08 Apr 2021

2021 AGM CEO address

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Thank you Chairman. And good morning everyone.

I too would like to thank securityholders for participating in today’s hybrid AGM.

I would especially like to thank our people for their commitment to our customers throughout a disrupted year, and for their contribution to our results.

I am very proud of our team, particularly how we kept adapting to the conditions, keeping our centres safe and open for the communities we serve. We continue to remain flexible.

The restrictions imposed by governments during 2020 to address COVID–19 made for an unprecedented operating environment.

Our team remained focused on balancing the health and safety of our customers, retail partners and people with business continuity and economic activity.

We are pleased that all our 42 Westfield Living Centres remained open, safe and trading during the year despite these restrictions.

We had more than 450 million customer visits across our portfolio, including an average of 46 million per month for the last quarter, highlighting how important our centres are to our customers and communities.

This scale of visitation and average dwell time of more than one and a half hours demonstrates that our Westfield Living Centres are a ‘third place’ for our customers after their home and workplace.

It also reflects the currency of our customer strategy and Our Plan to create the places more people choose to come, more often, for longer.

During the year, leadership of the industry and of our company remained a priority.

We were proactive and deliberate in the decisions we made with a view not just to the short term, but the long-term ramifications of those decisions.

Our capital management measures were focused on strengthening the Group’s financial position and preserving value for the long term for our securityholders by not raising dilutive equity.

The Group executed $10.1 billion of new and extended funding, including $3.6 billion of bank facilities, $2.4 billion of long-term bonds and $4.1 billion of subordinated notes. The subordinated hybrid notes issue was complex and has been viewed as unique and extremely innovative by the market.

As a result of these actions, we have available liquidity of over $6 billion, sufficient to cover all debt maturities to early 2024.

We maintain an “A” grade credit rating from all three ratings agencies.

Cash collection has been a priority for our team.

We achieved gross operating cash flows of $2.3 billion and net operating cashflows grew by 95.7 per cent in the second half of 2020, resulting in a cash surplus of $771 million for the 12-month period.

Cashflow momentum has continued into 2021 with gross rental cash inflow for the 3 months to 31 March being in excess of $600 million.

Operating Profit and FFO for 2020 were approximately $765 million or 14.7 cents per security. This included a credit charge of $304 million relating to the financial impact of the pandemic.

Importantly, we did not seek or receive funds from the Australian or New Zealand government including under its JobKeeper scheme.

All suppliers continued to be paid on 30-day terms to ensure their cash flow, consistent with our commitment to the Australian Supplier Payment Code.

Supporting our retail partners was a key focus for the team during the year, particularly our small to medium sized retailers – or SMEs - who bore the brunt of the cashflow shock with limited access to other capital.

We reached commercial arrangements with 3,398 retail partners including 2,456 SME retailers in line with the Code of Conduct.

Throughout the year, we saw continued demand for space by our retail partners with occupancy at 98.5 per cent. We introduced 217 new retail brands to Westfield across all categories.

Notably, the structure of our leases has not changed and remains based on the mutual agreement to pay a fixed base rent, a position fully supported by our debt and equity investors who do not want to see us take on retailer risk.

Notwithstanding the turbulence during 2020, we continued to evolve the Westfield ecosystem, creating new opportunities for interaction between Scentre Group, our customers, and our retail partners and brands.
We have a solid platform with approximately 20 million people living in close proximity to a Westfield Living Centre.

We seized the opportunity to introduce and progress strategic initiatives during the year including Westfield Direct and Westfield Plus.

Westfield Plus is our membership program and we now have approximately 1.5 million members. This provides the opportunity to engage more personally with our customers.

To support our retail partners through the height of the pandemic, we trialled Westfield Direct, a new drive-through, contactless click and collect service.

These initiatives have positioned us to accelerate growth as consumer confidence continues to pick up.
The most successful retailers are multichannel retailers with productive physical store networks.

Our Westfield Living Centres remain a central part of their business strategies given the quality of our centres and their proximity to customers.

We continue to invest in our portfolio and during the year completed a number of developments including a new dining precinct at Westfield Doncaster in Melbourne, introducing 14 new restaurants to the centre.

In December 2020, we were appointed by Cbus Property to design and construct the residential and commercial tower on the site of the former David Jones menswear store on the corner of Market and Castlereagh streets in Sydney’s CBD.

These outcomes were achieved while the Group also maintained its focus on being a responsible, sustainable business and delivering on key initiatives across our four pillars of community, people, environment and economic performance.

Community engagement with our Westfield Local Heroes community grants and recognition program continues to grow with more than 140,000 people voting for our 2020 Heroes. Over the past three years, we have granted $3.62 million to programs that directly benefit local communities.

Our diversity and inclusion strategy continues to be a key driver of our culture and we’re proud of our inclusion in the Bloomberg Gender-Equality Index for the second year running as well as continued recognition as an Employer of Choice by the Workplace Gender Equality Agency and Silver status in the Australian Workplace Equality Index Awards.

On the environment, we announced our net zero emissions by 2030 target and have established a roadmap to inform initiatives. We reduced our energy use by 10 per cent year-on-year, of which 4 per cent was continued asset operational efficiency. We publicly supported the Taskforce for Climate-related Financial Disclosures recommendations in 2020 and our climate resilience approach and reporting against the TCFD continues to improve. It was pleasing to improve our performance in key investor surveys, CDP and GRESB.

Highlights of our financial performance were referenced earlier, noting it has been a trademark of our leadership team to balance short-term responses with long-term consequences for the
business. Supply chains have also been a key focus throughout the year as we developed our first Modern Slavery Statement to assess and address risks in our direct operations and supply chain.

Both our Responsible Business Report and Modern Slavery Statement were released on the 31st of March and are available online.

Whilst COVID-19 uncertainty remains in 2021, subject to no material change in conditions, the Group expects to distribute at least 14.00 cents per security for 2021.

The Distribution is expected to continue to grow in future years. The Group plans to retain earnings to cover operating and leasing capital expenditure, fund strategic initiatives and reduce net debt.

What we learnt from last year is that regardless of the economic cycle, we must keep moving and innovating to deliver the most efficient platform for our partners to connect with customers.

We operate a business that is unparalleled in terms of scale and proximity to where people live and work. This is our competitive advantage.

We have a number of strategic initiatives underway that will drive our customer strategy in 2021 and beyond, delivering on Our Purpose – creating extraordinary places, connecting and enriching communities.
We believe Scentre Group is well positioned to deliver long term growth for securityholders.



 

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