Slide 1: FY09 Results Presentation
For personal use only FY09 Results Presentation 12 August 2009
Slide 2: Key messages
Key messages Operating results: Reasonable outcome given the tough conditions we faced For personal use only • Strong single lot Residential sales - right product, price and promotion to meet the first home buyer market • Much lower super lot sales reflecting buyer financing constraints • Good Comme
Slide 3: Summary of group results
Summary of group results FY09 FY08 For personal use only Statutory (loss)/profit ($1,801.9m) $704.6m Underlying profit * $631.4m ▼ 6% $674.0m Underlying earnings per security - before accounting adjustment 38.8 cents ▼ 16% 46.2 cents - after accounting adjustment ^ 36.5 cents 43.4 cents AFFO per sec
Slide 4: Residential - performance
Residential - performance FY09 FY08 • Strong Communities sales across all market For personal use only segments, not just first home buyers Communities Lots settled 4,303 4,188 • Lower average sales price for Communities due Average retail price* $206k $238k to: Revenue $873m $1,101m change in pro
Slide 5: Residential - Communities sales performance
Residential - Communities sales performance • A year of two halves – 1H09 weak, 2H09 Residential Communities sales For personal use only strong 2,975 (1,434) 5,000 • Solid 2H09 sales in all states: 4,000 (2,869) right product on the ground to meet all No. lots 3,000 1,870 segments 2,000 444 clea
Slide 6: Residential - Communities buyer composition
Residential - Communities buyer composition • First home buyer segment remains very Residential Communities buyer composition (no. of sales) For personal use only buoyant 1,600 37 50 • Second and subsequent home buyers are re- 1,400 140 188 entering the market as confidence builds: 1,200 30 437 418
Slide 7: Residential - Communities margin
Residential - Communities margin Downward margin pressure from: For personal use only Residential Communities FY09 net margin • Retail sales: 30% clearing of $130m of aged inventory at 25% (5.5%) lower margins (process complete) 20% (0.3%) 2.0% price reductions in NSW and WA (prices 15% 24.9% 21
Slide 8: Residential - asset values
Residential - asset values Residential book value For personal use only Communities Apartments Total No. projects $m No. projects $m No. projects $m Historic cost > net realisable value*: - cost 7 441 6 425 13 866 - impairment (239) (186) (425) Net 7 202 6 239 13 441 18% Historic cost < net realisab
Slide 9: Residential - Communities strategy
Residential - Communities strategy • Market leading position: Geographic mix For personal use only geographic and product diversification Vic 14% Sunshine Coast competitive advantage in scale, development, 10% Brisbane marketing and sales 13% NSW 18% • Market fragmentation provides opportunity t
Slide 10: Residential - Apartments strategy
Residential - Apartments strategy Projects under development • Apartments business is under review due For personal use only to: Est. cost to Est. future % Presales capital intensity of the projects – does it complete ($m) revenue ($m) @ 31 Jul 09* fit our capital model? NSW Prince Henry - Dickson
Slide 11: Residential - summary
Residential - summary • Strong start to FY10 - record level of Communities contracts on hand For personal use only • Market fundamentals support sustainable growth in volumes and prices: population growth demand / supply imbalance improving affordability and sentiment historically low intere
Slide 12: Retirement Living - performance
Retirement Living - performance • Solid profit performance FY09 FY08 For personal use only Operating profit $43m $42m • Delays at new projects impacted number of new units settled (profits New units settled 163 239 now expected in FY10) - Average price $313k $282k Established units settled 217 257 •
Slide 13: Retirement Living - strategy and outlook
Retirement Living - strategy and outlook • Capture growing share of bulging 65+ demographic: Percentage of Australians aged 65 and over For personal use only middle and upper-middle Australia metro and outer-metro areas 25% • Develop at a sustainable rate: 20% 2009, 13.5% 2030, 19.7% balance r
Slide 14: Commercial Property - performance
Commercial Property - performance • Strong earnings performance across all asset For personal use only Commercial Property operating profit ($m) classes - comparable income growth +5.9% 24 17 (77) • High portfolio occupancy - 98% 600 11 500 • Delivered on asset sales program - $592m 400 300 566 541
Slide 15: Commercial Property - asset values
Commercial Property - asset values • Weighted average cap rate softened 130bps since Commercial Property – book values ($bn) For personal use only the peak of the cycle (20% decline) 10 0.5 (0.4)* • 93% of assets independently valued at 30 June 09 9 0.1 (1.1) (remaining 7% under development) 8 ($bn)
Slide 16: Commercial Property - Retail
Commercial Property - Retail FY09 highlights Specialty shop lease expiry profile* For personal use only • Comparable income growth +6.8% Vacant <1% FY14+ 23% FY10 26% • 21% rent increase on specialty shop renewals • Vacancies remained low FY13 • Projects under development leasing well, however 16% F
Slide 17: Commercial Property - Office
Commercial Property - Office FY09 highlights FY10 rent reviews For personal use only • Comparable income growth +5.7% 100% 84% • 63% retention on lease expiry 80% 60% • Vacancies remained low at 2.6% 40% FY10 outlook 20% 15% 1% • Office market vacancies increasing and sublease 0% Fixed M arket CPI s
Slide 18: Commercial Property - Industrial
Commercial Property - Industrial FY09 highlights FY10 rent reviews For personal use only • Comparable income growth +4.2% 100% 75% • 51% retention on lease expiry 80% 60% • Vacancies stable at 4.4% 40% 21% FY10 outlook 20% 4% • Industrial market is challenging 0% Fixed CPI M arket (Average review +3
Slide 19: Commercial Property - summary
Commercial Property - summary • Office and industrial markets are softening - downward pressure on rents and increasing incentives For personal use only • Retail sales still growing – rents unlikely to fall • Office and Industrial portfolio in good shape with no major lease expiry risk in FY10 • Cap
Slide 20: UK
Stockland UK FY09 FY08 • Market expected to bottom out in 2009 For personal use only Operating (loss)/profit ($0.7m) $11.6m • Property futures market pricing in recovery from FY10 Net funds employed* $330m $448m • Orderly work out and asset sale program anticipated to take 2 to 3 years • Break-even
Slide 21: Group Financial Results
For personal use only Group Financial Results Hugh Thorburn – Finance Director
Slide 22: Profit summary
Profit summary Composition of underlying profit *($m) For personal use only 800 (1) (54) 541 (74) 700 1 600 500 400 300 631 43 200 100 175 0 Residential Retirement Living Commercial Property UK Net unallocated Net interest expense Tax Underlying profit* corporate costs Underlying profit * – reconcil
Slide 23: Accounting matters
Accounting matters • 1c EPS adjustment to 38.8c reflects the FY09 EPS - reconciliation to Apr 09 guidance (cents) dilution from previous guidance following the For personal use only 50 rights issue 40 (1.0) (2.3) 30 • 2.3c EPS Theoretical Ex-Rights Price (TERP) 20 adjustment to 36.5c relates to requ
Slide 24: Operating cash flow
Operating cash flow • Strong focus in FY09 on: FY09 operating cash flow For personal use only cash flow $m 3,000 reducing working capital 2,500 (880) 2,000 deferring developments costs 1,500 (637) 2,247 1,000 69 31 (274) cost reductions 500 730* 556 0 Revenue Expenditure Operating Net cash O
Slide 25: Credit and debt maturity profile
Credit and debt maturity profile As at 30 June 2009 For personal use only S&P rating A- / Stable Gearing (net debt / total tangible assets) 16.0% Interest cover 2.8:1 Available undrawn committed facilities (in addition to cash on deposit) $1.3bn Weighted average debt maturity 6.6 years Weighted aver
Slide 26: Strategy & Outlook
For personal use only Strategy & Outlook Matthew Quinn – Managing Director
Slide 27: Strategic weightings
Strategic weightings EBIT FY09 Assets 30 June 2009 For personal use only Actual Strategic weighting Actual Strategic weighting Recurring Retirement Living 5% 2% Commercial Property 75% 72% Net overheads and other (1%) 0% Total recurring 79% 60-80% 74% 70-80% Trading Residential 25% 23% Retirement Li
Slide 28: Strategy - Business units
Strategy - Business units Residential For personal use only • Leverage Residential Communities’ competitive advantages • Target land investment opportunities in growth corridors to deliver short and medium-term profits • Review Apartments business in light of capital intensity / low returns Commerci
Slide 29: Strategic investments
Strategic investments GPT Strategic stakes For personal use only • Exposure is in efficient financing structure Cost Market value • Expires May 2010 and is effectively self-funding 30 Jun 09 % Price Total Price Total • GPT’s core assets fit with our strategy and our stake ($) $m ($) $m provides opti
