives including Land Lease Communities.
Ultimately, the full Board determines who is invited to fill
a casual vacancy after extensive one-on-one and collective
interviews with candidates and thorough due diligence and
reference checking. Written agreements setting out the
terms of their engagement are entered into for all Directors
and senior executives. Directors coming up for re-election
are also reviewed by the People and Culture Committee and
the Board considers whether to support their re-election.
It is the Board’s policy that Directors offer themselves for
re-election only with the agreement of the Board.
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DIVERSITY OF BOARD SKILLS AND EXPERIENCE
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Stockland Annual Report 2021
Our approach to tax
Stockland’s tax strategy is to conduct all its tax affairs in a transparent,
equitable and commercially responsible manner, having regard to
all relevant tax laws, regulations and tax governance processes, to
demonstrate good corporate citizenship
TAX CONTROL
AND GOVERNANCE
POLICY FRAMEWORK
Stockland maintains a Tax Control and Governance
Framework (TCGF), reviewed and approved by the Audit
Committee, which outlines the principles governing
Stockland’s tax strategy and risk management policy.
The TCGF is consistent with the guidelines published
by the Australian Taxation Office (ATO) regarding tax
risk management and governance processes for large
business taxpayers.
We undertake periodic reviews of the TCGF to test
the robustness of the design of the framework against
ATO benchmarks and to demonstrate the operating
effectiveness of internal controls to stakeholders.
The key principles of the TCGF are summarised
as follows:
• A tax strategy that ensures all tax affairs are conducted in
a transparent, equitable and commercially responsible
manner, whilst having full regard to all relevant tax
laws, regulations and tax governance processes, to
demonstrate good corporate citizenship;
• A balanced tax risk appetite that is consistent with
the Board approved risk appetite, to ensure Stockland
remains a sustainable business and a reputable and
attractive investment proposition;
• A commitment to engage and maintain relationships
with tax authorities that are open, transparent and co-
operative, consistent with Stockland’s Code of Conduct
and Ethical Behaviour policy; and
• An operating and trading business based in Australia,
with no strategic intentions of engaging in any tax
planning involving the use of offshore entities or low-
tax jurisdictions.
VOLUNTARY TAX
TRANSPARENCY CODE
As part of Stockland’s commitment to tax transparency and
demonstrating good corporate citizenship, Stockland has
adopted the Australian Federal Government’s Voluntary
Tax Transparency Code (TTC), which provides a set of
principles and minimum standards to guide medium and
large businesses on public disclosure of tax information.
TAX DISCLOSURES
AND INFORMATION
For information and detailed reconciliations of Stockland’s
tax expense, effective tax rate and deferred tax balances
please refer to notes 22 (Income Tax) and 23 (Deferred Tax)
in the Financial Report.
TAX CONTRIBUTION SUMMARY
As one of Australia’s largest diversified property groups,
which owns, develops and manages commercial property
assets, residential and retirement living communities,
Stockland contributes to the Australia economy, through
the various taxes levied at the federal, state and local
government level.
In FY21 these taxes totalled more than $299 million, and
were either borne by Stockland as a cost of our business or
collected and remitted as part of our broader contribution
to the Australian tax system.
The chart below illustrates the types of taxes that
contributed to the taxes paid and/or collected and remitted
for the 2021 tax year.
Total tax contribution
45.2% Net GST Paid
20% PAYG Withholding
29.5%State Taxes (includes Land
Tax and Payroll Tax)
5.1% Other Duties & Levies
0.2% Fringe Benefit Tax
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Year ended 30 June 2021
95
General information
Directors' securityholdings
Particulars of securities held by Directors are set out in the Remuneration Report that forms part of this Report. No options
have been granted to Directors during the period.
No proceedings
No application has been made under section 237 of the Corporations Act 2001 (Cth) in respect of Stockland, and there are
no proceedings that a person has brought or intervened in on behalf of Stockland under that section.
Indemnities and insurance of officers and auditor
Subject to the following, no indemnity was given or insurance premium paid during or since the end of the Financial Year for
a person who is or has been an officer or auditor of the Group.
The Group has paid an insurance premium in respect of Directors and Officers liability insurance contracts as permitted
by the Corporations Act 2001. The terms of the insurance policy prohibit disclosure of details of the nature of the liabilities
covered by, and the amounts of the premiums payable under, that insurance policy. Premiums are also paid for fidelity
insurance and professional indemnity insurance to cover certain risks for a broad range of employees including Directors
and senior executives.
In addition, each Director and some Key Management Personnel have entered into a Deed of Access, Indemnity and Insurance
which provides for indemnity against liability as a Director or officer of the Group, except to the extent of indemnity under
an insurance policy or where prohibited by statute. The deed also entities the Directors and officers to access company
documents and records subject to undertakings as to confidentiality.
Non-audit services
During the financial year the Group’s auditor, PwC, provided certain other services to the Group in addition to their statutory
duties as auditor.
The Board has considered the non-audit services provided during the financial year by the auditor and is satisfied that the
provision of those services is compatible with, and did not compromise, the auditor independence requirements of the
Corporations Act 2001 (Cth).
The non audited services included services relating to:
• Model presentation and responses to queries on the Town Centre Report for Aura Town Centre
• Traffic planning for Aura Town Centre and reviewing planning assumptions and updating traffic model
• Assessment of tenants eligibility under the Commercial Code of Conduct and the level of revenue decline experienced by
tenants as a result of COVID-19.
The Audit Committee resolved that the provision of non-audit services during the financial year by PwC as auditor is
compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 (Cth).
The Board’s own review conducted in conjunction with the Audit Committee, having regard to the Board policy set out in this
Report, concluded that it is satisfied the non-audit services did not impact the integrity and objectivity of the auditor; and
the declaration of independence provided by PwC, as auditor of Stockland.
Details of the amounts paid to the auditor of the Group, PwC, and its related practices for audit and non-audit services
provided during the financial year are set out in note 35 of the accompanying financial statements.
96
Stockland Annual Report 2021
Lead Auditor’s Independence Declaration under section 307C of the
Corporations Act 2001
The external auditor’s independence declaration is set out on page 100 and forms part of the Directors’ Report for the year
ended 30 June 2021.
Rounding off
Stockland is an entity of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 and in accordance with that Instrument, amounts in the Financial Report and Directors’ Report have been rounded
to the nearest million dollars, unless otherwise stated.
Other Information
Associates and joint ventures, which the Company and Trust do not control, are not dealt with for the purposes of this
statement, however management confirms that procedures are in place to assess the integrity of the financial information
from these associates and joint ventures for the purposes of consolidating information into the financial accounts for the
Company and the Trust.
To support the Executive Confirmations a robust framework is in place to verify the integrity of the reporting provided to
securityholders. For financial reporting periods this includes a structured series of management questionnaires, sign offs,
direct interviews and engagement with auditors. All information released to the market is reviewed for accuracy, supported
by a verification and management approval process and approved by the Continuous Disclosure Committee and, where
required, the Board, as set out in the External Communications and Continuous Disclosure Policy available on our website
www.stockland.com.au/about-stockland/corporate-governance.
The Board is promptly provided with a copy of all material market announcements after they have been made.
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Year ended 30 June 2021
97
Executive confirmations
The Managing Director and the Chief Financial Officer have provided a written statement to the Board that:
1. With regard to the integrity of the financial statements of Stockland Corporation Limited (the “Company”) and its
controlled entities and Stockland Trust (the “Trust”) and its controlled entities for the financial year, being the year ended
30 June 2021, that having made appropriate enquiries, in our opinion:
a. The financial records of the Company and the Trust and of the entities whose financial statements are required to be
included in their respective consolidated financial statements (the consolidated entities) for the financial period, have
been properly maintained in accordance with section 286 of the Corporations Act 2001 (Cth)
b. The financial reports of the Company, the Trust and the respective consolidated entities, for the financial period, being
the financial statements and notes thereto, comply with relevant accounting standards in accordance with section
296 of the Corporations Act 2001 (Cth) and give a true and fair view of the financial position and performance of the
Company, the Trust and the respective consolidated entities, in accordance with section 297 of the Corporations Act
2001 (Cth).
2. With regard to the risk management and internal compliance and control systems of the Company, the Trust and the
respective consolidated entities in operation for the year ended 30 June 2021, that having made appropriate enquiries to
the best of our knowledge and belief:
a. The statements made in (1b) above regarding the integrity of the financial reports are founded on a sound system of
risk management and internal compliance and control systems which, in all material respects, implement the policies
which have been adopted by the Board of Directors either directly or through delegation to senior executives
b. The risk management and internal compliance and control systems are operating effectively, in all material respects,
based on the risk management model adopted by the Company and Trust
c. While these statements are comprehensive in nature, they provide a reasonable but not absolute level of assurance
about risk management and control systems and do not imply a guarantee against adverse events or more volatile
outcomes occurring in the future
d. Nothing has come to our attention since 30 June 2021 that would indicate any material change to the statements
made above.
98
Stockland Annual Report 2021
Corporate governance statement
Stockland is committed to achieving and demonstrating the highest standards of corporate governance. Stockland has
reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (4th
edition) published by the ASX Corporate Governance Council.
The 2021 corporate governance statement is dated as at 30 June 2021 and reflects the corporate governance practices
in place throughout the 2021 financial year. The 2021 corporate governance statement was approved by the Board
on 20 August 2021. Stockland governance and risk management documentation including key policies, charters, and
Stockland’s Appendix 4G Key to Disclosures under the Corporate Governance Principles and Recommendations for the year
ended 30 June 2021 can be viewed at www.stockland.com.au/about-stockland/corporate-governance.
Signed in accordance with a resolution of the Directors.
Tom Pockett
Chairman
Tarun Gupta
Managing Director
Dated at Sydney, 20 August 2021
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Year ended 30 June 2021
99
100
Stockland Annual Report 2021
PricewaterhouseCoopers, ABN 52 780 433 757 One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. Auditor’s Independence Declaration As lead auditor for the audit of Stockland Corporation Limited and Stockland Trust for the year ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been: (a)no contraventions of the auditor independence requirements of the Corporations Act 2001 inrelation to the audit; and(b)no contraventions of any applicable code of professional conduct in relation to the audit.This declaration is in respect of Stockland Corporation Limited and the entities it controlled during the year and Stockland Trust and the entities it controlled during the year. N R McConnell Sydney Partner PricewaterhouseCoopers 20 August 2021 O
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Year ended 30 June 2021
101
Financial report for the year ended 30 June 2021Highlands, VIC
Consolidated statement of comprehensive income
Year ended 30 June
$M
Revenue
Cost of property developments sold:
• land and development
• capitalised interest
• utilisation of provision for impairment of inventories
Investment property expenses
Share of profits of equity–accounted investments
Management, administration, marketing and selling expenses
Impairment loss on trade and other receivables
Net change in fair value of investment properties:
• Commercial Property
• Retirement Living
Net change in fair value of Retirement Living resident obligations
Impairment of Retirement Living goodwill
Net reversal of impairment of inventories
Net gain/(loss) on other financial assets
Net (loss)/gain on sale of other non–current assets
Finance income
Finance expense
Net gain/(loss) on financial instruments
Profit/(loss) before tax
Income tax benefit/(expense)
Profit/(loss) after tax
Items that are or may be reclassified to profit or loss, net of tax
Cash flow hedges – net change in fair value of effective portion
Cash flow hedges – reclassified to profit or loss
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Basic earnings/(losses) per security (cents)
Diluted earnings/(losses) per security (cents)
Stockland
Trust
Note
1
2021
2,756
(Restated)
20201
2,812
(1,368)
(1,254)
6
24
9
7
8
8
13
6
17
17
17
22
3
3
(90)
34
(237)
36
(347)
(8)
416
(61)
(18)
–
5
1
(18)
4
(90)
63
1,078
27
1,105
(74)
52
(22)
1,083
46.4
46.2
(129)
22
(239)
72
(362)
(69)
(496)
(138)
22
(38)
–
(4)
20
2
(88)
(109)
24
(45)
(21)
(75)
(6)
(81)
(102)
(0.9)
(0.9)
2021
723
–
–
–
(243)
36
(40)
(9)
2020
766
–
–
–
(253)
71
(40)
(66)
403
(509)
–
–
–
–
–
(3)
196
(150)
63
976
–
976
(74)
52
(22)
954
41.0
40.8
–
–
–
–
(4)
21
230
(169)
(109)
(62)
–
(62)
(75)
(6)
(81)
(143)
(2.6)
(2.6)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
1
Comparative information throughout the financial report has been restated for IFRIC agenda decision, "Configuration or Customisation Costs in a Cloud Computing Arrangement
(IAS 38 Intangible Assets)". Refer to note 36C for details of the impact of this accounting policy change.
102
Stockland Annual Report 2021
Consolidated balance sheet
As at 30 June
$M
Cash and cash equivalents
Receivables
Inventories
Other financial assets
Other assets
Non–current assets held for sale
Current assets
Receivables
Inventories
Investment properties – Commercial Property
Investment properties – Retirement Living
Equity–accounted investments
Other financial assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Other assets
Non–current assets
Assets
Payables
Borrowings
Retirement Living resident obligations
Development provisions
Other financial liabilities
Other liabilities
Current liabilities
Payables
Borrowings
Retirement Living resident obligations
Development provisions
Other financial liabilities
Other liabilities
Non–current liabilities
Liabilities
Net assets
Issued capital
Reserves
Retained earnings/undistributed income
Securityholders’ equity
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Note
16
9
6
18
14
9
6
7
8
24
18
13
23
10
15
8
6
18
11
10
15
8
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18
11
21
Stockland
Trust
2021
1,162
130
866
124
91
2,373
166
2,539
172
2,502
9,337
3,600
392
243
143
77
49
251
16,766
19,305
685
760
(Restated)
2020
443
117
690
15
101
1,366
469
1,835
117
2,840
8,890
3,936
354
734
153
72
22
202
17,320
19,155
593
272
2,448
2,594
443
3
129
4,468
227
3,994
64
172
260
536
5,253
9,721
9,584
8,663
(14)
935
328
–
59
3,846
190
4,750
101
501
313
373
6,228
10,074
9,081
8,656
8
417
9,584
9,081
2021
1,039
16
–
124
86
1,265
166
1,431
2,762
–
9,352
–
399
228
–
–
–
176
12,917
14,348
429
760
–
25
3
26
1,243
–
3,994
–
152
260
26
4,432
5,675
8,673
7,365
(15)
1,323
8,673
2020
359
30
–
15
92
496
469
965
3,084
–
8,921
–
361
724
–
–
–
186
13,276
14,241
378
272
–
38
–
16
704
–
4,750
–
148
313
28
5,239
5,943
8,298
7,358
6
934
8,298
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Year ended 30 June 2021
103
Consolidated statement of changes in equity
Attributable to securityholders of Stockland
$M
Balance at 30 June 2019
Note
Adoption of new accounting standards
Adjustment on change in accounting policy
36C
Balance at 1 July 2019
Loss for the year
Other comprehensive income, net of tax
Total comprehensive loss
Dividends and distributions
Security based payment expense
Acquisition of treasury securities
Securities vested under Security Plans
Securities lapsed under Security Plans
Other movements
Balance at 30 June 2020
Profit for the year
Other comprehensive income, net of tax
Total comprehensive income
Dividends and distributions
Security based payment expense
Acquisition of treasury securities
Securities vested under Security Plans
Other movements
Balance at 30 June 2021
4
33
21
21
4
33
21
21
Reserves
Security
based
payments
Cash flow
hedges
Retained
earnings
37
–
–
37
–
–
–
–
11
–
(12)
(1)
(2)
35
–
–
–
–
11
–
(11)
–
35
54
–
–
54
–
(81)
(81)
–
–
–
–
–
–
(27)
–
(22)
(22)
–
–
–
–
–
(49)
1,080
(7)
(62)
1,011
(21)
–
(21)
(574)
–
–
–
1
(573)
417
1,105
–
1,105
(587)
–
–
–
(587)
935
Issued
capital
8,657
–
–
8,657
–
–
–
–
–
(13)
12
–
(1)
8,656
–
–
–
–
–
(4)
11
7
8,663
Equity
9,828
(7)
(62)
9,759
(21)
(81)
(102)
(574)
11
(13)
–
–
(576)
9,081
1,105
(22)
1,083
(587)
11
(4)
–
(580)
9,584
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
104
Stockland Annual Report 2021
Consolidated statement of changes in equity
Attributable to securityholders of Trust
$M
Balance at 30 June 2019
Adoption of new accounting standards
Balance at 1 July 2019
Loss for the year
Other comprehensive income, net of tax
Total comprehensive loss
Dividends and distributions
Security based payment expense
Acquisition of treasury securities
Securities vested under Security Plans
Securities lapsed under Security Plans
Other movements
Balance at 30 June 2020
Profit for the year
Other comprehensive income, net of tax
Total comprehensive income
Dividends and distributions
Security based payment expense
Acquisition of treasury securities
Securities vested under Security Plans
Other movements
Balance at 30 June 2021
Note
Issued
capital
Security based
payments
Cash flow
hedges
Undistributed
income
Reserves
7,359
–
7,359
–
–
–
–
–
(12)
11
–
(1)
7,358
–
–
–
–
–
(3)
10
7
7,365
34
–
34
–
–
–
–
11
–
(11)
(1)
(1)
33
–
–
–
–
11
–
(10)
1
34
54
–
54
–
(81)
(81)
–
–
–
–
–
–
(27)
–
(22)
(22)
–
–
–
–
–
(49)
1,575
(6)
1,569
(62)
–
(62)
(574)
–
–
–
1
(573)
934
976
–
976
(587)
–
–
–
(587)
1,323
4
21
21
4
21
21
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Equity
9,022
(6)
9,016
(62)
(81)
(143)
(574)
11
(12)
–
–
(575)
8,298
976
(22)
954
(587)
11
(3)
–
(579)
8,673
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Year ended 30 June 2021
105
Consolidated statement of cash flows
Note
Year ended 30 June
$M
Receipts in the course of operations (including GST)
Payments in the course of operations (including GST)
Payments for land
Distributions received from equity–accounted investments
Receipts from Retirement Living residents
Payments to Retirement Living residents, net of DMF
Interest received
Interest paid
Net cash flows from operating activities
29
Proceeds from sale of investment properties
Payments for and development of investment properties:
• Commercial Property
• Retirement Living
Payments for plant and equipment and software
Proceeds from sale of/capital returns from investments
Payments for investments (including equity–accounted)
Loans to other parties
Distributions received from other entities
Loans from/(to) related entities
Net cash flows from investing activities
Payments for treasury securities under Security Plans
Proceeds from borrowings
Repayments of borrowings
Payments for derivatives and financial instruments
Dividends and distributions paid
Net cash flows from financing activities
Net movement in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
21
29
29
4
Stockland
Trust
2021
2,931
(1,434)
(477)
20
326
(169)
4
(154)
1,047
568
(318)
(68)
(20)
–
(24)
(43)
–
–
95
(4)
665
(561)
–
(523)
(423)
719
443
1,162
(Restated)
2020
2,880
(1,477)
(324)
25
332
(145)
2
(181)
1,112
369
2021
903
(414)
–
20
–
–
196
(154)
551
542
2020
795
(389)
–
24
–
–
230
(180)
480
342
(664)
(317)
(664)
(47)
(119)
336
(12)
–
4
–
(133)
(13)
2,452
(2,434)
(23)
(658)
(676)
303
140
443
–
–
–
(21)
(12)
–
357
549
(3)
665
–
–
336
(12)
–
4
485
491
(12)
2,452
(559)
(2,434)
–
(523)
(420)
680
359
1,039
(23)
(658)
(675)
296
63
359
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
106
Stockland Annual Report 2021
Notes to the financial report
Basis of preparation
108
Taxation
22. Income tax
23. Deferred tax
Group structure
24. Equity–accounted investments
25. Other arrangements
26. Controlled entities
27. Deed of cross guarantee
28. Parent entity disclosures
Other items
29. Notes to the consolidated statement of cash flows
30. Commitments
31. Contingent liabilities
32. Related party disclosures
33. Personnel expenses
34. Key management personnel disclosures
35. Auditor's remuneration
36. Accounting policies
37. Adoption of new and amended Accounting Standards
Results for the year
1. Revenue
2. Operating segments
3. EPS
4. Dividends and distributions
5. Events subsequent to the end of the year
Operating assets and liabilities
6. Inventories
7. Commercial Property
8. Communities investment property
9. Receivables
10. Payables
11. Other liabilties
12. Leases
13. Intangible assets
14. Non–current assets held for sale
Capital structure and financial
risk management
15. Borrowings
16. Cash and cash equivalents
17. Net financing costs
18. Other financial assets and liabilities
19. Fair value measurement of financial instruments
20. Financial risk factors
21. Issued capital
110
110
112
115
116
117
118
118
122
130
135
136
137
137
140
141
142
143
143
144
145
147
150
154
158
158
159
161
161
162
163
166
168
169
169
170
170
171
172
172
173
173
175
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Year ended 30 June 2021
107
Basis of preparation
IN THIS SECTION
This section sets out the basis upon which Stockland’s financial report is prepared as a whole. Specific accounting policies are
described in the section to which they relate.
A glossary containing acronyms and defined terms is included at the back of this report.
STAPLING ARRANGEMENT
Stockland represents the consolidation of Stockland Corporation Limited (Corporation) and Stockland Trust (Trust) and their
respective controlled entities. Stockland Corporation Limited and Stockland Trust were both incorporated or formed and are
domiciled in Australia.
Stockland is structured as a stapled entity: a combination of a share in Stockland Corporation Limited and a unit in Stockland Trust
that are together traded as one security on the ASX. The constitutions of Stockland Corporation Limited and Stockland Trust provide
that, for so long as the two entities remain jointly quoted, the number of shares in Stockland Corporation Limited and the number of
units in Stockland Trust shall be equal and that the shareholders and unitholders be identical. Both Stockland Corporation Limited
and the Responsible Entity of Stockland Trust must at all times act in the best interest of Stockland. The stapling arrangement will
cease upon the earlier of either the winding up of Stockland Corporation Limited or Stockland Trust or either entity terminating the
stapling arrangement.
As permitted by Class Order 13/1050, issued by ASIC, this financial report is a combined financial report that presents the financial
statements and accompanying notes of both Stockland and the Trust as at and for the year ended 30 June 2021.
STATEMENT OF COMPLIANCE
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board and the Corporations Act 2001. Stockland Corporation Limited and Stockland Trust
are both for-profit entities for the purpose of preparing the financial statements.
The financial statements are presented in Australian dollars, which is Stockland Corporation Limited’s and Stockland Trust’s functional
currency and the functional currency of Stockland and Stockland Trust’s subsidiaries.
HISTORICAL COST CONVENTION
The financial statements have been prepared on a going concern basis using historical cost conventions, except for investment properties
(including non-current assets held for sale), derivative financial instruments and certain financial assets and liabilities which are stated
at fair value.
COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
The financial statements of both Stockland and the Trust also comply with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board.
Comparative figures have been restated where appropriate to ensure consistency of presentation throughout the financial report.
CHANGE IN ACCOUNTING POLICIES AND NEW AND AMENDED ACCOUNTING STANDARDS
In accordance with an IFRS Interpretations Committee (IFRIC) agenda decision published on 27 April 2021 in relation to accounting for
Software-as-a-Service (SaaS) arrangements, Stockland retrospectively implemented this guidance as a change in accounting policy. Refer
to note 36C for details of the impact of this policy change.
Stockland's financial position as at 30 June 2021 and its performance for the year ended on that date have not been impacted as a result of
the adoption of new and amended Accounting Standards and Interpretations effective for annual reporting periods beginning on or after
1 July 2020. Refer to note 37A for further details of the amended Accounting Standards adopted during the year.
NET CURRENT ASSET DEFICIENCY POSITION
Stockland and the Trust generated positive cash flows from operations of $1,047 million and $551 million respectively during the year.
Undrawn bank facilities of $1,150 million (refer to note 15) are also available should they need to be drawn. In addition, Stockland and the
Trust have successfully refinanced external borrowings and raised new external debt when required. Based on the cash flow forecast for
the next 12 months which reflects an assessment of the current economic and operating environment, including the impact of the recurring
COVID-19 lockdowns, Stockland and the Trust will be able to pay their debts as and when they become due and payable. Stockland also has
a robust capital management framework and available liquidity, allowing flexibility in foreseeable business environments. Accordingly,
the financial statements have been prepared on a going concern basis.
108
Stockland Annual Report 2021
Stockland has a prima facie net current asset deficiency of $1,929 million at 30 June 2021 (2020: $2,011 million). This prima facie position
occurs each year and is unrelated to COVID-19. A detailed explanation is set out below. The Trust has a prima facie net current asset surplus
of $188 million (2020: $261 million surplus).
Stockland
In relation to Stockland, a number of liabilities are classified as current under Accounting Standards that are not expected to result in
actual net cash outflows within the next 12 months (in particular Retirement Living resident obligations). Similarly, some assets held
as non-current will generate cash income in the next 12 months (including Retirement Living DMF included within Retirement Living
investment properties, residential development work in progress and Retirement Living vacant stock).
Furthermore, current inventories are held on the balance sheet at the lower of cost and net realisable value (NRV), whereas most of these
are expected to generate cash inflows above carrying value.
In relation to current Retirement Living resident obligations for existing residents (2021: $2,446 million; 2020: $2,587 million),
approximately 8% (2020: 8%) of residents are estimated to depart their dwelling each year and therefore it is not expected that the
majority of the obligations to residents will fall due within one year. In the vast majority of transactions involving the turnover of units, the
resident obligations will be repaid from receipts from incoming residents. However, resident obligations are classified as current under
the definitions in the Accounting Standards as Stockland does not hold an unconditional contractual right to defer settlement for at least 12
months (residents may give notice of their intention to vacate their unit with immediate effect). In contrast, the corresponding Retirement
Living assets are classified as non-current under the Accounting Standards as the majority are not expected to be realised within 12 months.
