Slide 1: FY12 Results Presentation, 8 August 2012
For personal use only 8 August 2012 Merrylands, NSW
Slide 2: Agenda
Agenda For personal use only 1 Results summary: Matthew Quinn 2 Capital management: Tim Foster 3 Business commentary Retail: John Schroder Office & Industrial: John Schroder Residential Communities: Mark Hunter Retirement Living: David Pitman 4 Summary and outlook: Matthew Quinn -1-
Slide 3: Agenda
Agenda For personal use only 1 Results summary: Matthew Quinn 2 Capital management: Tim Foster 3 Business commentary Retail: John Schroder Office & Industrial: John Schroder Residential Communities: Mark Hunter Retirement Living: David Pitman 4 Summary and outlook: Matthew Quinn -2-
Slide 4: The year in review
1 The year in review Reasonable result in a difficult operating environment For personal use only • Retail centres delivered solid comparable sales and income growth • Residential Communities achieved record settlements, although lower margins impacted profit • Retirement Living delivered record sal
Slide 5: Result reflects portfolio transition and weak residential market
1 Result reflects portfolio transition and weak residential market FY12 FY11 For personal use only Statutory Profit $487.0m 35% $754.6m Statutory Earnings per Security 21.1 cents 33% 31.7 cents Underlying Profit1 $676.1m 7% $726.3m2 Underlying Earnings per Security 29.3 cents3 4% 30.5 cents2
Slide 6: Profit summary
1 Profit summary FY12 FY11 Comments For personal use only Retail 310 8% 286 3.8% comparable growth1 Residential Communities 198 15% 233 Margin pressure Retirement Living 36 125% 162 Price, volume & margin growth Office & Industrial 219 16% 260 Asset sales UK & Apartments 17 41% 29 Last mea
Slide 7: Underlying EPS as advised in July 2012
1 Underlying EPS as advised in July 2012 For personal use only March 2012 EPS guidance 30.5 cents Retirement Living accounting change (0.7) cents May 2012 EPS guidance 29.8 cents One-off restructuring costs (0.3) cents Additional benefits from FY13 Fewer shares purchased in buyback (0.1) cents 2.5%
Slide 8: This cycle is different and buyers are more cautious
1 This cycle is different and buyers are more cautious Rate cuts are not encouraging borrowing… … or stimulating the housing market For personal use only • Pre-GFC, 2% interest rate cut resulted in a • In previous cycles, dwelling approvals picked 10% increase in housing credit growth up within thre
Slide 9: Underlying residential fundamentals remain strong
1 Underlying residential fundamentals remain strong Strong population growth and low The residential market is undersupplied For personal use only unemployment drive underlying demand • Strong population growth, with bipartisan • Supply has been lower than underlying support for 180,000 immigrants p
Slide 10: Integrated business sets us up well for the future
1 Integrated business sets us up well for the future For personal use only Over 60% of our retail centres have Stockland Residential Communities and/or Retirement Villages within their trade areas Similar customers Integrated projects Common processes $125,000 pa household 3 million households incom
Slide 11: Agenda
Agenda For personal use only 1 Results summary: Matthew Quinn 2 Capital management: Tim Foster 3 Business commentary Retail: John Schroder Office & Industrial: John Schroder Residential Communities: Mark Hunter Retirement Living: David Pitman 4 Summary and outlook: Matthew Quinn - 10 -
Slide 12: Strong financial discipline is critical to delivering our strategy
2 Strong financial discipline is critical to delivering our strategy For personal use only Target FY12 actual Strong growth EPS 5-6% per annum through the cycle (4%) EPS growth FY11-12 Earnings resilience 60-80% recurring income 73% recurring income Conservative gearing 20-30% D/TTA Long-dated
Slide 13: Focus on improving cash returns
2 Focus on improving cash returns For personal use only Business unit return on assets1 Residential 11.3% 8.5% Retail 8.0% Return on Assets: Retirement 4.2% core Office 7.4% 7.1% 7.6% Industrial 8.7% Return on f Unlevered Assets: Return on Other2 3.4% other Assets 8.2% f Return on (0.4%) Equity Corp
Slide 14: Initiatives are underway to increase returns
2 Initiatives are underway to increase returns For personal use only Reduce inventory • Target $125m reduction in working capital Increase operational efficiency • >$20m gross annual overhead savings from FY12 initiatives Activate land bank • Plan to commence 16 new Residential Communities projects
Slide 15: Asset disposals funded retail developments and share buyback
2 Asset disposals funded retail developments and share buyback For personal use only FY12 cash inflows and outflows FY13 outlook is for more balanced cashflows ($m) • Ongoing operational efficiency improvements Additional debt 439 416 Acquisitions • Continuing non-core asset sales, with $190m 423 Re
Slide 16: Agenda
Agenda For personal use only 1 Results summary: Matthew Quinn 2 Capital management: Tim Foster 3 Business commentary Retail: John Schroder Office & Industrial: John Schroder Residential Communities: Mark Hunter Retirement Living: David Pitman 4 Summary and outlook: Matthew Quinn - 15 -
Slide 17: Retail business delivered strong, stable returns
3 Retail business delivered strong, stable returns For personal use only Retail centres delivered good growth Our centres are significantly more productive than industry benchmarks • $310m NOI, up 8% due to acquisitions and developments coming on line Shopping centre productivity • 3.8% comparable N