Slide 30: Summary & outlook
Summary & outlook • Financially strong and well-placed to capitalise on the expected economic recovery: For personal use only low gearing streamlined operations in FY09 full benefits of cost and operational efficiencies to come through in FY10 focused on value accretive growth opportunities
Slide 31: FY09 Results Annexures
For personal use only FY09 Results Annexures 12 August 2009
Slide 32: Proforma balance sheet
Stockland FY09 Results - Financial results Proforma balance sheet For personal use only FY09 FY08 ($m) ($m) Cash 1,176.3 65.1 Real estate related assets - Commercial Property 7,918.2 8,816.3 - Residential 2,490.3 3,052.3 - Retirement 416.4 320.8 - UK 329.8 448.2 Retirement living existing residents
Slide 33: Underlying profit reconciliation
Stockland FY09 Results - Financial results Underlying profit reconciliation Gross Tax Net ($m) ($m) ($m) For personal use only Underlying profit 630.8 0.6 631.4 Provision for write-down of inventories Provision for write-down of inventories - Australia (424.7) 127.4 (297.3) Provision for write-down
Slide 34: Securities on issue
Stockland FY09 Results - Financial results Securities on issue For personal use only Number of securities Opening balance 1,472,602,981 Add: - Employee share plan 4,405,334 - October 08 placement 56,603,774 - November 08 placement 51,000,000 - February 09 DRP 60,274,679 - May 09 rights offer and pla
Slide 35: GPT stake - accounting treatment
Stockland FY09 Results - Financial results GPT stake - accounting treatment For personal use only Number of shares – 1,215m representing 13% of GPT securities on issue Profit & Loss ($m) Notional cost 877 Notional value @ 30 Jun 09 591 Loss recorded in the profit and loss (286) Recognised as: Impair
Slide 36: Debt summary
Stockland FY09 Results - Financial results Debt summary Facility Facility limit Amount For personal use only ($m) drawn ($m) Bank Debt* 1,711.9 209.9 Domestic Medium Term Notes 600.0 594.4 European Medium Term Notes N/A 619.3 US Senior Term Notes N/A 1,517.0 Asian Medium Term Notes N/A 151.3 Less: B
Slide 37: Debt summary
Stockland FY09 Results - Financial results Debt summary Facility Facility limit Facility Facility Facility limit Facility For personal use only (fully drawn) maturity (fully drawn) maturity ($m) ($m) Domestic Medium Term Note Facility (MTN) US Senior Term Note Facility (STN) - MTN 444.4 Jun 2011 - U
Slide 38: Covenant calculations
Stockland FY09 Results - Financial results Covenant calculations All lenders have consistent covenants: Statutory Adjustments Gearing Covenant For personal use only Balance Balance Sheet • Total liabilities / total tangible assets As at June 09 Sheet $m $m $m (TL/TTA): 45% Assets 24.8% (TL net of
Slide 39: Commercial Property portfolio overview
Stockland FY09 Results - Commercial Property Portfolio overview Australian Commercial Property assets - $7.9bn For personal use only Retail – $3.9bn Office – $2.9bn Industrial / Intermodal – $1.1bn Vic Vic ACT WA 9% 5% 3% Vic 4% 23% WA 19% Qld SA NSW 27% 7% NSW NSW 55% 60% 59% Qld 14% Qld 15% * Geog
Slide 40: Commercial Property asset values
Stockland FY09 Results - Commercial Property Asset values For personal use only WACR Valuation Previous Movement 30 Jun 09 ($m) Book Value ($m) ($m) Retail * 7.3% 3,937 4,324 (387) Office 7.9% 2,908 3,465 (557) Industrial 8.6% 1,091 1,244 (153) Other ^ - - - (23) 7.7% 7,936 9,033 (1,120) * Includes
Slide 41: Retail portfolio asset values
Stockland FY09 Results - Commercial Property Asset values Previous Previous For personal use only Book Cap Book Cap Valuation Value Change Rate Valuation Value Change Rate Retail Portfolio ($m) ($m) % % ($m) ($m) % % Stockland Wetherill Park 318.8 342.8 (7.0) 7.00 Stockland Piccadilly Retail 52.5 47
Slide 42: Office portfolio asset values
Stockland FY09 Results - Commercial Property Asset values Previous Previous For personal use only Book Cap Book Cap Valuation Value Change Rate Valuation Value Change Rate Office Portfolio ($m) ($m) % % ($m) ($m) % % Waterfront Place 235.7 286.5 (17.7) 7.25 150 Charlotte Street 42.0 59.2 (29.1) 8.50
Slide 43: Industrial portfolio asset values
Stockland FY09 Results - Commercial Property Asset values Previous Previous For personal use only Book Cap Book Cap Valuation Value Change Rate Valuation Value Change Rate Industrial Portfolio ($m) ($m) % % ($m) ($m) % % Yennora Distribution Centre 335.7 347.1 (3.3) 8.00 Export Park, 9-13 Viola Plac
Slide 44: Commercial Property asset disposal