ROUNDING
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, amounts in the financial report have
been rounded to the nearest million dollars, unless otherwise stated.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
Stockland makes estimates and assumptions concerning the future. The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed in this financial report.
Estimates and judgements are continually evaluated and are based on historical experience as adjusted for current market conditions and
other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Assumptions underlying management’s estimates of fair value and recoverability are:
• Inventories – assumptions underlying net realisable value, profit margin recognition and Whole of Life (WOL) accounting – Note 6
• Commercial Property – assumptions underlying fair value – Note 7
• Retirement Living – assumptions underlying fair value – Note 8
• Receivables1 – assumptions underlying expected credit loss – Note 9
• Derivatives – assumptions underlying fair value – Note 18
• Valuation of security based payments – assumptions underlying fair value – Note 21
• Tax losses – assumptions underlying recognition and recoverability – Note 23
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1
The expected credit loss calculation is considered a significant accounting estimate in the current year due to the continuing impact of COVID-19 and the resulting increase in lease
receivables from tenants at 30 June 2021, when compared to pre COVID-19 levels.
Year ended 30 June 2021
109
Results for the year
IN THIS SECTION
This section explains the results and performance of Stockland.
It provides additional information about those individual line items in the financial statements that the Directors consider most
relevant in the context of the operations of Stockland, including:
• accounting policies that are relevant for understanding the items recognised in the financial report; and
• analysis of the results for the year by reference to key areas, including revenue, results by operating segment and taxation.
Residential
Land Lease
Communities
Retirement
Living
Communities
subtotal
Commercial
Property
Other
Stockland
Trust
1. REVENUE
Year ended
$M
30 June 2021
Property
development sales1
Outgoings recoveries2
Revenue from contracts
with customers
Rental income3
DMF revenue3
Other revenue
1,843
–
1,843
–
–
16
Statutory revenue
1,859
Amortisation of
lease incentives
Straight–line rent
Unrealised DMF revenue3
–
–
–
Segment revenue
1,859
30 June 2020
Property
development sales1,4
Outgoings recoveries2
Revenue from contracts
with customers
Rental income3
DMF revenue3
Other revenue
1,871
–
1,871
–
–
16
Statutory revenue
1,887
Amortisation of
lease incentives
Straight–line rent
Unrealised DMF revenue3
–
–
–
Segment revenue
1,887
2
–
2
–
–
–
2
–
–
–
2
–
–
–
–
–
–
–
–
–
–
–
34
–
34
4
131
1
1,879
–
1,879
4
131
17
170
2,031
–
–
(46)
124
46
–
46
2
109
2
159
–
–
(29)
130
–
–
(46)
1,985
1,917
–
1,917
2
109
18
2,046
–
–
(29)
2,017
–
72
72
644
–
8
724
79
1
–
804
–
74
74
685
–
4
763
75
(3)
–
835
–
–
–
–
–
1
1
–
–
–
1
–
–
–
–
–
3
3
–
–
–
3
1,879
72
1,951
648
131
26
2,756
79
1
(46)
2,790
1,917
74
1,991
687
109
25
2,812
75
(3)
(29)
–
71
71
649
–
3
723
79
2
–
804
–
74
74
690
–
2
766
75
(3)
–
2,855
838
1
Property development sales revenue is recognised under AASB 15 Revenue from Contracts with Customers at a point in time when control of the asset passes to the customer. Refer
to note 1A for further details of revenue from property development sales by state.
2 Revenue related to outgoings recoveries is recognised under AASB 15 over time in the accounting period in which the performance obligations are met.
3 Commercial Property rental income and Retirement Living DMF revenue meet the definition of a lease arrangement. Therefore, they fall outside the scope of AASB 15 and are
accounted for in accordance with AASB 16 Leases.
4 Property development sales in the prior year include the revenue recognised from the capital partnering transaction at Aura, QLD.
110
Stockland Annual Report 2021
RENT FROM INVESTMENT PROPERTIES
Rent from investment properties includes lease revenue and outgoings recoveries associated with general building and tenancy operation
from lessees in accordance with specific clauses within lease agreements.
Lease revenue is recognised in accordance with AASB 16 Leases on a straight-line basis over the lease term, net of any incentives. See
note 12 for the treatment of rent abatements granted in response to COVID-19 and note 9 for the treatment of expected credit losses on
lease receivables.
Outgoings recoveries are recognised in accordance with AASB 15 Revenue from Contracts with Customers and are typically invoiced monthly
based on an annual estimate. The consideration for the current month is typically due on the first day of the month. Revenue related to
outgoings recoveries is recognised over time as the estimated costs are consumed by the tenant. Should any adjustment be required based
on actual costs incurred, this is recognised in the balance sheet within the same reporting period and billed annually.
Rent from investment properties includes $5 million (2020: $3 million) contingent rents billed to tenants. Contingent rents are derived
from the tenants’ revenues and represent 0.7% (2020: 0.4%) of gross lease income.
DEFERRED MANAGEMENT FEE (DMF) REVENUE
The DMF is recognised over the tenancy period and includes both fixed fees recognised on a straight–line basis and contingent fees
recognised when earned.
The DMF calculated on the entry price of the unit is recognised each period; however, fees are only realised in cash upon receipt of the
next incoming resident's loan.
The DMF calculated on the exit price of the unit is recognised and realised in cash upon receipt of the next incoming resident's loan, or
when it is withheld under an approved investment proposal for development.
DIVIDENDS AND DISTRIBUTIONS
Revenue from dividends and distributions are recognised in Other Revenue on the date they are declared by the relevant entity but are
only recognised in the statement of cash flows upon receipt.
1A. Breakdown of revenue from property development sales
Residential revenue from property development by major product and geographical area is disaggregated as follows:
Year ended
$M
30 June 2021
Residential communities
Townhomes
Apartments
Property development sales
30 June 2020
Residential communities1
Townhomes
Apartments
Property development sales
ACT
NSW
QLD
VIC
WA
Residential
–
20
–
20
–
–
–
–
404
68
–
472
328
40
41
409
382
55
–
437
510
66
–
576
570
102
–
672
563
179
–
742
225
17
–
242
135
9
–
144
1,581
262
–
1,843
1,536
294
41
1,871
1
Property development sales in the prior year include the revenue recognised from the capital partnering transaction at Aura, QLD.
PROPERTY DEVELOPMENT SALES
Revenue from land and property sales is recognised when control over the property has been transferred to the customer. The properties
generally have no alternative use for Stockland due to contractual restrictions. However, an enforceable right to payment does not arise
until legal title, and therefore control of the asset, has passed to the customer. Therefore, revenue is recognised at a point in time when
legal title, and therefore control of the asset, has passed to the customer.
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Year ended 30 June 2021
111
2. OPERATING SEGMENTS
STOCKLAND
Stockland has five reportable segments, as listed below:
• Commercial Property – invests in, develops and manages Retail Town Centres, Workplace and Logistics properties;
• Residential – delivers a range of masterplanned and mixed use residential communities in growth areas, and townhomes and
• Land Lease Communities - invests in, designs, develops and manages communities for over 50s;
• Retirement Living – invests in, designs, develops, manages and sells communities for over 55s and retirees; and
• Other – dividends/distributions from strategic investments and other items which are not able to be classified within any of the other
apartments in general metropolitan areas;
defined segments.
Together, Residential, Land Lease Communities and Retirement Living represent Stockland’s Communities business.
Measurement of segment results
FFO is a non-IFRS measure that is designed to present, in the opinion of the Chief Operating Decision Maker (CODM), the results from
ongoing operating activities in a way that appropriately reflects Stockland's underlying performance. FFO is the primary basis on which
dividends and distributions are determined, and together with expected capital returns and AFFO impacts, reflects the way the business
is managed and how the CODM assesses the performance of Stockland. It excludes certain items which are non-cash, unrealised or
of a capital nature, and profit or loss made from realised transactions occurring infrequently and those that are outside the course of
Stockland’s core ongoing business activities. FFO also excludes income tax items that do not result in a cash flow.
A reconciliation from FFO to profit after tax is presented in note 2A.
AFFO is an alternative, secondary, non-IFRS measure used by the CODM to assist in the assessment of the underlying performance of
Stockland. AFFO is calculated by deducting maintenance capital expenditure and incentives and leasing costs from FFO.
There is no customer who accounts for more than 10% of the gross revenue of Stockland.
TRUST
The Trust has one reportable segment in which it operates, being Commercial Property. Therefore, no separate segment note has
been prepared. The CODM monitors the performance of the Trust in a manner consistent with that of the financial report. Refer to the
consolidated statement of comprehensive income for the segment financial performance and the consolidated balance sheet for the
assets and liabilities.
There is no customer who accounts for more than 10% of the gross revenue of the Trust.
112
Stockland Annual Report 2021
2A. Reconciliation of FFO to profit after tax
FFO excludes adjustments such as unrealised fair value gains/losses, realised transactions occurring infrequently and those that are
outside the course of Stockland's core ongoing business activities.
Year ended 30 June
$M
FFO
Adjust for:
Amortisation of lease incentives
Amortisation of lease fees
Straight–line rent
Net unrealised change in fair value of Commercial Property investment properties1
Net unrealised change in fair value of Retirement Living investment properties
Net unrealised change in fair value of Retirement Living obligations
Unrealised DMF revenue
Net gain/(loss) on financial instruments
Net gain/(loss) on other financial assets
Net (loss)/gain on sale of other non–current assets
Net reversal of impairment of inventories
Impairment of Retirement Living goodwill2
Income tax non–cash
Other one–off costs3
Profit/(loss) after tax
2021
788
(79)
(13)
(1)
433
(74)
(18)
46
63
1
(18)
5
–
27
(55)
1,105
(Restated)
2020
825
(75)
(14)
3
(452)
(152)
22
29
(109)
(4)
20
–
(38)
(45)
(31)
(21)
1
Includes Stockland’s share of revaluation relating to properties held through joint ventures (2021: $17 million gain; 2020: $44 million gain) and fair value unwinding of ground leases
recognised under AASB 16 (2021: $1 million; 2020: $1 million).
2 Write–down of goodwill associated with historic Retirement Living acquisitions.
3 Gross of tax benefits of $17 million (FY20: $9 million), other one-off costs reflect the impact of the change in accounting policy for the treatment of configuration and customisation
costs in a SaaS arrangement in line with the IFRIC decision published on 27 April 2021 and provisions for expected onerous contract costs. Prior year also includes costs associated
with the delay of SAP systems go-live and restructuring costs. To be classified as a one-off, these costs were assessed to be highly unlikely to reoccur in future years.
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Year ended 30 June 2021
113
2B. FFO and AFFO
The contribution of each reportable segment to FFO and AFFO is summarised as follows:
Year ended
$M
30 June 2021
Segment revenue1,2
Segment EBIT1,2
Amortisation of lease fees
Interest expense in cost of sales3
Segment FFO4,5
Finance income
Finance expense
Unallocated corporate and
other expenses
FFO
Maintenance capital expenditure6
Incentives and leasing costs7
AFFO
30 June 2020
Segment revenue1,2
Segment EBIT1,2
Amortisation of lease fees
Interest expense in cost of sales3
Segment FFO4,5
Finance income
Finance expense
Unallocated corporate and
other expenses
FFO
Maintenance capital expenditure6
Incentives and leasing costs7
AFFO
Residential
Land Lease
Communities
Retirement
Living
Communities
subtotal
Commercial
Property
Other
Stockland
1,859
420
–
(89)
331
1,887
500
–
(128)
372
2
–
–
–
–
–
–
–
–
–
124
1,985
59
–
(5)
54
479
–
(94)
385
130
2,017
65
–
(7)
58
565
–
(135)
430
804
545
13
–
558
835
523
14
–
537
1
–
–
–
–
3
–
–
–
–
2,790
1,024
13
(94)
943
4
(90)
(69)
788
(61)
(76)
651
2,855
1,088
14
(135)
967
2
(88)
(56)
825
(32)
(57)
736
1
Commercial Property segment revenue and EBIT adds back $79 million (2020: $75 million) of amortisation of lease incentives and excludes $1 million (2020: $3 million) of straight–line
rent adjustments.
$4 million (2020: $6 million) interest expense in Retirement Living is contained in the fair value adjustment of investment properties.
2 Retirement Living segment revenue and EBIT exclude $46 million (2020: $29 million) of unrealised DMF revenue.
3
4 Commercial Property segment FFO includes share of profits from equity–accounted investments of $20 million (2020: $22 million).
5 Residential segment FFO in prior year includes profit recognised from the capital partnering transaction at Aura, QLD.
6 Maintenance capital expenditure includes $6 million (2020: $6 million) of Retirement Living maintenance capital expenditure.
7
Expenditure incurred on incentives and leasing costs during the year excluding assets under construction.
114
Stockland Annual Report 2021
2C. Balance sheet by operating segment
As at
$M
30 June 2021
Real estate related assets1,2
Other assets
Assets
Retirement Living resident obligations
Borrowings
Other liabilities
Liabilities
Net assets/(liabilities)
30 June 2020
Real estate related assets1,2
Other assets3
Assets
Retirement Living resident obligations
Borrowings
Other liabilities
Liabilities
Net assets/(liabilities)
Residential
Land Lease
Communities
Retirement
Living
Communities
subtotal
Commercial
Property Unallocated
Stockland
3,216
192
3,408
–
–
1,461
1,461
1,947
3,395
114
3,509
–
–
1,292
1,292
2,217
47
–
47
–
–
–
–
47
–
–
–
–
–
–
–
–
3,570
79
3,649
2,512
–
80
2,592
1,057
3,969
11
3,980
2,695
–
10
2,705
1,275
6,833
271
7,104
2,512
–
1,541
4,053
3,051
7,364
125
7,489
2,695
–
1,302
3,997
3,492
10,351
72
10,423
–
–
403
403
129
1,649
1,778
–
4,754
511
5,265
10,020
(3,487)
10,140
51
10,191
–
–
333
333
130
1,345
1,475
–
5,022
722
5,744
9,858
(4,269)
17,313
1,992
19,305
2,512
4,754
2,455
9,721
9,584
17,634
1,521
19,155
2,695
5,022
2,357
10,074
9,081
Includes non–current assets held for sale, inventories, investment properties, equity–accounted investments and certain other assets.
Includes equity–accounted investments of $392 million (2020: $354 million) in Commercial Property.
1
2
3 Other assets in the prior year have been restated as a result of a retrospective change in accounting policy following an IFRIC agenda decision on accounting for SaaS arrangements
published on 27 April 2021. Refer to note 36C for further detail on the impact of this change in accounting policy.
3. EPS
KEEPING IT SIMPLE
EPS is the amount of post–tax profit attributable to each security.
Basic EPS is calculated as statutory profit for the period divided by the weighted average number of securities (WANOS) outstanding.
This is highly variable as it includes unrealised fair value movements in investment properties and financial instruments.
Diluted EPS adjusts the basic EPS for the dilutive effect of any instruments, such as Security Plan rights, that could be converted
into securities.
Basic FFO per security is disclosed in the Directors’ report and more directly reflects underlying income performance of the portfolio.
Year ended 30 June
Stockland
Trust
Profit/(loss) after tax attributable to shareholders ($M)
2021
1,105
(Restated)
2020
(21)
2021
976
2020
(62)
WANOS used in calculating basic EPS
2,382,771,858
2,378,133,131
2,382,771,858
2,378,133,131
Basic EPS (cents)
46.4
(0.9)
41.0
(2.6)
Effect of rights and securities granted under Security Plans1
9,887,792
1,945,535
9,887,792
1,945,535
WANOS used in calculating diluted EPS
2,392,659,650
2,380,078,666
2,392,659,650
2,380,078,666
Diluted EPS (cents)
46.2
(0.9)
40.8
(2.6)
1
Rights and securities granted under security plans are only included in diluted EPS where Stockland is meeting performance hurdles for contingently issuable security based
payment rights.
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Year ended 30 June 2021
115
4. DIVIDENDS AND DISTRIBUTIONS
STOCKLAND CORPORATION LIMITED
There were no dividends from Stockland Corporation Limited during the current or previous financial years. The dividend franking account
balance as at 30 June 2021 is $14 million based on a 30% tax rate (2020: $14 million).
STOCKLAND TRUST
For the current year, the interim and final distributions are paid solely out of the Trust and therefore the franking percentage is not relevant.
Date of payment
Cents per security
Total amount ($M)
Non attributable (%)
2021
2020
Interim distribution
26 February 28 February
Final distribution
31 August
31 August
Total distribution
2021
11.3
13.3
24.6
2020
13.5
10.6
24.1
2021
270
317
587
2020
321
253
574
2021
14.9
21.1
18.2
2020
31.6
–
0.8
The non-attributable component represents the amount distributed in excess of Stockland Trust’s taxable income (disregarding any
Capital Gains Tax discount applied to any capital gains derived by Stockland Trust in the year).
BASIS FOR DISTRIBUTION
Stockland’s distribution policy is to pay the higher of 100% of Trust taxable income or 75% to 85% of FFO on an annual basis over time.
The payout ratio for the current and comparative periods is summarised as follows:
Year ended 30 June ($M)
FFO1
Weighted average number of securities used in calculating basic EPS
FFO per security
Distribution per security for the year
Payout ratio
Note
2
3
4
2021
788
2020
825
2,382,771,858
2,378,133,131
33.1
24.6
75%
34.7
24.1
70%
1
FFO is a non–IFRS measure. A reconciliation from FFO to statutory profit after tax is presented in note 2A.
116
Stockland Annual Report 2021
5. EVENTS SUBSEQUENT TO THE END OF THE YEAR
STOCKLAND AND TRUST
Australia continued to see the implementation of COVID-19 related restrictions including lockdowns impacting retail and construction
activities across various states including across the Eastern Seaboard In late FY21 and into FY22. These restrictions related to the continued
community transmission of COVID-19 and low levels of vaccination - managing both issues will be instrumental in reducing future volatility
caused by lockdowns and related government actions. The Group has continued to navigate a path through this challenging environment
with a focus on the safety of our people, customers, residents and assets.
On 28 July 2021, the Victorian Government announced the reintroduction of the Commercial Tenancies Relief Scheme intended to facilitate
rent relief to retail and commercial tenants that have experienced a loss in turnover of more than 30 per cent during the pandemic. As
at the date of this report, the Regulations detailing the eligibility criteria for the Victorian Scheme has not yet been released. However,
Stockland affirms its commitment to work with its tenants, and in compliance with applicable legislation, to provide rent relief and rent
deferments to eligible tenants seeking support. The expected credit loss provision as at 30 June 2021 has not been adjusted as a result
of this announcement.
On 13 August 2021, the Retail and Other Commercial Leases (COVID-19) Amendment Regulation 2021 (Amendment) was legislated in NSW
requiring landlords to renegotiate rent and other terms with eligible tenants impacted by COVID-19. Eligible tenants have a turnover of
up to $50 million in the 2021 financial year and qualify for one or more of the 2021 COVID-19 Micro-business Grant, the 2021 COVID-19
Business Grant or the 2021 JobSaver Payment, which includes a requirement to demonstrate a revenue decline of 30 per cent or more.
The Amendment requires landlords to renegotiate rent for the period from 13 July 2021 to 13 January 2022 where requested by eligible
tenants having regard to the National Cabinet’s Mandatory Code of Conduct (the Code), as well as prohibits landlords from increasing
rent or taking actions in relation to certain breach actions for eligible tenants. The Code requires landlords to provide relief in the form of
rent waivers and rent payment deferral. The relief is to reflect a proportionate sharing of the revenue impact experienced by the eligible
tenant as a result of COVID-19, with at least 50 per cent of the relief in the form of an abatement. With an implementation date of 13 July
2021, the Group will assess any impact of this legislation on expected credit loss provisioning for the 12 month period to 30 June 2022.
On 17 August 2021, the Group acquired control of 100% of Halcyon Group’s land lease communities business for consideration of
$620 million plus transaction costs (including stamp duty) and other completion adjustments. The transaction, which will be fully funded
from existing available liquidity, includes the acquisition of six established communities with a further four under development and three
in planning. While the purchase price allocation for the acquisition is yet to be completed, the acquisition is expected to increase gross
assets by approximately $620 million and net debt will increase by approximately $620 million plus transaction costs.
The financial effects of this transaction have not been recognised at 30 June 2021. The operating results and assets and liabilities of the
acquired company will be consolidated from 17 August 2021.
Other than disclosed in this note or elsewhere in this report, there has not arisen in the interval between the end of the current financial
year and the date of this report any item, transaction or event of a material or unusual nature, likely, in the opinion of the Directors, to
affect significantly the operations, the results of operations, or the state of affairs in future years of Stockland and the Trust.
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Year ended 30 June 2021
117
Operating assets and liabilities
IN THIS SECTION
This section shows the real estate and other operating assets used to generate Stockland’s trading performance and the liabilities
incurred as a result.
6. INVENTORIES
KEEPING IT SIMPLE
A Whole of Life (WOL) methodology is applied to calculate the margin percentage over the life of each project. All costs, including
those costs spent to date and those forecast in the future, are allocated proportionally in line with net revenue for each lot to achieve
a WOL margin percentage. The WOL margin percentage, and therefore allocation of costs, can change over the life of the project as
revenue and cost forecasts are updated.
The determination of the WOL margin percentage requires significant judgement in estimating future revenues and costs and can
change over the life of the project, as revenue and cost forecasts are updated. The WOL margin percentages are regularly reviewed
and updated in project forecasts across the reporting period to ensure these estimates reflect market conditions through the cycle.
118
Stockland Annual Report 2021
As at 30 June
$M
Completed inventory
Cost of acquisition
Development and other costs
Interest capitalised
Impairment provision
Completed inventory1
Development work in progress
Cost of acquisition
Development and other costs
Interest capitalised
Impairment provision
Residential communities
Cost of acquisition
Development and other costs
Interest capitalised
Apartments
Cost of acquisition
Development and other costs
Interest capitalised
Aspire villages2
Cost of acquisition
Development and other costs
Interest capitalised
Land Lease Communities2
Cost of acquisition
Development and other costs
Interest capitalised
Impairment provision
Logistics
Development work in progress
Stockland
2021
2020
Current Non–current
Total
Current Non–current
Total
158
140
7
–
305
260
142
48
(15)
435
–
–
–
–
–
–
–
–
–
2
–
2
99
19
6
–
124
561
–
–
–
–
–
158
140
7
–
305
1,775
2,035
379
264
(73)
521
312
(88)
2,345
2,780
122
17
3
142
–
–
–
–
–
6
–
6
7
2
–
–
9
2,502
122
17
3
142
–
–
–
–
–
8
–
8
106
21
6
–
133
3,063
85
224
23
(5)
327
212
81
30
(8)
315
–
–
–
–
3
14
1
18
–
–
–
–
24
3
3
–
30
363
–
–
–
–
–
1,988
444
302
(105)
2,629
127
9
3
139
2
8
–
10
–
–
–
–
71
–
–
(9)
62
85
224
23
(5)
327
2,200
525
332
(113)
2,944
127
9
3
139
5
22
1
28
–
–
–
–
95
3
3
(9)
92
2,840
3,203
Inventories
866
2,502
3,368
690
2,840
3,530
1 Mainly comprises residential communities. Includes Aspire villages of $7 million (2020: $6 million). No apartments or logistics projects are included in inventory in the current or
prior year.
2 Refer to note 8 for further details on Aspire villages and Land Lease Communities.
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Year ended 30 June 2021
119
The following impairment provisions are included in the inventory balance with movements for the period recognised in profit or loss:
$M
Balance at 1 July 2020
Amounts utilised
Reversal of provisions previously recorded
Additional provisions created
Balance at 30 June 2021
Residential
communities
Logistics
118
(28)
(14)
12
88
9
(6)
(3)
–
–
Total
127
(34)
(17)
12
88
Properties held for development and resale are stated at the lower of cost and NRV. Cost includes the costs of acquisition, development
and holding costs such as borrowing costs, rates and taxes. Holding costs incurred after completion of development activities are
expensed. Inventory is classified as current if it is completed or work in progress expected to be settled within 12 months, otherwise it is
classified as non-current.
COST OF ACQUISITION
The cost of acquisition comprises the purchase price of the land, including land under option, along with any direct costs incurred as part
of the acquisition including legal, valuation and stamp duty costs.
The payments for land of $477 million (2020: $324 million) reported in the statement of cash flows are in respect of land that will be
developed over time.
LAND UNDER OPTION
Stockland has a number of arrangements with third parties primarily relating to the purchase of land on capital efficient terms, through
option arrangements.
Where the arrangement uses call options only, the decision to proceed with a purchase is controlled by Stockland. A future obligation
under a call option is only triggered if Stockland exercises the option. No asset or liability for the land under option is recognised on the
balance sheet until the option has been exercised. The call option is not disclosed as a capital commitment as there is no commitment
to purchase until the option is exercised.
Where the arrangement includes both put and call options and the put option requires Stockland to purchase the land at the discretion of
the seller, it creates a present obligation once the option is exercised by the holder. If Stockland also presently exhibits control over the
future economic benefits of the asset such as via a presently exercisable call option or physical control of the asset, the land is recognised
in inventories with a corresponding liability recognised in provisions for development costs at the exercise price of the option.
Any costs incurred in relation to the options, including option fees, are included in inventories.
DEVELOPMENT AND OTHER COSTS
Costs include variable and fixed costs directly related to specific contracts, costs related to general contract activity which can
be allocated to specific projects on a reasonable basis, and other costs specifically chargeable under the contract including under
rectification provisions.
INTEREST CAPITALISED
Financing costs on qualifying assets are also included in the cost of inventories. Finance costs were capitalised at interest rates ranging
from 3.6 to 3.9% during the financial year (2020: 3.5 to 4.6%).