Slide 18: Responding to the structural changes in retail
3 Responding to the structural changes in retail Spending habits are changing We focus on value and convenience For personal use only Proportion of retail sales online is increasing Our centres are weighted towards food and services 10% 15% 22% Services 8% 20% 6% 33% Food 31% 4% 20% Discretionary 2%
Slide 19: Investing for resilience and growth
3 Investing for resilience and growth Expect our centres to remain resilient For personal use only • 75% of our centres are ranked first in the trade area by market share and/or productivity • Our retail mix is heavily weighted towards non-discretionary spending, food and services • Rents are sustai
Slide 20: Agenda
Agenda For personal use only 1 Results summary: Matthew Quinn 2 Capital management: Tim Foster 3 Business commentary Retail: John Schroder Office & Industrial: John Schroder Residential Communities: Mark Hunter Retirement Living: David Pitman 4 Summary and outlook: Matthew Quinn - 19 -
Slide 21: Continued the sale of non-core Office & Industrial assets
3 Continued the sale of non-core Office & Industrial assets Committed to maximising returns from our Office & Industrial portfolio For personal use only • $2.7b Office and Industrial assets remain on balance sheet • Focusing on maximising rental income and asset value • Disposal plan will take into
Slide 22: Agenda
Agenda For personal use only 1 Results summary: Matthew Quinn 2 Capital management: Tim Foster 3 Business commentary Retail: John Schroder Office & Industrial: John Schroder Residential Communities: Mark Hunter Retirement Living: David Pitman 4 Summary and outlook: Matthew Quinn - 21 -
Slide 23: Residential Communities has demonstrated resilience in a soft market
3 Residential Communities has demonstrated resilience in a soft market Achieved record settlements and steady prices For personal use only Change in median house prices • Settled a record 5,388 lots June 2011-June 2012 • Maintained flat “like for like” pricing in a declining market 1.6% 2.0% • Targe
Slide 24: Continue to deliver market leading residential communities
3 Continue to deliver market leading residential communities For personal use only Large, geographically diverse High quality affordable Investment in communities projects provide market reach products enhance market share underpins future returns Delivering ten of Australia’s Deliver what customers
Slide 25: Expect FY13 to be another challenging year
3 Expect FY13 to be another challenging year FY13 has a lower starting position than FY12 For personal use only • Beginning the year with 1,561 deposits, around 700 less than last year • Majority of the difference is in Victoria, where FY12 was boosted by government stimulus Signs the market is near
Slide 26: Agenda
Agenda For personal use only 1 Results summary: Matthew Quinn 2 Capital management: Tim Foster 3 Business commentary Retail: John Schroder Office & Industrial: John Schroder Residential Communities: Mark Hunter Retirement Living: David Pitman 4 Summary and outlook: Matthew Quinn - 25 -
Slide 27: Making good progress to improve Retirement Living returns
3 Making good progress to improve Retirement Living returns For personal use only Significant increase in revenue and profit Operating profit more than doubled in FY121 • $36m operating profit, up $20m from FY11 • Record number of settlements: 519 existing units and 268 new units Clear focus on cash
Slide 28: Aim to be Australia's leading Retirement Living operator
3 Aim to be Australia’s leading Retirement Living operator For personal use only Full, happy villages • 94% occupancy • Affordable to enter, affordable to live in • 88% of residents satisfied or highly • Industry leading community centres satisfied • Well run villages • 26% of settlements from refer
Slide 29: Well positioned for the future
3 Well positioned for the future For personal use only Retirement Living is a growing market segment • Australian population aged 65+ is expected to grow by 46% by 2021 • Moving to a retirement village is a needs-based decision We have had a good start to FY13 but expect market conditions to remain
Slide 30: Agenda
Agenda For personal use only 1 Results summary: Matthew Quinn 2 Capital management: Tim Foster 3 Business commentary Retail: John Schroder Office & Industrial: John Schroder Residential Communities: Mark Hunter Retirement Living: David Pitman 4 Summary and outlook: Matthew Quinn - 29 -
Slide 31: FY13 is a key year in our transition to higher returns
4 FY13 is a key year in our transition to higher returns For personal use only Today Future Transition Retail • Complete key developments Income and capital growth Residential • Continue to trade out of impaired Higher cash returns projects • Develop new, higher returning projects Retirement Living
Slide 32: Summary and Outlook
4 Summary and Outlook Responding to the challenging market For personal use only • Continued focus on value and convenience saw us achieve solid Retail rental growth and record Residential and Retirement settlements • Streamlined the business for efficiency Continue to manage prudently and appropria
Slide 33: Stockland contact details and disclaimer of liability
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