Stockland FY09 Results - Commercial Property Asset disposal Previous For personal use only 31 Dec 08 Book Cap Valuation Value Change Rate Disposal Disposal Initial Revaluation ($m) ($m) % % Disposal Date Value ($m) Yield Engadine 6.0 11.7 (48.7) 9.00 Batemans Bay & Bridge Plaza Aug-08 80.5 6.9% 81-9
Slide 45: Tenancy profile - Top tenants
Stockland FY09 Results - Commercial Property Tenancy profile - Top 20 tenants* Retail Portfolio Office Portfolio Industrial Portfolio For personal use only Rank Tenant Portfolio Tenant Portfolio Tenant Portfolio % % % 1 Wesfarmers 27.1% Singtel 5.6% ACI 13.2% 2 Woolworths Limited 22.8% Bankwest 3.1%
Slide 46: Tenancy retention and new leasing
Stockland FY09 Results - Commercial Property Tenancy retention and new leasing For personal use only Office Industrial FY09 Increase Weighted FY09 Increase Weighted retention in base average retention in base average Retained tenants rate rent incentive* Retained tenants rate rent incentive* Sydney
Slide 47: Lease expiry profiles
Stockland FY09 Results - Commercial Property Lease expiry profiles Vacant FY09 FY10 FY11 FY12 FY13 FY14+ For personal use only (FY13+ for June 08) Retail June 2008 June 2009 15% 14% 9% 12% 50% 1% 20% 8% 12% 12% 47% Office June 2008 June 2009 2%8% 18% 14% 11% 47% 3% 16% 15% 10% 11% 45% Industrial Jun
Slide 48: Commercial Property development pipeline
Stockland FY09 Results - Commercial Property Development pipeline Forecast cost to complete ($m) For personal use only UNDER CONSTRUCTION Forecast total FY10 FY11 FY12 Forecast year cost ($m) one cash yield Retail Balgowlah 134 17 5.9% Riverton (50% share) 16 10 7.3% Merrylands (Stages 1-4)* 350 58
Slide 49: Commercial Property retail sales
Stockland FY09 Results - Commercial Property Retail sales For personal use only Total MAT % MAT % % 6mth % 3mth ($m) Growth Comparable Comparable Comparable Growth Growth Growth Supermarkets 1,817 2.2 1.4 1.9 2.1 DDS 808 2.9 3.2 0.6 3.2 Specialties 1,376 2.6 2.7 2.3 2.0 Other Majors 74 N/A N/A N/A N
Slide 50: Residential portfolio overview
Stockland FY09 Results - Residential Portfolio overview Communities Apartments For personal use only Communities – $2.0bn Apartments – $0.5bn No. of projects: 66 No. of projects: 9 Lots controlled: 63,870 Units controlled: 1,736 End value of land bank: $15.5bn End value of projects $1.7bn Average ag
Slide 51: Residential market conditions
Stockland FY09 Results - Residential Market Conditions Market conditions Improving sentiment For personal use only • Market fundamentals remain strong 30 Consumer Sentiment 20 10 • Sentiment is improving 0 -10 • Continued demand and improving housing -20 affordability -30 -40 1984 1989 1994 1999 200
Slide 52: Communities - Lots settled by location and age
Stockland FY09 Results - Residential Communities – Lots settled by location and age For personal use only Lots Settled by Age Lots Settled by Location 100% 5,000 84% 80% 4,000 414 545 1029 1335 60% 52% 3,000 Lots 266 388 40% 33% 2,000 20% 15% 15% 2348 2166 1,000 2% 0% 0 1-3 yrs 4-6 yrs 6+ yrs FY08 F
Slide 53: Communities - Average price per lot
Stockland FY09 Results - Residential Communities – Average price per lot Average price* of retail lots – price per lot and price per m2 For personal use only FY09 FY08 • Overall Trend No. Avg Avg Price No. Avg Avg Price price growth achieved in Qld & Vic Lots Size Price per m 2 Lots Size Price per
Slide 54: First home buyer grant entitlements
Stockland FY09 Results - Residential First home buyer grant entitlements For personal use only - 53 -
Slide 55: Apartments development pipeline
Stockland FY09 Results - Residential Apartments development pipeline • Tooronga Stage 1 under construction Cash Generator – Projects under construction For personal use only with successful launch in July 09 - Tower 1 presales of 57% FY10 FY11 FY12 TOTAL $m $m $m $m • The Hyde moved from late FY10 t
Slide 56: Apartments development pipeline
Stockland FY09 Results - Residential Apartments development pipeline For personal use only Costs to Complete ($m) Expected Net Revenue ($m) Projects under construction FY10 FY11 FY 12+ Total FY10 FY11 FY 12+ Total NSW Prince Henry – Dickson 5 5 25 25 Prince Henry – Mantra 11 20 4 35 30 5 35 The Vill
Slide 57: Stockland contact details and disclaimer
For personal use only Stockland Corporation Limited ACN 000 181 733 Stockland Trust Management Limited ACN 001 900 741 25th Floor 133 Castlereagh Street SYDNEY NSW 2000 DISCLAIMER OF LIABILITY While every effort is made to provide accurate and complete information, Stockland does not warrant or repr