ALLOCATION OF INVENTORIES TO COST OF SALES
A WOL methodology is applied to calculate the margin percentage for each project. On settlement, all costs, including those spent to date
and those forecast in the future, are proportionally allocated to each lot in line with net revenue and released from inventories to cost of
sales. The allocation of costs can change throughout the life of the project, as revenue and cost forecasts are updated to reflect market
conditions not previously forecast.
IMPAIRMENT PROVISION
The NRV of inventories is the estimated selling price in the ordinary course of business less estimated costs of completion and costs to
sell. NRV is based on the most reliable evidence available at 30 June 2021 of the amount the inventories are expected to be realised at
(using estimates such as revenue escalations) and the estimate of total costs (including costs to complete). These estimates take into
consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events
confirm conditions existing at the end of the period. This is an area of accounting estimation and judgement for Stockland.
In accordance with AASB 102 Inventories, key estimates are reviewed each period, including the costs of completion, sales rates and
revenue escalations, to determine whether an impairment provision is required where cost (including costs to complete) exceeds NRV.
120
Stockland Annual Report 2021
Management undertook an extensive impairment review of all development projects taking into account the current economic and
operating environment, including impacts of COVID-19. Based on information available at 30 June 2021 and the information arising since
that date about conditions at that date, the Directors have determined that the inventory balances reported are held at the lower of cost
or NRV.
The sensitivity of key inventory recoverability drivers to the evolving economic and operating conditions has been analysed across all
inventory projects. In addition, government stimulus and production options continue to be available to Stockland to mitigate the risk of
future impairments. While it is unlikely that these drivers would move in isolation, these sensitivities have been performed independently
to illustrate the impact each individual driver has on the reported NRV of inventory and they do not represent management's estimate at
30 June 2021.
Stockland
$M
Additional impairment charge on inventories
Sales price
5% Decrease
(24)
Average 3 year
price growth1
0%
(83)
1 year sales rate
25% reduction
(1)
1
The average 3 year price growth underpinning the 30 June 2021 impairment assessment is 3.8%.
Key inputs used to assess impairment of inventories are:
Item
Sales rates
Current sales price
Description
Assumptions on the number of lot sales expected to be achieved each month.
Sales prices are generally reviewed semi-annually by the sales and development teams in light of internal
benchmarking and market performance and are approved by the General Manager, Communities Sales and
CEO, Communities.
Revenue escalation rates
The annual growth rate a lot is expected to increase in value until point of sale.
Costs to complete
The cost expected to be incurred to bring remaining lots to practical completion including rectification
provisions and other costs.
Cost escalation rates
The annual increase in base costs applied up to the period in which the costs are incurred.
Financing costs
Assumptions on the annual interest rates underpinning future finance costs capitalised to the cost
of inventories.
Selling costs
The costs expected to be incurred to complete the sale of inventories.
DEVELOPMENT COST PROVISIONS
As at 30 June
$M
2021
Current
Non–current
Development cost provisions1
443
172
2020
Total
615
Current
Non–current
328
501
1
Includes $177 million (2020: $186 million) provisions relating to Commercial Property investment property assets.
Balance at 1 July 2020
Additional provisions
Amounts utilised
Amounts derecognised1
Balance at 30 June 2021
Total
829
$M
829
385
(263)
(336)
615
1 Derecognition of Marsden Park land option following mutual agreement on 12 August 2020 to end Stockland's obligations under the original agreement. Exclusive negotiations to
agree new terms continue at reporting date.
The development cost provisions reflect obligations as at 30 June 2021 that arose as a result of past events. This balance includes deferred
land options, and cost to complete provisions for both active and trade out projects. They are determined by discounting the expected
future cash outflows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks
specific to the liability. Onerous contract costs have also been recognised in relation to property development agreements where, due
to changes in market conditions, the expected benefit is lower than the committed cost, and is measured at the minimum net obligation
under the contracts.
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Year ended 30 June 2021
121
7. COMMERCIAL PROPERTY
As at 30 June
$M
Retail Town Centres
Logistics
Workplace
Social infrastructure1
Capital works in progress and sundry properties
Book value of commercial property
Less amounts classified as:
• cost to complete provision
• property, plant and equipment
• non–current assets held for sale
• other assets (including lease incentives and fees)
• other assets (including lease incentives and fees) attributable to equity–
• other receivables (straight–lining of rental income)
• other receivables (straight–lining of rental income) attributable to equity–
accounted investments
accounted investments
Stockland
Trust
2021
5,421
3,397
1,063
51
449
2020
5,910
2,859
1,084
33
307
2021
5,369
3,397
1,102
–
392
2020
5,853
2,859
1,130
–
252
10,381
10,193
10,260
10,094
(13)
(129)
(166)
(250)
(2)
(72)
(3)
(19)
(130)
(469)
(256)
(1)
(69)
(7)
(13)
–
(166)
(246)
(2)
(69)
(3)
(19)
–
(469)
(255)
(1)
(70)
(7)
Investment properties (including Stockland’s share of investment properties held
by equity–accounted investments)
9,746
9,242
9,761
9,273
Less: Stockland’s share of investment properties held by equity–
accounted investments
Investment properties
Net carrying value movements
Balance at 1 July
Acquisitions
Expenditure capitalised
Transfers to non–current assets held for sale
Movement in ground leases of investment properties2
Transfers to inventories
Disposals
Net change in fair value
Balance at 30 June
(409)
(352)
(409)
(352)
9,337
8,890
9,352
8,921
8,890
67
213
(153)
(1)
–
(96)
417
9,145
613
246
(469)
27
–
(176)
(496)
8,921
9,076
67
211
613
359
(153)
(469)
(1)
–
(96)
403
27
–
(176)
(509)
8,921
9,337
8,890
9,352
1
2
The investment property balance at 30 June 2021 comprises $51 million of social infrastructure properties (previously referred to as healthcare and childcare centres) held by the
Retirement Living business (2020: $33 million) leased to tenants under commercial leases.
$27 million in the prior year is driven by the initial adoption of AASB 16 Leases.
122
Stockland Annual Report 2021
RETAIL TOWN CENTRES
As at 30 June
$M
Directly owned
Stockland Green Hills, East Maitland NSW
Stockland Wetherill Park, Western Sydney NSW
Stockland Shellharbour, Shellharbour NSW1
Stockland Merrylands, Merrylands NSW
Stockland Rockhampton, Rockhampton QLD
Stockland Glendale, Newcastle NSW
Stockland Point Cook, Point Cook VIC
Stockland Burleigh Heads, Burleigh Heads QLD2
Stockland Baldivis, Baldivis WA
Stockland Forster, Forster NSW
Stockland Hervey Bay, Hervey Bay QLD
Stockland Wendouree, Wendouree VIC
Stockland Townsville, Townsville QLD (50%)2,3,4
Stockland Cairns, Cairns QLD
Stockland Balgowlah, Balgowlah NSW
Stockland Bundaberg, Bundaberg QLD5
Stockland Gladstone, Gladstone QLD2
Stockland Nowra, Nowra NSW
Shellharbour Retail Park, Shellharbour NSW
Stockland Birtinya, Birtinya QLD2
Stockland Bull Creek, Bull Creek WA
Stockland Harrisdale Complex, Harrisdale WA6
Stockland Baringa, Baringa QLD
Stockland Townsville Kingsvale Sunvale, Aitkenvale
QLD (50%)3
Stockland The Pines, Doncaster East VIC7
Stockland Baulkham Hills, Baulkham Hills NSW7
Stockland Caloundra, Caloundra QLD7
Stockland Traralgon, Traralgon VIC7
North Shore Townsville, Townsville QLD7
Owned through equity–accounted investments
Independent valuation
Stockland
Independent valuers’
capitalisation rate %
Book value
Date
$M
2021
2020
2021
2020
Dec-20
Dec-20
Jun-21
Dec-20
Dec-20
Jun-21
Dec-20
Jun-21
Dec-20
Dec-20
Dec-20
Dec-20
Jun-21
Jun-21
Dec-20
n/a
Dec-20
Dec-20
Jun-21
Dec-20
Jun-21
Dec-20
Dec-20
Dec-20
n/a
n/a
n/a
n/a
n/a
750
640
604
510
363
288
210
194
182
174
166
160
156
146
142
0
130
103
80
75
63
58
29
2
0
0
0
0
0
5.75
5.50
5.75
5.75
6.00
6.25
6.75
5.75
5.50
5.75
5.75
6.00
6.25
6.75
6.25 - 6.50
6.75 - 7.00
6.50
6.50
7.00
6.75
6.50
6.50
7.00
6.75
6.25 - 6.50
6.00 – 6.75
6.75
6.00
n/a
6.75
6.00
6.75
6.75 - 7.00
6.75 – 7.00
6.75
6.00
6.75
7.00
5.75 - 6.25
5.75 – 6.25
6.75
6.50
6.00
n/a
n/a
n/a
n/a
n/a
n/a
6.75
6.50
6.00
n/a
n/a
n/a
n/a
7.50
n/a
746
642
604
513
364
288
211
194
183
179
166
160
156
146
143
138
134
103
80
71
63
58
28
2
–
–
–
–
–
49
5,421
754
648
620
513
351
290
210
179
182
178
165
158
165
162
145
137
127
107
68
71
67
57
22
2
147
140
93
83
15
54
5,910
Stockland Riverton, Riverton WA (50%)
Dec-20
49
6.75
6.75
Retail Town Centres8
Independent valuation excludes the adjacent property owned by Stockland.
Stockland's share of this property is held through a direct interest in the asset.
1
2 A range of capitalisation rates are disclosed for a complex comprising of a number of properties.
3
4 A property within this compex with a book value of $16 million at 30 June 2021 is held for sale at period end.
5 Asset held for sale at period end.
6 Property is not held by the Trust.
7
Property was sold during the year.
8 Totals may not add due to rounding.
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Year ended 30 June 2021
123
LOGISTICS
As at 30 June
$M
Directly owned
Independent valuation
Stockland
Independent valuers’
capitalisation rate %
Book value
Date
$M
2021
2020
2021
2020
Yennora Distribution Centre, Yennora NSW
Triniti Business Park, North Ryde NSW
Ingleburn Logistics Park, Ingleburn NSW1
Brooklyn Distribution Centre, Brooklyn VIC
Hendra Industrial Estate, Hendra QLD
Coopers Paddock, Warwick Farm NSW
60–66 Waterloo Road, Macquarie Park NSW1
Forrester Distribution Centre, St Marys NSW
Granville Industrial Estate, Granville NSW1
Willawong Distribution Centre, Yatala QLD
Oakleigh Industrial Estate, Oakleigh South VIC
Mulgrave Corporate Park, Mulgrave VIC
39 Silica Street, Carole Park QLD1
Somerton Distribution Centre, Somerton VIC1
16 Giffnock Avenue, Macquarie Park NSW
Yatala Distribution Centre, Yatala QLD
23 Wonderland Drive, Eastern Creek NSW
Altona Industrial Estate, Altona VIC
Macquarie Technology Business Park, Macquarie
Park NSW
KeyWest Distribution Centre, Truganina VIC
Altona Distribution Centre, Altona VIC1
72–76 Cherry Lane, Laverton North VIC
Wetherill Park Distribution Centre, Wetherill Park NSW
Smeg Distribution Centre, Botany NSW
Erskine Park, Erskine Park NSW
787 Boundary Road, Richlands QLD
Balcatta Distribution Centre, Balcatta WA2
Owned through equity–accounted investments
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-20
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
n/a
661
245
239
184
148
142
141
109
106
103
99
98
97
96
76
65
63
59
61
55
52
51
45
41
37
16
4.25
5.63
3.75 - 4.50
4.50
5.25
4.00
5.50
5.75
5.25
5.75
6.75
5.00
5.38
5.88 – 6.00
5.00
6.25
4.75 - 5.00
5.75 – 6.00
5.50
4.25
6.75
5.25
6.00
5.75
6.75
5.25 – 6.00
4.75 - 5.50
6.25 – 6.50
5.25
5.00
4.25
5.00
n/a
4.25
5.25
4.75
4.75
4.00
4.00
5.25
6.00
6.25
5.00
6.00
n/a
5.13
5.75 – 6.00
6.25
5.75
4.75
4.75
6.50
n/a
n/a
n/a
661
245
239
184
148
142
141
109
106
103
99
98
97
96
76
65
63
60
58
55
52
51
45
41
37
16
–
524
233
201
135
114
113
130
78
81
65
70
98
75
65
69
48
55
51
61
46
43
34
37
36
30
14
64
Optus Centre, Macquarie Park NSW (51%)
Mar-21
312
5.00
5.00
Logistics3
1
2
3
A range of capitalisation rates are disclosed for a complex comprising of a number of properties.
Property was sold during the year.
Totals may not add due to rounding.
312
3,397
292
2,859
124
Stockland Annual Report 2021
WORKPLACE
As at 30 June
$M
Directly owned
Independent valuation
Stockland
Independent valuers’
capitalisation rate %
Book value
Date
$M
2021
2020
2021
2020
Stockland Piccadilly, 133–145 Castlereagh Street,
Sydney NSW1,2,3,4
601 Pacific Highway, St Leonards NSW
Durack Centre, 263 Adelaide Terrace, Perth WA1,2
118 Walker Street, North Sydney NSW
110 Walker Street, North Sydney NSW
122 Walker Street, North Sydney NSW
Workplace5
Dec-20
673
5.25 - 5.75
5.25 – 5.75
Jun-21
Jun-21
Jun-20
Jun-20
Jun-20
130
80
91
62
37
5.75
6.00
8.00
8.75 – 9.00
n/a
n/a
n/a
n/a
n/a
n/a
636
130
106
91
63
38
651
125
118
91
62
37
1,063
1,084
A range of capitalisation rates are disclosed for a complex comprising of a number of properties.
Property is a leasehold property.
1
2
3 Book value includes the retail component of the property.
4 The book value excludes the revaluation relating to the area occupied by Stockland. This owner–occupied area is classified as property, plant and equipment and is recognised at
historical cost.
Totals may not add due to rounding.
5
INVESTMENT PROPERTIES
Commercial Property comprises investment interests in land and buildings including integral plant and equipment held for the purpose
of producing rental income, capital appreciation or both.
Commercial Property is initially recognised at cost including any acquisition costs and subsequently stated at fair value at each balance
date. Fair value is based on the latest independent valuation adjusted for capital expenditure and capitalisation and amortisation of lease
incentives since the date of the independent valuation report. Any gain or loss arising from a change in fair value is recognised in profit
or loss in the period. The valuation of Commercial Property is a key area of accounting estimation and judgement for Stockland.
Commercial Property under development is classified as investment property and stated at fair value at each balance date. Fair value is
assessed with reference to reliable estimates of future cash flows, status of the development and the associated risk profile. Finance costs
incurred on properties undergoing development or redevelopment are included in the cost of the development.
If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment and its fair value at the date of
reclassification becomes its cost for accounting purposes.
A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis
when Stockland holds it to earn rental income or for capital appreciation or both. Any such property interest under a financing lease
classified as an investment property is carried at fair value.
SUBSEQUENT COSTS
Stockland recognises in the carrying amount of an investment property the cost of replacing part of that investment property if it is
probable that the future economic benefits embodied within the item will flow to Stockland and the cost can be measured reliably. All
other costs are recognised in profit or loss as an expense as incurred.
LEASE INCENTIVES
Lease incentives provided by Stockland to lessees, and rental guarantees which may be received by Stockland from third parties (arising
from the acquisition of investment properties), are included in the measurement of fair value of investment property and are treated as
separate assets. Such assets are amortised over the respective periods to which the lease incentives and rental guarantees apply using
a straight-line basis.
DISPOSAL OF REVALUED ASSETS
The gain or loss on disposal of revalued assets is calculated as the difference between the carrying amount of the asset at the time of
disposal and the net proceeds on disposal and is recognised in profit or loss in the year of disposal.
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Year ended 30 June 2021
125
7A. Fair value measurement, valuation techniques and inputs
The adopted valuations (both internal and external) for investment properties in the Retail Town Centres, Logistics and Workplace
portfolios are a combination of the valuations determined using the discounted cash flow (DCF) method, the income capitalisation method,
the direct comparison method and transaction prices where relevant.
In ordinary years, the adopted value of properties in the properties under development portfolio is based on an internal tolerance check
performed by the Directors at each reporting date. The tolerance check takes into account the expected cost of completion, the stage of
completion, the risk associated with the project, expected underlying income and applying the income capitalisation method.
In light of the continued uncertainty in investment property markets created by COVID-19, Stockland was prudent in ensuring all Retail
assets were externally valued within the full year. At 30 June 2021, in line with internal tolerance checks, 28% of the Retail Town Centre
property portfolio, 21% of the Workplace property portfolio and 98% of the Logistics portfolio were independently valued. Across the
portfolio, valuers adopted a range of adjustments to reflect the short-term impact of the current situation. These adjustments, which were
made based on property-specific factors and considered each property's tenancy mix, included increases in vacancy periods, increases in
operating costs, reductions in revenues for lease abatements, reduction in renewal assumptions on expiry, and reductions in retail rental
growth rates, when compared to pre COVID-19 levels. Generally, the external experts believe the negative impact has not been as steep
as initially estimated and any recovery phase is expected to be rapid.
While the above short-term impacts have been factored into valuations, the external valuers have indicated that their Retail Town Centre
valuations are subject to material uncertainty on a forward-looking basis. They have certified that their valuations were appropriate on
the valuation date of 30 June 2021, but do state that due to the current market uncertainty the valuations may change materially after that
date as new information comes to light.
Based on available information at 30 June 2021 and information arising since that date about both conditions at that date, and the economic
and operating conditions evolving since, the Directors have determined that all relevant and available information has been incorporated
into the reported valuations.
In addition, using this information, the sensitivity of key drivers to further fair value movements has been analysed across the carrying value
of Commercial Property at 30 June 2021. Commercial Property valuations remain subject to market-based assumptions on discount rates,
capitalisation rates, market rents and incentives. It is possible that there will be movements in these key inputs after 30 June 2021 given
the reduced volume of retail and workplace sector transactions during COVID-19 and changes in how businesses and individuals interact
with the Group's Commercial Property assets. While it is unlikely that these reported drivers would move in isolation, these sensitivities
have been performed independently to illustrate the impact each individual driver has on the reported fair value and they do not represent
management's estimate at 30 June 2021.
Stockland
$M
Fair value gain/(loss) on
• Retail Town Centres
• Logistics
• Workplace
Commercial Property
Capitalisation rate
Discount rate
Net operating income
0.25%
Decrease
0.25%
Increase
0.25%
Decrease
0.25%
Increase
5%
Decrease
5%
Increase
246
199
40
485
(226)
(179)
(37)
(442)
100
67
17
184
(98)
(65)
(16)
(179)
(286)
(181)
(47)
(514)
286
181
47
514
The following table shows the valuation techniques used in measuring the fair value of Commercial Property excluding assets held for sale,
as well as significant unobservable inputs used.
126
Stockland Annual Report 2021
Class of
property
Fair value
hierarchy
Valuation technique
Inputs used to measure
2021
2020
Retail Town
Centres
Level 3
DCF and income
capitalisation method
Workplace
Level 3
DCF and income
capitalisation method
Logistics
Level 3
DCF and income
capitalisation method
Properties
under
development
Level 3
Income
capitalisation method
Net market rent (per sqm p.a.)
$185 – 696
$185 – 714
10 year average specialty market rental growth
2.28 – 3.02%
2.17 – 2.85%
Adopted capitalisation rate
5.50 – 7.00%
5.50 – 7.50%
Adopted terminal yield
Adopted discount rate
5.75 – 7.25%
5.75 – 7.75%
6.75 – 7.75%
6.50 – 8.00%
Net market rent (per sqm p.a.)
$352 – 902
$399 – 922
10 year average market rental growth
2.92 - 3.99%
2.78 – 3.82%
Adopted capitalisation rate
5.13 - 8.00%
5.25 – 9.00%
Adopted terminal yield
Adopted discount rate
5.50 – 8.25%
5.63 – 10.16%
6.00 – 8.25%
6.25 – 7.41%
Net market rent (per sqm p.a.)
$73 – 505
$69 – 484
10 year average market rental growth
2.67 - 3.55%
1.77 – 3.71%
Adopted capitalisation rate
3.75 - 6.75%
4.75 – 6.75%
Adopted terminal yield
Adopted discount rate
4.00 - 6.75%
5.00 – 7.25%
5.50 - 7.00%
6.75 – 7.75%
Net market rent (per sqm p.a.)
$100 – 489
$105 – 280
Adopted capitalisation rate
4.50 – 5.75%
5.25 – 6.0%
Key inputs used to measure fair value for Commercial Property are:
Item
DCF method
Description
Under the DCF method, a property’s fair value is estimated using explicit assumptions regarding the benefits
and liabilities of ownership over the asset’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, market-derived discount rate is applied to establish the present value of the income stream
associated with the real property.
Income capitalisation method
This method involves assessing the total net market income receivable from the property and capitalising
this in perpetuity to derive a capital value, with allowances for capital expenditure reversions.
Net market rent
A net market rent is the estimated amount for which a property or space within a property should
lease between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length
transaction, after proper marketing and wherein the parties have each acted knowledgeably, prudently
and without compulsion. In a net rent, the owner recovers outgoings from the tenant on a pro rata basis
(where applicable).
10 year average market
rental growth
The expected annual rate of change in market rent over a 10 year forecast period in alignment with expected
market movements.
10 year average specialty market
rental growth
An average of a 10 year period of forecast annual percentage growth rates in Retail specialty tenancy rents.
Specialty tenants are those tenancies with a gross lettable area of less than 400 square metres (excludes
ATMs and kiosks).
Adopted capitalisation rate
The rate at which net market income is capitalised to determine the value of a property. The rate is
determined with regards to market evidence and the prior external valuation.
Adopted terminal yield
Adopted discount rate
The capitalisation rate used to convert income into an indication of the anticipated value of the property
at the end of the holding period when carrying out the DCF method. The rate is determined with regards to
market evidence and the prior external valuation.
The rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
It reflects the opportunity cost of capital, that is, the rate of return the capital can earn if put to other uses
having similar risk. The rate is determined with regards to market evidence and the prior external valuation.
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Year ended 30 June 2021
127
VALUATION PROCESS
The Commercial Property valuation team is responsible for managing the valuation process across Stockland’s Commercial Property
investment portfolio. The aim of the valuation process is to ensure that assets are held at fair value in Stockland’s accounts and facilitate
compliance with applicable regulations (for example the Corporations Act 2001 and ASIC regulations) and the STML Responsible Entity
Constitution and Compliance Plan.
Stockland’s external valuations are performed by independent professionally qualified valuers who hold a recognised relevant
professional qualification and have specialised expertise in the investment properties valued. Internal tolerance checks have been
performed by Stockland’s internal valuers who hold recognised relevant professional qualifications.
INTERNAL TOLERANCE CHECK
An internal tolerance check is performed every six months with the exception of those properties being independently valued during the
current reporting period. Stockland’s internal valuers perform tolerance checks by utilising the information from a combination of asset
plans and forecasting tools prepared by the asset management teams. For the Retail Town Centres, Workplace and Logistics classes,
appropriate capitalisation rates, terminal yields and discount rates based on comparable market evidence and recent external valuation
parameters are used to produce an income capitalisation and DCF valuation. The internal tolerance check gives consideration to both the
income capitalisation and DCF valuations.
The current book value, which is the value per the asset’s most recent external valuation plus any capital expenditure since the valuation
date, is compared to the internal tolerance check.
• If the internal tolerance check is within 5% of the current book value (higher or lower), then the current book value is retained, and
• If the internal tolerance check varies by more than 5% to the current book value (higher or lower), then an external independent
judgement is taken that this remains the fair value of the property.
valuation will be undertaken and adopted as the fair value of the property.
The internal tolerance checks are reviewed by Commercial Property senior management who recommend the adopted valuation to the
Audit Committee and Board in accordance with Stockland’s internal valuation protocol above.
A development feasibility is prepared for each Commercial Property under development. The feasibility includes an estimated valuation
upon project completion based on the income capitalisation method. During the development period, fair value is assessed by reference
to the value of the property when complete, less deductions for costs required to complete the project and appropriate adjustments for
profit and risk. The fair value is compared to the current book value. In ordinary years:
• If the internal tolerance check is within 5% of the current book value (higher or lower), then the current book value is retained, and
• If the internal tolerance check varies by more than 5% to the current book value (higher or lower), then an internal valuation will be
judgement is taken that this remains the fair value of the property under development
adopted with an external valuation obtained on completion of the development.
EXTERNAL VALUATIONS
The STML Responsible Entity Compliance Plan requires that each asset in the portfolio must be valued by an independent external valuer
at least once every three years.
In practice, assets are generally independently valued more than once every three years primarily as a result of:
• A variation between book value and internal tolerance check. Refer to the internal tolerance check section above.
• The asset undergoing major development or significant capital expenditure.
• An opportunity to undertake a valuation in line with a joint owners’ valuation.
• Ensuring an appropriate cross-section of assets are externally assessed at each reporting period.
128
Stockland Annual Report 2021
SENSITIVITY INFORMATION
Significant input
Net market rent
10 year average market rental growth
10 year specialty market rental growth
Adopted capitalisation rate
Adopted terminal yield
Adopted discount rate
Impact on fair value of
an increase in input
Impact on fair value of
a decrease in input
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Increase
Generally, a change in the assumption made for the adopted capitalisation rate is accompanied by a directionally similar change in the
adopted terminal yield. The adopted capitalisation rate forms part of the income capitalisation approach and the adopted terminal yield
forms part of the DCF method.
When calculating the income capitalisation approach, the net market rent has a strong interrelationship with the adopted capitalisation
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. In theory, an increase in the net market rent and an increase (softening) in the adopted capitalisation rate could
potentially offset the impact to the fair value. The same can be said for a decrease in the net market rent and a decrease (tightening) in the
adopted capitalisation rate. A directionally opposite change in the net market rent and the adopted capitalisation rate could potentially
magnify the impact to the fair value.
When assessing a DCF valuation, 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.
In theory, an increase (softening) in the adopted discount rate and a decrease (tightening) in the adopted terminal yield could potentially
offset the impact to the fair value. The same can be said for a decrease (tightening) 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 could potentially
magnify the impact to the fair value.
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Year ended 30 June 2021
129
8. COMMUNITIES INVESTMENT PROPERTY
LAND LEASE COMMUNITIES (LLC)
Stockland is developing a portfolio of LLC to further broaden its product offering. On 17 August 2021, Stockland acquired control of
100% of Halcyon Group's land lease communities which includes six established communities with a further four under development
and three in planning.
LLC homes are typically built on site and are engineered to be relocatable. Residents pay an initial purchase price for the home and
ongoing site rental costs (without departure costs), and are entitled to the total capital gain or loss upon sale of the relocatable home.
Stockland will operate and retain ownership of the land and common amenity at each community. LLC broaden the customer reach
of Stockland’s existing communities by offering an affordable product to a growing demographic.
The land retained by Stockland at each community is recognised at fair value within investment property. Any change in fair value of
the land on initial settlement of the homes is recognised as a net change in fair value of Retirement Living investment properties and
is included in FFO. Any subsequent changes in fair value are excluded from FFO.
The clubhouse facilities are recognised at cost as property, plant and equipment and depreciated over the asset's expected useful
life. An element of revenue received on the sale of each home is deemed to be earned in the provision of access to these facilities and
is amortised over the same expected useful life. The costs of the home and associated civil works are recognised within inventory and
allocated to cost of sales using the WOL methodology set out in note 6.
RETIREMENT LIVING
Stockland offers a range of independent living retirement products to meet the needs of its customers. Customers have a choice of
dwelling type and contractual arrangement, depending on their individual preferences, personal circumstances, and the services
and support that they require.
Deferred management fee (DMF) contracts
DMF contracts allow residents to access the full lifestyle offering of a village today and pay for this when they leave the village. Each
state and territory has extensive laws and regulations that are designed to protect resident interests, which Stockland complies
with. DMF contracts are generally affordable as they sell at a lower price than the non–retirement freehold properties in the area.
Retirement Living residents lend Stockland an amount equivalent to the value of the dwelling in exchange for a lease to reside in the
village and to access community facilities, which are Stockland owned and maintained, for as long as the resident wants. Stockland
records this loan as a resident obligation liability.
During the resident’s tenure, Stockland earns DMF revenue, which is calculated based on the individual resident contract and depends
on the dwelling type, location and specific terms within the agreement. The contract will specify the DMF rate charged each year and
the maximum DMF that will be charged across the life of the contract. The DMF provides customers with the ability to free up equity
(usually from the sale of their previous home), giving them extra capital that they can access to fund their retirement lifestyle.
The DMF for an individual resident contract covers the right to reside in the dwelling and the resident’s share of up–front capital costs
of building the common infrastructure of the village, which typically includes amenities such as a pool, bowling green and community
centre, and allows the resident to pay for these at the end of their tenancy. DMF revenue is included in Retirement Living FFO only when
Stockland receives the accumulated DMF in cash after a resident leaves and either a new resident enters the dwelling, or when it is
withheld under an approved investment proposal for development. The accrued portion of DMF revenue forms part of statutory profit
only and not FFO. The contracts determine how Stockland and the resident will share any net capital gain or loss when the dwelling
is re–leased to the next resident and this can range from 0% to 100%. For the majority of existing contracts, the capital gain or loss
and refurbishment costs are shared equally.
The Retirement Living segment result also includes the settled development margin associated with new villages and village
expansions or redevelopments. This margin represents the unit price realised on first lease less the cost of development and is
recognised in FFO on settlement of a newly developed unit.
Unrealised fair value gains or losses from revaluations of investment property and resident obligations are excluded from FFO.
Contract choices under DMF
'Capital Share' contracts offer the resident the opportunity to offset DMF by receiving 50% of any capital gain earned net of 50% of any
capital expenditure, when the home is resold or after a maximum of 18 months from when the resident leaves the village. In the event of
a capital loss, the resident's exit repayment is reduced by 50% of the loss arising. DMF is calculated at 5% per annum, capped at 35%.
'Peace of Mind' contracts offer certainty by ensuring residents know what the exit repayment will be when they leave a village. It also
guarantees that they will be repaid after a maximum of six months from their departure even if their unit has not yet been resold. DMF
is calculated at 5% per annum, capped at 25%, and there are no capital expenditure deductions or share in capital gains or losses.
ASPIRE VILLAGES
Aspire villages grant freehold title. Under the agreements, residents purchase their dwelling outright. There is no DMF associated with
these sales as the dwelling is no longer owned or maintained by Stockland. Common areas and facilities are owned under a community
title managed by a body corporate which is funded by resident contributions. Stockland holds Aspire villages at cost within inventory
and recognises profit based on property development sales revenue net of associated cost of property developments sold.
130
Stockland Annual Report 2021
Net carrying value
As at 30 June
$M
Operating villages
Villages under development
Retirement Living investment properties
Existing resident obligations
Net carrying value of Retirement Living investment properties
Land Lease Communities under development
Net carrying value of Communities investment properties
Net carrying value movement during the year
Balance at 1 July
Expenditure capitalised
Cash received on first sales
Realised investment properties fair value movements
Unrealised investment properties fair value movements1
Unrealised Retirement Living resident obligations fair value movements
Other movements2
Balance at 30 June
Stockland
2021
3,438
123
3,561
(2,506)
1,055
39
1,094
1,254
78
(86)
13
(74)
(18)
(73)
1,094
2020
3,717
219
3,936
(2,682)
1,254
–
1,254
1,405
58
(131)
14
(152)
22
38
1,254
1
2
Includes an $11 million fair value gain (30 June 2020: $24 million loss) on discounting of vacant stock not expected to settle within the next 12 months, with a $13 million discount
applied at 30 June 2021 compared to a $24 million discount at 30 June 2020.
Includes the impact of villages disposed on 18 December 2020.
8A. Investment properties
Communities investment properties comprise LLC (communities under development only at this point in time) and retirement villages
(both operating villages and villages under development) held to earn revenue and capital appreciation over the long-term. LLC comprise
the fair value of the land component retained by Stockland at each community. Retirement villages include ILUs, SAs, community facilities
and integral plant and equipment.
DISPOSALS
During the year, Stockland disposed of four villages located in Victoria for a combined total proceeds of $89 million, payable over two
instalments in FY21 and FY22.
FAIR VALUE MEASUREMENT, VALUATION TECHNIQUES AND INPUTS
The fair value of Retirement Living investment properties (including villages under development) is the value of the Retirement Living
assets and the future cash flows associated with the contracts. Changes in fair value of investment properties are recognised in profit
or loss.
The fair value is determined by the Directors using a DCF methodology. The valuation of Retirement Living investment properties and
resident obligations is a key area of accounting estimation and judgement for Stockland.
Both the investment properties and resident obligations are considered to be Level 3 in the fair value hierarchy.
The following significant unobservable inputs are used to measure the fair value of the investment properties:
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131
Inputs used to measure fair value
Discount rate1
Average 20 year growth rate2
Average length of stay of existing and future residents
Current market value of unit
Renovation/reinstatement cost
Renovation recoupment
2021
2020
12.50 – 15.75% (average: 13.2%)
12.50 – 15.75% (average: 13.2%)
3.00%
11 years
$0.1 – 2.3 million
$6 – 90 thousand
0 – 100%
3.20%
11 years
$0.1 – 2.2 million
$4 – 88 thousand
0 – 100%
1 Discount rate includes a premium to allow for future village–wide capital expenditure.
2
This is the average of the 20 year growth rates adopted across the portfolio. The maximum growth rate adopted is capped at 4%.
COVID-19 created a level of uncertainty in relation to the inputs underpinning the Retirement Living investment property valuation.
Demand for the Retirement Living offering may fluctuate in the short-term depending on the wider macroeconomic environment; however,
Stockland expects demand to be strong in the long-term given the growth in Australia's aged population and trends seen between
COVID-19 lockdowns.
The Directors have determined, based on the available information at 30 June 2021 and the information arising since that date about
conditions at that date, that all relevant information has been incorporated into the reported valuations.
In addition, the sensitivity of key drivers to further fair value movements as a result of the evolving economic and operating conditions has
been analysed across the carrying value of Retirement Living investment properties at 30 June 2021. While it is unlikely that these drivers
would move in isolation, these sensitivities have been performed independently to illustrate the impact each individual driver has on the
fair value and they do not represent management's estimate at 30 June 2021.
Stockland
$M
Fair value gain/(loss) on Retirement Living
investment property
Current market value
Discount rate
5%
Decrease
5%
Increase
0.25%
Decrease
0.25%
Increase
(61)
63
22
(21)
Average 3 year
price growth1
0%
(90)
1
The average 3 year price growth rate underpinning the 30 June 2021 valuation is 2.5%.
The DCF methodology uses unobservable inputs and these are further explained below:
Item
DCF method
Description
Under the DCF method, an asset or liability’s fair value is estimated using explicit assumptions regarding the benefits
and liabilities of ownership over the asset’s life including an exit or terminal value. The DCF method involves the
projection of a series of cash flows the property asset will generate. To this projected cash flow series, an appropriate,
market-derived discount rate is applied to establish the present value of the income stream associated with the
real property.
Discount rate
The rate of return used to convert a monetary sum, payable or receivable in the future, into present value. It reflects
the opportunity cost of capital, that is, the rate of return the capital can earn if put to other uses having similar risk. The
rate is determined with regards to market evidence and the external valuations performed.
20 year growth rate
This represents the rate that the unit is expected to increase in value by over 20 years. It is determined on the basis of
the historical performance of the property, available sector and industry benchmarks, available CPI forecasts and the
external valuations performed.
Average length of
stay of existing and
future residents
Assumptions on future resident gender and entry age based upon analysis of historical entrant profiles are used to
estimate average length of stay.
Current market value Market values are generally reviewed semi-annually by the sales and operational teams in light of external valuations
performed and the market, and are approved by the General Manager, Communities Sales and CEO, Communities.
Renovation/
Reinstatement cost
Renovation
recoupment
The cost that is required to maintain the independent living units and serviced apartments to the appropriate condition.
The percentage of renovation costs that will be recouped from the residents based on contractual terms.
VALUATION PROCESS
The Retirement Living finance team are responsible for managing the bi-annual DMF valuation process across Stockland’s Retirement
Living portfolio. The aim of the DMF valuation process is to confirm that assets are held at fair value on Stockland’s balance sheet.
132
Stockland Annual Report 2021
ESTABLISHED VILLAGES
Internal valuations are completed every six months using valuation models with reference to external market data. An independent
professionally qualified valuer who holds a recognised relevant professional qualification and has specialised expertise in the investment
properties valued provides assurance on the key assumptions used. The most recent independent assessment, which was obtained at
31 March 2021, incorporated current market considerations. Independent investment property valuations are also obtained from time
to time. The Directors have considered the changes in market and village specific conditions since the independent assessment in their
estimate of fair value at reporting date.
VILLAGES UNDER CONSTRUCTION
Villages under construction are carried at fair value. There are two elements to the value of villages under construction: the value of land
and other development expenditure, and the value of discounted future DMF revenue. The land and other development expenditure is
made up of costs incurred to date plus a development margin. Development margin is recognised on a percentage of completion basis and
is based on an internally certified level of completion of the stage. The DMF asset is also recognised on a percentage of completion basis.
Units are transferred from villages under construction to established villages once they have been leased for the first time. This transfer
is at the cost of the unit plus development profit recognised during construction.
SENSITIVITY INFORMATION
Significant input
Discount rate
20 year growth rate
Average length of stay of existing and future residents1
Current market value of unit
Renovation cost
Renovation recoupment
Impact on fair value of
an increase in input
Impact on fair value of
a decrease in input
Decrease
Increase
Decrease
Increase
Decrease
Increase
Increase
Decrease
Increase
Decrease
Increase
Decrease
1
The impact of this is dependent on the length of stay as the majority of contracts have maximum DMF periods.
8B. Resident obligations
Resident obligations represent the net amount owed by Stockland to existing and former residents. Resident obligations are non-interest
bearing and net movements are recognised at fair value through profit or loss as the Retirement Living portfolio is measured and assessed
by Stockland on a net basis.
CURRENT RESIDENT OBLIGATIONS
Based on actuarial turnover calculations, approximately 8% (2020: 8%) of residents are estimated to depart their dwelling each year and
therefore it is not expected that the full obligation to residents will fall due within one year. In the vast majority of cases, the resident
obligations are able to be repaid from receipts from incoming residents.
However, resident obligations are classified as current under the Accounting Standards as Stockland does not hold an unconditional
contractual right to defer settlement for at least 12 months (residents may give notice of their intention to vacate their unit with
immediate effect).
NON-CURRENT RESIDENT OBLIGATIONS
The non-current obligations relate to certain legacy contracts that give Stockland a right to defer settlement of the obligation for up to
eight years.
As at 30 June
$M
Existing resident obligations
Former resident obligations
Resident obligations
2021
Current
Non–current
2,446
2
2,448
60
4
64
Stockland
Total
2,506
6
2,512
2020
Current
Non–current
2,587
7
2,594
95
6
101
Total
2,682
13
2,695
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Year ended 30 June 2021
133
FAIR VALUE MEASUREMENT, VALUATION TECHNIQUES AND INPUTS
The fair value of the resident obligations is the amount payable on demand to residents and comprises the initial loan amount plus the
resident’s share of any net capital gains or losses in accordance with their contracts, less DMF earned to date. Changes in fair value of
resident obligations are recognised in profit or loss.
Inputs used in relation to the resident obligations are identical to those used for investment properties. Refer above for a detailed
description of the inputs used. Both the investment properties and resident obligations inputs are considered to be Level 3 in the fair
value hierarchy.
The following table shows a reconciliation from the opening to the closing Retirement Living resident obligation balances:
As at 30 June
$M
Opening balance
Realised movement recognised in profit or loss
Unrealised movement recognised in profit or loss
Cash receipts from incoming residents on turnover
Cash payments to outgoing residents on turnover, net of DMF
Closing balance
VALUATION PROCESS
Stockland
2021
(2,695)
358
(18)
(326)
169
2020
(2,597)
67
22
(332)
145
(2,512)
(2,695)
It is impractical to have the resident obligations valued externally, therefore these are valued every six months by the Directors. For the
majority of existing contracts, the resident shares net capital gains or losses with Stockland upon exit. Therefore, current market value is
the only input that significantly impacts the fair value of the resident obligation. The market values are externally reviewed and assessed
for reasonableness each reporting period as part of the Retirement Living investment property valuations.
SENSITIVITY INFORMATION
As the resident obligations are a financial liability, a quantitative sensitivity analysis has been disclosed. Sensitivity of the resident
obligations to changes in the current market value assumption is shown below:
As at 30 June
Significant input
Current market value
Increase/(decrease) in resident obligations ($M)
Increase in input
Decrease in input
Change in
assumption
10%
2021
147
2020
170
2021
(147)
2020
(170)
134
Stockland Annual Report 2021
9. RECEIVABLES
As at 30 June
$M
Trade receivables1
Allowance for expected credit loss
Net current trade receivables
Other receivables
Allowance for expected credit loss
Net other receivables
Straight–lining of rental income
Current receivables
Trade receivables1
Allowance for expected credit loss
Net non–current trade receivables
Straight–lining of rental income
Other receivables
Receivables due from related companies
Allowance for expected credit loss
Non–current receivables
Stockland
2021
2020
65
(21)
44
88
(7)
81
5
130
1
–
1
67
104
–
–
172
115
(22)
93
21
(5)
16
8
117
27
(13)
14
61
42
–
–
117
Trust
2021
25
(20)
5
14
(7)
7
4
16
1
–
1
65
56
2,647
(7)
2,762
2020
32
(20)
12
14
(5)
9
9
30
27
(13)
14
61
11
3,005
(7)
3,084
1
Lease receivables from tenants total $26 million (2020: $73 million), of which $1 million (2020: $27 million) is classified as non-current.
The loss allowances for trade receivables and the intergroup loan as at 30 June 2021 reconcile to the opening loss allowances as follows:
$M
Opening ECL balance
Provision raised during the year
Provision released during the year
Bad debts written off in the year1
Closing ECL balance
Stockland
Trust
2021
2020
2021
2020
40
26
(34)
(4)
28
2
40
–
(2)
40
45
26
(33)
(4)
34
10
38
(1)
(2)
45
1
Rent abatements driven by COVID-19 of $20 million were also expensed in the current year (FY20: $29 million).
Expected credit losses
Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less any
allowance under the Expected Credit Loss (ECL) model. Stockland applies the simplified approach to the ECL calculation used for trade
receivables, lease receivables and contract assets, and measures the ECL allowance at an amount equal to lifetime ECL. The lifetime ECL
calculation is based on an unbiased and probability-weighted amount determined by evaluating a range of possible outcomes, the time
value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions
and forecasts of future economic conditions.
Given the possible extended timeframe over which receivables will be collected, the receivables balance has been split between current
and non-current based on the expected timing of cash receipts, with cash receipts expected beyond 12 months booked as non-current.
This will ensure adequate emphasis is placed on the risk of default as the debt ages and the time value of money.
TRADE RECEIVABLES FROM TENANTS
Prior to the outbreak of COVID-19, Stockland did not have a material tenant receivable balance as most tenants paid rent monthly in
advance within a short timeframe from billing date. In response to the operational and liquidity pressures faced by tenants as a result of
COVID-19, the Federal Government introduced a Commercial Code of Conduct2 (Code) in April 2020 which required, among other things,
that businesses share the economic impacts arising from COVID-19, and was given effect by state and territory legislation. As a result,
2 National Cabinet Mandatory Code of Conduct - SME Commercial Leasing Principles During COVID-19
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Year ended 30 June 2021
135
Stockland has deferred rent payments from some tenants for a period of up to two years. Terms were negotiated on a lease-by-lease basis
for tenants that came under the Code. In addition, Stockland undertook negotiations with tenants who were not covered by the Code but
had experienced significant financial hardship. The various state and territory regimes implementing the Code concluded operation at the
end of March 2021.
In assessing credit risk, management has applied a matrix approach to categorise tenants as high, medium and low risk of default. In
arriving at these categorisations, consideration has been given to a range of risk factors, including:
• tenant type and size;
• performance of the tenant's business before and during COVID-19;
• management's forward-looking tenant risk assessment; and
• ageing of the tenant's outstanding debt.
Using all these relevant inputs, an ECL percentage has been booked against each risk category, reflecting management's best estimate of
expected losses on balances owed at 30 June 2021 based on the historical, current and future-looking information available at that date.
Depending on emerging conditions and the business performance of affected tenants after 30 June 2021, the actual losses may be higher
or lower and will be assessed on an ongoing basis.
Further, for specific individual tenants identified as likely to default on their debts, the full value of their debts have been provided for.
Despite the ECL booked in 2021, Stockland intends to collect as much of the closing receivables balance as reasonably possible.
Rent abatements relating to future periods that change the scope of a lease are accounted for in accordance with the disclosure in Note 12.
The table below sets out the lease receivables position by risk category as at 30 June 2021:
$M
Lease receivables at 30 June 2021
ECL provision on lease receivables
Lease receivables net of provisions
Stockland and Trust
Low
2
Medium
8
High
2
Specific
14
Total
26
(20)
6
RECEIVABLES DUE FROM RELATED COMPANIES
The Trust has applied the ECL model under AASB 9 to its unsecured intergroup loan receivable from Stockland, repayable in 2023. While
there has been no history of defaults, and the loan is considered to be low credit risk, an impairment provision determined as the 12
month ECL has been recorded at balance date. Despite the current economic environment, management has determined that there
has not been a significant increase in credit risk on the intergroup loan since its inception as the Corporation maintains a strong capital
position and forecasts sufficient cash flows to repay the loan to the Trust on expiry. There is no impact on Stockland as this loan eliminates
on consolidation.
10. PAYABLES
As at 30 June
$M
Trade payables and accruals
Land purchases
Distributions payable
GST payable/(receivable)
Current payables
Other payables
Land purchases
Non–current payables
Note
4
Stockland
Trust
2021
305
52
318
10
685
4
223
227
2020
262
70
253
8
593
1
189
190
2021
109
–
318
2
429
–
–
–
2020
91
35
253
(1)
378
–
–
–
Trade and other payables are initially recognised at fair value less transaction costs and subsequently carried at amortised cost.
The carrying values of payables at balance date represent a reasonable approximation of their fair value.
136
Stockland Annual Report 2021
11. OTHER LIABILTIES
As at 30 June
$M
Land purchases
Other liabilities
Current other liabilities
Land purchases
Other liabilities
Non–current other liabilities
LAND PURCHASES
Stockland
Trust
2021
49
80
129
484
52
536
2020
2021
2020
–
59
59
318
55
373
–
26
26
–
26
26
–
16
16
–
28
28
During the year, as part of its normal restocking process, Stockland acquired land on deferred terms from vendors who subsequently
entered into reverse factoring arrangements with financiers in order to receive their aggregated deferred payments early. To comply
with an IFRIC agenda decision published on 14 December 2020, all future amounts payable under these arrangements have been
recognised on the balance sheet within other liabilities rather than payables, which continues to be the treatment for traditional land
creditor transactions.
During the prior financial year, Stockland acquired a separate parcel of land from another vendor that entered into a similar arrangement.
All future amounts due in respect of that transaction have been reclassified from payables to other liabilities as well, and as a result
comparative figures have been restated to ensure consistency of presentation throughout the financial report.
12. LEASES
This note provides information about Stockland's accounting for leases under AASB 16 Leases.
Stockland as a lessee
AMOUNTS RECOGNISED IN THE CONSOLIDATED BALANCE SHEET
The consolidated balance sheet contains the following amounts relating to leases:
As at 30 June
$M
Right–of–use assets
Investment properties (non–current)1
Other assets (non–current)2
Total right–of–use assets
Lease liabilities
Other liabilities (current)
Other liabilities (non-current)
Total lease liabilities
Stockland
Trust
2021
2020
2021
2020
26
13
39
2
39
41
27
14
41
2
41
43
26
–
26
–
27
27
27
–
27
–
28
28
Right–of–use assets capitalised to investment properties include ground leases for Durack Centre, WA.
1
2 Right–of–use assets capitalised to other assets includes the lease for Stockland's Brisbane office, Stockland's Melbourne office and a number of other individually immaterial
operating leases.
Additions to the right-of-use assets during the year were $nil (2020: $10 million).
AMOUNTS RECOGNISED IN THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
The consolidated statement of comprehensive income contains the following amounts relating to leases:
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Year ended 30 June 2021
137
Year ended 30 June
$M
Depreciation charge of right–of–use assets
Investment properties
Other assets
Total depreciation charge of right–of–use assets
Other expenses relating to leases
Interest expense (included in finance expense)
Expense relating to short–term leases (included in management,
administration, marketing and selling expenses)
Total other expenses relating to leases
Stockland
Trust
2021
2020
2021
2020
1
1
2
2
2
4
1
1
2
2
2
4
1
–
1
1
–
1
1
–
1
2
–
2
The total cash outflow for leases in the year was $7 million (2020: $7 million).
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as
to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
RIGHT-OF-USE ASSETS
Right–of–use assets are measured at cost less depreciation and impairment and adjusted for any remeasurement of the lease liability.
The cost of the asset includes the amount of the initial measurement of lease liability and any lease payments made at or before the
commencement date, less any lease incentives received, any initial direct costs, and restoration cost.
Right–of–use assets are depreciated on a straight–line basis from the commencement date of the lease to the earlier of the end of the
useful life of the right–of–use asset or the end of the lease term, unless they meet the definition of an investment property. Right–of–use
assets which meet the definition of an investment property form part of the investment property balance and are measured at fair value
in accordance with AASB 140 Investment Property (refer to note 7 and below section on ground leases).
The lease term is the non–cancellable period of a lease together with the lease period under reasonably certain extension options and
periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.
Management considers all the facts and circumstances that create an economic incentive to exercise an extension option or not exercise
a termination option. This assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this
assessment and that is within the control of the lessee. No lease terms were revised during the period.
Stockland tests right–of–use assets for impairment where there is an indicator that the asset may be impaired. An asset’s carrying amount
is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
Stockland’s right–of–use assets are all property leases.
Payments associated with lease terms of 12 months or less and leases of low value assets are recognised in profit or loss.
LEASE LIABILITIES
Lease liabilities are initially measured at the present value of the lease payments discounted using the interest rate implicit in the
lease. If that rate cannot be determined, Stockland’s incremental borrowing rate is used. Lease payments used in calculating the lease
liability include:
• fixed payments less incentives receivable;
• variable lease payments that are based on an index or a rate, initially measured using the index or rate at commencement date;
• payments of penalties for terminating the lease if the lease term reflects Stockland exercising that option; and
• lease payments to be made under options for extension which are reasonably certain to be exercised.
Lease liabilities are subsequently measured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying
amount to reflect the lease payments made, and remeasuring the carrying amount to reflect any reassessment or lease modifications.
Interest on the lease liability and any variable lease payments not included in the measurement of the lease liability are recognised in profit
or loss in the period in which they relate.
Stockland is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease
liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed
and adjusted against the right-of-use asset.
INCREMENTAL BORROWING RATE
The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar
security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. To determine
the incremental borrowing rate, Stockland:
138
Stockland Annual Report 2021
financing was received;
• where possible, uses recent third-party financing as a starting point, adjusted to reflect changes in financing conditions since the
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by Stockland, which does not
• makes adjustments specific to the lease, e.g. term, country, currency and security.
