|17.4% increase in Residential operating profit|
|15.3% operating profit margin
|20.8% return on assets (core portfolio)
|83% communities liveability score in Stockland Liveability Survey
|($M, unless otherwise stated)||FY17||FY16||Change|
|Lots settled (lots)||6,604||6,135||7.6% ↑|
| - Including superlot revenue1
|EBIT (before interest in COGS)
|EBIT margin||23.3%||23.9%|| ↓
|Operating profit (FFO)2||270||230||17.4% ↑|
|Operating profit margin||15.3%||15.5%|| ↓
|ROA - core portfolio3||20.8%||19.6%||↑|
|ROA - total portfolio||15.2%||13.8%||↑|
1 44 superlot settlements in FY17; 33 settlements in FY16.
2 Operating profit is equal to FFO for the Residential business.
3 Core excludes impaired projects.
Our Residential business delivered another year of double-digit operating profit (FFO) growth of 17.4%, and a net operating profit margin of 16.6% on the core portfolio. We settled a record 6,604 lots in FY17, and we commence FY18 with record pre-sales.
We made a number of strategic land acquisitions over the past 12 months to significantly restock our portfolio, acquiring 9,900 lots. The majority of these are in the high-performing Melbourne market. Our landbank now totals over 80,000 future housing lots nationally.
We have continued to expand our medium density business, with 213 homes settled this year, close to 600 currently under construction, and pipeline of over 2,800 across Australia. Medium density development is a key growth driver for our Residential business as we extend our focus on community creation in the important “missing middle” of our major capital cities.
We continue to deliver some of the most liveable and desirable new communities in Australia. Our leadership in housing affordability and commitment to delivering a range of options for first home buyers and families, places us in a preferred position for residential lending trends and government growth initiatives.
During the year, the Residential business reviewed its application of whole of life (WOL) accounting to ensure ongoing consistency across our portfolio, ahead of our change in systems, specifically in relation to the allocation of costs and treatment of superlots consistently with retail lots. There was no net impact to our WOL profitability and no material change to FFO in FY17.
We regularly review our approach to managing project cost contingencies and potential revenue upside as part of our WOL accounting within the Residential business. This ensures effective risk management to support our business performance through the business cycle. The cost contingency and revenue review resulted in no incremental FFO in FY17.
The Residential business is making good progress on its plans to make the portfolio more resilient and profitable in the future by continuing to focus on: