STOCKLAND Half Year
Review 2015
31 December 2014
er value to all stakeholders
ing places where communities thrive. A place we make, but you make your own.
Our strategy in action
Cloverton - our largest
Melbourne community
Stockland will soon embark on the largest project we have ever undertaken in Victoria, creating around
11,000 new homes in a thriving, masterplanned community. The 30-year project in Melbourne's northern growth corridor, with an approximate end
value of $4.6 billion, will significantly increase our residential exposure in Victoria.
Our new community, Cloverton, will eventually become a city in its own right, providing homes and recreational areas for more than 30,000 people.
The project will feature a 60 hectare city centre with a regional shopping centre, a future train station, four additional local town centres and a retirement village.
This is a transformative project for our business which will further strengthen our returns and lift profit margins. We acquired the rights to the landholding on capital-efficient terms and it is expected to achieve returns above our hurdle rates.
The project represents the second of two major new development fronts for Stockland in Victoria, following our recent launch of The Grove at Tarneit, west of the Melbourne CBD, which sold out with
55 lot sales on its first day of release.
Both Cloverton and The Grove, in the northern and western growth corridors will offer a diverse mix of lot sizes and home styles. We'll also be implementing our new strategy to create completed, turnkey homes and medium density housing to expand our customer reach in these communities.
Construction is underway with the first land sales planned in 2H15 and the first settlements scheduled for FY16.
CO TACT
Level 25, 133 Castlereagh Street
Sydney NSW 2000
T: (61 2) 9035 2000
Toll free: 1800 251 813
Stockland Corporation Limited
N 000 181 733
Stockland Trust Management Limited
ACN 001 900 741, AFSL 241190
As the responsible entity
for Stockland Trust
ARSN 092 897 348
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KEY DATES
30 June 2015
Record date
19 August 2015
Full year result announcement
27 October 2015
Annual General Meeting
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IMPORTANT NOTICE
While every effort is made to provide accurate and complete information, Stockland does not warrant or represent that the information in this brochure is free from errors or omissions or is suitable for
your intended use. Subject to any terms implied by law and which cannot be excluded, Stockland accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in information.
Note: All figures are in Australian dollars unless otherwise indicated.
This report is printed on an environmentally responsible paper, produced using Elemental Chlorine Free (ECF), FSC® certified Mixed Source pulp from Responsible Sources, and manufactured under the strict ISO14001
Environmental Management System.
Letter from our Chairman and Managing Director
Our strategy in action
GRAHAM BRADLEY AM
Chairman
MARK STEINERT
Managing Director & CEO
Dear Securityholders
We continue to achieve profitable growth across our core portfolios as we actively implement our strategy and capitalise on supportive market conditions.
Our Underlying Profit1 for the half year to December
2014 grew 8.5 per cent to $290 million compared to
the same period last year, with a particularly strong
contribution from our Residential business.
Positive movements in the valuation of our
Commercial Property assets and profit on the sale
of our investment in Australand led to a 55.1 per cent
improvement in our statutory profit to $462 million.
Our first half distribution was steady at 12 cents per security, half of our expected total full year distribution of 24 cents per security.
During the half we continued to deliver on our core strategic priorities of growing asset returns and our customer base; capital strength; and operational excellence. This included the launch of 10 new projects, four strategic acquisitions, significant progress extending our customer reach with the introduction of new medium density and
Completed Home products, and the launch of our refreshed brand.
GROW ASSET RETURNS AND CUSTOMER BASE
Our Residential business was a standout performer in the first half with Operating Profit increasing by
a substantial 72.8 per cent on the corresponding period last year. We have benefitted from both improved market conditions, and the strategies we've implemented to reshape our portfolio, increase speed to market, and extend our customer reach.
Our newest communities in Sydney and Perth ramped up to full production with successive stages at each community selling out on their first respective day of release. We have also made important progress selectively restocking and activating a greater proportion of our portfolio, launching two new major projects,
and delivering Completed Homes and medium density developments.
Our Commercial Property business remains a key driver of our overall success. On a comparable basis we achieved operating profit growth of 4.7 per cent across the portfolio, with 3.3 per cent in Retail,
5.7 per cent in Logistics and Business Parks and
7.8 per cent in Office, reflecting our strong focus
on property fundamentals.
We are making good progress with our retail developments at Hervey Bay, Qld, Wetherill Park, NSW, and Baldivis, WA. We also announced two new projects at Point Cook in Melbourne, and Glasshouse in the Sydney CBD. These five projects represent a total investment cost of $501 million.
Despite subdued consumer sentiment, our shopping centres recorded improvements in
retail sales over this half, achieving strong speciality store comparable growth of 4.5 per cent in the December quarter.
Our Logistics and Business Parks portfolio is showing the benefits of increased strategic focus and investment. We have continued to optimise the performance of our existing assets and made three acquisitions in key Sydney and Melbourne markets that meet our return criteria.
Our Retirement Living business has also continued to grow lifting profit 5.8 per cent on 1H14. The business delivered a 6.6 per cent increase in new unit settlements in 1H15 compared to 1H14, and commences the June half with a 22 per cent increase in net reservations on hand.
CAPITAL STRENGTH
We maintain a strong balance sheet with an A-/stable credit rating. At 22 per cent our gearing remains
well within our target range of 20-30 per cent. Our dividend reinvestment plan remains active with a take up of 20 per cent.
In October, we further diversified our funding sources, becoming the first Australian corporate to link sustainability with its funding strategy by issuing the first Australian corporate green bond.
OPERATIONAL EXCELLENCE
During the half we continued to focus on maximising efficiency through process and system improvements. Key initiatives included internalising the leasing, asset and property management of our logistics assets and realising positive outcomes from improvements in Retirement Living turnover processes. This saw renovation costs reduced by
20 per cent and downtime by 50 per cent over the past 18 months.
Sustainability remains a key focus for Stockland, providing long term benefits to our customers and the communities in which we operate, as well as enhanced operational efficiencies. We are proud
to be rated as one of the most sustainable real estate companies in the world by the Dow Jones Sustainability World Index 2014/2015, for the eighth consecutive year. We are also proud to
be recognised as an Employer of Choice for
Gender Equality.
OUTLOOK
We have commenced the second half with strong momentum in our Residential and Retirement Living businesses; with over 3,700 residential contracts on hand at the start of January 2015, and construction underway at nine of our Retirement Living villages. In the coming months we will complete our redevelopment of Stockland Baldivis, WA, and Stockland Hervey Bay, Qld.
While consumer confidence and employment growth are likely to remain constrained, we expect population growth and interest rates to remain generally supportive of residential markets for some time. Stockland is well positioned with the right strategy, assets and people to produce sustainable returns for our securityholders into
the future.
For more detailed insight on our half year performance and outlook, we encourage you
to visit our investor centre www.stockland.com.au/
investor-centre.htm
Statutory
Profit/(Loss) ($m)
462
Statutory Earnings per security (¢)
19.8
Underlying
Profit1 ($m)
290
Underlying earnings per security (¢)
12.4
Distribution
per security (¢)
12.0
1H14 298 1H14 12.9 1H14 267 1H14 11.6 1H14 12.0
1 Underlying Profit is a non-IFRS measure that is determined to present, in the opinion of the Directors, the ongoing operating activities of Stockland in a way that appropriately reflects its underlying performance. Underlying Profit is the basis on which distributions are determined. Refer to the Interim Statutory Accounts for the complete definition.
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