INVESTMENT PROPERTIES WITH GROUND LEASES
have recent third party financing; and
A lease liability reflecting the leasehold arrangements of investment properties is disclosed in other liabilities in the balance sheet and
the carrying value of the investment properties are adjusted (i.e. grossed up) so that the net of these two amounts equals the fair value
of the investment properties. The lease liabilities are calculated as the net present value of the future lease payments discounted at the
incremental borrowing rate.
Stockland as a lessor
Information relating to Stockland's accounting for revenue from operating leases is contained in note 1. Information relating to Stockland's
accounting for lease incentives is contained in note 7.
MATURITY ANALYSIS OF FUTURE LEASE RECEIPTS
The following table shows a maturity analysis of undiscounted, contracted lease payments to be received under operating leases:
$M
Undiscounted lease payments due to Stockland or the Trust in the years ending 30 June:
2021
2022
2023
2024
2025
2026
Beyond 2026 (2020: Beyond 2025)
Total undiscounted lease payments due:
LEASE MODIFICATIONS
Stockland
Trust
2021
2020
2021
2020
n/a
617
483
383
287
217
838
638
552
440
337
232
n/a
808
n/a
620
486
380
283
213
818
646
562
450
341
232
n/a
806
2,825
3,007
2,800
3,037
Lease modifications arise when there is a change in the scope of a lease or a change in the consideration for a lease that was not part of its
original terms and conditions. Stockland accounts for lease modifications from the effective date of the modification. Existing unamortised
lease incentives capitalised to investment property will continue to be amortised over the remaining lease term. Any amounts prepaid or
owing relating to the original lease are treated as payments for the new lease.
During the year, Stockland granted a combination of rent abatements and deferrals to tenants, under the Code and in line with the
Australian Government's request for businesses to work together to protect the economy.
Rent deferrals
Rent deferrals alone do not constitute a lease modification as they do not change the scope of a lease. During the year, Stockland granted
rent deferrals to be repaid in instalments over a period of up to two years starting from the date of the agreement. This amount is recorded
as revenue and in trade receivables as at 30 June 2021. Refer to note 9 for details on the receivable and the associated expected credit loss.
Rent abatements
Where an abatement is granted retrospectively on uncollected past due rent, the abatement is expensed as an impairment of trade
receivables. Where an agreement on past due receivables has not been reached by 30 June 2021, an estimate of the expected abatement
on the outstanding balance is made and incorporated into the expected credit loss calculation - see note 9.
Where an abatement has been agreed between Stockland and the tenant and is considered under the lease agreement, there is no lease
modification. Instead, the abatement is treated as a variable lease payment whereby Stockland recognises a reduction in rental revenue
in the current year.
For abatements or other lease modifications accompanied by extensions of lease terms or other changes in lease scope, Stockland has
accounted for these as a lease modification. The abated portion will be capitalised as a lease incentive and amortised on a straight-line
basis over the remaining life of the lease.
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Year ended 30 June 2021
139
13. INTANGIBLE ASSETS
This note provides information about Stockland's accounting for intangible assets. An IFRIC agenda decision issued in April 2021 required
companies to make a retrospective change to their accounting policies in relation to the accounting treatment of configuration or
customisation costs in a SaaS arrangement. Stockland has adopted this decision and implemented the change required, including the
restatement of the prior year comparative information. See note 36C for the impact of this change in policy.
The consolidated balance sheet contains the following amounts relating to intangible assets:
As at 30 June
2021
(Restated) 20201
Stockland
$M
Cost
Opening balance
Additions
Transfer
Closing balance
Accumulated amortisation
and impairment
Opening balance
Amortisation
Impairment
Closing balance
Intangible assets
Goodwill
Software
Under
development
Total
Goodwill
Software
Under
development
Total
117
–
–
117
(117)
–
–
(117)
–
20
72
–
92
(14)
(7)
–
(21)
71
66
15
(75)
6
–
–
–
–
6
203
87
(75)
215
(131)
(7)
–
(138)
77
117
–
–
117
(79)
–
(38)
(117)
–
19
1
–
20
(11)
(3)
–
(14)
6
58
10
(2)
66
–
–
–
–
66
194
11
(2)
203
(90)
(3)
(38)
(131)
72
1
Restated as a result of a retrospective change in accounting policy following an IFRIC agenda decision on accounting for SaaS arrangements published on 27 April 2021. Refer to
note 36C for further detail on the impact of this change in accounting policy.
GOODWILL
Goodwill represents the excess of the cost of an acquisition over the fair value of Stockland’s share of the net identifiable assets of the
acquired subsidiary at the date of acquisition.
Goodwill that has an indefinite useful life is not subject to amortisation and is tested annually for impairment, or more frequently if events or
changes in circumstances indicate that it might be impaired. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
The determination of the recoverability of goodwill is an area of accounting estimation and judgement for Stockland.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which goodwill is monitored for internal management
purposes and allocated to cash-generating units (CGU). The allocation is made to each CGU or groups of CGUs that are expected to benefit
from the business combination in which the goodwill arose, identified according to operating segments.
Goodwill arose on the acquisition of the Retirement Living division of Australian Retirement Communities on 28 February 2007 and the
acquisition of Aevum Limited on 31 October 2010.
Impairment test
An impairment of goodwill of $38 million was recognised in the prior year, reducing the goodwill balance to zero. This was primarily driven
by a reduction in the future development pipeline and projects under construction as Stockland shifts its strategic focus towards LLC and
Aspire projects.
SOFTWARE
Software is stated at cost less accumulated amortisation and impairment losses. Amounts incurred in design and testing of software are
capitalised, including employee costs and an appropriate part of directly attributable overhead costs, where the software will generate
probable future economic benefits. This is a key area of accounting estimation and judgement for Stockland.
Costs associated with maintaining software are recognised as an expense as incurred.
All software is amortised using the straight-line method at rates between 10 to 100% (2020: 10 to 100%) from the point at which the asset
is ready for use. Amortisation is recognised in profit or loss. The residual value, the useful life and the amortisation method applied to an
asset are reviewed at least annually.
140
Stockland Annual Report 2021
14. NON–CURRENT ASSETS HELD FOR SALE
As at 30 June
$M
Investment properties transferred from Commercial Property
Non–current assets held for sale
Stockland
Trust
2021
166
166
2020
469
469
2021
166
166
2020
469
469
The following investment properties were held for sale at 30 June 2021:
• Stockland Bundaberg, Bundaberg QLD
• Nathan St, Townsville QLD, a property within the Stockland Townsville complex, Townsville QLD
• Sundry properties at Balcatta WA and Caloundra QLD
Contracts for the sale of the properties were exchanged before reporting date.
During the current year, Stockland completed the sale of the following properties which were classified as non-current assets held for sale
at 30 June 2020:
• Balcatta Distribution Centre, Balcatta WA
• North Shore Townsville, Townsville QLD
• Stockland Baulkham Hills, Baulkham Hills NSW
• Stockland Caloundra, Caloundra QLD
• Stockland The Pines, Doncaster East VIC
Investment properties are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather
than through continuing use. This condition is met only when the sale is highly probable and the asset is available for immediate sale in
its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed
sale within one year from the date of classification.
Investment properties held for sale remain measured at fair value.
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Year ended 30 June 2021
141
Capital structure and financial risk management
IN THIS SECTION
This section outlines how Stockland manages the market, credit and liquidity risk associated with its capital structure and related
financing costs.
Capital management
The Board determines the appropriate capital structure of Stockland, specifically, how much is raised from securityholders (equity)
and how much is borrowed from financial institutions and global capital markets (debt), in order to finance Stockland’s activities both
now and in the future. The Board considers Stockland’s capital structure and its dividend and distribution policy at least twice a year
ahead of announcing results, in the context of its ability to continue as a going concern, to execute the strategy and to deliver its
business plan.
Stockland’s capital structure is monitored through its gearing ratio and the Board maintains a capital structure to minimise the overall
cost of capital. Stockland has a stated target gearing ratio range of 20% to 30% and credit ratings of A-/stable and A3/stable from
S&P and Moody's respectively.
Financial risk
Financial risk and capital management is carried out by a central treasury department. The Board reviews and approves written
principles of overall risk management, as well as written policies covering specific areas such as managing capital, mitigating interest
rates, liquidity, foreign exchange and credit risks, use of derivatives and investing excess liquidity. The Audit Committee assists the
Board in monitoring the implementation of these treasury policies.
Borrowings
The Trust borrows money from financial institutions and debt investors globally in the form of bonds, bank debt and other financial
instruments. As a result, Stockland is exposed to changes in interest rates on its net borrowings and to changes in foreign exchange
rates on its transactions, assets and liabilities denominated in foreign currencies. In accordance with risk management policies,
Stockland uses derivatives to appropriately hedge these underlying exposures.
The Group continues to meet both the general and financial undertakings required under its financing arrangements, even in this
COVID-19 affected environment. Furthermore, there has been no change in the Group's hedging policy with the resulting derivative
portfolios operating as expected and in line with market movements.
The composition and maturity profile for the Group's drawn debt of $4.4 billion is shown below at face value:
Drawn debt maturity profile1
Drawn debt composition %1
7575
300300
1,846
1,846
87% Offshore MTNs
11% Domestic MTNs
2% Bank debt
637637
250250
105105
200200
FY22
FY23
FY24
112112
FY25
Offshore MTNs
Bank debt
Domestic MTNs
890890
FY26
FY27+
1
Face value in AUD at 30 June 2021 after the effect of the CCIRS.
142
Stockland Annual Report 2021
15. BORROWINGS
Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs and are subsequently stated
at amortised cost. Any difference between amortised cost and redemption value is recognised in profit or loss over the period of the
borrowings using the effective interest method. However, where a qualifying fair value hedge is in place, borrowings are stated at the
carrying amount adjusted for changes in fair value of the hedged risk. The changes are recognised in profit or loss.
The table below shows the fair value of each of these instruments measured at Level 2 in the fair value hierarchy. Fair value reflects the
principal amount and remaining duration of these notes based on current market interest rates and conditions at balance date. Stockland
has complied with all covenants throughout the year ended 30 June 2021 and up to the date of authorisation of these accounts.
The weighted average cost of debt for the year was 3.7% (2020: 4.0%).
As at 30 June
$M
Offshore medium term notes
Domestic medium term notes and
commercial paper
Bank facilities
Borrowings
Stockland and Trust
2021
2020
Note
Current
Non–
current
Carrying
value Fair value Current
15A
15B
15C
760
3,172
3,932
4,013
–
–
747
75
747
75
780
75
760
3,994
4,754
4,868
102
170
–
272
Non–
current
Carrying
value Fair value
4,227
4,329
4,594
448
75
618
75
673
75
4,750
5,022
5,342
The difference of $114 million (2020: $320 million) between the carrying amount and fair value of the offshore medium term notes,
commercial paper and domestic medium term notes (MTN) is due to notes being carried at amortised cost under AASB 9.
15A. Offshore medium term notes
The Trust has issued fixed coupon notes in the US private placement market and under its Euro MTN program in Europe and Asia. These
notes have been issued in USD, EUR and HKD and converted back to Australian dollars (AUD or $) principal and AUD floating coupons
through CCIRS.
As at 30 June 2021, the fair value of the US private placements and Eurpoean and Asian MTNs is $2,363 million (2020: $2,868 million) and
$1,650 million (2020: $1,726 million) respectively.
15B. Domestic medium term notes and commercial paper
Domestic medium term notes and commercial paper have been issued at either face value or at a discount to face value and are carried
at amortised cost. The discount or premium is amortised to finance costs over the term of the notes. The medium term notes are issued
on either fixed or floating interest rate terms.
15C. Bank facilities
Bank facilities are multi-use facilities which may be used partially for bank guarantees. Bank facilities are unsecured and held at amortised
cost. As at 30 June 2021, Stockland and the Trust have undrawn bank facilities of $1,150 million (2020: $1,575 million) of which $450 million
is due to expire within 12 months of balance sheet date.
16. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash balances, at call deposits and other short-term investments. Included in the cash and cash
equivalents balance of $1,162 million is $92 million (2020: $59 million) in cash that is relating to joint operations and/or held to satisfy real
estate and financial services licensing requirements, and is not immediately available for use by Stockland.
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Year ended 30 June 2021
143
17. NET FINANCING COSTS
KEEPING IT SIMPLE
This note details the interest income generated on Stockland’s cash and other financial assets and the interest expense incurred
on borrowings and other financial liabilities. The presentation of the net financing costs in this note reflects income and expenses
according to the classification of the financial instruments.
Fair value movements reflect the change in fair value of Stockland’s derivative instruments between the later of inception or 1 July
2020 and 30 June 2021. The fair value at year end is not necessarily the same as the settlement value at maturity.
Net financing costs can be analysed as follows:
Year ended 30 June
$M
Interest income from related parties
Interest income from other parties
Finance income
Interest expense relating to borrowings
Interest paid or payable on other financial liabilities at
amortised cost
Finance expense on lease liabilities
Less: interest capitalised to inventories
Less: interest capitalised to investment properties
Finance expense
Designated hedge accounting relationships
Fair value hedges – gain/(loss) on change in fair value of derivatives
Fair value hedges – gain/(loss) on change in fair value of borrowings
Net gain/(loss) on designated hedge accounting relationships
Non-designated hedge accounting relationships
Gain/(loss) on foreign exchange movements
Gain/(loss) on fair value movements
Net gain/(loss) on non–designated hedge
accounting relationships
Net gain/(loss) on financial instruments
Stockland
Trust
2021
2020
–
4
4
(158)
(39)
(2)
99
10
(90)
(322)
310
(12)
6
69
75
63
–
2
2
(174)
(33)
(2)
114
7
(88)
177
(200)
(23)
(3)
(83)
(86)
(109)
2021
193
3
196
(158)
–
(1)
–
9
2020
229
1
230
(173)
–
(2)
–
6
(150)
(169)
(322)
310
(12)
6
69
75
63
177
(200)
(23)
(3)
(83)
(86)
(109)
Finance income is recognised in profit or loss as it accrues using the effective interest method.
Finance expense includes interest payable on short-term and long-term borrowings calculated using the effective interest method and
payments of interest on derivatives. These borrowing costs are expensed as incurred except to the extent that they are directly attributable
to the acquisition, construction or production of a qualifying asset, such as investment properties or inventories. Qualifying assets are
assets that necessarily take a substantial period of time to reach the stage of their intended use or sale.
In these circumstances, borrowing costs are capitalised to the cost of the assets while in active development until the assets are ready
for their intended use or sale. Total interest capitalised does not exceed the net interest expense in any period. Project carrying values,
including all capitalised interest attributable to projects, continue to be recoverable based on the latest project feasibilities. In the event
that development is suspended for an extended period of time or the decision is taken to dispose of the asset, the capitalisation of
borrowing costs is also suspended. The rate at which interest has been capitalised to qualifying assets is disclosed in note 6.
Borrowing costs are capitalised using a weighted average capitalisation rate applied to the expenditures on the asset excluding
specific borrowings.
The accounting policy and fair value of derivatives are discussed in notes 18 and 19.
144
Stockland Annual Report 2021
18. OTHER FINANCIAL ASSETS AND LIABILITIES
KEEPING IT SIMPLE
Other financial assets are managed in accordance with Stockland's documented risk policy. Based on the nature of the assets
and their purpose, movements in the fair value of other financial assets are recognised either through profit or loss or other
comprehensive income.
A derivative is a type of financial instrument typically used to manage an underlying risk. A derivative’s value changes over time in
response to underlying variables such as exchange rates or interest rates and is entered into for a fixed period. A hedge is where a
derivative is used to manage underlying exposures. Stockland uses derivatives to manage exposure to foreign exchange and interest
rate risk.
As at 30 June
Other financial assets
Other financial liabilities
Other financial assets
Other financial liabilities
$M
2021
2020
2021
2020
2021
2020
2021
2020
Stockland
Trust
Instruments in a designated fair value hedge1
CCIRS
73
Instruments in a designated cash flow hedge1
CCIRS
41
Instruments held at fair value through profit or loss
CCIRS
IRS
Current
10
–
124
Instruments in a designated fair value hedge
CCIRS
IRS
185
–
Instruments in a designated cash flow hedge
CCIRS
IRS
12
–
Instruments held at fair value through profit or loss
CCIRS
IRS
Other2
Non–current
13
18
15
243
–
–
11
4
15
551
5
105
–
34
29
10
734
–
–
–
(3)
(3)
(50)
–
–
–
–
–
–
(23)
–
(36)
(16)
–
–
(174)
–
(260)
–
–
(274)
–
(313)
73
41
10
–
124
185
–
12
–
13
18
–
228
–
–
11
4
15
551
5
105
–
34
29
–
724
–
–
–
(3)
(3)
(50)
–
–
–
–
–
–
(23)
–
(36)
(16)
–
–
(174)
–
(260)
–
–
(274)
–
(313)
1 No current interest rate swaps are in designated hedge relationships.
2 Other financial assets include investments by the Corporation in Stockland Care Foundation Trust and other third party digital start-up entities.
DERIVATIVE FINANCIAL INSTRUMENTS
Stockland holds a number of derivative instruments including interest rate swaps, forward exchange contracts and CCIRS to manage its
exposures. Stockland assesses whether the derivative designated in each hedging relationship is expected to be and has been effective
in offsetting changes in cash flows of the hedged item using the hypothetical derivative method.
In order to qualify for hedge accounting, prospective hedge effectiveness testing must meet all of the following criteria:
• an economic relationship exists between the hedged item and hedging instrument;
• the effect of credit risk does not dominate the value changes resulting from the economic relationship; and
• the hedge ratio is the same as that resulting from actual amounts of hedged items and hedging instruments for risk management.
In these hedge relationships, the main sources of ineffectiveness are:
• the effect of the counterparty and Stockland’s own credit risk on the fair value of the swaps, which is not reflected in the fair value of
• changes in interest rates will impact the fair value of the Australian dollar margin and implied foreign currency margin respectively.
the hedged item; and
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Year ended 30 June 2021
145
Derivative financial instruments are recognised initially at fair value and remeasured at each balance date. The valuation of derivatives is
an area of accounting estimation and judgement for Stockland. Third party valuations are used to determine the fair value of Stockland’s
derivatives. The valuation techniques use inputs such as interest rate yield curves and currency prices/yields, volatilities of underlying
instruments and correlations between inputs.
The gain or loss on remeasurement to fair value is recognised in profit or loss. However, where derivatives qualify for hedge accounting,
recognition of any resultant gain or loss depends on the nature of the item being hedged.
Stockland enters into ISDA Master Agreements with its derivative counterparties. Under the terms of these arrangements, where certain
credit events occur, the net position owing/receivable with a single counterparty in relation to all outstanding derivatives with that
counterparty, will be taken as owing/receivable and all the relevant arrangements terminated. As Stockland does not presently have a
legally enforceable right of set-off, these amounts have not been offset in the balance sheet. If a credit event had occurred, the ISDA
Master Agreement would have the effect of netting, allowing a reduction to derivative assets and derivative liabilities of the same amount
of $139 million (2020: $258 million).
DERIVATIVES THAT QUALIFY FOR HEDGE ACCOUNTING
Stockland uses derivatives to hedge its exposure to fluctuations in interest and foreign exchange rates. At the inception of the transaction,
Stockland designates and documents these derivative instruments into a hedging relationship with the hedged items, as well as its risk
management objective and strategy for undertaking various hedge transactions.
Stockland documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives used in hedging
transactions have been and will continue to be effective in offsetting changes in fair value or cash flows of hedged items.
Cross currency interest rate swaps hedging foreign currency borrowings are designated in either dual fair value and cash flow hedges or
fair value hedges only.
FAIR VALUE HEDGE
A fair value hedge is a hedge of the exposure to changes in fair value of an asset or liability that is attributable to a particular risk.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together with
any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
Hedge accounting is discontinued when the hedging instrument matures or is sold, terminated or exercised, or until such time where the
hedging relationship ceases to meet the qualifying criteria. Any adjustment between the carrying amount and the face value of a hedged
financial instrument is amortised to profit or loss using the effective interest method. Amortisation begins when the hedged item ceases
to be adjusted for changes in its fair value attributable to the risk being hedged.
CASH FLOW HEDGE
A cash flow hedge is a hedge of the exposure to variability in cash flows attributable to a particular risk associated with an asset, liability
or highly probable forecast transaction that could affect profit or loss.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity
in the cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss within finance
income or expense.
Amounts in the cash flow hedge reserve are recognised in profit or loss in the periods when the hedged item is recognised in profit or loss.
Hedge accounting is discontinued when the hedging instrument matures or is sold, terminated or exercised, no longer qualifies for hedge
accounting, or when Stockland revokes designation. Any cumulative gain or loss recognised in equity at that time remains in equity and
is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected
to occur, the cumulative gain or loss that was recognised in equity is recognised immediately in profit or loss.
Additionally, there are a number of derivatives that are not designated as fair value and/or cash flow hedges. These are used to hedge
economic exposures and the gains or losses on remeasurement to fair value of these instruments are recognised immediately in profit
or loss.
146
Stockland Annual Report 2021
Stockland and Trust
Borrowings
Derivatives
Carrying amount
Mark to market
Changes
in
desig-
nation
Gain/
(loss)
on FV
of debt
2021
2020
Cash
flow
hedge
reserve
impact
Gain/
(loss) on
FV of
deriva-
tives
(20)
(20)
–
(1)
(2)
(284)
(261)
(23)
(43)
(68)
Move–
ments
(305)
(282)
(23)
(44)
(70)
–
–
82
–
–
–
–
–
666
(419)
(22)
(395)
224
201
23
51
(28)
247
–
–
529
483
46
95
42
–
–
(159)
(241)
82
82
Net
gain/
(loss)
recog-
nised
in
profit
or loss
(5)
3
(8)
(2)
(12)
(19)
–
–
As at 30 June
$M
2021
2020
Move–
ments
(Repaid)
Drawn
US Dollar
• Effective
• Other1
Euro2
HK Dollar2
2,278
2,647
(369)
(90)
1,855
2,176
(321)
423
987
679
471
1,028
669
(48)
(41)
10
–
(90)
–
66
Foreign exposure
3,944
4,344
(400)
(24)
AUD bank debt
75
75
–
–
AUD MTNs and
commercial paper
750
620
130
130
AUD IRS
–
–
Borrowing costs
(15)
(16)
–
1
–
–
Total3
4,754
5,022
(268)
106
279
264
15
41
56
376
–
–
–
–
(57)
57
–
–
–
–
–
–
–
–
376
89
426
(337)
(22)
(313)
63
1
2
3
Relates to instruments which are in economic hedge relationships but do not qualify for hedge accounting or have not been designated in hedge accounting relationships.
These hedge relationships were deemed effective accounting hedges in the current and prior years.
Totals may not add due to rounding.
RECONCILIATION OF CASH FLOW HEDGE RESERVE
Year ended 30 June
$M
Opening cash flow hedge reserve
Net change in fair value of cash flow hedges
Reclassified to profit or loss
Closing cash flow hedge reserve
Stockland
Trust
2021
(27)
(74)
52
(49)
2020
54
(75)
(6)
(27)
2021
(27)
(74)
52
(49)
2020
54
(75)
(6)
(27)
19. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
KEEPING IT SIMPLE
The financial instruments included on the balance sheet are measured at either fair value or amortised cost. The measurement
of fair value may in some cases be subjective and may depend on the inputs used in the calculations. Stockland generally uses
external valuations based on market inputs or market values (e.g. external share prices). The different valuation methods are called
hierarchies and are described below:
• 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.
• 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.
as prices) or indirectly (i.e. derived from prices); and
DETERMINATION OF FAIR VALUE
The fair value of financial instruments, including offshore medium term notes and derivatives, is determined in accordance with generally
accepted pricing models by discounting the expected future cash flows using assumptions supported by observable market rates. While
certain derivatives are not quoted in an active market, Stockland has determined the fair value of these derivatives using quoted market
inputs (e.g. interest rates, volatility, and exchange rates) adjusted for specific features of the instruments and debit or credit value
adjustments based on the current creditworthiness of Stockland or the derivative counterparty.
O
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s
s
2
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2
1
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a
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2
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2
1
f
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e
a
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n
d
e
d
3
0
J
u
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e
F
i
n
a
n
c
i
a
l
r
e
p
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y
d
a
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e
s
S
e
c
u
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y
h
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r
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f
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m
a
t
i
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n
a
n
d
G
l
o
s
s
a
r
y
Year ended 30 June 2021
147
The following table sets out the financial instruments included on the balance sheet at fair value:
As at 30 June
$M
Derivative assets
Other investments
Financial assets carried at
fair value
Offshore MTNs1
Derivative liabilities
Retirement Living
resident obligations
Financial liabilities
carried at fair value
Net position
Stockland
2021
2020
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
–
15
15
–
–
–
–
352
–
352
(3,521)
(263)
–
–
–
–
–
352
15
367
(3,521)
(263)
–
(2,512)
(2,512)
(3,784)
(2,512)
(6,296)
–
10
10
–
–
–
–
739
–
739
(3,873)
(313)
–
–
–
–
–
739
10
749
(3,873)
(313)
–
(2,695)
(2,695)
(4,186)
(2,695)
(6,881)
15
(3,432)
(2,512)
(5,929)
10
(3,447)
(2,695)
(6,132)
1 Offshore MTNs not in an accounting hedge relationship are carried at amortised cost. This table only reflects offshore MTNs carried at fair value according to its hedge designation.
As at 30 June
$M
Derivative assets
Financial assets carried at
fair value
Offshore MTNs1
Derivative liabilities
Financial liabilities
carried at fair value
Net position
2021
2020
Trust
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
–
–
–
–
–
–
352
352
(3,521)
(263)
(3,784)
(3,432)
–
–
–
–
–
–
352
352
(3,521)
(263)
(3,784)
(3,432)
–
–
–
–
–
–
739
739
(3,873)
(313)
(4,186)
(3,447)
–
–
–
–
–
–
739
739
(3,873)
(313)
(4,186)
(3,447)
1 Offshore MTNs not in an accounting hedge relationship are carried at amortised cost. This table only reflects offshore MTNs carried at fair value according to its hedge designation.
Derivative financial assets and liabilities are not offset in the balance sheet as, under agreements held with derivative counterparties,
Stockland does not have a legally enforceable right to set off the position payable/receivable with a single counterparty.
148
Stockland Annual Report 2021
The following table shows a reconciliation from the opening to closing balances for fair value measurements in Level 3 of the fair
value hierarchy.
Stockland
2021
2020
$M
Balance at 1 July
Gains/losses recognised in
profit or loss
Cash receipts from
incoming residents
on turnover
Cash payments to outgoing
residents on turnover, net
of DMF
Capital distribution
Balance at 30 June
Securities
in unlisted
entities Derivatives
Retirement
Living
resident
obligations
Securities
in unlisted
Total
entities Derivatives
Retirement
Living
resident
obligations
Total
–
–
–
–
–
–
–
–
–
–
–
–
(2,695)
(2,695)
340
340
(326)
(326)
169
–
169
–
(2,512)
(2,512)
8
–
–
–
(8)
–
–
–
–
–
–
–
(2,597)
(2,589)
89
89
(332)
(332)
145
–
145
(8)
(2,695)
(2,695)
2021
2020
Trust
$M
entities Derivatives
Securities
in unlisted
Retirement
Living
resident
obligations
Securities
in unlisted
Total
entities Derivatives
Retirement
Living
resident
obligations
Balance at 1 July
Capital distribution
Balance at 30 June
–
–
–
–
–
–
–
–
–
–
–
–
8
(8)
–
–
–
–
–
–
–
Total
8
(8)
–
O
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s
s
2
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2
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p
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p
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C
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a
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a
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a
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p
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G
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a
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2
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2
1
f
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3
0
J
u
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F
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a
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c
i
a
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p
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d
a
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s
S
e
c
u
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i
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h
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d
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r
i
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f
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m
a
t
i
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n
a
n
d
G
l
o
s
s
a
r
y
Year ended 30 June 2021
149
20. FINANCIAL RISK FACTORS
KEEPING IT SIMPLE
Stockland’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. Stockland’s overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on
financial performance.
The sensitivity analysis included in this note shows the impact that a shift in the financial risks would have on the financial statements
at balance date, but is not a forecast or prediction. In addition, it does not include any management action that might take place to
mitigate these risks, were they to occur.
20A. Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect Stockland’s
financial performance or the value of its financial instrument holdings. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising returns.
Currency risk
Currency risk arises when anticipated transactions or recognised assets and liabilities are denominated in a currency that is not Stockland’s
functional currency, being Australian dollars (AUD). Stockland manages its currency risk by using CCIRS and forward exchange contracts.
Stockland’s offshore medium term notes create both an interest rate and a currency risk exposure. Stockland’s policy is to minimise its
exposure to both interest rate and exchange rate movements. Accordingly, Stockland has entered into a series of CCIRS which cover 100%
of the principals outstanding and are timed to expire when each note matures. These CCIRS also swap the obligation to pay fixed interest
to floating interest. When these swaps are no longer effective in hedging the interest rate and currency risk exposure, management will
reassess the value in continuing to hold the swap.
These CCIRS have been designated as fair value and cash flow hedges and are accounted for in line with the accounting principles
highlighted in note 18.
The effects of foreign currency-related hedging instruments on the Group's financial position and performance are as follows:
As at 30 June
Carrying amount
Notional amount
Maturity date
Hedge ratio
Change in discounted spot value of outstanding hedging instruments since inception
of the hedge
Change in value of hedged item used to determine hedge ineffectiveness
Weighted average hedged rate for outstanding hedged instruments against AUD$1
Stockland and Trust
2021
3,521
3,181
2020
3,873
3,180
Sep 2021 – Mar 2036
Jul 2020 – May 2034
1:1
224
(296)
USD 0.81
HKD 5.59
EUR 0.66
1:1
632
(627)
USD 0.81
HKD 5.54
EUR 0.66
SENSITIVITY ANALYSIS – CURRENCY RISK
The following sensitivity analysis shows the impact on the profit or loss and equity if there was an increase/decrease in AUD exchange
rates of 10% at balance date with all other variables held constant, being the movement Stockland determines is reasonably possible
(2020: 10%). In determining what constitutes a reasonably possible movement, management gives consideration to their best estimate
at balance date of the range of possible future exchange rate movements.
150
Stockland Annual Report 2021
As at 30 June
Profit or loss
Equity
Profit or loss
Equity
Stockland and Trust
2021
2020
$M
EUR
HKD
USD
Impact
Interest rate risk
Increase
Decrease
Increase
Decrease
Increase
Decrease
Increase
Decrease
–
–
(1)
(1)
–
–
1
1
(3)
(5)
(13)
(21)
4
7
16
27
–
–
(1)
(1)
–
–
2
2
(4)
(6)
(11)
(21)
4
7
14
25
Interest rate risk is the risk that the fair value or cash flows of financial instruments will fluctuate due to changes in interest rates.
The Trust’s interest rate risk arises from borrowings. Borrowings issued at variable rates expose the Trust to cash flow interest rate risk.
Borrowings issued at fixed rates expose the Trust to fair value interest rate risk. Stockland’s treasury policy allows it to enter into approved
derivative instruments to manage the risk profile of the total debt portfolio to achieve an appropriate mix of fixed and floating interest rate
exposures. The Trust manages its interest rate risk through CCIRS and fixed-to-floating interest rate swaps.
SENSITIVITY ANALYSIS – INTEREST RATE RISK
The following sensitivity analysis shows the impact on profit or loss and equity if there was an increase/decrease in market interest rates
of 100 basis points (bps) at balance date with all other variables held constant, being the movement Stockland determines is reasonably
possible (2020: 100bps). In determining what constitutes a reasonably possible movement, management gives consideration to their best
estimate at balance date of the range of possible future interest rate movements.
Stockland
Trust
2021
2020
2021
2020
Increase
Decrease
Increase
Decrease
Increase
Decrease
Increase
Decrease
12
113
125
7
(12)
(121)
(133)
(7)
5
133
138
11
(5)
(143)
(148)
(11)
37
113
150
7
(37)
(121)
(158)
(7)
33
133
166
11
(33)
(143)
(176)
(11)
As at 30 June
$M
Impact on interest
income/(expense)
Impact on net gain/(loss)
on derivatives – through
profit or loss
Impact on profit or loss
Impact on equity
Equity price risk
Equity price risk is the risk that the fair value of investments in listed/unlisted entities fluctuates due to changes in the underlying security
price. Stockland’s equity price risk arises from investments in listed securities and units in unlisted funds. These investments are classified
as financial assets carried at fair value, with any resultant gain or loss recognised in profit or loss or other comprehensive income.
Decisions required for the purchase or divestment of material equity investments are made by the Board.
SENSITIVITY ANALYSIS – EQUITY PRICE RISK
The following sensitivity analysis shows the impact on profit or loss and equity if the market price of the underlying equity securities/units
at balance date had been 10% higher/lower with all other variables held constant.
As at 30 June
$M
Stockland
Trust
2021
2020
2021
2020
Increase
Decrease
Increase
Decrease
Increase
Decrease
Increase
Decrease
Impact on profit or loss
Impact on equity
1
–
(1)
–
1
–
(1)
–
1
–
(1)
–
1
–
(1)
–
O
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s
s
2
0
2
1
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a
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s
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9
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2
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2
1
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3
0
J
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F
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a
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c
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p
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d
a
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s
S
e
c
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i
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h
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d
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m
a
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i
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n
a
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d
G
l
o
s
s
a
r
y
Year ended 30 June 2021
151
20B. Credit risk
Credit risk is the risk that a customer or counterparty to a financial instrument fails to meet its contractual obligations resulting in a financial
loss to Stockland.
RISK MANAGEMENT
Stockland has no significant concentrations of credit risk with any single counterparty and has policies to review the aggregate exposure of
tenancies across its portfolio. Stockland also has policies to ensure that sales of properties with deferred payment terms and development
services are made to customers with an appropriate credit history.
Derivative counterparties and cash deposits are currently limited to financial institutions approved by the Audit Committee. There are
also policies that limit the amount of credit risk exposure to any one of the approved financial institutions based on their credit rating and
country of origin.
The maximum exposure to credit risk at the end of the reporting period is the gross carrying amount of each class of financial assets
mentioned in this report.
As at 30 June 2021, these financial institutions had an Investment Grade rating greater than BBB- provided by S&P.
Bank guarantees and mortgages over land are held as security over certain receivables balances.
IMPAIRMENT OF FINANCIAL ASSETS
As at 30 June 2021 and 30 June 2020, there were no significant financial assets that were past due. Financial assets are subject to the
expected credit loss model as per AASB 9. Refer to note 9 for details of the loss allowances recognised on trade receivables and the
intercompany loan.
20C. Liquidity risk
Liquidity risk is the risk that Stockland will not be able to meet its financial obligations as they fall due. Due to the dynamic nature of
the underlying businesses, Stockland aims to maintain flexibility in liquidity and funding sources by keeping sufficient cash and cash
equivalents and/or undrawn committed credit lines available, while maintaining a low cost of holding these facilities. Management
prepares and monitors rolling forecasts of liquidity requirements on the basis of expected cash flow.
Stockland manages liquidity risk through monitoring the maturity profile of its debt portfolio. At 30 June 2021, the current weighted average
debt maturity is 5.3 years (2020: 5.7 years).
KEEPING IT SIMPLE
The following table analyses Stockland’s financial liabilities including derivatives into relevant maturity groupings based on the period
remaining until the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows
(including interest) and therefore may not reconcile with the amounts disclosed on the balance sheet.
As derivative assets have been excluded from these tables, refer to note 19 for the fair value of the derivative assets to provide a
meaningful analysis of Stockland and Trust total derivatives.
152
Stockland Annual Report 2021
As at
$M
30 June 2021
Non–derivative
Payables (excl. GST)
Other liabilities
Lease liabilities
Distributions payable
Borrowings
Retirement Living
resident obligations1
Derivative
Interest rate derivatives
CCIRS
• Inflows
• Outflows
Carrying
amount
Contractual
cash flows
1 year or less
1 – 2 years
2 – 5 years
Over 5 years
Stockland
(584)
(533)
(41)
(318)
(584)
(533)
(41)
(318)
(4,754)
(5,402)
(357)
(49)
(2)
(318)
(908)
(107)
(48)
(2)
–
(30)
(161)
(7)
–
(90)
(275)
(30)
–
(493)
(1,555)
(2,446)
(2,512)
(2,512)
(2,448)
–
–
(64)
(177)
(86)
(186)
687
(794)
(38)
17
(20)
Financial liabilities
(9,005)
(9,683)
(4,123)
30 June 2020
Non–derivative
Payables (excl. GST)
Other liabilities
Lease liabilities
Distributions payable
Borrowings
Retirement Living
resident obligations1
Derivative
Interest rate derivatives
CCIRS
• Inflows
• Outflows
(521)
(318)
(43)
(253)
(5,022)
(2,695)
(273)
(40)
(521)
(318)
(43)
(253)
(5,684)
(2,695)
(287)
577
(626)
(332)
–
(2)
(253)
(440)
(2,599)
(40)
14
(16)
(45)
17
(21)
(699)
(56)
(38)
(2)
–
(80)
143
(171)
(23)
510
(582)
(1,861)
(3,000)
(70)
(107)
(6)
–
(63)
(173)
(33)
–
(944)
(1,066)
(3,234)
(1)
(37)
14
(16)
(4)
(129)
43
(50)
(91)
(81)
506
(544)
(3,713)
Financial liabilities
(9,165)
(9,850)
(3,668)
(1,080)
(1,389)
1
Refer to the net current asset deficiency position section under the Basis of preparation note for further explanation of the impact of Retirement Living resident obligations on
liquidity risk.
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Year ended 30 June 2021
153
Carrying
amount
Contractual
cash flows
1 year or less
1 – 2 years
2 – 5 years
Over 5 years
Trust
(109)
(27)
(318)
(109)
(27)
(318)
(4,754)
(5,402)
As at
$M
30 June 2021
Non–derivative
Payables (excl. GST)
Lease liabilities
Dividends and distributions payable
Borrowings
Derivative
Interest rate derivatives
CCIRS
• Inflows
• Outflows
(177)
(86)
(273)
(40)
–
(186)
–
687
(794)
(6,149)
(126)
(28)
(253)
(287)
–
577
(626)
(6,427)
Financial liabilities
(5,471)
30 June 2020
Non–derivative
Payables (excl. GST)
Lease liabilities
Dividends and distributions payable
(126)
(28)
(253)
(5,022)
(5,684)
Borrowings
Derivative
Interest rate derivatives
CCIRS
• Inflows
• Outflows
Financial liabilities
(5,742)
21. ISSUED CAPITAL
KEEPING IT SIMPLE
(109)
–
(318)
(908)
(38)
17
(20)
(1,376)
(126)
–
(253)
(440)
(40)
14
(16)
(861)
–
(1)
–
–
(1)
–
–
(25)
–
(493)
(1,555)
(2,446)
(45)
17
(21)
(543)
–
(1)
–
(80)
143
(171)
(23)
510
(582)
(1,664)
(2,566)
–
(1)
–
–
(26)
–
(944)
(1,066)
(3,234)
(37)
(129)
(81)
14
(16)
(984)
43
(50)
(1,203)
506
(544)
(3,379)
This note explains material movements recorded in issued capital that are not explained elsewhere in the financial statements. The
balances and movements in equity of Stockland are presented in the consolidated statement of changes in equity.
Issued capital represents the amount of consideration received for securities issued by Stockland. Transaction costs of an equity
transaction are accounted for as a deduction from equity, net of any related income tax benefit.
For so long as Stockland remains jointly quoted, the number of shares in Stockland Corporation Limited and the number of units in
Stockland Trust shall be equal and the securityholders and unitholders shall be identical.
Holders of stapled securities are entitled to receive dividends and distributions as declared from time to time and are entitled to one vote
per stapled security at securityholder meetings. The liability of a member is limited to the amount, if any, remaining unpaid in relation to a
member’s subscription for securities. A member is entitled to receive a distribution following termination of the stapling arrangement (for
whatever reason). The net proceeds of realisation must be distributed to members, after making an allowance for payment of all liabilities
(actual and anticipated) and meeting any actual or anticipated expenses of termination.
The following table provides details of securities issued by Stockland:
154
Stockland Annual Report 2021
Stockland and Trust
Number of securities
Stockland
$M
Trust
$M
As at 30 June
2021
2020
2021
2020
2021
2020
Ordinary securities on issue
Issued and fully paid
2,387,171,662
2,384,351,503
8,692
8,692
7,393
7,393
Other equity securities
Treasury securities
(3,517,364)
(5,147,539)
Issued capital
2,383,654,298
2,379,203,964
(29)
8,663
(36)
8,656
(28)
7,365
(35)
7,358
21A. Movements in ordinary securities
As at 30 June
Opening balance
Securities issued during
the year
Stockland and Trust
Number of securities
2021
2020
2,384,351,503
2,384,351,503
2,820,159
–
Closing balance
2,387,171,662
2,384,351,503
Stockland
$M
2021
8,692
–
8,692
2020
8,692
–
8,692
Trust
$M
2021
7,393
–
7,393
2020
7,393
–
7,393
On 27 August 2020, Stockland issued 576,983 fully paid ordinary stapled securities pursuant to the vesting of performance rights under
Stockland's long-term incentive plan.
On 6 October 2020, Stockland issued:
• 330,638 fully paid ordinary stapled securities pursuant to Stockland's Tax Exempt Employee Security Plan to eligible employees; and
• 1,822,538 fully paid ordinary stapled securities pursuant to vesting of performance rights under Stockland's deferred short-term
incentive plan.
On 23 March 2021, Stockland issued a further 90,000 fully paid ordinary stapled securities pursuant to its long-term incentive plan.
21B. Other equity securities
TREASURY SECURITIES
Treasury securities are securities in Stockland that are held by the Stockland Employee Securities Plan Trust. Securities are held until the
end of the vesting period affixed to the securities. As the securities are held on behalf of eligible employees, the employees are entitled
to the dividends and distributions.
MOVEMENT OF OTHER EQUITY SECURITIES
Stockland and Trust
Number of securities
2021
5,147,539
895,776
2020
6,691,865
2,910,142
(2,525,951)
(4,454,468)
Opening balance
Securities acquired1
Securities transferred to
employees on vesting
Closing balance
3,517,364
5,147,539
1
Average price: $3.91 per security (2020: $4.37).
Stockland
$M
2021
(36)
(4)
11
(29)
Trust
$M
2020
2021
2020
(35)
(13)
12
(36)
(35)
(3)
10
(28)
(34)
(12)
11
(35)
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Year ended 30 June 2021
155
21C. Security based payments
KEEPING IT SIMPLE
Stockland operates three Security Plans at its discretion for eligible employees which are described below:
Long term incentives (LTI)
Under the LTI, employees have the right to acquire Stockland securities at nil consideration when certain performance conditions
are met. For FY21, grants may vest based on a relative TSR performance measure over a three-year performance period, provided
employment continues to the applicable vesting date. In prior years, two equally-weighted performance measures were used, being
underlying EPS growth and relative TSR. Eligibility is by invitation of the Board and is reviewed annually.
Deferred short term incentives (DSTI)
For Executives and Senior Management there is a compulsory deferral of at least one third of STI incentives into Stockland securities
to further align remuneration outcomes with securityholders. Half of the awarded DSTI securities will vest 12 months after award with
the remaining half vesting 24 months after award, provided employment continues to the applicable vesting date.
Tax exempt employee security plan
Under this plan, eligible employees receive up to $1,000 worth of Stockland securities.
The security options granted under the three Security Plans are held at fair value. The valuation of security options is a key area of
accounting estimation and judgement for Stockland.
The number and weighted average fair value of LTI rights and DSTI securities under the Security Plans are as follows:
Details
Opening balance
Granted during the year
Forfeited and lapsed during the year
Rights converted to vested Stockland stapled securities
Outstanding at the end of the year
LTI
Weighted average price
per right/security
Number of
rights/securities
2021
$3.23
$3.22
$2.75
$4.15
$3.16
2020
$3.25
$3.58
$3.31
$4.18
$3.23
2021
11,061,448
6,792,106
2020
8,801,524
4,816,864
(3,292,107)
(685,391)
(2,603,051)
(1,871,549)
11,958,396
11,061,448
The fair value of LTI rights is measured at grant date using the Monte Carlo Simulation option pricing model taking into account the terms
and conditions upon which the rights were granted. The fair value is expensed on a straight-line basis over the vesting period, the period
over which the rights are subject to performance and service conditions, with a corresponding increase in reserves.
Where the individual forfeits the rights due to failure to meet a service or performance condition, the cumulative expense is reversed
through profit or loss in the current year. The cumulative expenditure for rights forfeited due to market conditions are not reversed.
Where amendments are made to the terms and conditions subsequent to the grant, the value of the grant immediately prior to and
following the modification is determined. This occurs upon resignation or termination where the amendment relates to rights becoming
vested in terms of beneficial ownership, which would otherwise have been forfeited due to the failure to meet future service conditions. In
this situation, the value that would have been recognised in future periods in respect of the rights not forfeited is recognised in the period
that the rights vest.
The number of rights granted to employees under the plan for the year ended 30 June 2021 was 3,763,407 (2020: 3,490,356). The number
of LTI rights awarded is based on the Volume Weighted Average Price of Stockland securities for the ten working days post 30 June (face
value methodology). This is consistent with the approach for determining the number of DSTI awards.
Assumptions made in determining the fair value of rights granted under the security plans are:
156
Stockland Annual Report 2021
Details
Grant date
Fair value of rights granted under plan
Securities spot price at grant date
Exercise price
Distribution yield
Risk–free rate at grant date
Expected remaining life at grant date
Volatility of Stockland
Volatility of index price
2021
25 February 2021
$2.71
$4.39
–
6.17%
0.11%
2020
1 July 2019
$2.61
$4.21
–
6.38%
0.98%
2.35 years
3.00 years
31%
21%
17%
14%
The LTI rights outstanding as at 30 June 2021 of 8,586,568 (2020: 9,115,913), have a fair value ranging from $1.11 to $4.47 (2020:$1.11 to $4.47)
per right and a weighted average restricted period remaining of 1.7 years (2020: 1.5 years).
During the year, 1,028,378 rights (2020: 129,560) vested and will convert to securities with a weighted average fair value of $4.18 per security
(2020: $4.13).
DSTI
The fair value of securities granted under the DSTI plan has been calculated based on the 10 day Volume Weighted Average Price post
30 June 2020 of $4.59 (2020: $4.47).
The DSTI outstanding as at 30 June 2021, included in the table above, are 3,082,420 (2020: 1,945,535). The DSTI outstanding have a fair
value ranging from $2.72 to $5.12 (2020: $4.05 to $4.47) per security.
EMPLOYEE SECURITY PLAN
Stockland securities issued to eligible employees under the Tax Exempt Employee Security Plan ($1,000 Plan) are recognised as an expense
with a corresponding increase in issued capital. The value recognised is the market price of the securities granted at grant date.
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Year ended 30 June 2021
157
Taxation
IN THIS SECTION
This section sets out Stockland’s tax accounting policies and provides an analysis of the income tax expense/benefit and deferred tax
balances, including a reconciliation of tax expense to accounting profit. Accounting income is not always the same as taxable income,
creating temporary differences. These differences usually reverse over time. Until they reverse, a deferred tax asset or liability must
be recognised on the balance sheet, to the extent that it is probable that a reversal will take place. This is known as the balance sheet
liability method.
22. INCOME TAX
22A. Income tax recognised in profit or loss
Year ended 30 June
$M
Current tax1
Adjustments for prior years
Current tax1
Tax losses utilised during the year1
Deferred tax recognised during the year
Origination and reversal of temporary differences
Deferred tax
Income tax in profit or loss
Stockland
2021
–
–
–
(70)
50
47
27
27
(Restated)
2020
–
(4)
(4)
(23)
–
(18)
(41)
(45)
1
There is no current tax expense because tax and capital losses totalling $231.7 million (2020: $61.0 million) have been utilised to offset the Stockland Corporation Group's
taxable income.
22B. Reconciliation of profit before tax to income tax recognised in profit or loss
Year ended 30 June
$M
Profit before tax
Less: Trust (profit)/loss before tax
Adjust for: intergroup eliminations
Profit before tax of Stockland Corporation Group
Prima facie income tax calculated at 30%
Impact on income tax recognised in profit or loss due to:
Non–deductible expenses for the year
Other deductible expense for the current period
Other assessable income for the year
Under–provided in prior years
Income tax in profit or loss
Effective tax rate
Effective tax rate (excluding tax losses recognised)
158
Stockland Annual Report 2021
Stockland
2021
1,078
(976)
(12)
90
(27)
–
4
–
50
27
(30%)
(30%)
(Restated)
2020
24
62
8
94
(28)
(12)
–
(1)
(4)
(45)
48%
48%
STOCKLAND
Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised in other comprehensive income
(OCI) or directly in equity. Income tax expense is calculated at the applicable corporate tax rate of 30%, and is comprised of current and
deferred tax expense.
Current tax expense represents the expense relating to the expected taxable income at the applicable tax rate for the financial year.
Deferred tax expense represents the tax expense in respect of the future tax consequences of recovering or settling the carrying amount
of an asset or liability.
TAX CONSOLIDATION
Stockland Corporation Limited is head of the tax consolidated group which includes its wholly-owned Australian resident subsidiaries. As
a consequence, all members of the tax consolidated group are taxed as a single entity.
Members of the tax consolidated group have entered into a tax sharing agreement and a tax funding arrangement. The arrangement
requires that Stockland Corporation Limited assumes the current tax liabilities and deferred tax assets arising from unused tax losses,
with payments to or from subsidiaries settled via intergroup loans. Any subsequent period adjustments are recognised by Stockland
Corporation Limited only and do not result in further amounts being payable or receivable under the tax funding arrangement. The tax
liabilities of the entities included in the tax consolidated group will be governed by the tax sharing agreement should Stockland Corporation
Limited default on its tax obligations.
TRUST
Under current Australian income tax legislation, Stockland Trust and its sub-trusts are not liable for income tax on their taxable income
(including any assessable component of capital gains) provided that the unitholders are attributed the taxable income of the Trust.
Securityholders are liable to pay tax at their effective tax rate on the amounts attributed.
23. DEFERRED TAX
As at 30 June
$M
Inventories
Investment properties
Property, plant and equipment
Payables
Retirement Living resident obligations
Provisions
Leases
Reserves
Tax losses carried forward
Tax assets/(liabilities)1
1
Totals may not add due to rounding.
Assets
Liabilities
Net
2021
(Restated)
2020
33
90
32
27
92
15
0
7
431
727
46
6
32
6
92
23
4
7
494
710
2021
(165)
(431)
–
(1)
(81)
–
–
–
–
2020
(163)
(440)
–
–
(81)
–
(4)
–
–
(678)
(688)
2021
(132)
(341)
32
26
11
15
–
7
431
49
2020
(117)
(434)
32
6
11
23
–
7
494
22
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y
Year ended 30 June 2021
159
MOVEMENT IN TEMPORARY DIFFERENCES
As at 30 June
$M
Inventories
Investment properties
Property, plant and equipment
Payables
Retirement Living resident obligations
Provisions
Reserves
Tax losses carried forward
Tax assets/(liabilities)2
Recognised in
Recognised in
Retained
earnings1
Profit or
loss
(Restated)
2020
Retained
earnings
Profit or
loss
–
(1)
25
(1)
–
–
–
(1)
22
(18)
(7)
4
(6)
(3)
16
–
(26)
(40)
(117)
(434)
32
6
11
23
7
494
22
–
–
–
–
–
–
–
–
–
(15)
93
–
20
–
(8)
–
(63)
27
2019
(99)
(426)
3
13
14
7
7
521
40
2021
(132)
(341)
32
26
11
15
7
431
49
1
2
Impact of adoption of new accounting standards recorded in retained earning on 1 July 2019.
Totals may not add due to rounding.
STOCKLAND
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary
differences can be utilised. Deferred tax assets are reviewed for recoverability at each balance date and the recognised amount is adjusted
as required. This is a key area of accounting estimation and judgement for Stockland.
Deferred tax is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using the
applicable tax rates.
Deferred tax arises due to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences:
• initial recognition of goodwill;
• the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (for example acquisition of customer
• differences relating to investments in subsidiaries to the extent that they are unlikely to reverse in the foreseeable future.
TRUST
lists); and
There are no deferred tax assets or liabilities in the Trust. As the Trust limits its activities to deriving income from renting Commercial
Property and interest on the cross stapled loan with Stockland, all of the Trust's taxable income each year is attributed to its investors
and the Trust is not subject to tax. All of the annual taxable income is subject to tax in the hands of Stockland’s investors. The Trustee of
Stockland Trust should be liable to pay tax to the extent that Stockland Trust does not distribute all of its ‘net income’, as determined under
Stockland Trust’s trust deed. It is not anticipated that Stockland Trust will distribute less than its net income for the current year.
160
Stockland Annual Report 2021
Group structure
IN THIS SECTION
This section provides information which will help users understand how Stockland's structure affects the financial position and
performance of Stockland as a whole. Stockland includes entities that are classified as joint ventures, joint operations, associates
and structured entities.
Joint ventures and associates are accounted for using the equity method, while joint operations are proportionately consolidated
and structured entities are recorded as investments at cost.
In this section of the notes there is information about:
Interests in joint arrangements;
1.
2. Transactions with non-controlling interests; and
3. Changes to the structure that occurred during the year as a result of business combinations or the disposal of a
discontinued operation.
24. EQUITY–ACCOUNTED INVESTMENTS
Stockland has interests in a number of individually immaterial joint ventures that are accounted for using the equity method. Stockland
did not have investments in associates at 30 June 2021 or 30 June 2020.
A joint arrangement is either a venture or operation over whose activities Stockland has joint control, established by contractual
agreement. Investments in joint ventures are accounted for on an equity-accounted basis. Investments in joint ventures are assessed for
impairment when indicators of impairment are present and if required, written down to the recoverable amount. Joint operations are
discussed in note 25.
Stockland’s share of the joint venture’s profit or loss and other comprehensive income is from the date joint control commences until the
date joint control ceases.
If Stockland’s share of losses exceeds its interest in a joint venture, the carrying amount is reduced to nil and recognition of further losses
is discontinued except to the extent that Stockland has incurred legal or constructive obligations or made payments on behalf of the
joint venture.
Transactions with the joint venture are eliminated to the extent of Stockland’s interest in the joint venture until such time as they are
realised by the joint venture on consumption or sale.
The following table analyses, in aggregate, the carrying amount and share of profit or loss and other comprehensive income of these
joint ventures.
As at 30 June
$M
Aggregate carrying amount of individually immaterial
joint ventures
Aggregate share of:
• profit from continuing operations
• other comprehensive income
Total comprehensive income
Stockland
2021
392
36
–
36
2020
354
72
–
72
Trust
2021
399
36
–
36
2020
361
71
–
71
The ownership interest in each of these immaterial entities is presented below:
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Year ended 30 June 2021
161
As at 30 June
%
Brisbane Casino Towers
Eagle Street Pier Pty Limited1
Fife Kemps Creek Trust
Macquarie Park Trust
Riverton Forum Pty Limited
Sequoia Victoria Trust
Stockland Fife Willawong Trust
Willeri Drive Trust2
This entity was deregistered on 19 August 2020.
1
2 Owner of Stockland Riverton, Riverton WA.
CHANGES TO JOINT VENTURES
Stockland
Trust
2021
2020
2021
2020
50
–
50
51
50
50
50
50
50
50
50
51
50
–
50
50
–
–
50
51
50
50
50
50
–
–
50
51
50
–
50
50
During the year, Stockland entered into a joint venture with a special purpose vehicle (SPV) advised by J.P. Morgan Asset Management to
acquire Logistics properties on the eastern seaboard. This SPV has received FIRB approval for an acquisition program.
There were no other changes to the above list of investments in joint ventures during the year.
25. OTHER ARRANGEMENTS
25A. Investments in unconsolidated structured entities
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls
the entity.
SDRT No.1
At 1 July 2020, Stockland held an interest in a closed-end, unlisted property fund that invested in real estate assets in Australia for the
purpose of generating investment income and for capital appreciation. The fund financed its operations through unitholder contributions
and also through external banking facilities. The fund was determined to meet the definition of a structured entity.
At a unitholder meeting held on 8 March 2019, the unitholders passed a special resolution to terminate and wind-up SDRT No.1 (the Fund)
and sell all of the properties or interests in the properties of the Fund. All properties in the Fund were sold during the prior year and the
Fund was wound up on 25 July 2021.
As a result, at 30 June 2021 Stockland held nil interest (2020: 19.9%) in the Fund. In the prior year, Stockland’s interest in the Fund was
included in ‘Other Financial Assets’ on the balance sheet.
25B. Joint operations
Interests in unincorporated joint operations are consolidated by recognising Stockland’s proportionate share of the joint operations’
assets, liabilities, revenues and expenses on a line-by-line basis, from the date joint control commences to the date joint control ceases
and are not included in the above table.
162
Stockland Annual Report 2021
26. CONTROLLED ENTITIES
The following entities were 100% controlled during the current and prior years:
CONTROLLED ENTITIES OF STOCKLAND CORPORATION LIMITED
Albert & Co Pty Ltd1
ARC Joint Ventures Pty. Ltd.1
AW Bidco 1 Pty Limited1
AW Bidco 2 Pty Limited1
AW Bidco 4 Pty Limited1
AW Bidco 5 Pty Limited1
AW Bidco 6 Pty Limited1
AW Bidco No. 7 Pty Limited
AW Bidco No. 8 Pty Limited
AW Bidco No. 9 Pty Limited
AW Bidco No. 10 Pty Limited
AW Bidco No. 11 Pty Limited
AW Bidco No. 12 Pty Limited
AW Bidco No. 13 (NSW) Pty Limited
Bayview Road Property Trust
Bellevue Gardens Trust
Compam Property Management Pty Limited
Eisha Pty Ltd
Enaard Pty Ltd
Endeavour (No. 2) Unit Trust
Glengar Capital Pty Limited
Glenmore Park Investments Pty Limited
IOR Friendly Society Pty Limited1
Jimboomba Trust
JT Bid Co No. 1 Pty Limited
JT Bid Co No. 2 Pty Limited
Knowles Property Management Unit Trust
Knox Unit Trust
LAB-52 Bricklet Pty Limited
LAB-52 Holdings Pty Limited
LAB-52 SMRTR Pty Limited
LAB-52 Yodel Pty Limited
Mayflower Investments Pty Ltd
Merrylands Court Pty Limited
Mulgoa Nominees Pty Limited
Northpoint No. 1 Trust
Northpoint No. 2 Trust
Northpoint No. 3 Trust
Northpoint No. 4 Trust
Northpoint No. 5 Trust
Northpoint No. 6 Trust
Stockland Development (Sub7) Pty Limited1
Stockland Development Holding Trust
Stockland Development Pty Limited1
Stockland Direct Retail Trust No. 2
Stockland Epping Retirement Village Pty Limited
Stockland Eurofinance Pty Limited1
Stockland Farrington Grove Retirement Village Pty Limited
Stockland Financial Services Pty Limited1
Stockland Golden Ponds Forster Pty Limited
Stockland Greenleaves Management Services Pty Limited
Stockland Greenleaves Village Pty Limited
Stockland Hibernian Investment Company Pty Limited1
Stockland Highett Pty Limited
Stockland Highlands Pty Limited1
Stockland Highlands Retirement Village Pty Limited
Stockland Holding Trust No. 3
Stockland Holding Trust No. 4
Stockland Holding Trust No. 5
Stockland Holding Trust No. 6
Stockland IOR Group Pty Limited1
Stockland Kawana Waters Pty Limited1
Stockland Knox Village Pty Limited1
Stockland Lake Doonella Pty Limited1
Stockland Land Lease Communities Holdings Pty Limited1
Stockland Land Lease Landlord Pty Limited1
Stockland Land Lease Management Pty Limited1
Stockland LLC Aura Pty Limited
Stockland LLC Pty Limited
Stockland LLC General Pty Limited
Stockland LLC Providence Pty Limited
Stockland LLC SLC SPV Pty Limited
Stockland Lensworth Glenmore Park Limited1
Stockland Lincoln Gardens Pty Limited
Stockland Long Island Village Pty Limited1
Stockland Management Limited
Stockland Maybrook Manor Pty Limited
Stockland Mernda Retirement Village Pty Limited
Stockland Miami (Fund) Unit Trust
Stockland Miami (Non–Fund) Unit Trust
Stockland Miami (QLD) Pty Limited1
Stockland Midlands Terrace Adult Community Pty Limited1
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Year ended 30 June 2021
163
Nowra Property Unit Trust
Patterson Lakes Unit Trust
Retirement Living Acquisition Trust
Retirement Living Holding Trust No. 1
Retirement Living Holding Trust No. 2
Retirement Living Holding Trust No. 3
Retirement Living Holding Trust No. 4
Retirement Living Holding Trust No. 5
Retirement Living Holding Trust No. 6
Retirement Living Unit Trust No. 1
Retirement Living Unit Trust No. 2
Rogan’s Hill Retirement Village Trust
SDRT 2 Property 1 Trust
SDRT 2 Property 2 Trust
SDRT 2 Property 3 Trust
SDRT 2 Property 4 Trust
Stockland (Boardwalk Sub 2) Pty Limited
Stockland (Queensland) Pty. Limited1
Stockland (Russell Street) Pty Limited1
Stockland A.C.N 116 788 713 Pty Limited1
Stockland Aevum Pty Limited1
Stockland Newport Retirement Village Pty Limited
Stockland North Boambee Valley LLC Trust
Stockland North Lakes Development Pty Limited1
Stockland North Lakes Pty Limited1
Stockland Oak Grange Pty Limited1
Stockland Ormeau Trust
Stockland Patterson Village Pty Limited1
Stockland Pine Lake Management Services Pty Limited
Stockland Pine Lake Village Pty Limited
Stockland PR1 Trust
Stockland PR2 Trust
Stockland PR3 Trust
Stockland PR4 Trust
Stockland Property Management Pty Ltd1
Stockland Property Services Pty Limited1
Stockland Queenslake Village Pty Limited
Stockland Retail Services Pty Limited1
Stockland Retirement Pty Limited1
Stockland Richmond Retirement Village Pty Limited
Stockland Ridgecrest Village Management Services Pty Limited
Stockland Ridgecrest Village Pty Limited
Stockland Aevum SPV Finance No. 1 Pty Limited
Stockland RRV Pty Limited1
Stockland Affinity Retirement Village Pty Limited
Stockland RVG (Queensland) Pty Limited
Stockland Armstrong Creek LLC Trust
Stockland Bellevue Gardens Pty Limited
Stockland Bells Creek Pty Limited1
Stockland Berwick LLC Trust
Stockland Salford Living Pty Limited1
Stockland Scrip Holdings Pty Limited
Stockland Selandra Rise Retirement Village Pty Limited
Stockland Services Pty Limited1
Stockland Birtinya Retirement Village Pty Limited1
Stockland Singapore Pte Ltd
Stockland Buddina Pty Limited1
Stockland Caboolture Waters Pty Limited1
Stockland South Beach Pty Limited1
Stockland Syndicate No. 1 Trust
Stockland Caloundra Downs Pty Limited1
Stockland Templestowe Retirement Village Pty Limited1
Stockland Capital Partners Limited
Stockland The Grove Retirement Village Pty Limited
Stockland Care Foundation Pty Limited
Stockland The Hastings Valley Parklands Village Pty Limited
Stockland Care Foundation Trust
Stockland Castlehaven Pty Limited
Stockland Castleridge Pty Limited
Stockland Catering Pty Limited
Stockland CH Finance Pty Limited
Stockland The Pines Retirement Village Pty Limited1
Stockland Trust Management Limited
Stockland Vermont Retirement Village Pty Limited1
Stockland WA (Estates) Pty Limited1
Stockland WA Development (Realty) Pty Limited1
Stockland Development (Holdings) Pty Limited1
Stockland WA Development (Vertu Sub 1) Pty Limited
Stockland Development (NAPA NSW) Pty Limited1
Stockland WA Development Pty Limited1
Stockland Development (NAPA QLD) Pty Limited1
Stockland Wallarah Peninsula Management Pty Limited1
Stockland Development (NAPA VIC) Pty Limited1
Stockland Wallarah Peninsula Pty Limited1
Stockland Development (PHH) Pty Limited1
Stockland Wantirna Village Pty Limited1
Stockland Development (PR1) Pty Limited
Stockland Willowdale Retirement Village Pty Limited
Stockland Development (PR2) Pty Limited
Stockland Willows Retirement Village Services Pty Limited
Stockland Development (PR3) Pty Limited
Templestowe Unit Trust
164
Stockland Annual Report 2021
Stockland Development (PR4) Pty Limited
The Mount Gravatt Retirement Village Unit Trust
Stockland Development (Sub3) Pty Limited
The Pine Lake Management Services Unit Trust
Stockland Development (Sub4) Pty Limited
Stockland Development (Sub5) Pty Limited
Toowong Place Pty Limited
Vermont Unit Trust
1
These entities are parties to the Deed of Cross Guarantee and members of the Closed Group as at 30 June 2021.
CONTROLLED ENTITIES OF STOCKLAND TRUST
9 Castlereagh Street Unit Trust
Acimon Pty Ltd
ADP Trust
Advance Property Fund
Advance Property Fund No. 2
AVNW Pty Limited
Baratheon Developments Pty Ltd
Capricornia Property Trust
Caitjan Pty Ltd
CP Trust No. 1 Trust
CP Trust No. 2 Trust
CP Trust No. 3 Trust
CP Trust No. 4 Trust
CP Trust No. 5 Trust
CP Trust No. 6 Trust
Endeavour (No. 1) Unit Trust
Eriwill Pty Limited
Faxrow Pty Limited
Flinders Industrial Property Trust
Stockland CP Acquisition Trust
Stockland CPR Industrial Trust
Stockland Direct Diversified Fund
Stockland Direct Office Trust No. 4
Stockland Direct Retail Trust No. 3
Stockland Eastern Creek Trust
Stockland Finance Holdings Pty Limited1
Stockland Finance Pty Limited1
Stockland Harrisdale Trust
Stockland Industrial No. 1 Property 1 Trust
Stockland Industrial No. 1 Property 4 Trust
Stockland Industrial No. 1 Property 5 Trust
Stockland Industrial No. 1 Property 6 Trust
Stockland Industrial No. 1 Property 7 Trust
Stockland Industrial No. 1 Property 8 Trust
Stockland Industrial No. 1 Property 9 Trust
Stockland Industrial No. 1 Property 11 Trust
Stockland Kemps Creek Industrial Trust
Stockland Leppington Industrial Trust
Flinders Industrial Property Subtrust (No. 1)
Stockland Logistics Capital Partnership Trust
Hervey Bay Holding Trust
Hervey Bay Sub Trust
Horlyd Pty Ltd
Industrial Property Trust
Stockland Logistics Trust
Stockland Marrickville Unit Trust
Stockland Mature Holding Trust
Stockland Mornington Unit Trust
Jimboomba Village Shopping Centre and Tavern Trust
Stockland Mt Atkinson Industrial Trust
Landdoc Pty Ltd
Marinatas Pty Ltd
Mariste Pty Ltd
Mattlix Pty Ltd
Moncas Pty Ltd
Pallawell Pty Ltd
Racjen Pty Ltd
Sandtor Pty Ltd
SDOT 4 Property # 1 Trust
SDOT 4 Property # 2 Trust
SDOT 4 Property # 3 Trust
SDRT1 Property # 3 Trust
Stockland Mulgrave Unit Trust
Stockland North Ryde Unit Trust
Stockland Padstow Unit Trust
Stockland Parkinson Unit Trust
Stockland Quarry Road Trust
Stockland Retail Holding Sub-Trust No. 1
Stockland Retail Holding Trust No. 1
Stockland Richlands Unit Trust
Stockland St Marys Unit Trust
Stockland Tingalpa Unit Trust
Stockland Truganina Industrial Trust
Stockland Walker Street Trust
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Year ended 30 June 2021
165
SDRT3 Property # 1 Trust
SDRT3 Property # 2 Trust
SDRT3 Property # 3 Trust
Sequoia Victoria Trust
Sequoia Victoria Trust No. 2
Shellharbour Property Trust
Stockland Baringa Shopping Centre Trust
Stockland Bayswater Unit Trust
Stockland Birtinya Shopping Centre Trust
Stockland Brooklyn Industrial Trust
Stockland Bundaberg Trust
Stockland Castlereagh Street Trust
Stockland Wholesale Office Trust No. 1
Stockland Wholesale Office Trust No. 2
Stockland Willawong Industrial Trust
Stockland Willawong Industrial Trust No. 2
Stockland Wonderland Drive Property Trust
Stockland Yatala Industrial Trust
Sugarland Shopping Centre Trust
SWOT2 Sub Trust No. 1
SWOT2 Sub Trust No. 2
SWOT2 Sub Trust No. 3
The M_Park Trust
Tianmar Pty Ltd
1
These entities are parties to the Deed of Cross Guarantee (Finance) as at 30 June 2021.
27. DEED OF CROSS GUARANTEE
Stockland Corporation Limited and certain wholly-owned companies (the Closed Group, also the Extended Closed Group) are parties to a
Deed of Cross Guarantee (the Deed). The effect of the Deed is that the members of the Closed Group guarantee to each creditor, payment
in full of any debt, in the event of winding-up of any of the members under certain provisions of the Corporations Act 2001.
ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 provides relief to parties to the Deed from the Corporations Act
2001 requirements for preparation, audit and lodgement of Financial Reports and Directors’ reports, subject to certain conditions as set
out therein.
Pursuant to the requirements of this instrument, a summarised consolidated balance sheet as at 30 June 2021 and consolidated statement
of comprehensive income for the year ended 30 June 2021, comprising the members of the Closed Group after eliminating all transactions
between members, are set out on the following pages.
166
Stockland Annual Report 2021
Summarised consolidated balance sheet
As at 30 June
$M
Cash and cash equivalents
Receivables
Inventories
Other assets
Current assets
Receivables
Inventories
Investment properties
Other financial assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Other assets
Non–current assets
Assets
Payables
Retirement Living resident obligations
Provisions
Other liabilities
Current liabilities
Payables
Borrowings
Retirement Living resident obligations
Provisions
Other liabilities
Non–current liabilities
Liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Securityholders’ equity
Summarised consolidated statement of comprehensive income
Year ended 30 June
$M
Profit before tax
Income tax
Profit after tax
Other comprehensive income
Total comprehensive income
Closed Group
2021
478
27
505
–
505
Closed Group
(Restated)
2020
2021
4
88
437
5
534
48
2,539
2,558
39
59
77
49
74
5,443
5,977
390
1,483
424
39
2,336
222
1,891
38
33
450
2,634
4,970
1,007
1,309
5
(307)
1,007
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y
31
63
364
9
467
19
2,840
2,329
39
32
72
22
16
5,369
5,836
546
1,462
311
12
2,331
204
2,394
38
367
14
3,017
5,348
488
1,298
2
(812)
488
2020
112
(45)
67
–
67
Year ended 30 June 2021
167
Summarised movement in consolidated accumulated losses
As at 30 June
$M
Accumulated losses at 1 July
Adjustment for entities added/removed
Profit after tax
Accumulated losses at 30 June
28. PARENT ENTITY DISCLOSURES
$M
Results for the year ended 30 June
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income
Financial position as at 30 June
Current assets
Assets1
Current liabilities
Liabilities
Net assets
Issued capital
Reserves
(Accumulated losses)/retained earnings
Equity
1
There were no intangible assets as at 30 June 2021 (2020: $nil).
PARENT ENTITY CONTINGENCIES
Closed Group
2021
(812)
–
505
(307)
2020
(879)
–
67
(812)
Stockland Corporation Limited
Stockland Trust
2021
Restated
2020
2021
2020
82
–
82
4,721
4,863
–
3,837
1,026
1,298
4
(276)
1,026
59
–
59
4,659
4,780
–
3,838
942
1,298
2
(358)
942
1,047
(22)
1,025
1,967
24,078
11,168
15,420
8,658
7,363
(12)
1,307
8,658
(62)
(81)
(143)
1,648
24,427
11,467
16,210
8,217
7,356
8
853
8,217
There are no contingencies within either parent entity as at 30 June 2021 (2020: $nil).
PARENT ENTITY CAPITAL COMMITMENTS
Neither parent entity has entered into any capital commitments as at 30 June 2021 (2020: $nil).
ASIC DEED OF CROSS GUARANTEE
Stockland Corporation Limited has entered into a Deed of Cross Guarantee with the effect that it has guaranteed debts in respect of its
subsidiaries. Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed are disclosed in note 27.
168
Stockland Annual Report 2021
Other items
IN THIS SECTION
This section includes information about the financial performance and position of Stockland that must be disclosed to comply with
the Accounting Standards, the Corporations Act 2001 or the Corporations Regulations 2001.
29. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
29A. Reconciliation of profit after tax to net cash flows from operating activities
$M
Profit after tax
Adjustments for:
• Net impact on fair value hedges
• Net impact on derivatives
• Interest capitalised to investment properties
• Net impact on sale of non–current assets
• Net (gain)/loss on other financial assets
• DMF base fee earned, unrealised
• Net write–back of inventories
• Depreciation
• Straight–line rent adjustments
• Impairment of Retirement Living goodwill
• Net unrealised change in fair value of
impairment provision
investment properties (including equity–
accounted investments)
• Equity–settled security based payments
• Other items
Adjustments for movements in:
• Receivables
• Other assets
• Inventories
• Deferred tax assets
• Payables and other liabilities
• Resident obligations (net of impact of
• Other provisions
village disposals)
Net cash flows from operating activities
Stockland
Trust
2021
1,105
12
(75)
(10)
18
(1)
(46)
(5)
13
(1)
–
(Restated)
2020
(21)
23
86
(7)
(20)
4
(29)
–
17
(3)
38
2021
976
12
(75)
(9)
3
–
–
–
–
(2)
–
2020
(62)
23
86
(6)
(21)
4
–
–
–
(3)
–
(359)
604
(419)
466
11
9
47
(38)
162
(27)
230
112
(110)
1,047
11
–
38
9
(25)
47
334
77
(71)
1,112
–
(4)
26
15
–
–
(15)
–
43
551
–
(6)
(6)
10
–
–
(5)
–
–
480
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Year ended 30 June 2021
169
29B. Reconciliation of movement in financial liabilities arising from financing activities
Stockland and Trust
Non cash movements
Net cash flow
Foreign
exchange
movements
Fair value
changes1 Closing balance
(23)
129
–
106
259
(140)
(100)
19
(240)
(134)
3,932
–
–
(240)
105
–
–
105
–
–
(134)
193
1
–
194
747
75
4,754
4,329
618
75
5,022
Opening
balance
4,329
618
75
5,022
3,772
757
175
4,704
As at 30 June
$M
Offshore medium term notes
Domestic medium term notes and
commercial paper
Bank facilities
2021
Offshore medium term notes
Domestic medium term notes and
commercial paper
Bank facilities
2020
1
Includes amortisation of capitalised transaction costs.
30. COMMITMENTS
CAPITAL EXPENDITURE COMMITMENTS
Commitments for acquisition of land and future development costs not recognised on balance sheet at reporting date are as follows:
As at 30 June
$M
Inventories
Investment properties
Capital expenditure commitments
31. CONTINGENT LIABILITIES
KEEPING IT SIMPLE
Stockland
Trust
2021
508
79
587
2020
374
109
483
2021
2020
–
63
63
–
65
65
A contingent liability is a liability that is not sufficiently certain to qualify for recognition as a provision where uncertainty may exist
regarding the outcome of future events.
Contingent liabilities at 30 June 2021 comprise bank guarantees, letters of credit, property indemnities and insurance bonds:
As at 30 June
$M
Bank guarantees, letters of credit, property indemnities and insurance bonds issued to local government
and other authorities against performance contracts, maximum facility $1,225 million (2020: $680 million)
Stockland and Trust
2021
444
2020
419
170
Stockland Annual Report 2021
32. RELATED PARTY DISCLOSURES
Year ended 30 June
$’000s
Responsible Entity fees
Development management and service fee
Property management, tenancy design and leasing fees
Rental income
Finance income
Revenue from related parties
Responsible Entity fees
Property management, tenancy design and leasing fees
Recoupment of expenses
Development management fee capitalised to investment property
Expenses to related parties
RESPONSIBLE ENTITY AND MANAGEMENT AND OTHER FEES
Stockland
Trust
2021
121
1,092
1,099
–
–
2020
315
239
2,039
–
–
2,312
2,593
–
–
–
–
–
–
–
–
–
–
2021
2020
–
–
–
14,248
193,439
207,687
35,435
26,667
59,353
2,146
123,601
–
–
–
9,370
229,101
238,471
36,914
27,836
59,914
3,787
128,451
Stockland received Responsible Entity and other management fees from the unlisted property funds managed by Stockland during the
financial year.
The Trust pays responsible entity fees to Stockland Trust Management Limited, calculated at 0.30 to 0.35% of gross assets of the Trust
less intergroup loans (2020: 0.30 to 0.35%).
Property management expenses and tenancy design fees were paid by the Trust to Stockland Trust Management Limited (the Responsible
Entity) or its related parties provided in the normal course of business and on normal terms and conditions.
RENTAL INCOME
Rent was paid by Stockland Corporation Limited, a related party of the Responsible Entity, to Stockland Trust in the normal course of
business and on normal terms and conditions.
FINANCE INCOME
The Trust has an unsecured loan to Stockland Corporation Limited of $2,647 million (2020: $2,955 million) repayable in 2023. Interest on
the loan is payable monthly in arrears at interest rates within the range of 6.06 to 6.15% during the year ended 30 June 2021 (2020: 6.20
to 7.30%).
Interest was paid by Stockland Corporation Limited to Stockland Trust, a related party of the Responsible Entity, provided in the normal
course of business and on normal terms and conditions.
DEVELOPMENT MANAGEMENT FEE
A development management deed was executed between Stockland Trust and Stockland Development Pty Limited (a controlled entity of
Stockland Corporation Limited) effective 1 July 2012 in relation to a management fee in respect of Retail developments. The fee represents
remuneration for the Corporation’s property development expertise and for developments which commenced after 1 July 2016. It is
calculated based on a fixed 4% of total development costs in line with recent changes to benchmark methodologies (for developments
which commenced prior to 1 July 2016, the fee is calculated as 50% of the total valuation gain or loss on the completion of a development).
Fees are paid by Stockland Trust to Stockland Development Pty Limited.
Stockland has trade receivables of $nil (2020: $517 thousand) due from the unlisted property funds.
As at 30 June 2021, the carrying amount of Stockland’s investment in unlisted property funds was $nil (2020: $373 thousand).
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Year ended 30 June 2021
171
33. PERSONNEL EXPENSES
Year ended 30 June
$M
Wages and salaries (including on–costs)
Equity–settled security based payment transactions
Contributions to defined contribution plans
Movement in annual and long service leave provisions
Redundancy provision
Personnel expenses
PERSONNEL EXPENSES
Stockland
Trust
2021
195
11
14
6
–
226
2020
197
11
12
(1)
1
220
2021
2020
–
–
–
–
–
–
–
–
–
–
–
–
The total personnel expenses for the year was $226 million (2020: $220 million), which includes $11,386,335 of equity-settled security based
payment transactions (2020: $11,453,466).
ANNUAL LEAVE
Accrued annual leave of $11 million (2020: $10 million) is presented in current liabilities, since Stockland does not have an unconditional
right to defer settlement for any of these obligations. Based on past experience, Stockland expects all employees to take the full amount
of accrued leave within the next 12 months.
LONG SERVICE LEAVE
The current portion of long service leave includes all unconditional entitlements where employees have completed the required period
of service and also those where employees are entitled to pro rata payments in certain circumstances.
The liability for long service leave expected to be settled more than 12 months from the balance date is recognised in the provision for
employee benefits and measured as the present value of expected payments to be made in respect of services provided by employees up
to the balance date.
Consideration is given to expected future wage and salary levels, past experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the balance date on corporate bonds with terms to maturity that match, as closely
as possible, the estimated future cash outflows.
BONUS ENTITLEMENTS
A liability is recognised in current trade and other payables for employee benefits in the form of employee bonus entitlements where there
is a contractual obligation or where there is a past practice that has created a constructive obligation. Liabilities for employee bonus
entitlements are expected to be settled within 12 months and are measured at the amounts expected to be paid when they are settled.
SUPERANNUATION PLAN
Stockland contributes to several defined contribution superannuation plans. Contributions are recognised as a personnel expense as they
are incurred. The annual expense was $14 million (2020: $12 million).
34. KEY MANAGEMENT PERSONNEL DISCLOSURES
Year ended 30 June
$000’s
Short term employee benefits
Post–employment benefits
Other long term benefits
Termination benefits
Security based payments
Key management personnel compensation
Stockland
Trust
2021
10,054
232
116
750
3,482
14,634
2020
5,797
234
97
–
4,199
10,327
2021
2020
–
–
–
–
–
–
–
–
–
–
–
–
Information regarding individual Directors’ and Executives’ remuneration is provided in the remuneration report on pages 58 to 80 of the
Directors’ report.
172
Stockland Annual Report 2021
OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
There are transactions between Stockland and entities with which key management personnel have an association. These transactions
do not meet the definition of related parties since the key management personnel as individuals are not considered to have control
or significant influence over the financial or operating activities of the respective non-Stockland entities. Furthermore, the terms and
conditions of those transactions were no more favourable than those available, or might reasonably be available, on similar transactions
to non-key management personnel related entities on an arm’s length basis.
From time to time, key management personnel acquire Residential land lots from Stockland. These purchases are at market rates and on
an arm’s length basis. This amounted to $nil for the year (2020: $nil), however, deposits totalling $26 thousand were received from related
parties of key management personnel during 2021 for land where settlement is expected to occur in 2022.
35. AUDITOR'S REMUNERATION
Year ended 30 June
$000’s
PricewaterhouseCoopers Australia
Audit and review of financial report
Audit of unlisted property fund financial reports
Regulatory audit and assurance services
Remuneration for audit services
Other non–audit services1
Remuneration for non–audit services
Auditor remuneration
Stockland
Trust
2021
2020
2021
2020
2,442
77
634
3,153
96
96
3,249
1,812
104
687
2,603
530
530
3,133
584
–
332
916
–
–
916
570
–
410
980
–
–
980
1 Other non-audit services in the prior year include agreed upon procedures for tenant claims under the Commercial Code of Conduct, economic, land and traffic analysis at
masterplanned communities, and an independent review of Stockland's remuneration process.
Auditor’s fees are paid by Stockland Development Pty Limited on behalf of Stockland.
36. ACCOUNTING POLICIES
KEEPING IT SIMPLE
Accounting policies that apply to a specific category in the profit or loss or balance sheet have been included within the relevant notes.
The accounting policies listed below are those that apply across a number of Stockland's profit or loss and balance sheet categories
and are not specific to a single category.
36A. Principles of consolidation
CONTROLLED ENTITIES
The consolidated financial statements of Stockland incorporate the assets, liabilities and results of all controlled entities.
Controlled entities are all entities over which the parent entities, Stockland or the Trust, are exposed to, or have a right to, variable returns
from their involvement with the entity and have the ability to affect those returns through their power to direct the relevant activities of
the entity.
Intergroup transactions, balances and unrealised gains on transactions between controlled entities are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
FOREIGN CURRENCY
Transactions
Foreign currency transactions are translated into the entity’s functional currency at the exchange rate on the transaction date.
Assets and liabilities denominated in foreign currencies are translated to Australian dollars at balance date using the following applicable
exchange rates:
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Year ended 30 June 2021
173
Foreign currency amount
Monetary assets and liabilities
Non-monetary assets and liabilities measured at historical cost
Applicable exchange rate
Balance date
Date of transaction
Non-monetary assets and liabilities measured at fair value
Date fair value is determined
Foreign exchange differences arising on translation are recognised in the profit or loss.
36B. Reserves
SECURITY BASED PAYMENTS RESERVE
The security based payments reserve arises due to the rights and deferred securities awarded under the LTI and DSTI plans being accounted
for as security based payments. The fair value of the rights and deferred securities is recognised as an employee expense in profit or loss
with a corresponding increase in the reserve over the vesting period. On vesting, the LTI and DSTI awards are settled by either an issue of
securities or by allocating treasury securities to the rights holder and the cost to acquire the treasury securities is recognised in the security
based payments reserve by a transfer from treasury securities. Where rights are forfeited due to failure to satisfy a service or performance
condition, the cumulative expense is reversed through profit or loss in the current year. The cumulative expenditure for rights forfeited
due to market conditions are not reversed.
HEDGING RESERVE
The hedging reserve captures both cash flow hedges and fair value hedges.
Cash flow hedging
The hedging reserve is used to record the effective portion of changes in the fair value of derivatives that are designated and qualify as
cash flow hedges. Refer to note 18.
Fair value hedging
The hedging reserve comprises the cumulative net change in the fair value of available for sale financial assets until the assets are
derecognised or impaired.
36C. Change in accounting policy
An IFRIC agenda decision issued in April 2021 clarified the accounting treatment of configuration and customisation costs in SaaS
arrangements. The decision requires costs to be recognised as an intangible asset if the activities create an intangible asset that meets
the recognition criteria and that the entity controls. Costs that do not result in intangible assets are expensed as incurred, unless they are
paid to the supplier of the SaaS application to significantly customise the software for Stockland, in which case the costs are recorded as
a prepayment for services and amortised over the expected renewable term of the SaaS arrangement.
Historical financial information has been restated to account for the impact of the change in accounting policy, as follows:
$M
Consolidated balance sheet extract
Intangible assets
Deferred tax asset/(liability)
Net assets
Retained earnings
Securityholders' equity
Stockland
Net Asset
Increase/
(Decrease)
(Restated)
2020
(98)
29
(69)
(69)
(69)
72
22
9,081
417
9,081
2020
170
(7)
9,150
486
9,150
Net Asset
Increase/
(Decrease)
(Restated)
2019
(89)
27
(62)
(62)
(62)
104
67
9,766
1,018
9,766
2019
193
40
9,828
1,080
9,828
174
Stockland Annual Report 2021
$M
Consolidated statement of comprehensive income extract
Management, administration, marketing and selling expenses
Profit/loss before tax
Tax
Loss after tax
Total comprehensive loss
Basic losses per security (cents)
Diluted losses per security (cents)
$M
Consolidated statement of cash flows
Payments in the course of operations (including GST)
Net cash flows from operating activities
Payments for plant and equipment and software
Net cash flows from investing activities
Stockland
2020
Profit Increase/
(Decrease)
(Restated)
2020
(353)
33
(47)
(14)
(95)
(0.6)
(0.6)
2020
(1,462)
1,127
(134)
(148)
(9)
(9)
2
(7)
(7)
(0.3)
(0.3)
(362)
24
(45)
(21)
(102)
(0.9)
(0.9)
Stockland
Increase/
(Decrease)
(Restated)
2020
(15)
(15)
15
15
(1,477)
1,112
(119)
(133)
37. ADOPTION OF NEW AND AMENDED ACCOUNTING STANDARDS
37A. New and amended Accounting Standards adopted
AASB 2018-6 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS – DEFINITION OF A BUSINESS
Stockland has adopted AASB 2018–6 Amendments to Australian Accounting Standards – Definition Of Business from 1 July 2020. The
amendment provides more clarity on the definition of a business. An assessment has been performed on the revised definition which
determined that there is no impact on Stockland's financial results or position on adoption.
AASB 2018-7 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS – DEFINITION OF MATERIAL
Stockland has adopted AASB 2018–7 Amendments to Australian Accounting Standards – Definition Of Material from 1 July 2020, which
provides more clarity on the definition of material and aligns the definition across Accounting Standards. Stockland has assessed the
revised definition and determined that there is no impact on adoption.
AASB 2019–1 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS – REFERENCES TO THE
CONCEPTUAL FRAMEWORK
Stockland has adopted AASB 2019–1 Amendments to Australian Accounting Standards – References to the Conceptual Framework from
1 July 2020. Key changes include revising the definitions of an asset and a liability. Stockland has assessed the revised definitions and has
determined that there is no material impact from the changes in the definitions. Stockland has also assessed the other changes to the
Conceptual Framework and determined no impact on adoption.
37B. Accounting Standards issued but not yet in effect
Certain new Accounting Standards and Interpretations have been published that are not mandatory for the year ended 30 June 2021.
Stockland has not elected to early adopt any accounting standards during the period and has yet to assess the implications of these new
standards and amendments upon adoption.
IAS 1 CLASSIFICATION OF LIABILITIES AS CURRENT OR NON-CURRENT
IAS 1 Classification of Liabilities as Current or Non–current provides clarity on the classification of liabilities as either current or non–current.
The amendment requires a liability to be classified as current when companies do not have a substantive right to defer settlement at the
end of the reporting period.
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AASB 2020-8 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS - INTEREST RATE BENCHMARK REFORM
PHASE 2
AASB 2020-8 Amendments to Australian Accounting Standards - Interest Rate Benchmark Reform Phase 2 amends a number of existing
Accounting Standards to introduce practical expedients in relation to accounting for the modification of financial contracts and/or leases
if a change results directly from IBOR reform. IBOR reform refers to the global reform of interest rate benchmarks, which includes the
replacement of some interbank offered rates (IBOR) with alternative benchmark rates. Amendments also allow a series of exemptions from
the regular hedge accounting rules and introduce additional disclosure requirements.
Stockland is currently assessing the impact of these amendments. The transition to alternative benchmark rates for any affected financial
contracts and/or leases has begun and is being managed by the central treasury department.
AASB 2020-3 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS - ANNUAL IMPROVEMENTS 2018-2020 AND
OTHER AMENDMENTS
AASB 2020-3 Amendments to Australian Accounting Standards - Annual Improvements 2018-2020 and Other Amendments sets out a number
of amendments to existing Accounting Standards. It is effective for annual reporting periods beginning on or after 1 January 2022.
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Stockland Annual Report 2021
Directors’ declaration
1.
In the opinion of the Directors of Stockland Corporation Limited, and the Directors of the Responsible Entity of Stockland Trust,
Stockland Trust Management Limited (collectively referred to as the Directors):
• the financial report and notes of the consolidated stapled entity, comprising Stockland Corporation Limited and its controlled
financial year ended on that date; and
entities and Stockland Trust and its controlled entities (Stockland), and Stockland Trust and its controlled entities (the Trust), set
out on pages 101 to 176, are in accordance with the Corporations Act 2001, including:
• giving a true and fair view of Stockland’s and the Trust’s financial position as at 30 June 2021 and of their performance, for the
• complying with Australian Accounting Standards and the Corporations Regulations 2001; and
due and payable.
• there are reasonable grounds to believe that both Stockland and the Trust will be able to pay their debts as and when they become
2. There are reasonable grounds to believe that Stockland Corporation Limited and the Stockland entities identified in note 26 will be able
to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between those
Group entities pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
3. Stockland Trust has operated during the year ended 30 June 2021 in accordance with the provisions of the Trust Constitution of
29 October 2013, as amended from time to time.
4. The Register of Unitholders has, during the year ended 30 June 2021, been properly drawn up and maintained so as to give a true account
of the unitholders of Stockland Trust.
5. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing Director and
Chief Financial Officer for the year ended 30 June 2021.
6. The Directors draw attention to the basis of preparation section to the financial statements, which includes a Statement of Compliance
with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Tom Pockett
Chairman
Tarun Gupta
Managing Director
Dated at Sydney, 20 August 2021
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Stockland Annual Report 2021
PricewaterhouseCoopers, ABN 52 780 433 757 One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, Sydney NSW 2001 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. Independent auditor’s report To the stapled securityholders of Stockland and Stockland Trust Group Report on the audit of the financial report Our opinion In our opinion: The accompanying financial reports of Stockland, being the consolidated stapled entity, which comprises Stockland Corporation Limited and its controlled entities, and Stockland Trust and its controlled entities (together the “Stockland Trust Group” or the “Trust”) are in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the financial positions of Stockland and the Stockland Trust Group as at 30 June 2021 and of their financial performance for the year then ended (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. What we have audited The financial reports of Stockland and the Stockland Trust Group (the financial report) comprise: ● the consolidated balance sheet as at 30 June 2021 ● the consolidated statement of comprehensive income for the year then ended ● the consolidated statement of changes in equity for the year then ended ● the consolidated statement of cash flows for the year then ended ● the notes to the financial report, which include significant accounting policies and other explanatory information ● the directors’ declaration. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of Stockland and the Stockland Trust Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. O
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Our audit approach An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of Stockland and the Stockland Trust Group, their accounting processes and controls and the industry in which they operate. Materiality Audit scope Key audit matters ● For the purpose of our audit of Stockland and the Stockland Trust Group, we used overall materiality of $39.4 million and $29.5 million, respectively, which represents approximately 5% of Funds from Operations. The metric is defined in note 2 of the financial report. ● We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole. ● We chose Funds from Operations because, in our view, it is the primary metric against which the performance of Stockland and the Stockland Trust Group are most commonly measured in the industry. ● We chose 5% based on our professional judgement, noting that it is within the common range relative to profit-based benchmarks. ● Our audit focused on where Stockland and the Stockland Trust Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events. ● The audit team consisted of individuals with the appropriate skills and competencies needed for the audit, and this included industry expertise in real estate, as well as IT specialists, valuation, tax and treasury professionals. ● Amongst other relevant topics, we communicated the following key audit matters to the Audit Committee: − Valuation of Investment Properties – Commercial Property − Valuation of Investment Properties - Retirement Living − Carrying value of inventory and cost of property developments sold − Implementation and migration of data to SAP ● These are further described in the Key audit matters section of our report.
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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 and were determined separately for Stockland and the Stockland Trust Group. Relevant amounts listed for each part of the stapled group represent balances as they are presented in the financial report and should not be aggregated. The key audit matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context. Key audit matter How our audit addressed the key audit matter Valuation of Investment Properties – Commercial Property (Refer to note 7) Stockland - $9,337 million Stockland Trust Group - $9,352 million Stockland’s and the Trust’s Commercial Property portfolio (“Commercial Property”) consisted primarily of retail town centres, logistics, and workplace investment properties, as well as properties under development at 30 June 2021. Commercial Properties were valued at fair value as at reporting date using a combination of the income capitalisation, discounted cash flow and the direct comparison methods, as well as transaction prices where relevant. The value of Commercial Properties was dependent on the valuation methodology adopted and the significant assumptions and inputs into the valuation model. Factors such as prevailing market conditions, the individual nature, condition and location of each property and the expected future income for each property, directly impact fair values. Amongst others, the following assumptions were key in establishing fair value: ● net market rent ● average market rental growth ● capitalisation rate ● discount rate ● terminal yield. At the end of each reporting period the directors determine the fair value of the Commercial Properties in accordance with their valuation policy as described in note 7A. This was a key audit matter because of the: Our procedures included, amongst others: ● Obtaining an understanding of Stockland’s process for determining the valuation of Commercial Property; ● Engaging PwC’s real estate valuation experts where relevant; ● Assessing the scope, competence and objectivity of the external valuation firms engaged by Stockland to provide external valuations at reporting date; ● Assessing the appropriateness of the valuation methodologies utilised; ● Selecting a risk-based sample of Commercial Property assets to assess the appropriateness of significant assumptions with reference to market data where possible. We agreed a sample of the underlying lease terms to the tenancy schedule and traced the rental income used in the external valuation to the tenancy schedule. We assessed the appropriateness of income related assumptions including adjustments made in response to the impacts of COVID-19, and tested the mathematical accuracy of a sample of the Commercial Property valuations; ● Reconciling the fair value recorded in note 7 to the external valuation reports for all the properties externally valued at balance date; O
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● relative size of the Commercial Property portfolio to net assets and related valuation movements, and ● inherent subjectivity of the key assumptions that underpin the valuations and the general market uncertainty arising from the outbreak of COVID-19. ● Considering the reasonableness of the disclosures made in relation to the significant assumptions, including the sources of estimation uncertainty in note 7A in light of the requirements of Australian Accounting Standards. Valuation of Investment properties - Retirement Living (Refer to note 8) Stockland - $3,561 million Stockland Trust Group – this KAM is not applicable as the Trust does not invest in Retirement Living assets. Stockland’s Retirement Living portfolio (“Retirement Living”) comprises retirement village investment properties, as well as properties under development. Retirement Living investment properties are valued at fair value at the reporting date using a discounted cash flow analysis. The value of investment properties in this segment is dependent on the terms of the residents’ contracts and other assumptions as the inputs to the valuation model. Factors such as prevailing market conditions, the individual nature, condition and location of each property and the expected future income for each property directly impact fair values. Amongst others, the following assumptions are key in establishing fair value: ● discount rates ● growth rates ● average length of stay of existing and future residents ● current market value of units ● renovation / reinstatement costs ● renovation recoupment. The Stockland valuation policy provides that all key valuation assumptions be externally appraised by an external valuer each reporting period as explained in note 8A. This was a key audit matter because of the: ● relative size of the Retirement Living portfolio to net assets and related valuation movements, and Our procedures included, amongst others: ● Obtaining an understanding of Stockland’s process for determining the valuation of Retirement Living investment properties; ● Engaging PwC’s valuation experts where relevant; ● Assessing the scope, competence and objectivity of the external valuer engaged by Stockland to provide assurance on the key assumptions used in the valuation model. ● Assessing the appropriateness of the valuation methodology utilised; ● For a risk-based sample of retirement living villages, we assessed the appropriateness of significant assumptions. We also agreed a sample of the underlying resident information and terms to resident contracts and traced those inputs used in the valuation model; ● We tested the mathematical accuracy of a sample of the valuations; ● Considering the adequacy of the disclosures made in relation to the significant assumptions, including sources of estimation uncertainty in note 8A in light of the requirements of Australian Accounting Standards.
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● inherent subjectivity of the key assumptions that underpin the valuations and the general market uncertainty arising from the outbreak of COVID-19. Carrying value of inventory and cost of property developments sold (Refer to note 6) Stockland - $3,368 million Stockland Trust Group – this KAM is not applicable as the Trust does not hold inventory assets. Carrying value of inventory Stockland has a portfolio of development projects that it develops for future sale which are classified as inventory. Stockland’s inventory is accounted for at the lower of the cost and net realisable value for each inventory project, as assessed at each reporting date as outlined in note 6. The cost of the inventory is calculated using actual land acquisition costs, construction costs, development related costs and interest capitalised for eligible projects. Net realisable value is calculated based on the estimated selling price of the inventory, less the estimated costs of completion, including forecast capitalised interest, and associated selling costs. Each of these factors is impacted by expected future market and economic conditions which include assumptions such as sales prices, sales rates and development costs. Where an inventory project’s net realisable value is lower than its cost, the inventory project is written down to its net realisable value under Australian Accounting Standards. Cost of property developments sold When inventory is sold by Stockland the carrying amount of the relevant inventory is recognised as an expense in the same period that the sale is recognised. The cost of property developments sold is based directly upon the forecast profit margin for the relevant project as a whole, and results in the recognition of a profit margin in the period the inventory is sold. These were key audit matters because of the: Our procedures included, amongst others: ● Obtaining an understanding of Stockland’s process for determining the net realisable value (NRV) of inventory and related considerations in the current market environment; ● Reconciling the carrying value of each of the projects to the accounting records and comparing the carrying value to each project’s NRV; ● Selecting a risk-based sample of NRV assessments to assess the appropriateness of the significant assumptions; ● Tracing a sample of additions included in the cost of the project (e.g. project development costs) to the relevant invoice to check the nature and amount of the costs capitalised. We also checked that interest was appropriately capitalised to inventory in accordance with AASB 123 Borrowing Costs; ● Tested a sample of recorded sales to the underlying sale contracts and recalculated the related profit margin recognised; and ● Considering the adequacy of the disclosures made in relation to the significant assumptions, including the sources of estimation uncertainty in note 6 in light of the requirements of Australian Accounting Standards. O
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● relative size of the inventory balance to net assets, and ● inherent subjectivity of the key assumptions that underpin the net realisable value, and the profit margin recognised. Implementation and migration of data to SAP In August 2020, Stockland implemented SAP as its core financial reporting system as part of the establishment of its end-to-end enterprise platform. As part of the implementation of the new system, management migrated data from the legacy systems to SAP. This was a key audit matter because Stockland’s operations and the accuracy of its financial reporting processes, including the determination of the retirement living valuations, are dependent on the operation and migration of data from its legacy systems to SAP as the core financial reporting system. Together with our IT audit specialists, we obtained an understanding of Stockland’s implementation and data migration plans from legacy systems to SAP. This included consideration of data migration, end-user testing, and privileged access. We assessed the impact of the implementation and the migration of data on the financial statement reporting process by performing the following procedures, amongst others: ● Selected a risk-based sample of end-user test cases and assessed whether appropriate testing was performed and approved by Stockland prior to go-live of SAP; ● Obtained Stockland’s reconciliation evidence and approval for a sample of data reconciliations relevant to the financial reporting process to support the complete and accurate migration of data between legacy systems and SAP; ● Evaluated the design of Stockland’s controls over privileged access provisioning and monitoring in SAP; ● Obtained an understanding of the impact of the implementation of SAP on the design of Stockland’s end-to-end processes and controls for key financial reporting processes and, where relevant, tested the operating effectiveness of key controls; and ● Together with PwC’s modelling experts, assessed the accuracy of the calculation derived from the retirement living valuation model.
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Stockland Annual Report 2021
Other information The directors of Stockland Corporation Limited and the directors of Stockland Trust Management Limited, the Responsible Entity for Stockland Trust (collectively referred to as the “directors”) are responsible for the other information. The other information comprises the information included in the Annual Report for the year ended 30 June 2021, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of Stockland and the Stockland Trust Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate Stockland and the Stockland Trust Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report. O
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Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 62 to 80 of the directors’ report for the year ended 30 June 2021. In our opinion, the remuneration report of Stockland and the Stockland Trust Group for the year ended 30 June 2021 complies with section 300A of the Corporations Act 2001. Responsibilities The directors are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers NR McConnell JL Reilly Sydney Partner Partner 20 August 2021
Securityholder
information
and key dates
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Stockland Annual Report 2021
Cloverton, VIC Securityholders
As at 30 July 2021, there were 2,387,171,662 securities on issue and the top 20 securityholders as at 30 July 2021 is as set
out in the table below.
Securityholders
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
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